17 Synopsis

SYNOPSIS OF THE THESIS SUBMITTED BY
SHITAL JITENDRA MEHTA
TO THE UNIVERSITY OF MUMBAI
FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY IN COMMERCE
1. Title of the Thesis:
APPLICATION OF HUMAN RESOURCE AUDIT IN RETAIL BUSINESS IN THE CITY

OF MUMBAI: AN ANALYTICAL STUDY
2. Name of the Candidate:
Ms. Shital Jitendra Mehta (As per name on M.Com. convocation)
3. Name of the Guide: Dr. Arvind Luhar
4. Name of the College: K.P.B. Hinduja College of Commerce, Mumbai.
5. Number and Date of Registration: No. 43/09-10-13
6. Signature of Student:
7. Signature of Guide:
8. Date of Submission: 19th November,2015.
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A SYNOPISIS OF THE Ph.D. THESIS
ON
APPLICATION OF HUMAN RESOURCE AUDIT IN RETAIL BUSINESS IN THE CITY

OF MUMBAI: AN ANALYTICAL STUDY
SUBMITTED BY
MS. SHITAL JITENDRA MEHTA
M.Com, UGC-NET-JRF
UNDER THE GUIDANCE OF
Dr. ARVIND LUHAR
M.COM, LLB, MBA, Ph.D., UGC-NET
K.P.B. HINDUJA COLLEGE OF COMMERCE, MUMBAI.
SUBMITTED TO THE FACULTY OF COMMERCE (ACCOUNTANCY)
UNIVERSITY OF MUMBAI
FOR
DOCTOR OF PHILOSOPHY (COMMERCE) DEGREE IN ACCOUNTANCY
NOVEMBER 2015
428
1. INTRODUCTION
At the root of success of every established organization, there lies a team of its committed and
dedicated employees. It is their hard work and intense efforts which enable a firm to achieve its
goals and mission. This is the reason why firms consider their human resources as the most
valuable assets. It is human resources which enable a firm to stand at advantage in this
competitive and dynamic business environment. Their performance facilitates higher revenues,
corporate image, customer satisfaction, wider market share and much more.
Almost every firm have human resource management department in their organization.
Traditionally, this department performed variety of functions irrespective of its contribution to
business performance and contribution to the needs of employees. These functions include:
recruitment, selection, staffing, training, performance measurement, compensation and
motivation. It was concerned with administration of human resource and can be termed as
technical human resource management. It was towards the end of 1970s, new approach towards
the human resource development called Strategic Human Resource Management (SHRM) marked
its existence. SHRM involves designing and implementing set of internally consistent policies and
practices that ensure firm‟s human capital (employees‟ collective knowledge, skills and abilities)
contributes to achievement of its business objectives.
With the advent of SHRM emphasis shifted from simply managing human resources to
developing them. For this purpose importance now was placed on advanced techniques of training
and development, career development and organizational development.
Liberalization and globalization of Indian economy has posed new challenges to Indian business
firms in terms of strategies, technology, quality, and cost and so on. If firms had to cope up with
such dynamic and competitive environment, they needed to focus on their human resources, as
they are the only active resource of business. Money, material and machines being passive factor
of production; need assistance of human resources. Human Resource (HR) plays significant role
in implementation of strategy and management of systems. Thus HR became the most valuable
resource. HR started to be recognized as strategic business partner in planning policies and
attaining organizational goals. In order to justify the claim of being strategic partner HR managers
must clearly demonstrate the way in which HR practices contribute to the business performance
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and organizational goals. However, proper tool is required to measure effectiveness of HR
function for this purpose. HR Audit is one such tool that links the HR system and policies to
organizational objectives while focusing on business needs of internal customers.
In the post liberalization period, being threatened by global competition, managers started
establishing direct links between Human resource development and firm performance. Hence,
competence building, commitment building and culture building have become important concerns
of corporations. It is in response to these changes and with an intention to focus HRD (Human
Resource Development) on business goals, business linkages, competence building, commitment
building and culture building; T.V.Rao Learning Systems (TVRLS) initiated a comprehensive
HRD Audit program in the early nineties. Initially, they worked with individual corporations to
conduct HRD Audit. During this period HRD Audit caught attention of Mr. Aditya Vikram Birla
who asked all his companies audited. During this period TVRLS came up with HRD Audit
questionnaire and methodology. The first software for HRD Audit was developed and marketed
by Academy of HRD through Equinox and later by TVRLS through software creations, a Delhi-
based software systems company. The company started developing internal auditors through
HRD Audit programs. Detailed manuals are being developed to promote and make the audit
easier.
The concept of Human Resource Audit has taken birth from the tradition of an audit of financial
accounts, which every company performs annually to ensure that sound accounting practices and
principles are followed. Financial audit is an examination of accounting and financial records of a
company to ensure its reliability and validity. It certifies true and fair presentation of company‟s
financial position. Similarly, Human Resource Audit is a practice through which an organization
inspects and examines various aspects of its human resource management functions. Such
functions include human resource planning, recruitment and selection practices, training and
development programs, compensation and motivation efforts, performance appraisal system,
participative management, communication, welfare, safety and health, industrial relations, trade
unionism, and disputes and their resolution.
Thus, HR audit plays a very important role as it evaluates the effectiveness of Human Resource
functions and establishes its relevance in changing business environment. Management can get
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clarity that whether expenses and efforts spent on such HR practices really contribute in meeting
the needs of its stakeholder. Thereby, realizing the true and fair picture of investment made on
human resource management functions and its contribution to firms operations.
Such audit may reveal the strengths and weaknesses of an organisation‟s Human Resource
Management practices. Based on such information management can take steps to improve on its
weaknesses in respect of:
i. Effectiveness in Implementation and measurement of such practices, and
ii. Determination of future course of action in direction that will lead to achievement of firm‟s
objectives.
There are five approaches to human resource audit:
i. Comparative approach: The auditors identify another company as the model. The results of their
organizations are compared with those of the model company.
ii. Outside authority approach: The auditors use standards set by an outside consultant benchmark
for comparison of own results.
iii. Statistical approach: Here, statistical measures of performance are developed based on the
company‟s existing information.
iv. Compliance approach: Auditors review past actions to determine if those activities complied
with legal requirements and company policies and procedures.
v. Management by objectives approach: It creates specific goals against which performance can be
measured. Then the audit team researches actual performance and compares it with the
objectives.
Present study focuses on application of Human Resource audit in retail business in the city of
Mumbai. Retailing has been defined as a business activity involving sale of goods and services to
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consumers for their personal, family or household use. Although retailing has been around since
times immemorial, it was in the 20th century that significant changes occurred in the retail sector,
especially in the developed countries. Modern formats of retailing, such as department stores,
discount stores, supermarket, convenience stores, fast food outlets, specialty stores, warehouse
retailers and hypermarket, are now making inroads into developing countries of the world.
Retailing has become more organized and chain stores (using sophisticated information
technology and communication to manage their operations) are coming up at the expense of
independent shops.
Retail sector in India is mainly divided into:
1) Unorganized retailing - Local Kirana Shop, Mom & Pop store.
2) Organized retailing – Licensed retailer like Shopping Mall, Super Market, Departmental store.
Indian retail sector is dominated by unorganized sector with almost 90 percent share. The share of
organized retail sector is steadily increasing with the entry and operations of departmental stores,
hypermarkets, supermarkets and specialty stores. Thus the structure and face of Indian retail
market is changing dramatically.
Many past researchers have identified positive relationship between effectiveness of human
resource management practices and business performance. In this study the researcher has studied
the impact of Human Resource Audit on effectiveness of Human Resource Management
functions as well as on the financial performance of the firm. The study is interdisciplinary in
nature. It used human resource management and accounting areas of the field of commerce. Two
groups of retail firms- Retailers that adopt HR audit and retailers that do not adopt HR audit are
studied. A comparative study of both the groups is made. Financial performance, effectiveness of
human resource management functions, employee productivity, return on personnel cost, HR
system and culture and HR work climate of both the groups of firm is studied.
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2. REVIEW OF LITERATURE
Available literature in the research domain is reviewed to look into the available work done in
research papers, journals, write-ups on websites, newspapers, books etc. to understand the studies
undertaken in the area of research. Review of literature is segmented in three parts namely “Link
between HR practices and organizational performance”, “Measures to evaluate HR practices” and
“HRM practices in retail business”. Various studies have shown that good HR practices can
influence financial and other performance indicators of corporations by generating employee
satisfaction, which in turn can influence customer satisfaction.
Recent researches worldwide have shown that good HR practices and policies can go a long way
in influencing business growth and development.
Mark A. Huselid (1995) stated that the investment in high performance work system is
associated with lower employee turnover and greater productivity and corporate financial
performance. He also concluded that the impact of high performance work practices on corporate
financial performance is in part due to their influence on employee turnover and productivity.
Zaini Abdullah, Nilufar Ahsan and Syed Shah Alam (2009) found that training and
development, performance appraisal and team work have positive impact on business
performance but compensation/incentives and employee security do not have significant impact
on business performance.
Pfeffer (1998) has proposed seven HRM practices that are expected to enhance organizational
performance.
1. Employment security.
2. Selective hiring of new personnel.
3. Self-managed teams and decentralization of decision making as the basic principles of

