Job evaluation Essay Example

Job evaluation Essay Job evaluation is a practical technique, designed to enable trained and experienced staff to judge the size of one job relative to others. It does not directly determine pay levels, but will establish the basis for an internal ranking of jobs. An approach designed to enable a job to be compared to all other jobs in an Institution in a systematic and transparent way in order to create a fair rank order of jobs, usually as the basis for a grading and pay structure, to ensure equal pay for work of equal value Some Principles of Job Evaluation Clearly defined and identifiable jobs must exist. These jobs will be accurately described in an agreed job description. ?All jobs in an organisation will be evaluated using an agreed job evaluation scheme. ?Job evaluators will need to gain a thorough understanding of the job ? Job evaluation is concerned with jobs, not people. It is not the person that is being evaluated. ?The job is assessed as if it were being carried out in a fully competent and acceptable manner. ?Job evaluation is based on judgement and is not scientific.However if applied correctly it can enable objective judgements to be made. ?It is possible to make a judgement about a jobs contribution relative to other jobs in an organisation. ?The real test of the evaluation results is their acceptability to all participants. ?Job evaluation can aid organisational problem solving as it highlights duplication of tasks and gaps between jobs and functions. Job Evaluation The Future As organisations constantly evolve and new organisations emerge there will be challenges to existing principles of job evaluation.Whether existing job evaluation techniques and accompanying schemes remain relevant in a faster moving and constantly changing world, where new jobs and roles are invented on a regular basis, remains to be seen. The formal points systems, used by so many organisations is often already seen to be inflexible. Sticking rigidly to an existing scheme may impose barri ers to change. Constantly updating and writing new jobs together with the time that has to be spent administering the job evaluation schemes may become too cumbersome and time consuming for the benefits that are derived.Does this mean that we will see existing schemes abandoned or left to fall into disrepute ? Will providers of job evaluation schemes examine and, where necessary, modify them to ensure they are up to date and relevant ? Simply sticking rigidly to what is already in place may not be enough to ensure their survival. Job Evaluation More Job evaluation is essentially one part of a tripartite subject, which is collectively referred to as Job Study (other names exist).The three parts are Job Analysis; Job Evaluation the information collected is evaluated using a numerical scale or ranking and rating methodology; and Merit Rating BSI definition (32542). BSI definition 32529 – â€Å"Any method ranking the relative worth of jobs which can then be used as a basis f or a remuneration system† It is essentially a comparative process. Job evaluation evaluates selected job factors, which are regarded as important for the effective performance of the job, according to one of several alternative methods. The resulting numerical gradings can form the basis of an equitable structure of job gradings.The job grades may or may not be used for status or payment purposes. Explanation: Job Evaluation is concerned with measuring the demands the job places on its holder. Most factors that contribute to this job pressure, e. g. physical strength required, knowledge of mathematics required, are assessed and the result is a numerical estimate of the total job pressure. When evaluations are carried out on all hourly paid personnel the technique’s uses include establishing relative wage rates for different tasks. It is possible to use it for all grades of personnel, even senior management. Illustration:The Time Span of Discretion is an interesting and unusual method of job evaluation developed by Elliot Jaques for the Glacier Metal Company. In this method the job pressure is assessed according to the length of time over which managers decisions commit the company. A machine operative, for example, is at any moment committing the company only for the period needed to make one product unit or component. The manager who buys the machine is committing the company for ten years. Job evaluation is the process of determining the appropriate Career Group and Role to which a position is assigned.The job evaluation process has four steps: Selecting the Occupational Family: The first step is to determine the appropriate Occupational Family by reviewing the vocational characteristics (the nature and type of work performed) outlined in the Employee Work Profile. Comparing and Selecting the Career Group: The second step is to compare the Concept of Work capsule that describes the array of work performed in the various Career Group Descriptions to the Employee Work Profile in order to determine the appropriate Career Group.Comparing and Selecting a Role within a Career Group: The third step is to evaluate and compare the Work Description (position objective; purpose of position; knowledge, skills, abilities and competencies; education, experience, certification and licensure; core responsibilities and special assignments) outlined in the Employee Work Profile to the various Role Descriptions and the factor matrices to determine the appropriate Role.Comparing to other positions within a Role to ensure consistency: The final step is to confirm the assignment of the position to the Role by checking to make sure that