WAGE REVISION w.e.f. 01.08.2007

1. WAGE REVISIONw.e.f. 01.08.2007 PRESENTATION ON ORGANIZATIONAL AGENDA GIPSA

2. ORGANIZATIONAL AGENDA AS PRELUDE TO WAGE REVISION GIPSA

3. WHY, WHAT & HOW OF THE ORGANIZATIONAL AGENDA GIPSA

4. Why Organizational Agenda? • All Insurance Companies in India regulated by various norms including those on Management Expenses. • As per Sec 40C of Insurance Act, GIPSA Companies require to remain within specified limits of MEs. • Existing level of MEs of GIPSA Companies found to cross these limits frequently. • Any Wage Revision would push these Companies beyond ME limits perennially. • Commensurate Rise in Productivity must before any level of Wage Revision could be thought of. • The Organizational Agenda seeks to provide a road map to achieve such rise in Productivity. • The items of Agenda developed to ensure a sustained growth in Productivity by inducing to usher the Companies in an era of Organizational Efficiency, Utmost Customer Satisfaction and a Committed, Professional Workforce. GIPSA

5. WHAT IS THE ORGANIZATIONAL AGENDA? GIPSA

6. ORGANIZATIONAL AGENDA AS PART OF THE OFFER MADE ON 22.12.2009 • The Organizational Agenda that formed part of Wage Revision w.e.f. 01.08.02 to continue with modifications as may be found necessary by the Management :- • TMP for Class III to be freed from the geographical limitations of 150 kms. so as to further synchronize with Company’s contemporary needs • Further outsourcing of certain activities (including some service benefits such as Housing Loan) to fall in line with current competitive business environment • Code of Conduct for Unions/Associations relevant to contemporary business requirement and conducive to productivity, accountability and discipline to be evolved and strictly implemented. • Annual GDPI Growth Rate to be minimum 8.5% • Flexibility in hiring manpower - Lateral induction – short term appointments at various levels in officers’ cadres in line with current competitive business environment • Flexi-pay and Variable pay for maximizing motivation levels, retention of talents and optimizing returns on productivity Contd…. GIPSA

7. ORGANIZATIONAL AGENDA AS PART OF THE OFFER MADE ON 22.12.2009 (Contd..) • Flexi working hours to address the requirement arising out of the impact of IT interventions and the need for 24 hours connectivity • Introduction of modern gadget-monitored and IT enabled entry (including biometric attendance) and surveillance system in office premises to address the safety and security requirement of employees and customers • New measures, such as training followed by mandatory passing of Tests, to empower the workforce at various levels and enable them update their knowledge and skills to cope up with the changing business requirements and technological changes • Implementation of provisions for Compulsory Retirement on grounds of gross inefficiency / Company’s interests with adequate system of checks and balances and exit option for employees with incompatible profile • Any other measure to improve productivity, accountability and discipline GIPSA

8. HOW THIS ORGANIZATIONAL AGENDA? We Explain it One by One GIPSA

9. TMP for Class III • The rationale for TMP for Class III had been explained to the Employees’ Unions during discussions on the last Wage Revision due w.e.f. 01.08.2002 • To recall the same it was meant to serve the Company’s needs as also to minimize the co-existence of pockets of surplus and deficit in the Company thereby resulting in optimum utilization of manpower • Even in last Wage Revision discussions, it was felt that the distance limit of 150 kms. was inadequate to meet the Company’s needs • However, the Employees’ Unions, although appreciating the Company’s needs and consenting to introduction of TMP, suggested to limit the TMP upto 150 kms to begin with and extend it in the next Wage Revision, if required. • Accordingly, and in sync with Company’s contemporary needs, it is proposed to free TMP from the geographical limitations of 150 kms. GIPSA