organizational design.
4. Comparatively high compensation contingent on organizational performance.
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5. Extensive training.
6. Reduced status distinctions and barriers, including dress, language, office arrangements, and
wage differences across levels.
7. Extensive sharing of financial and performance information throughout the organization.
Patrick M. Wright, Timothy M. Gardner and Lisa M. Moynihan (2003) found that there is
positive relationship between HR practices and productivity, quality and operating expenses and
profitability.
National Skill Development Corporation (NSDC) Report on Human Resource and Skill
Requirements in the Organised Retail sector - Study on mapping of human resource skill
gaps in India till 2022 (2012) states that:
i. The retail industry employs over 35 million persons 1 with the majority of the employment
being in unorganised sector. The employment in the organised segment is about 0.3 million.
ii. The Organised Retail industry has a large proportion of the incremental human resource
requirement with adequate skills.
Keeping in view above scenario, broad possible focus areas for NSDC for skill building in the
Organised Retail sector are:
i. Emphasis on basic formats/categories to advanced formats/categories – with specific emphasis

on apparel retail, technology and lifestyle retail, generic/Food and Grocery retail.
ii. Entry level training for specific product categories, company specific training hold potential.
Such Importance of HR in retail industry calls for effective Human Resource Management
(HRM) practices of recruitment and training and development.
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Julia Merkel, Pall Jackson and Doren Pick(2006) in their book “New Challenges in Retail
Human Resource Management” have pointed that retailing means serving the customers in direct
and personal way. Retailing is a labour intensive industry and people are driving force behind
every retail transaction. Again long working hours and peaks in trading day/week along with
sophisticated and well informed customers require special focus on HRM. In such conditions,
HRM needs to provide “coach” to organize and support employees and management mentally and
professionally, which would enable them to achieve organizational objectives. He also pointed
out that retailing is characterized by longer working hours and lower pay. Thus, future HRM has
to find the practical way so as to achieve a balance between company‟s and employees‟ needs in
terms of working hours and payment and customers‟ service requirements.
Review of literature reveals that there is positive relationship between HR practices and firm
performance. There are varieties of models available in literature to evaluate effectiveness of
HRM functions. Some of them are HR Scoecard, Business scorecard, Strategic HR framework,
Balanced Scorecard, integrative approach, human capital appraisal approach and benchmarking.
However, in response to changes in business environment on account of liberalization,
privatization and globalization, in the early nineties many firms came up with the implementation
of Human Resource Audit. This approach is similar to the financial audit. HR Audit tries to
evaluate HR function in an organization. It measures effectiveness of HR function in respect of
HR systems, HR strategies, HR competencies, HR culture and values and HR impact and
alignment. It uses questionnaire, interviews of HR managers and staff, secondary data from
various documents in the organization as a methodology. This technique was first developed in
early nineties by T.V. Rao.
But no study focused on the impact adoption of these models to evaluate HR function, on
effectiveness of HRM functions and firm performance. Thus, in light of current competitive
scenario, present study attempts to study- The impact of „Human Resource Audit‟ methodology
on effectiveness of HR function and financial performance of the firm.
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3. CONCEPTUAL FRAMEWORK
Research may be defined as documented prose work. The purpose of the research work is to
discover answers to the questions through the application of scientific procedure. Hence initially
concept map was prepared. Through this new information related to study was gathered. On the
basis of this research process was designed. This design focuses on
1. Defining and redefining a research problem.
2. Formulating objectives and hypothesis of the study
3. Developing a research plan.
4. Collection of primary and secondary data.
5. Analyzing and interpretation of data.
6. Preparation of report.
4. STATEMENT OF PROBLEM
With the above discussion in light, researcher has selected the research endeavor of examining
meticulously and critically the conduct observable of the “ Application of Human Resource
Audit in Retail Business in the City of Mumbai- An Analytical Study”
Researcher has made an attempt to critically address following problems:-
i. Retailers have challenge of maintaining financial position due to stiff competition in the market.
ii. Retail being service industry, its Human Resource needs are different from other sectors.
Present Human Resource practices adopted by retailers lack effectiveness.
iii. Due to poor attention towards Human Resource Management, retailers have problem of low
productivity.
iv. Due to inappropriate Human Resource policies, retailers are not in a position to provide proper
service to customers.
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v. As Human Resource audit is not mandatory under any law, retailers do not consider it as an
important process.
vi. Due to Foreign Direct Investment, retailers have to face tough competition in the market not
only from domestic firms but also foreign entrants in the market.
5. OBJECTIVES OF THE STUDY
i. To examine the impact of Human Resource Audit on financial performance of sample

organizations.
ii. To study the whole organizational system of Human Resource practices in sample
organization.
iii. To analyze the impact of Human Resource audit system on employee‟s productivity.
iv. To study difference in quality of service in organizations adopting Human Resource Audit and
not adopting Human Resource audit.
v. To study relationship between personnel cost and returns in firms adopting and not adopting
Human Resource Audit.
6. HYPOTHESIS OF THE STUDY
i. Null Hypothesis (Ho): There is no significant difference between financial performance

of the companies adopting Human Resource audit and not adopting Human Resource
audit.
Alternative Hypothesis (H1): There is significant difference between financial
performance of the companies adopting Human Resource audit and not adopting Human
Resource audit.
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ii. Null Hypothesis (Ho): There is no significant difference in effectiveness of Human
Resource Management functions of the companies adopting Human Resource audit and
Alternative Hypothesis (H1): There is significant difference in effectiveness of Human
Resource Management functions of the companies adopting Human Resource audit and
iii. Null Hypothesis (Ho): There is no significant difference in Human Resource system and
culture of the companies adopting Human Resource audit and not adopting Human
Resource audit.
Alternative Hypothesis (H1): There is significant difference in Human Resource system
and culture of the companies adopting Human Resource audit and not adopting Human
Resource audit.
iv. Null Hypothesis (Ho): There is no significant difference in Human Resource work
climate of the companies adopting Human Resource audit and not adopting HR audit.
Alternative Hypothesis (H1): There is significant difference in Human Resource work
climate of the companies adopting Human Resorce audit and not adopting Human
Resource audit.
v. Null Hypothesis (Ho): There is no significant difference in quality of services of the

companies adopting HR audit and not adopting HR audit.
Alternative Hypothesis (H1): There is significant difference in quality of services of the
companies adopting HR audit and not adopting HR audit.
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7. SCOPE OF THE STUDY
The present study works on the following scales:
i. Reviewing available literature in the concerned area of research.
ii. Studying Human Resource Management practices adopted by selected retailers.
iii. Studying adoption of Human Resource audit among selected retailers.
iv. Analysing difference in financial performance and employee productivity among retailers
adopting HR audit and not adopting Human Resource audit.
iv. Understanding difference in service quality of retailers adopting Human Resource audit and
v. Analyzing difference in effectiveness of Human Resource Management functions, Human

Resource system, culture and work climate among retailers adopting Human Resource audit
and not adopting Human Resource audit.
vi. Analysing impact of Human Resource audit on return on personnel cost.
8. RESEARCH METHODOLOGY
A. Qualitative / Quantitative Research Approach
The study makes use of a quantitative research approach. The research method was chosen
because quantitative research allows the researcher to examine relationships and differences
among variables.
B. Universe of the Study:
Universe of the study comprises of organized retailers having registered head office in the city of
Mumbai and are listed on BSE/NSE as on 31st March 2014. Thus universe of the study comprises
of following 22 retail firms.
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Sr. No. Name of the Retail Firms
1. Ashapura Intimates Fashion Limited
2. Bharat Petroleum Corporation Ltd.
3. Bombay Swadeshi Stores Ltd.
4. Brand house Retails Ltd.
5. Future Lifestyle Fashions Ltd.
6. Future Retail Ltd.
7. Gini Silk Mills Ltd.
8. Globus Corporation Ltd.
9. Gitanjali Gems Ltd.
10. Kewal Kiran Retail Ltd.
11. Mandhana Industries Ltd.
12. Pantaloon Retail (India) Retail Ltd.
13. Provogue (India) Ltd.
14. Reliance Retail Ltd.
15. Rymond Ltd.
16. Shoppers Stop Ltd.
17. Siyaram Silk Mills Ltd.
18. Tara Jewels Ltd.
19. Thomas Scott (India) Ltd.
20. Trent Ltd.
21. Tribhovandas Bhimji Zaveri Ltd.
22. Zodiac Clothing Co. Ltd.
C. Sample of the Study:
Out of the universe researcher selected a sample of 12 retail firms, which represents almost 50
percent of the universe. Simple random sampling method was selected for the purpose. The
following table represents sample of the study.
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Sr. No. Name of the Retail Firms
1. Future Lifestyle Fashions Ltd.
2. Future Retail Ltd.
3. Gitanjali Gems Ltd.
4. Kewal Kiran Retail Ltd.
5. Mandhana Industries Ltd.
6. Pantaloon Retail (India) Retail Ltd.
7. Provogue (India) Ltd.
8. Reliance Retail Ltd.
9. Rymond Ltd.
10. Shoppers Stop Ltd.
11. Siyaram Silk Mills Ltd.
12. Trent Ltd.
D. Reference Period:
For the purpose of literature review pre-liberalization and post liberalization period is considered.
For the purpose of study researcher has collected financial data of sample firms, of the three
financial years: 2011-12, 2012-2013 and 2013-14.
E. Sources of data:
As per the need of the research study both primary and secondary data are collected.
i. Primary Data:
Primary data refers to the data collected by the researcher through questionnaire from HR
managers, employees and customers of selected retail firms.
Primary data are collected through
a. Questionnaire
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b. Personal Interview
c. Telephonic Interview
d. E-mail
Different questionnaires are framed for:
Human Resource Managers of selected firms: related questions from questionnaire of „Cranet‟
survey on Comparative Human Resource Management-2005 were used. „Cranet‟ is an
international network of business schools around the world which conducts a survey of Human
Resource Management, enquiring into policies and practices in people management through a set
of common questions. This questionnaire includes HRM practices in the areas of staffing,
employee development, compensation and benefits, employee relations and communication. Total
responses from 12 HR managers at branch level or head office level were obtained.
Employees of selected firms: Related questions from HRD profile questionnaire developed by
T.V.Rao were used. Questionnaire relates to employees‟ perception of effectiveness of HRM
practices and HR culture and climate in the organization. Total usable responses in the form of
filled in questionnaire fro 234 employees either at branch or head office level, were obtained.
Customers of selected firms: questionnaire containing different dimensions of service quality of