it is consistent with other positions assigned to the same Role Job Evaluation: Methods: The two most common methods of job evaluation that have been used are first, whole job ranking, where jobs are taken as a whole and ranked against each other. The second method is one of awarding points for various aspects of the job.In the points system various aspects or parts of the job such as education and experience required to perform the job are assessed and a points value awarded the higher the educational requirements of the job the higher the points scored. The most well known points scheme was introduced by Hay management consultants in 1951. This scheme evaluates job responsibilities in the light of three major factors know how, problem solving and accountability Ranking Ranking This method is one of the simplest to administer. Jobs are compared to each other based on the overall worth of the job to the organization.The worth of a job is usually based on judgements of skill, effort (physical and mental), responsibility (supervisory and fiscal), and working conditions. Advantages Simple. Very effective when there are relatively few jobs to be evaluated (less than 30). Disadvantages Difficult to administer as the number of jobs increases. Rank judgements are subjective. Since there is no st andard used for comparison, new jobs would have to be compared with the existing jobs to determine its appropriate rank. In essence, the ranking process would have to be repeated each time a new job is added to the organization. - Ranking Methods Ordering Simply place job titles on 35 inch index cards then order the titles by relative importance to the organization. Weighting Paired Comparison Job Evaluation: Methods: Classification Classification Jobs are classified into an existing grade/category structure or hierarchy. Each level in the grade/category structure has a description and associated job titles. Each job is assigned to the grade/category providing the closest match to the job.The classification of a position is decided by comparing the whole job with the appropriate job grading standard. To ensure equity in job grading and wage rates, a common set of job grading standards and instructions are used. Because of differences in duties, skills and knowledge, and other aspect s of trades and labor jobs, job grading standards are developed mainly along occupational lines. The standards do not attempt to describe every work assignment of each position in the occupation covered. The standards identify and describe those key characteristics of occupations which are significant for distinguishing different levels of work.They define these key characteristics in such a way as to provide a basis for assigning the appropriate grade level to all positions in the occupation to which the standards apply. Advantages Simple. The grade/category structure exists independent of the jobs. Therefore, new jobs can be classified more easily than the Ranking Method. Disadvantages Classification judgments are subjective. The standard used for comparison (the grade/category structure) may have built in biases that would affect certain groups of employees (females or minorities). Some jobs may appear to fit within more than one grade/category.Job Evaluation: Methods: Factor Com parison Factor Comparison A set of compensable factors are identified as determining the worth of jobs. Typically the number of compensable factors is small (4 or 5). Examples of compensable factors are: Skill Responsibilities Effort Working Conditions Next, benchmark jobs are identified. Benchmark jobs should be selected as having certain characteristics. equitable pay (not overpaid or underpaid) range of the factors (for each factor, some jobs would be at the low end of the factor while others would be at the high end of the factor).The jobs are then priced and the total pay for each job is divided into pay for each factor. See example matrix below: Job Evaluation: Factor Comparison The hourly rate is divided into pay for each of the following factors: Job Hourly Rate . Pay for Skill Pay for Effort Pay for Responsibility Pay for Working Conditions This process establishes the rate of pay for each factor for each benchmark job. Slight adjustments may need o be made to the matrix to ensure equitable dollar weighting of the factors.The other jobs in the organization are then compared with the benchmark jobs and rates of pay for each factor are summed to determine the rates of pay for each of the other jobs. Advantages The value of the job is expressed in monetary terms. Can be applied to a wide range of jobs. Can be applied to newly created jobs. Disadvantages The pay for each factor is based on judgements that are subjective. The standard used for determining the pay for each factor may have build in biases that would affect certain groups of employees (females or minorities). Job Evaluation: Methods: Point MethodPoint Method A set of compensable factors are identified as determining the worth of jobs. Typically the compensable factors include the major categories of: Skill Responsibilities Effort Working Conditions These factors can then be further defined. Skill Experience Education Ability Responsibilities Fiscal Supervisory Effort Mental Physical Working C onditions Location Hazards Extremes in Environment The point method is an extension of the factor comparison method. Each factor is then divided into levels or degrees which are then assigned points. Each job is rated using the job evaluation instrument.The points for each factor are summed to form a total point score for the job. Jobs are then grouped by total point score and assigned to