10. FURTHER OUTSOURCING • Outsourcing of certain activities was listed as an item of the Organizational Agenda linked with the Wage Revision w.e.f. 01.08.2002 • The primary criteria for resorting to outsourcing in an activity was (and continues to be) cost benefit analysis and to concentrate more on core activities • Some progress in this Item has since been made and further progress is required to cover the remaining gamut • Accordingly, further outsourcing of certain activities (including some service benefits such as Housing Loan) to fall in line with current competitive business environment is envisaged • Care, of course, shall be taken to protect the interests of employees while furthering the interests of the Organization • For example, while outsourcing Housing Loan, the employee shall have the choice of approaching any approved lender (Public Sector Banks, LICHF or GICHF etc.) of his choice to avail Housing Loan for which the Company shall bear its part of subsidy on the rate of Housing Loan Interest. The manpower currently engaged in Housing Loan Deptts at various ROs/HO of Company would be better utilized in core activities GIPSA

11. CODE OF CONDUCT FOR UNIONS • This is an Item again carried forward from the Organizational Agenda of the last Wage Revision • Pre-occupation with other equally important Reforms in HR area left little time to attend to this Item so far • However, the relevance of the Item not only continues but has even been accentuated • Accordingly, Code of Conduct for Unions/Associations relevant to contemporary business requirement and conducive to productivity, accountability and discipline is proposed to be evolved and implemented • Time frame and/or Task Force for accomplishment of this task could be earmarked for ensuring a time bound achievement GIPSA

12. GDPI GROWTH RATE • As indicated earlier, every Wage Revision, even for a single rupee, requires corresponding improvement in the GDPI Growth Rate to comply with provisions of Section 40C • In the 5th Round of Discussions of current Wage Revision, an overall 17.5% rise in the wages has been offered, for absorbing which minimum 8.5% GDPI Growth Rate is required for continued compliance of S.40C - purely arithmetical matter • The index of 8.5% represents the average annualized growth rate over the 5 year period from 01.08.2007 to 31.07.2012 and not any particular year therein • Listing of this as an Item on the Organizational Agenda helps all of us to achieve the required compliance by way of awareness towards it • In any case, achievement of this compliance is a must for survival GIPSA

13. NOT JUST GROWTH BUT GROWTH WITH PROFIT • Apart from the requisite growth rate in GDPI, generation of surplus from our core activity, i.e. underwriting, is also of paramount importance not only for affording the desired quantum of Wage rise but also to sustain the business activities in future • The Organizations can not solely depend upon the Investment Income to earn Net Profits • Apart from generating revenue, good Underwriting results are indicative of sound underwriting practices and good claims management • In the FY 2008-09, the Underwriting Results have been hardly hit and it is high time that all employees at all level pull up their socks to make the Revenue Accounts come out of the red GIPSA

14. The current competitive business environment is fast changing and so are the business technologies The systems, processes and procedures of a business enterprise also need to change as fast to keep pace with the changes in the business environment and technologies Some of these changes can not be imbibed or kept pace with without resorting to a flexibility in hiring manpower of a particular prescription for a particular period and for a particular functional area Accordingly, Flexibility in hiring manpower - Lateral induction – short term appointments at various levels in officers’ cadres in line with current competitive business environment is proposed While doing so, adequate care shall be taken to protect the interests of our existing manpower at various levels Even existing employees could be allowed to participate in the process of such flexi-hiring, if otherwise eligible and desirous for the same FLEXI-HIRING GIPSA

15. FLEXI-PAY • Keeping pace with the changing business environment also calls for cutting costs but paying the best to deserving employee • The objective is to maximize motivation levels of employees, retention of talents and optimizing returns on productivity • Flexi-pay and Variable pay are tools to achieve this objective • Flexi-pay refers to a differential system of payment amongst various groups of employees, such as between the flexi-hired ones and the regular ones • Variable Pay refers to Wage comprising of two components – one being fixed and the other varying with performance - Proportional weight-ages of the two components could be decided through discussions • The system is already in place in a number of public sector undertakings GIPSA

16. FLEXI-HOURS • The changing business environment and requirement of unhindered service to net-savvy customers call for flexibility in availability of manpower at various points of time in different functional areas • For example, to address the requirement arising out of the impact of IT interventions and the need for 24 hours connectivity, certain IT Personnel are required to be available on 24 hours basis • In such situations, the concept of Flexi working hours is proposed to be introduced on case to case basis • Suitable compensation, including flexi-pay / variable pay could be resorted to while adopting flexi working hours • Wherever shifts are to be followed, health issues of employees concerned shall be duly taken care of GIPSA