retailers was developed, after discussions and interviews with Customer Care Executives of some
of the selected retail firms. The questionnaire consisted of customers‟ perception on effectiveness
of quality of goods and services provided by retailers. Total usable responses from 286 customers
were obtained.
ii. Secondary Data:
Secondary data for the study are being collected from the following sources
h. Annual Reports of the companies
i. Company and Trade Associations Magazines
j. Websites of selected firms
k. Reports of Ministry of Trade and Finance
l. Journals, Magazines and Periodicals
m. News papers
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n. BSE/NSE Websites
F. Statistical Analysis:
Collected data are being processed by editing, coding and classification. Processed data are
tabulated and presented in the form of suitable graphs and tables. Statistical analysis of data can
be defined as the act of transforming data with the aim of extracting useful information and
facilitating conclusions. Depending upon the type of data statistical methods are chosen.
Statistical analysis is categorized as descriptive analysis and inferential analysis, which is often
known as statistical analysis.
G. Descriptive Analysis:
This part of study is mainly focused on verifying main objectives of the study. Researcher has
used statistical tools like mean, median, mode, standard deviation and graphs for analysis of data.
H. Inferential Analysis:
Inferential analysis is used to generalize the results obtained from the sample which was drawn
for the purpose of study. In the present study researcher used this analysis for hypothesis testing.
For testing the hypothesis or test of significance, following tests are performed.
i.„t‟ test for two independent samples at 95% confidence level.
ii. Mann-Whitney Test for two independent samples at 95% confidence level.
For the purpose of analysis researcher used statistical package SPSS version 21. In addition to
this, excel add-in Mega Stat is also used.
Collected data are being processed by editing, coding and classification. Processed data are
tabulated and presented in the form of suitable graphs and tables. Statistical analysis of data can
be defined as the act of transforming data with the aim of extracting useful information and
facilitating conclusions. Depending upon the type of data statistical methods are chosen.
Statistical analysis is categorized as descriptive analysis and inferential analysis, which is often
known as statistical analysis.
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I. Descriptive Analysis:
This part of study is mainly focused on verifying main objectives of the study. Researcher has
used statistical tools like mean, median, mode, standard deviation and graphs for analysis of data.
J. Inferential Analysis:
Inferential analysis is used to generalize the results obtained from the sample which was drawn
for the purpose of study. In the present study researcher used this analysis for hypothesis testing.
For testing the hypothesis or test of significance, following tests are performed.
i. „t‟ test for two independent samples at 95% confidence level.
ii. Mann-Whitney Test for two independent samples at 95% confidence level.
For the purpose of analysis researcher used statistical package SPSS version 21. In addition to
this, excel add-in Mega Stat is also used.
9. SIGNIFICANCE OF THE STUDY
The study on Human Resource Audit in retailing would be of great use in future due to
following reasons.
i. Due to technological progress and spread of educational institutions workers will

increasingly became aware of their higher level needs, manager will have to evolve
appropriate policies and techniques to motivate the workers.
ii. Technological developments will require retraining and mid career training of workers
and managers. Rise of the international corporation is proving new challenges for
personnel function.
iii. Due to improved educational facilities for women, Schedule caste, Schedule tribe there has
been increase in educational qualification of such group. This will change the composition of
work force. New policies would be required for such change.
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iv. Government is also controlling HRM by introduction of labour laws. Businessmen are
required to cop up with such laws.
v. On 20th September 2012, the Government of India formally notified the FDI reforms for single
brand (100%) and multi brand retail (51%), thereby making it effective under Indian law. This
will require adaptation of more effective HR strategies to compete with foreign firm entering in
Indian market.
vi. This research will bring transparency in the HRM practices.
vii. This research will motivate HR managers and employees to contribute extensively for
improvement of HRM standards.
viii. This research study will give feedback to the stakeholders of the retail firms.
ix. This research will bring out the weaknesses of the current HRM practices adopted by
retailers that will lead to improvement of existing conditions.
x. This will draw attention of policy makers to the HRM conditions prevailing in the retail
sector/ service sector.
10. LIMITATIONS OF THE STUDY
i. Primary data relevant for the study may be much depended upon the co-operation of the
respondents.
ii. Respondents‟ opinion can be biased, which cannot be ruled out.
iii. The geographical limitations for the primary data collection is limited to Mumbai city and
suburbs, Navi Mumbai and Thane districts only. However, mail survey was done wherever it
was not possible for researcher to meet respondents personally due to time and cost
constraints.
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11. FINDINGS OF THE STUDY
Following are the findings of the study based on objectives and hypothesis.
Findings based on Objectives:
11.1. The first objective of the study was to examine the impact of HR audit on financial
performance. The research findings for the first objective are shown below:
The secondary data of five indicators of financial performance viz. Gross profit margin, Net profit
margin, Rate of return on assets, Return on net worth and Return on capital employed for three
financial years 2011-12, 2012-13 and 2013-14 for 7 Retailers that adopt HR Audit and 5 Retailers
that do not adopt HR Audit were analysed.
i. Kewal Kiran Retail has highest three year mean Gross profit margin of 22.86% among
those firms adopting HR audit. Siyarams silk pvt. Ltd has highest gross profit margin of
9.10% among those firms not adopting HR audit.
ii. Combine mean gross profit of the firms adopting HR audit 9.09% and Combine mean
gross profit of the firm‟s not adopting HR audit 4.29%.
iii. Kewal Kiran Retail has highest three year mean Net profit margin of 17.08% among
iv. Combine mean net profit ratio of the firms adopting HR audit 5.09%. Combine mean net
profit of the firm‟s not adopting HR audit 0.66%.
v. Gitanjali Jewels has highest three year mean Rate of return on assets of 296.01% among
vi. Combine mean rate of return on assets of the firms adopting HR audit 80.16%.Combine
mean rate of return on assets of the firms not adopting HR audit 5.85%.
vii. Kewal Kiran Retail has highest three year mean Return on net worth of 22.37% among
those firms adopting HR audit. Pantaloons Fashion and Retail has highest Return on net
worth 76.99% among those firms not adopting HR audit.
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viii. Combine mean rate of Return on net worth of the firms adopting HR audit
8.52%.Combine mean rate of return on assets of the firms not adopting HR audit 24.06%.
ix. Kewal Kiran Retail has highest three year mean Return on capital employed of 31.85%
among those firms adopting HR audit. Pantaloons Fashion and Retail has highest Return
on capital employed 50.05% among those firms not adopting HR audit.
x. Combine mean rate of Return on capital employed of the firms adopting HR audit
12.92%.Combine mean rate of return on assets of the firms not adopting HR audit
19.60%.
Overall, this objective conveys that firms that adopt HR audit have better profitability
(Gross profit and Net profit Ratio) and better return on their total assets. However, in case
of return on net worth and return on capital employed, firms that do not adopt HR audit
have better position.
11.2. The second objective of the study was to study the whole organizational system of Human
Resource practices in sample organization. Primary data from questionnaire on various
aspects of HRM practices to HR managers were collected. The results indicate that:
I. Source of recruitment of the most senior personnel or HR Director
i. There are variations in sources recruitment of HR directors. 4 firms (33.33%)

recruit HR director from within HR department and 3 firms (25%) from HR
specialists from within the organizations. 4 firms (33.33%) recruit HR director from
outside the organization.
II. Primary responsibility for major policy decisions
i. Pay and benefits decisions in 6 firms (50%) are taken by line management in
consultation with HR department, whereas in 4 firms (33.33%) theses decisions taken
by HR department in consultation with line management. Only in 2 firms (16.7%) this
decision is solely taken by line managers. No organization gives autonomy to HR
department in determining pay and benefits.
ii. In taking decision relating to recruitment and selection 8 firms (66.67%) involve HR
department and line management. 3 firms (25%) give sole autonomy to HR
department, whereas only 1 firm (8.3%) give autonomy to line management.
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iii. 5 organisations (41.7%) give sole autonomy to HR department in taking policy
decisions relating to training and development and in 5 organisations (41.7%)
decision is taken by HR department in consultation with line management. In 2
organisations (16.7%) autonomy is given to line management.
iv. Decisions relating to industrial relations are taken by HR dept in consultation with
line management in 5 organisations(41.7%). 3 organisations (25%) take these
decisions through Line Management in consultation with HR dept. whereas in 3
organisations (25%) decision is taken solely by line management and only 1
organisation (8.3%) gives autonomy to HR department.
v. Workforce expansion/reduction decisions in 5 organisations(41.7%) is taken by
Line Management in consultation with HR department. 5 organisations(41.7%) take
these decisions through HR department in consultation with line management. Only in
2 firms (16.7%) this decision is solely taken by line managers. No firm gives sole
autonomy to HR department in this respect.
Thus, HR department has fair voice in taking policy decisions in above aspects.
III. Use of Computerised HR Information System
i. There is use of computerized HR information system in maintaining Individual and