wage/salary grades so that similarly rated jobs would be placed in the same wage/salary grade. Advantages The value of the job is expressed in monetary terms. Can be applied to a wide range of jobs. Can be applied to newly created jobs. Disadvantages The pay for each factor is based on judgments that are subjective. The standard used for determining the pay for each factor may have built-in biases that would affect certain groups of employees (females or minorities).Performance appraisal, also known as employee appraisal, is a method by which the performance of an employee is evaluated (generally i n terms of quality, quantity, cost and time). The roots of performance appraisal can be found in Frederick Winslow Taylors time and motion study[citation needed]. Performance appraisal is a part of career development. Performance appraisals are a regular review of employee performance within organizations. Generally, the aims of a scheme are: Give feedback on performance to employees. Identify employee training needs. Document criteria used to allocate organizational rewards.Form a basis for personnel decisions-salary (merit) increases,promotions, disciplinary actions, etc. Provide the opportunity for organizational diagnosis and development. Facilitate communication between employee and administrator. Validate selection techniques and human resource policies to meet federal Equal Employment Opportunity requirements. A common approach to assessing performance is to use a numerical or scalar rating system whereby managers are asked to score an individual against a number of objective s/attributes. Employees are also allowed the opportunity to assess the person (manager) at the same time.This is known as 360 ° appraisal. The most popular methods that are being used as performance appraisal process are: Management by objectives (MBO) 360 degree appraisal Thus performance appraisal is important for effective human resource management. Performance appraisal is a process of evaluating employee performance in order to guide and develop the employees potential. In many extension organizations which are government departments, the performance appraisal is nothing more than a confidential judgement of work done and a character report used to facilitate disciplinary action or promotion.The employees do not get feedback about their performance. Extension organizations need to have an open appraisal system to provide feedback and opportunities for open discussion with employees on their performance, because they have immense potential to grow and develop. This system can create a healthy working climate and employee motivation. The performance appraisal which aims at facilitating employee development has the following major purposes: (1) to provide feedback and guidance, (2) to set performance goals, (3) to identify training needs, and (4) to provide inputs for management of pay administration, rewards, and promotion.The steps involved in effective performance appraisal are (1) identification of key performance areas and setting yearly objectives under each KPA, (2) identification of critical attributes for effective performance, (3) periodic review of performance, (4) discussion of performance with employees, and (5) identification of training and developmental needs (Pareek ; Rao, 1992). Potential Appraisal The potential appraisal is a future-oriented appraisal by which the potential of an employee to occupy higher positions and to assume higher responsibilities is evaluated.The potential appraisal can help the extension staff to know their streng ths and weaknesses and can motivate them to further develop their skills. Thus the potential appraisal helps in planning overall career development of employees. Some of the techniques used for the appraisal are self-appraisals, peer rating, the management by objectives (MBO) approach, psychological test and simulated work exercises, case analyses, and leadership exercises. Job evaluation Essay Example Job evaluation Essay Job evaluation is a practical technique, designed to enable trained and experienced staff to judge the size of one job relative to others. It does not directly determine pay levels, but will establish the basis for an internal ranking of jobs. An approach designed to enable a job to be compared to all other jobs in an Institution in a systematic and transparent way in order to create a fair rank order of jobs, usually as the basis for a grading and pay structure, to ensure equal pay for work of equal value Some Principles of Job Evaluation Clearly defined and identifiable jobs must exist. These jobs will be accurately described in an agreed job description. ?All jobs in an organisation will be evaluated using an agreed job evaluation scheme. ?Job evaluators will need to gain a thorough understanding of the job ? Job evaluation is concerned with jobs, not people. It is not the person that is being evaluated. ?The job is assessed as if it were being carried out in a fully competent and acceptable manner. ?Job evaluation is based on judgement and is not scientific.However if applied correctly it can enable objective judgements to be made. ?It is possible to make a judgement about a jobs contribution relative to other jobs in an organisation. ?The real test of the evaluation results is their acceptability to all participants. ?Job evaluation can aid organisational problem solving as it highlights duplication of tasks and gaps between jobs and functions. Job Evaluation The Future As organisations constantly evolve and new organisations emerge there will be challenges to existing principles of job evaluation.Whether existing job evaluation techniques