17. FLEXI-HOURS (Contd..) • Implementation of Flexi-hours will be need based and in phases • The first phase will be implemented in Metros and then gradually to cover other cities – tier II and tier III • Generally, services of Scale II and Scale III Officers will be utilized with support staff under the supervision and monitoring of Scale V Officer • The employees will be generally required to work within the maximum no. of hours of work as specified. In case of any hardship due to flexi-hours, Management may bring out some compensation/ incentives in the form of extra leave, allowance etc. GIPSA

18. USE OF MODERN GADGETS • Cutting costs, avoiding subjectivities and human intervention in certain activities, improvement in working conditions, Customer Service and Safety of Crucial Business Data call for use of efficient modern gadgets wherever necessary and possible • Examples could be IT enabled entry (including biometric scanner) and surveillance system in office premises to address the safety and security of employees and customers • Such systems are already in vogue in a number of Govt. and Public Sector Organizations • It is in these contexts that Introduction of modern gadgets has been listed as an Item on the Agenda • While introducing such gadgets, adequate care shall be taken to safeguard the personal dignity and honor of the individual employee GIPSA

19. CAPACITY BUILDING OF EMPLOYEES • Fast changing business requirements and technological advancements call for continuous updating of knowledge and skills of employees • The training modules and techniques also need to be revamped in tune with the changing requirements so as to yield optimum benefits • Current system of evaluation-less training grossly inadequate to empower the workforce at various levels and enable them update their knowledge and skills • It is in this context that new measures, such as regular and periodical trainings followed by mandatory passing of Tests have been envisaged with a view to build the capacity of employees and bring about greater professionalism and attitudinal changes for the benefit of the Organization • While training will be an on-going process with routine and specialized training modules, training in certain core functional areas may be made pre-requisite for employees to become eligible for promotion so that they are well-equipped to shoulder higher responsibilities • Cases of exceptional hardships, if any, could be considered for special dispensation, as may be considered necessary GIPSA

20. COMPULSORY RETIREMENT • Provisions already exist for Compulsory Retirement on specified grounds • Not implemented so far for various reasons • In today’s era of cost cuttings, cut-throat competition and heavy discounts, strict regulatory regime and customers’ increasing expectations : • No room for complacency & delinquency • Unproductive and inefficient employees have to make way for devoted, dedicated and productive workforce • It is in this context that implementation of provisions for Compulsory Retirement on grounds of gross inefficiency / Company’s interests is proposed as an Item of the Agenda • Care would be taken to put in place an adequate system of checks and balances and exit option for employees with incompatible profile • One such Exit Option for Class I Officers has already been floated in the shape of “Golden Gate” GIPSA

21. ANY OTHER MEASURE • All these measures are proposed with a view to improve productivity, accountability and discipline so as to not only face the competition but also to survive • However, in the fast changing world, no degree of far-sightedness is sufficient to guarantee an all time solution • It is in this context that a residual Item of “Any Other Measure” has been listed purely directed to the core objective of productivity, accountability and discipline GIPSA

22. EXPECTATIONS FROM UNIONS/ASSOCIATIONS • In the First Round of Discussions on Wage Revision held on 28.11.2008, the Chairman gave a call for jointly building the Organizational Agenda • In the Second Round of Discussions held in first week of Feb. 2009, a caricature of the Agenda submitted by Management for Unions to elicit their inputs • Detailed Explanation on each and every Item of the Agenda also submitted to them in individual Meeting and their views ascertained • In the Third, Fourth & Fifth Rounds held on 30th March, 2009, 31st July, 2009 and 22nd December, 2009, the First, Second & Final Offers of Wage Revision made linked to the Organizational Agenda so evolved • In this presentation, attempt is made to further involve the bonafide representatives of employees in the process of achieving the Organizational Agenda • In the ever increasing competitive scenario, Unions/Associations are expected to play a supportive role in the initiatives undertaken by the Management GIPSA

23. Thank you