personnel records in 83.33% (10) firms.
ii. All the firms use computerized HR information system in maintaining payrolls.
iii. All the firms use computerized HR information system in Time-registration and
attendance
iv. There is use of computerized HR information system for Recruitment and selection
in only 2 firms (16.7%) firms.
v. There is use of computerized HR information system for Training and development
in only 2 firms (16.7%) for training and development.
vi. There is use of computerized HR information system for Performance management
in 7 (58.3%) firms.
vii. Only 4 firms (33.3%) use computerized HR information system for Career
planning/Succession planning.
viii. Computerized HR information system is used for work scheduling in 7 firms
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(58.3%).
ix. Computerized HR information system is used for Health and safety records in 7
firms (58.3%).
Thus there is greater use of HR Information System in maintaining personnel records,
payrolls, Time-registration and attendance, Performance management, work scheduling and in
maintaining Health and safety records.
IV. Human resource audit:
i. Out of which 7 retail firms adopt the practice of HR audit and 5 firms do not adopt
HR audit. Thus one can say that 58.3% firms from the sample adopt HR audit and
41.7% firms do not.
ii. Only 2 firms (16.7%) conduct HR audit on continuous basis. Three (25%)firms
perform HR audit on yearly basis and 2 firms (16.7%) perform it on three to five
yearly basis. Whereas, 5 firms (41.7%) do not perform HR audit at all.
iii. Out of 7 firms adopting HR audit practice, 5 firms conduct it only internally. No firm
conducts it solely externally. Only 2 firms conduct it internally as well as externally.
iv. Out of 7 firms conducting audit, in all the firms audit is mainly conducted by Internal
auditor. There is lack of emphasis on external consultant and certified auditors.
v. Out of 12 organisations selected, 3 firms (25%) use Statistical approach, 2 firms
(16.7%) adopt Compliance approach and 2 firms (16.7%) follow MBO approach to
conduct audit. Whereas, 5 firms do not adopt HR audit at all.
vi. 15.4% use Interview as well as Group discussion as their way to conduct HR audit.
23.1% use Questionnaire as their way to conduct HR audit. 46.2% apply Analysis of
records to conduct HR audit. None of the firms selected Workshop, Observation and
any other option as way to conduct HR audit.
V. Staffing practices:
A. Sources of Recruitment:
i. 24.1% firms fill positions under management category internally (3 adopting HRA, 4
not adopting HRA) and 20.7% firms use Word of Mouth (3 adopting HRA, 3 not
adopting HRA). 13.8% firms use each of Recruitment agencies/ consultancies (2
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adopting HRA, 2 not adopting HRA), Vacancy page on company website (3 adopting
HRA, 1 not adopting HRA), Vacancies on commercial job websites (3 adopting HRA,
1 not adopting HRA) and Direct from educational institution (2 adopting HRA, 2 not
adopting HRA) as their way for filling of positions under management category. None
of them selected Advertisement as their way for filling of positions under management
category.
ii. 13.3% firms fill positions under Professional category internally (1 adopting HRA, 3
not adopting HRA) and through advertisement on Commercial websites (2 adopting
HRA, 2 not adopting HRA). 20% use Recruitment Agency (4 adopting HRA, 2 not
adopting HRA) and Word of Mouth (3 adopting HRA, 3 not adopting HRA) and
16.7% firms select Professional staff through Company Website (4 adopting HRA, 1
not adopting HRA). 6.7% firms elect Professional staff through Educational Institutes
(1 adopting HRA, 1 not adopting HRA). 10% respondents selected advertisement (1
adopting HRA, 2 not adopting HRA)as way of filling of positions under Professional
category.
iii. 17.6% respondents fill positions under clerical category Internally (1 adopting HRA,
2 not adopting HRA). 47.1% firms use Recruitment Agency (6 adopting HRA, 2 not
adopting HRA) and 11.8% firms use Advertisement (2 adopting HRA). 23.5% firms
selected Word of Mouth (4 not adopting HRA) as a way of filling positions under
clerical category. None of the firm selected Company website, Commercial websites
and Educational Institutes as a way of filling positions under clerical category.
iv. 12.5% firms fill positions under manual category Internally (2 not adopting HRA).
25% firms use Recruitment Agency (3 adopting HRA, 1 not adopting HRA) and
56.3% firms use Word of Mouth (4 adopting HRA, 5 not adopting HRA). 6.3% firms
use other method (1 not adopting HRA) as a way of filling positions under manual
category. None of the firms use advertisement, company websites, commercial
websites and educational institutes as a way of filling positions under manual category.
B. Methods of Selection:
i. 28.6% firms use Panel interview (5 adopting HRA, 3 not adopting HRA) as a method
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of selection for management category. 32.1% firms use One to One interview (5
adopting HRA, 4 not adopting HRA) and 17.9% firms apply Application Form (2
adopting HRA, 3 not adopting HRA) as a method of selection for this section. 3.6%
firms use each of Psychometric test (2 adopting HRA), Assessment centre (1 adopting
HRA) and Graphology (1 not adopting HRA) as a method of selection of management
category employees and 10.7% firms use References (1 adopting HRA, 2 not adopting
HRA).
ii. 25% firms select professional category staff through Panel interview (4 adopting
HRA, 2 not adopting HRA). 29.2% firms apply One to one interview (4 adopting
HRA, 3 not adopting HRA) and 20.8% firms use Application Form (3 adopting HRA,
2 not adopting HRA). 4.2% firms use Psychometric test (1 not adopting HRA) and
12.5% firms use Assessment Centers (3 adopting HRA) as a method of selection for
professional category staff. 8.3% firms use Reference (2 not adopting HRA) as a
method of selection for this section.
iii. 10% firms select clerical category staff through Panel interview (1 adopting HRA, 1
not adopting HRA). 45% firms select them through One to one interview (6 adopting
HRA, 3 not adopting HRA) and 25% firms use Application Form (3 adopting HRA, 2
not adopting HRA). 20% firms use References (4 not adopting HRA) as a method of
selection for this section. Firms do not use Assessment centers, Graphology and
Psychometric test for selection of clerical staff.
iv. 40% firms use Panel interview (6 adopting HRA) as a method of selection of manual
staff. 26.7% firms use One to one interview (1 adopting HRA, 3 not adopting HRA)
and 6.7% firms apply Application Form(1 not adopting HRA). 26.7% firms make use
of References (4 not adopting HRA). None of the retailers use Assessment centers,
Graphology and Psychometric test for manual staff.
C. Presence of Action programmes for various groups
i. Out of 12 organisations, only 3 organisationsly (25%) have action programmes

covering minority ethnics.
ii. Again, on 3 organisationsly (25%) have action programmes covering older
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workers (aged 50 plus).
iii. Only 4 organisations (33.3%) have action programmes covering People with
disabilities.
iv. Majority 7 (58.3%) organisations have action programmes covering women.
IV. Employee development:
A. Parties expected to make an input/provide data for the appraisal process
i. Out of 12 organisations, in 10 organisations (83.3%) data for appraisal is provided by

immediate supervisors.
ii. In 10 organisations (83.3%) data for appraisal is provided by Supervisor‟s superior.
iii. In 7 organisations (58.3%), data for appraisal is provided by the employee
himself/herself.
iv. In 3 organisations (25%), data for appraisal is provided by subordinates.
v. In only 1 organisations (8.3%) data for appraisal is provided by peers.
vi. Only 2 organisations (16.7%) get input for appraisal from customers.
B. Use of appraisal system to inform about
i. Out of 12, 7 organisations (58.3%) use appraisal system for taking decisions regarding
HR planning and pay determination.
ii. 10 organisations (83.3%) use information from appraisal system for analyzing
training and development needs.
iii. Only 4 organisations (33.3%) use information from appraisal system for career
planning and organization of work.
C. Influence over training aspect
i. In 20% firms (1 adopting HRA, 2 not adopting HRA) Individuals influence decision
relating to determination of training needs. In 66.7% firms (6 adopting HRA, 4 not
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adopting HRA) Line managers and in 13.3% firms (2 adopting HRA) HR department
determine training needs. In no cases Trade Union has influence in determining
training needs.
ii. In 37.5% (2 adopting HRA, 4 not adopting HRA) firms line managers influence
decision relating to designing training activities. In 50% firms (6 adopting HRA, 2
not adopting HRA) HR department and 12.5% firms (1 adopting HRA, 1 not adopting
HRA) Trade Union influence decision relating to designing training activities. None of
the respondent selected individuals for this section.
iii. In 7.1% firms Individuals (1 adopting HRA) and Trade Union (1 not adopting HRA)
influence decision relating to implementing training activities. In 14.3% firms (2 not
adopting HRA) Line managers and 71.4% firms (7 adopting HRA, 3 not adopting
HRA) HR department influence decisions relating to implementing training activities.
D. Extent of use of various methods for Career Development
i. Out of 12, only 1 organisation ( 8.3%) use Special tasks/projects to stimulate learning
for career development to a large extent. 9 organisaions (75%) use to a small extent
and 2 organisations (16.7%) does not use it at all.
ii. Out of 12, only 1 organisation (8.3%) use Involvement in cross-organisational/
disciplinary/functional tasks as a method of career development entirely. 4
organisations (33.3%) do not use it at all and other 4 organisations (33.3%) use it to a
large extent. 3 organisations (25%) use it to a small extent.
iii. Participation in project team work is encouraged to a large extent by 6 firms (50%).
3 (25%) firms does not encourage it at all and other 3 firms (25%) encourage it to a
small extent.
iv. Only 2 firms (16.7%) use networking as a technique of career development to a large
extent. 5 (41.7%) firms does not use it at all and remaining 5 firms (41.7%) use it to a
small extent.
v. Only 1 firm (8.3%) use formal career plan for career development to a large extent. 6
(50%) firms use this technique to a small extent and remaining 5 (41.7%) firms does
not use it at all.
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vi. 6 firms (50%) do not use assessment centers as a method of career development at
all. 3 firms (25%) use it to a large extent and remaining 3firms (25%) use it to a small
extent.
vii. Only 11 firm (8.3%) use succession plans for career development to a large extent. 4
(33.3%) firms do not use it at all and 7 firms (58.3%) use it to a large extent.
viii. 5 organisations (41.7%) use planned job rotation for career development to a large
extent. 4 firms (33.3%) use it to a small extent and 3 firms (25%) do not use it at all.
ix. “High flier” schemes is used to a large extent by 3 firms (25%). Remaining 9 firms
do not use it at all.
x. 1 firm (8.3%) use Experience schemes for career development to a large extent and 1
firm (8.3%) use it entirely. 4 (33.3%) firms use it to a small extent and 6 firms (50%)
do not use it at all.
xi. Only 1 firm (8.3%) use Secondments to other organizations to a small extent.
Remaining 11 firms (91.7%) do not use it all.
V. Compensation and benefits
A. Level of determination of basic pay
i. 42.1% firms determine basic pay for management category employees at National level
(5 adopting HRA, 3 not adopting HRA), 15.8% at Company level (2 adopting HRA, 1 not
adopting HRA), 10.5% firms at Establishment level (1 adopting HRA, 1 not adopting
HRA) and 31.6% firms at Individual level (4 adopting HRA, 2 not adopting HRA). None
of the firm determines basic pay for management category employees at Regional level.
ii. 25% firms determine basic pay for professional category employees at National level (4
adopting HRA, 1 not adopting HRA), 20% firms at Regional level (3 adopting HRA, 1 not
adopting HRA), 15% at Company level (2 adopting HRA, 1 not adopting HRA), 10%
firms at Establishment level (1 adopting HRA, 1 not adopting HRA) and 30% firms at
Individual level (3 adopting HRA, 3 not adopting HRA).
iii. 5.9% firms determine basic pay for Clerical category employees at National level (1
adopting HRA) and Regional level (1 not adopting HRA). 35.3% firms determine it at
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Company level (3 adopting HRA, 3 not adopting HRA) and Individual level (4 adopting
HRA, 2 not adopting HRA) for this category. 17.6% firms determine pay for Clerical
category employees at Establishment level (2 adopting HRA, 1 not adopting HRA).
iv. 8.3% firms determine basic pay for manual category employees at National level (1
adopting HRA). 25% firms at Regional level (2 adopting HRA, 1 not adopting HRA) and
58.3% firms at Individual level (3 adopting HRA, 4 not adopting HRA). None of the firms
determine it at Company level and Establishment level.
B. Special Incentives Offered

i. 23.5% firms offer Employee share scheme (3 adopting HRA, 1 not adopting HRA)
and Profit Sharing (2 adopting HRA, 2 not adopting HRA) to management category
employees. 35.3% firms offer Stock Option (5 adopting HRA, 1 not adopting HRA)
and 17.6% firms do not offer any of these (3 not adopting HRA) to management
category employees.
ii. 7.1% firms offer Employee share scheme (1 adopting HRA) to professional category
employees. 14.3% firms offer Profit Sharing (1 adopting HRA, 1 not adopting HRA)
and Stock Options (1 adopting HRA, 1 not adopting HRA) for this category. 64.3%
firms do not offer any of these (5 adopting HRA, 4 not adopting HRA) to
Professional/Technical category.
iii. No special incentives are offered to manual and clerical category employees by any
of the firm.
VI. Employee relations and communication
A. Trade Union
i. Out of 12, 8 organisations (66.7%) do not have trade union. In 2 (16.7%) organisations 1-
10% of the employees are the members of trade union and in other 2 (16.7%)
organisations 11-25% of the employees are the members of the trade union.
ii. Only 4 organisations (33.3%) recognize trade union for the purpose of collective
bargaining. That means all the firms that have trade union, recognize them for collective
bargaining.
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iii. There is presence of consultative committee or works council in 5 organisations (41.7%).
Whereas, 7 firms (58.3%) do not have such committee or council.
B. Change in way of communicating major issues to employees during the last 3 years
i. 8 out of 12 firms (66.75) have not been communicating through representative for the last
three years. There is no change in the frequency of communication through representative
in 3 firms (25%). There is increase in the frequency of communication through
representative in 1 firm (8.3%).
ii. 5 firms (41.7%) have increased verbal direct communication to employees. 3 firms (25%)
have decreased it, 2 firms (16.7%) did not use it and remaining 2 firms (16.7%) are using
it at the same pace.
iii. 9 retailers (75%) have increased direct written communication with employees. 2 retailers
(16.7%) did not use it for past three years and 1 retailer (8.3%) is using it at the
same pace.
iv. As far as written electronic communication is concerned, 10 organisations (83.3%) have
increased its use and 2 organisations (16.7%) are not using it.
v. Use of team briefings as a method of communication is increased in 7 (58.3%) firms. 3
(25%) firms are not using it at all and 2 firms (16.7%) are using it at the same pace.
C. Change in the way employees communicate their views to management in the past three
years
i. There has been increase in direct communication to senior managers by employees in

11 (91.7%) firms.
ii. Employees of the 8 firms (66.7%) have increased communication through immediate
superior and employees of the 4 firms (33.3%) are using it at the same level.
iii. Employees of the 7 firms (58.3%) do not communicate their views through trade union
representatives. In 2 firms (16.7%) its use has been decreased and remaining 3 firms
(25%) are using it at the same pace.
iv. Employees of the 6 organisations (50%) do not make use of work councils to
communicate their views to the management. Employees of the 4 firms (33.3%) are using
it at the same level and Employees of the 2 firms (16.7%) have increased its use.
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v. There has been increase in communication through regular workforce meetings by
employees in 7firms (58.3%). 4 firms (33.3%) are using it at the same pace and 1 firm
(8.3%) do not use it at all.
vi. Use of Team briefings for communication by employees is increased in 5 firms (41.7%).
5 firms do not use it at all and 2 firms (16.7%) exercise it at the same level.
vii. There is increase in Suggestion schemes by employees in 5 firms (41.7%). Employees of
the 2 firms (16.7%) do not use it at all and 2 firms (16.7%) are exercising it at the same
level. Whereas, there is decrease in its use in 3 firms.
viii. Attitude surveys as a method of communicating their views is increased among
employees of only 1 firm (8.3%) and also decreased in 1 firm (8.3%). employees of 6
(50%) firms do not use it at all and employees of 4 firms (33.3%) exercise it at the same
level.
ix. There is increase in use of Electronic communication by employees of the 9 firms
(75%). Employees of the 2 firms (16.7%) do not use it at all and 1 firm (8.3%) is using at
the same level.
D. Employee categories briefed about important issues
i. 41.7% firms brief management category employees about business strategy (6 adopting
HR audit, 4 not adopting HR audit). 33.3% firms inform them about Financial (3 adopting
HR audit, 5 not adopting HR audit) Performance and 25% firms about Organisation of
work (3 adopting HR audit, 3 not adopting HR audit).
ii. 25.9% firms brief professional category employees about business strategy (4 adopting
HR audit, 3 not adopting HR audit). 33.3% firms inform them about Financial
Performance (6 adopting HR audit, 3 not adopting HR audit) and 40.7% firms about
Organisation of work (7 adopting HR audit, 4 not adopting HR audit).
iii. 14.3% firms brief clerical category employees about Financial Performance (1 adopting
HR audit, 1 not adopting HR audit). 85.7% firms inform them about Organisation of work
(7 adopting HR audit, 5 not adopting HR audit). None of the firms inform them about
Business strategy.
iv. 15.4% firms brief management category employees about Financial Performance (1
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adopting HR audit, 1 not adopting HR audit). 84.6% firms inform them about
Organisation of work (7 adopting HR audit, 4 not adopting HR audit). None of the firms
inform manual category employees about Business strategy.
11.3. Third objective of the study was to analyze the impact of Human Resource audit system on
employee productivity. Analysis of employee productivity of sample resulted in following
findings.
Yearly details of employee productivity of Retailers that adopt HR Audit and Retailers that
do not adopt HR Audit
Sr.No. NAME 2012 2013 2014 Average

Retailers that adopt HR Audit
1 Future Retail 7738642 13184396 21844226 14255755
2 Gitanjali Jewels 11405103 15265691 10798574 12489789
3 Kewal Kiran Retail 4076000 3787375 4590125 4151167
4 Mandhana Industries 1910624 2657037 2958947 2508869
5 Provogue India Ltd 25670213 23484681 26142979 25099291
6 Shoppers Stop 2983082 3307272 3978258 3422871
7 Trent Ltd. 1192037 135741.2 181955.2 503244.3
GRAND MEAN(combine mean) 8918712
Retailers that do not adopt HR Audit
1 Future Lifestyle Fashion Pvt. Ltd. NA NA 4035265 NA
2 Pantaloons Fashion and Retail 1281.62 94495.59 122147.8 72641.67
3 Reliance Retails 2171143 3085714 4141714 3132857
4 Rymonds Industry 2595862 2803297 3014607 2804589
5 Siyarams silk pvt. Ltd 14085231 16020154 20052769 16719385
GRAND MEAN(combine mean) 5682368
Interpretation:
Combine (Grand) mean employee productivity of the firms adopting HR audit 8918712. Combine
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(Grand) mean employee productivity of the firms not adopting HR audit 5682368.
Thus we can conclude that firms adopting HR Audit have better employee productivity/ sales per
employee.
11.4. Fourth objective of the study was to study difference in quality of service in organizations
adopting Human Resource Audit and not adopting Human Resource audit. Primary data collected
from customers through questionnaire in various aspects of quality shows following results:
Descriptive statistics parameters: Organizations adopting HR audit
Mean Median Mode Std. Deviation
A. Product Quality 4.35 4 4 0.702
B. Prices of the Product 3.71 4 4 0.817
C. Service/ Store Timings 4.1 4 4 0.864
D. Information on product and services 3.99 4 4 0.87
E. Promotional Offers 4.03 4 4 0.924
F. Behaviour of Sales personnel 4.03 4 4 0.903
G. Speed of addressing Service requirements 3.68 4 4 0.943
H. Provision of After-Sales Services 3.59 4 4 1.023
I. Grievance Handling 3.56 4 4 1.006
J. Online Service Support 3.82 4 4 1.007
K. Infrastructure 4.16 4 5 0.974
Descriptive statistics parameters: Organizations not adopting HR

Mean Median Mode Std. Deviation
A. Product Quality 3.81 4.00 4 .859
B. Prices of the Product 3.87 4.00 4 .855
C. Service/ Store Timings 3.81 4.00 4 .968
D. Information on product and services 3.48 4.00 4 1.078
E. Promotional Offers 3.17 3.00 3 1.171
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F. Behaviour of Sales personnel 3.34 3.00 4 1.140
G. Speed of addressing Service requirements 3.26 3.00 3 1.132
H. Provision of After-Sales Services 3.21 3.00 4 1.099
I. Grievance Handling 3.09 3.00 4 1.203
J. Online Service Support 2.31 2.00 1 1.277
K. Infrastructure 3.13 3.00 3 1.168
Interpretation:
Mean values of all parameters except price for firms adopting HR audit is higher than mean
values of firms not adopting HR audit. Thus we conclude that organizations adopting HR audit
are comparatively in better position with respect to overall service quality.
11.5. Fifth objective of the study was to study relationship between personnel cost and returns in
firms adopting and not adopting Human Resource Audit. Results of analysis of secondary
data show that:
Yearly details of return on personnel cost of Retailers that adopt HR Audit and Retailers
that do not adopt HR Audit
Sr. No. NAME 2012 2013 2014 Average
Retailers that adopt HR Audit
1 Future Retail 35.38 82.73 0.66 39.59
2 Gitanjali Jewels 974.5 1111.32 111.8 732.54
3 Kewal Kiran Retail 178.32 156.75 175.2 170.09
4 Mandhana Industries 153.22 98.24 77.32 109.5933
5 Provogue India Ltd 138.6 79.96 7.05 75.20333
6 Shoppers Stop 50.34 24.32 18.1 30.92
7 Trent Ltd. 69.64 85.44 51.91 68.99667
GRAND MEAN 175.2762
Retailers that do not adopt HR Audit
1 Future Lifestyle Fashion Pvt. Ltd. NA NA 18.03 NA
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2 Pantaloons Fashion and Retail -90 -75.58 -125.4 -96.9933
3 Reliance Retails -615.94 215.33 123.21 -92.4667
4 Rymonds Industry 23.06 17.08 31.9 24.01333
5 Siyarams silk pvt. Ltd 90.31 61.75 58.95 70.33667
GRAND MEAN -23.7775
Interpretation:
Combine (Grand) mean return on personnel cost of the firms adopting HR audit
175.2762%.Combine (Grand) mean return on personnel cost of the firm‟s not adopting HR audit -
23.7775%.
Thus we can conclude that firms adopting HR Audit have better return on personnel cost ratio.
Finding based on hypothesis testing:
The researcher has set up five hypotheses for the present study.
11.6. The first null hypothesis was “There is no significant difference between financial
performance of the companies adopting HR audit and not adopting HR audit.”
For testing of first hypothesis parametric „t‟ test and non parametric Mann-Whitney Test of two
independent samples were used.
Findings of parametric „t‟ test indicate that:
Sr no Ratio „p‟ z value Result Hypothesis is
value (at 5 % LOS) accepted/ rejected
1 Gross Profit Margin .024 -2.002 Significant Rejected
2 Net Profit Margin .026 -1.506 Significant Rejected
3 Rate of Return on .539 -0.833 Insignificant Accepted

Assets
4 Return on Net Worth .371 -0.461 Insignificant Accepted
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5 Return on Capital .538 -0.797 Insignificant Accepted
Employed
Note: Calculated „z‟ value is – 2.645 (significant value at 5% level of significance)
Out of five variables considered for study, in three cases we failed to reject null hypothesis Ho.
Hence, there is no significant difference between financial performance of the companies
adopting HR audit and not adopting HR audit.
11.7. Second null hypothesis of the study was “There is no significant difference in
effectiveness of HRM functions of the companies adopting HR audit and not adopting
HR audit.”
For testing of this hypothesis parametric „t‟ test and non parametric Mann-Whitney Test of two
p value is 0.000 which is less than α = 0.01 (1% significant level). It is also observed that
calculated„t‟ value is 12.352 is greater than + 2.645 (table value of at 1% significant level, two
tailed and d.f. 232). Hence we reject null hypothesis Ho.
Findings of non parametric Mann-Whitney Test of two independent samples are:
p value is 0.000 which is less than α = 0.01 (1% significant level). Also „z‟ value is -9.747 which
is less than – 2.645 (significant value at 1% level of significance) Hence we reject null hypothesis
Ho.
Thus we conclude that there is significant difference in effectiveness of HRM functions of the
companies adopting HR audit and not adopting HR audit. Also descriptive statistics indicate that
that average value for effectiveness of HRM functions of the companies adopting HR audit
(3.9123) is higher than average value for effectiveness of HRM functions of the companies not
adopting HR audit (2.8901).
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11.8. Third null hypothesis of the study was “There is no significant difference in HR system
and culture of the companies adopting HR audit and not adopting HR audit.”
From above table it is observed that p value is 0.000 which is less than α = 0.01 (1% significant
level). Also „z‟ value is -8.467 which is less than – 2.645 (significant value at 1% level of
significance) Hence we reject null hypothesis Ho.
Thus we conclude that there is significant difference in HR system and culture of the companies
adopting HR audit and not adopting HR audit. Also descriptive statistics indicate that average
value HR system and culture of the companies adopting HR audit (4.0800) is higher than average
value for HR system and culture of the companies‟ not adopting HR audit (3.1544).
11.9. Fourth null hypothesis of the study was “There is no significant difference in HR work
climate of the companies adopting HR audit and not adopting HR audit.”
For testing of this hypothesis parametric„t‟ test and non parametric Mann-Whitney Test of two
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Ho.
Thus we conclude that there is significant difference in HR work climate of the companies
value for HR work climate of the companies adopting HR audit (4.0375) is higher than average
value for HR work climate of the companies‟ not adopting HR audit(3.1535).
11.10. Fifth null hypothesis of the study was “There is no significant difference in quality of
services of the companies adopting HR audit and not adopting HR audit.”
calculated „t‟ value is 7.655 is greater than + 2.645 (table value of at 1% significant level, two
tailed and d.f.275). Hence we reject null hypothesis Ho.
Ho.
Thus we conclude that there is significant difference in HR work climate of the companies
value for HR work climate of the companies adopting HR audit (3.9103) is higher than average
value for HR work climate of the companies‟ not adopting HR audit (3.3154).
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12. CONCLUSIONS OF THE STUDY
Based on the findings of the study, following conclusion have been arrived at.
12.1 Conclusions with respect to: the impact of Human Resource audit on financial
performance
i. Firms adopting HR Audit have better gross profit ratio as compared to firms not adopting
HR audit.
ii. Firms adopting HR Audit have better Net profit ratio as compared to firms not adopting
HR audit.
iii. Firms adopting HR Audit have better rate of return on assets as compared to firms not
adopting HR audit.
iv. Firms that do not adopt HR Audit have better return on net worth as compared to firms
that adopt HR audit.
v. Firms that do not adopt HR Audit have better return on return on capital employed as
compared to firms that adopt HR audit.
Thus we conclude that adoption of Human Resource Audit have impact on profitability and return
on assets but it does not have impact on return on net worth and capital employed.
12.2 Conclusions with respect to: study of whole organisational system of human resource
practices
i. HR department has fair voice in taking policy decisions in respect to Pay and benefits,
recruitment and selection, training and development, industrial relations and Workforce
expansion/reduction.
ii. There is greater use of HR Information System in maintaining personnel records,
payrolls, Time-registration and attendance, Performance management, work scheduling
and in maintaining Health and safety records.
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A. Human Resource Audit:
i. Out of 12 retail firms selected 7 firms adopt HR audit and 5 firms do not adopt HR audit.
ii. Out of firms adopting HR audit, some firms conduct it continuously and five yearly. Some
of them conduct it on yearly basis.
iii. In majority firms responsibility of conducting HR audit is with top management. Only in
few firms responsibility is with HR department and CEO and his team
iv. Majority of firms conduct HR audit internally. Very few conduct it internally as well as
externally. None of them conduct it externally only.
v. In all firms audit is mainly conducted by internal auditor. There is lack of emphasis on
external consultant and certified auditors.
vi. Firms follow statistical, compliance and MBO approach to conduct HR audit.
vii. Majority of the firm apply Analysis of records method to conduct HR audit. Some of them
use interview, questionnaire and group discussion method.
B. Recruitment and selection:
i. Both types of firms, adopting and not adopting HR audit applies different ways such as
internal source, recruitment agencies/ consultancies, advertisement, word of mouth,
vacancy page on company website, vacancies on commercial job websites and direct from
educational institution in different proportion for selection of various category of staff.
ii. Both types of firms, adopting and not adopting HR audit applies different methods such as
interview panel, One-to-one interviews, Application forms, Psychometric test, Assessment
centre, Graphology and References for selection in different proportion for various
categories of staff.
C. Action programmes:
i. There is lack of special action programmes covering minority ethnics, older workers (aged
50 plus) and People with disabilities in majority organisations. But many organizations
have programmes for women employees.
466
D. Performance appraisal:
i. Immediate supervisors, supervisor‟s superior and employee himself/herself have greater

say with respect to appraisal. Subordinates, peers and customers do not have much say in
this respect.
ii. Appraisal system is mainly used to provide information regarding HR planning, pay
determination; and for analyzing training and development needs and not for career
E. Training:
i. Line mangers have more influence on training need determination in both category firms.
HR manager do not have any influence on training need determination in case of firms
who do not adopt HR audit. In none of the category Trade Union has influence.
ii. In case of firms who adopt HR audit, individuals and HR managers has influence in
implementing training activities. whereas, in case of firms who do not adopt HR audit line
managers, HR managers and trade union has influence in implementing training activities.
iii. HR department, line managers and trade union influence designing training activities.
Individuals do not have any say in this respect.
F. Career Development:
i. Various methods are used for career development to a different extent for career
development by firms in both the category. These methods are- Special tasks/projects,
cross-organisational / disciplinary/functional tasks, Participation in project team work,
networking, formal career plan, assessment centers, succession plans, planned job rotation
“High flier” scheme, Experience schemes and Secondments to other organizations.
467
G. Compensation and benefits:
i. Pay for management category employees is determined at various levels such as- National
Level, Company Level, Establishment Level and Individual Level; except regional level.
ii. Pay for Professional/Technical category employees is determined at various levels.
iii. Pay for Clerical category employees is determined at various levels. Firms that adopt HR
audit determine it at various level except Regional, whereas; firms that do not adopt HR
audit determine it at various level except National level.
iv. Pay for manual level employees is determined at National, Regional, Individual and other
level by firms adopting HR audit. Firms that do not adopt HR audit determine the same at
Regional and Individual level. None of them determine it at Company level and
Establishment level.
v. Some of the firms that adopt HR audit and do not adopt HR audit offer Employee share
scheme, Stock options and Profit Sharing to management category employees, whereas
some firms that do not adopt HR audit do not offer any of such special incentives to
management category employees.
vi. Very few firms that adopt HR audit offer Employee share scheme, Stock options and
Profit Sharing to Professional/Technical category employees. Few firms that do not adopt
HR audit offer Stock options and Profit Sharing. Many firms from both category do not
offer any of these to professional/Technical category employees.
vii. All the firms do not offer any of such special incentives to clerical and manual employees.
H. Employee relations and communication:
i. Majority of firms do not have trade unions. All the firms that have trade union, recognize
them for collective bargaining.
ii. Some of the firms have joint consultative committee or works council and others do not.
iii. There is considerable increase in direct written communication, written electronic
communication and team briefings as a method of communication from company to
employees in past three years.
468
iv. There is increase in communication by employee through Direct to senior managers,
immediate superior, regular workforce meetings, team briefings, suggestion schemes and
electronic communication over past three years.
v. Management and professional category employees are briefed about variety of issues
relating to business strategy, organization of work and financial performance by all the
firms.
vi. Very few firms inform clerical level and manual level employees about financial
performance, none about business strategy. Majority firms inform them about organization
of work only.
12.3 Conclusions with respect to: the impact of human resource audit system on employee
productivity
Firms adopting human resource audit have better employee productivity/ sales per employee as
compared to firms not adopting human resource audit. This implies that human resource audit
have favourable impact on employee productivity.
12.4 Conclusions with respect to: difference in quality of service in organizations adopting
HR audit and not adopting HR audit
Organizations adopting HR prove better on parameters of product quality, service/store timing,

information on products and services, promotional offers, behaviour of Sales personnel, speed of
addressing service requirements, provision of after sales services, grievance handling, online
service support and infrastructure.
Organizations not adopting HR prove to offer products at better prices as compared to those
adopting HR audit.
Comparatively Organizations adopting HR prove better on customers‟ perception about overall

service quality.
Overall firms adopting HR audit have better quality of service.
469
12.5 Conclusions with respect to: Relationship between return on personnel cost in firms
adopting and not adopting HR audit
Firms adopting HR Audit have better return on personnel cost ratio as compared to firms not
adopting HR audit. Thus we can conclude that human resource audit have positive impact on
return on personnel cost.
12.6 In case of testing of first hypothesis
On the basis of inferential analysis conducted for testing first null hypothesis we concluded that -
There is no significant difference between financial performance of the companies adopting HR
audit and not adopting HR audit.
12.7 In case of testing of second hypothesis
On the basis of inferential analysis conducted for testing second null hypothesis we concluded
that- There is significant difference in effectiveness of HRM functions of the companies adopting
HR audit and not adopting HR audit. Effectiveness of HRM functions of the companies adopting
HR audit is higher than effectiveness of HRM functions of the companies not adopting HR audit.
12.8 In case of testing of third hypothesis
On the basis of inferential analysis conducted for testing third null hypothesis we concluded that-
There is significant difference in HR system and culture of the companies adopting HR audit and
not adopting HR audit. Value HR system and culture of the companies adopting HR audit is
higher than value for HR system and culture of the companies‟ not adopting HR audit.
12.9 In case of testing of fourth hypothesis
On the basis of inferential analysis conducted for testing fourth null hypothesis we concluded
that- There is significant difference in HR work climate of the companies adopting HR audit and
not adopting HR audit.
Value for HR work climate of the companies adopting HR audit is higher than value for HR work
climate of the companies‟ not adopting HR audit.
470
12.10 In case of testing of fifth hypothesis
On the basis of inferential analysis conducted for testing fourth null hypothesis we concluded
that- There is significant difference in quality of services of the companies adopting HR audit and
not adopting HR audit.
Average value for quality of services of the companies adopting HR audit is significantly higher
than value for quality of services of the companies not adopting HR audit.
13. SUGGESTIONS AND RECOMMENDATIONS
13.1 Suggestions to HR managers:
i. Human resource audit should be given due importance in the organization. They should
follow external approach to conduct human resource audit. External certified auditors
should be appointed to conduct HR audit. If HR audit is conducted internally, team
conducting audit should have HR specialist.
ii. HR managers and his department should take active interest in conducting HR audit. It
should be conducted as seriously as financial audit.
iii. Comprehensive approach should be adopted to conduct HR audit. Various systems,
strategies, practices, policies, culture, values, competencies, alignment and impact should
be evaluated in detail.
iv. Various methods and tools such as interviews, group discussions, questionnaire, work-
shops, analysis of records and documents and observations should be used
comprehensively to conduct HR audit.
v. Lower level employees should also be offered incentives such as profit sharing, stock
options and employee share schemes.
vi. Special action programs should be designed for minority ethnics, older workers (aged 50
plus) and People with disabilities along with women employees.
vii. Subordinates, peers and customers should also be considered for feedback with respect
performance appraisal. Data of performance appraisal should also be used for career
471
viii. HR managers should play active role in determining, designing and implementing training
activities.
ix. They should motivate workers to communicate their view for improving HRM climate in
the organization and design and implement worker friendly HRM climate in the
organization.
x. Results of HR audit should be implemented to improve HRM climate in the organization
and for HR development seriously. It should not be conducted just as a fashion and
formality.
13.2 Suggestions to government/policy makers:
i. HR audit should be made mandatory as financial audit. There should be some provision
with this respect in labour laws.
ii. There should be some standard for its reporting. Government should set up some authority
under HRD ministry to monitor implementation of HR audit and implementation of its
findings.
iii. Considering the growing FDI in retail sector, government should take some steps in this
respect so as to make domestic retailers more competitive to fight foreign competition, by
focusing on valuable human resources.
iv. Also in a country like India where there is huge unemployment, and one of the reason to
allow FDI is to create employment opportunities, government should be cautious to
prevent exploitation of workers. HR audit practices may prove to be greater assisting tool
in this respect.
v. Government should also introduce some special courses for conducting HR audit in
variety of areas.
472
14. CHAPTER SCHEME
Chapter 1: Introduction and Research Design
It deals with the introductory part of the research. It gives brief idea about the HR Audit, retail
business, Mumbai city, Application of HR Audit in retail business. An attempt is made to
highlight the objectives of the study and the detailed methodology adopted for the present study.
Chapter 2: Review of Literature.
It deals with the past study on the HR Audit. It shows the literature regarding linkages of HRM
practices with firm performance, models to evaluate HR practices and HRM practices in
retail/service sector.
Chapter 3: Human Resource Audit Process/ Methodology
This chapter deals with need and objectives of HR Audit, scope of HR Audit, methods of HR
Audit, and pre-requisites of HR Auditor and limitations of HR Audit. At the same time it briefly
discusses the process/ procedure to conduct human resource audit. It also covers the scope of
Human Resource Audit.
Chapter 4: Overview of the Retail Sector and Selected Retailers
This chapter gives detailed description of history, product line and present business structure of
selected retailers.
Chapter 5: Analysis and Interpretation of Data
Primary and secondary data collected by HR managers, employees and customers are being
processed through statistical packages. And data is being evaluated to study objectives and to test
the hypothesis mentioned.
Chapter 6: Summary of Findings and Suggestions
It deals with the outcome of the data analysis and interpretation. It shows in detail about the
findings the researcher has found out from the primary survey and secondary data and researcher
will be giving the suggestions for the same.
473
15. SCOPE FOR FURTHER STUDY
The analysis provided in this thesis suggests a number of areas for further research.
i. Researcher has studied Human Resource Audit with special reference to retail sector in the
city of Mumbai. Further research can be conducted with reference to retail business in
other metro cities of India and also in other countries of the world.
ii. Other sectors of the economy such as industry, banking, finance etc. can also be studied.
iii. Researcher has made an attempt to evaluate impact of HR audit on various aspects of
performance of the retail sector such as financial performance, effectiveness of HRM
functions, HR culture, HR work climate, employee productivity and quality of services.
Further study can be conducted with reference to its impact on stock market performance,
growth rate, wealth creation and such other parameters.
iv. Social significance of such HR Audit can also be studied in light of social responsibility of
firms towards employees.
v. In depth effectiveness of each element of HR audit such as HR systems, strategies,
practices, policies, culture, values, competencies, alignment and impact can also be
studied.
vi. Present study has covered the opinion of HR managers, employees and customers.
Opinion of other parties such as top management and shareholders can also be taken in to
consideration.
474
BIBLIOGRAPHY
BOOKS
1. Agarwal T. Strategic Human Resource Management, Oxford University Press.

2. Aswathappa K (2010). Human Resource and Personnel Management: Text and
Cases, Third edition, Tata McGraw Hill, New Delhi.
3. C.R. Kothari (2004). Research Methodology-Methods and Techniques, New Age
Publishers.
4. Chiranjeev A, Jacob R, Natrajan S (2013). Research Methodology in Retail
Marketing, New Delhi, Jnanadu Prakashan.
5. Dassler. Gary (2006). Framework for HRM, Pearson publication, New Delhi.
6. HR Audit, Sikkim Manipal University. (MBA Book)
7. Merkel J, Jackson P. and Pick D.(2006) ,New Challenges in Retail Human Resource
Management in Retailing in the 21st Century. Springer Berlin Heidelberg.
8. Nair Suja R. (2011). Retail Management, Himalaya Publication, Mumbai.
9. Pradhan Swapna (2009), Retailing Management: Text and Cases, Tata Mcgraw Hill,
New Delhi.
10. Raju, PVL (2005). Effective HRM, ICFAI, Hydrabad.
11. Rao V.S. (2006). Human Resource Management: Text and Cases, Excel Books, New
Delhi.
12. Retail Management- Perspective and Cases: The ICFAI Books, The ICFAI University
Press. Edited by VV Gopal .(2005)
13. Rao T.V. (2007). HRD Audit: Evaluating the HR function for Business Improvement,
Response Book, New Delhi.
14. Rao T.V. (2011). HRD Score Card 2500, Response Books From Sage.
15. Vedamani, Gibson G. (2009). Retail Management Functional: Principles and
Practices, Jaico Publication, Mumbai.
475
JOURNALS
1. Abdullah, Z., Ahsan, N., & Alam, S. S. (2009). The effect of human resource
management practices on business performance among private companies in
Malaysia. International Journal of Business and Management, 4(6), 65.
2. Huselid, M. A. (1995). The impact of human resource management practices on
turnover, productivity, and corporate financial performance. Academy of management
journal, 38(3), 635-672.
3. Pfeffer, J. (1998). The human equation: Building profits by putting people first.
Harvard Business Press.
4. Som, A. (2008). Innovative human resource management and corporate performance
in the context of economic liberalization in India. The International Journal of Human
Resource Management, 19(7), 1278-1297.
5. Srimannarayana, M. (2013). Measurement of HR activities in India, Indian journal of
Industrial Relations, 45(2).
6. Sultana, A. (2014). Human Resource Management in Organized Retail Industry in
India. Global Journal of Finance and Management, 6(6), 491-496.
7. Wright, P. M., Gardner, T. M., & Moynihan, L. M. (2003). The impact of HR
practices on the performance of business units. Human Resource Management Journal,
13(3), 21-36.
8. Merkel, J., Jackson, P., & Pick, D. (2006). New challenges in retail human resource
management in Retailing in the 21st Century (pp. 211-224). Springer Berlin
Heidelberg. available at www. spinger.com, retrieved on 29th Dec, 2014 at 1.10 p.m.
9. Yeung, A. K., & Berman, B. (1997). Adding value through Human Resource:
Reorienting HR measurement to drive business performance. Human Resource
Management, fall 1997, 36(3), 321–335
476
REPORTS
1. Department of Industrial Policy and Promotion, ministry of commerce and industry,

Government of India; Federation of Indian Chamber of Commerce and Industry (2012) Invest
India guiding your investments, Retailing
2. National Skill Development Corporation (NSDC) Report on Human Resource and Skill
Requirements in the Organised Retail sector- Study on mapping of human resource skill gaps
in India till 2022 (2012)
3. The Boston Consulting Group and Retail Association of India, Retail Leadership
Summit, Retail 2020: Retrospect, Reinvent, Rewrite, Leadership Perspectives on
Trends in Indian Retail, (Feb-2015).
WEBSITES
1. www.bseindia.com
2. www.markhuselid.com.
3. www.moneycontrol.com
4. www.nseindia.com
5. www.sagejournals.in
6. www.theglobaljournals.com
7. www.zenithresearch.org.in
Signature of Guide Signature of Student
Dr. ArvindLuhar Ms. Shital Jitendra Mehta
Date: Date:
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SYNOPSIS OF THE THESIS SUBMITTED BY

SHITAL JITENDRA MEHTA

TO THE UNIVERSITY OF MUMBAI

FOR THE DEGREE OF

DOCTOR OF PHILOSOPHY IN COMMERCE

1. Title of the Thesis:

APPLICATION OF HUMAN RESOURCE AUDIT IN RETAIL BUSINESS IN THE CITY

2. Name of the Candidate:

Ms. Shital Jitendra Mehta (As per name on M.Com. convocation)

3. Name of the Guide: Dr. Arvind Luhar

4. Name of the College: K.P.B. Hinduja College of Commerce, Mumbai.

5. Number and Date of Registration: No. 43/09-10-13

8. Date of Submission: 19th November,2015.

APPLICATION OF HUMAN RESOURCE AUDIT IN RETAIL BUSINESS IN THE CITY

MS. SHITAL JITENDRA MEHTA

UNDER THE GUIDANCE OF

Dr. ARVIND LUHAR

M.COM, LLB, MBA, Ph.D., UGC-NET

K.P.B. HINDUJA COLLEGE OF COMMERCE, MUMBAI.

SUBMITTED TO THE FACULTY OF COMMERCE (ACCOUNTANCY)

DOCTOR OF PHILOSOPHY (COMMERCE) DEGREE IN ACCOUNTANCY

i. Effectiveness in Implementation and measurement of such practices, and

There are five approaches to human resource audit:

Retail sector in India is mainly divided into:

1) Unorganized retailing - Local Kirana Shop, Mom & Pop store.

2. Selective hiring of new personnel.

3. Self-managed teams and decentralization of decision making as the basic principles of

4. Comparatively high compensation contingent on organizational performance.

7. Extensive sharing of financial and performance information throughout the organization.

i. Emphasis on basic formats/categories to advanced formats/categories – with specific emphasis

1. Defining and redefining a research problem.

2. Formulating objectives and hypothesis of the study

3. Developing a research plan.

4. Collection of primary and secondary data.

5. Analyzing and interpretation of data.

Researcher has made an attempt to critically address following problems:-

5. OBJECTIVES OF THE STUDY

i. To examine the impact of Human Resource Audit on financial performance of sample

6. HYPOTHESIS OF THE STUDY

i. Null Hypothesis (Ho): There is no significant difference between financial performance

v. Null Hypothesis (Ho): There is no significant difference in quality of services of the

The present study works on the following scales:

i. Reviewing available literature in the concerned area of research.

ii. Studying Human Resource Management practices adopted by selected retailers.

iii. Studying adoption of Human Resource audit among selected retailers.

v. Analyzing difference in effectiveness of Human Resource Management functions, Human

vi. Analysing impact of Human Resource audit on return on personnel cost.

A. Qualitative / Quantitative Research Approach

B. Universe of the Study:

C. Sample of the Study:

Primary data are collected through

Different questionnaires are framed for:

Customers of selected firms: questionnaire containing different dimensions of service quality of

ii. Secondary Data:

i.„t‟ test for two independent samples at 95% confidence level.

i. „t‟ test for two independent samples at 95% confidence level.

9. SIGNIFICANCE OF THE STUDY

i. Due to technological progress and spread of educational institutions workers will

vi. This research will bring transparency in the HRM practices.

10. LIMITATIONS OF THE STUDY

ii. Respondents‟ opinion can be biased, which cannot be ruled out.

Findings based on Objectives:

I. Source of recruitment of the most senior personnel or HR Director

i. There are variations in sources recruitment of HR directors. 4 firms (33.33%)