and accompanying schemes remain relevant in a faster moving and constantly changing world, where new jobs and roles are invented on a regular basis, remains to be seen. The formal points systems, used by so many organisations is often already seen to be inflexible. Sticking rigidly to an existing scheme may impose barri ers to change. Constantly updating and writing new jobs together with the time that has to be spent administering the job evaluation schemes may become too cumbersome and time consuming for the benefits that are derived.Does this mean that we will see existing schemes abandoned or left to fall into disrepute ? Will providers of job evaluation schemes examine and, where necessary, modify them to ensure they are up to date and relevant ? Simply sticking rigidly to what is already in place may not be enough to ensure their survival. Job Evaluation More Job evaluation is essentially one part of a tripartite subject, which is collectively referred to as Job Study (other names exist).The three parts are Job Analysis; Job Evaluation the information collected is evaluated using a numerical scale or ranking and rating methodology; and Merit Rating BSI definition (32542). BSI definition 32529 – â€Å"Any method ranking the relative worth of jobs which can then be used as a basis f or a remuneration system† It is essentially a comparative process. Job evaluation evaluates selected job factors, which are regarded as important for the effective performance of the job, according to one of several alternative methods. The resulting numerical gradings can form the basis of an equitable structure of job gradings.The job grades may or may not be used for status or payment purposes. Explanation: Job Evaluation is concerned with measuring the demands the job places on its holder. Most factors that contribute to this job pressure, e. g. physical strength required, knowledge of mathematics required, are assessed and the result is a numerical estimate of the total job pressure. When evaluations are carried out on all hourly paid personnel the technique’s uses include establishing relative wage rates for different tasks. It is possible to use it for all grades of personnel, even senior management. Illustration:The Time Span of Discretion is an interesting and unusual method of job evaluation developed by Elliot Jaques for the Glacier Metal Company. In this method the job pressure is assessed according to the length of time over which managers decisions commit the company. A machine operative, for example, is at any moment committing the company only for the period needed to make one product unit or component. The manager who buys the machine is committing the company for ten years. Job evaluation is the process of determining the appropriate Career Group and Role to which a position is assigned.The job evaluation process has four steps: Selecting the Occupational Family: The first step is to determine the appropriate Occupational Family by reviewing the vocational characteristics (the nature and type of work performed) outlined in the Employee Work Profile. Comparing and Selecting the Career Group: The second step is to compare the Concept of Work capsule that describes the array of work performed in the various Career Group Descriptions to the Employee Work Profile in order to determine the appropriate Career Group.Comparing and Selecting a Role within a Career Group: The third step is to evaluate and compare the Work Description (position objective; purpose of position; knowledge, skills, abilities and competencies; education, experience, certification and licensure; core responsibilities and special assignments) outlined in the Employee Work Profile to the various Role Descriptions and the factor matrices to determine the appropriate Role.Comparing to other positions within a Role to ensure consistency: The final step is to confirm the assignment of the position to the Role by checking to make sure that it is consistent with other positions assigned to the same Role Job Evaluation: Methods: The two most common methods of job evaluation that have been used are first, whole job ranking, where jobs are taken as a whole and ranked against each other. The second method is one of awarding points for various aspects of the job.In the points system various aspects or parts of the job such as education and experience required to perform the job are assessed and a points value awarded the higher the educational requirements of the job the higher the points scored. The most well known points scheme was introduced by Hay management consultants in 1951. This scheme evaluates job responsibilities in the light of three major factors know how, problem solving and accountability Ranking Ranking This method is one of the simplest to administer. Jobs are compared to each other based on the overall worth of the job to the organization.The worth of a job is usually based on judgements of skill, effort (physical and mental), responsibility (supervisory and fiscal), and working conditions. Advantages Simple. Very effective when there are relatively few jobs to be evaluated (less than 30). Disadvantages Difficult to administer as the number of jobs increases. Rank judgements are subjective. Since there is no st andard used for comparison, new jobs would have to be compared with the existing jobs to determine its appropriate rank. In essence, the ranking process would have to be repeated each time a new job is added to the organization. - Ranking Methods Ordering Simply place job titles on 35 inch index cards then order the titles by relative importance to the organization. Weighting Paired Comparison Job Evaluation: Methods: Classification Classification Jobs are classified into an existing grade/category structure or hierarchy. Each level in the grade/category structure has a description and associated job titles. Each job is assigned to the grade/category providing the closest match to the job.The classification of a position is decided by comparing the whole job with the appropriate job grading standard. To ensure equity in job grading and wage rates, a common set of job grading standards and instructions are used. Because of differences in duties, skills and knowledge, and other aspect s of trades and labor jobs, job grading standards are developed mainly along occupational lines. The standards do not attempt to describe every work assignment of each position in the occupation covered. The standards identify and describe those key characteristics of occupations which are significant for distinguishing different levels of work.They define these key characteristics in such a way as to provide a basis for assigning the appropriate grade level to all positions in the occupation to which the standards apply. Advantages Simple. The grade/category structure exists independent of the jobs. Therefore, new jobs can be classified more easily than the Ranking Method. Disadvantages Classification judgments are subjective. The standard used for comparison (the grade/category structure) may have built in biases that would affect certain groups of employees (females or minorities). Some jobs may appear to fit within more than one grade/category.Job Evaluation: Methods: Factor Com parison Factor Comparison A set of compensable factors are identified as determining the worth of jobs. Typically the number of compensable factors is small (4 or 5). Examples of compensable factors are: Skill Responsibilities Effort Working Conditions Next, benchmark jobs are identified. Benchmark jobs should be selected as having certain characteristics. equitable pay (not overpaid or underpaid) range of the factors (for each factor, some jobs would be at the low end of the factor while others would be at the high end of the factor).The jobs are then priced and the total pay for each job is divided into pay for each factor. See example matrix below: Job Evaluation: Factor Comparison The hourly rate is divided into pay for each of the following factors: Job Hourly Rate . Pay for Skill Pay for Effort Pay for Responsibility Pay for Working Conditions This process establishes the rate of pay for each factor for each benchmark job. Slight adjustments may need o be made to the matrix to ensure equitable dollar weighting of the factors.The other jobs in the organization are then compared with the benchmark jobs and rates of pay for each factor are summed to determine the rates of pay for each of the other jobs. Advantages The value of the job is expressed in monetary terms. Can be applied to a wide range of jobs. Can be applied to newly created jobs. Disadvantages The pay for each factor is based on judgements that are subjective. The standard used for determining the pay for each factor may have build in biases that would affect certain groups of employees (females or minorities). Job Evaluation: Methods: Point MethodPoint Method A set of compensable factors are identified as determining the worth of jobs. Typically the compensable factors include the major categories of: Skill Responsibilities Effort Working Conditions These factors can then be further defined. Skill Experience Education Ability Responsibilities Fiscal Supervisory Effort Mental Physical Working C onditions Location Hazards Extremes in Environment The point method is an extension of the factor comparison method. Each factor is then divided into levels or degrees which are then assigned points. Each job is rated using the job evaluation instrument.The points for each factor are summed to form a total point score for the job. Jobs are then grouped by total point score and assigned to wage/salary grades so that similarly rated jobs would be placed in the same wage/salary grade. Advantages The value of the job is expressed in monetary terms. Can be applied to a wide range of jobs. Can be applied to newly created jobs. Disadvantages The pay for each factor is based on judgments that are subjective. The standard used for determining the pay for each factor may have built-in biases that would affect certain groups of employees (females or minorities).Performance appraisal, also known as employee appraisal, is a method by which the performance of an employee is evaluated (generally i n terms of quality, quantity, cost and time). The roots of performance appraisal can be found in Frederick Winslow Taylors time and motion study[citation needed]. Performance appraisal is a part of career development. Performance appraisals are a regular review of employee performance within organizations. Generally, the aims of a scheme are: Give feedback on performance to employees. Identify employee training needs. Document criteria used to allocate organizational rewards.Form a basis for personnel decisions-salary (merit) increases,promotions, disciplinary actions, etc. Provide the opportunity for organizational diagnosis and development. Facilitate communication between employee and administrator. Validate selection techniques and human resource policies to meet federal Equal Employment Opportunity requirements. A common approach to assessing performance is to use a numerical or scalar rating system whereby managers are asked to score an individual against a number of objective s/attributes. Employees are also allowed the opportunity to assess the person (manager) at the same time.This is known as 360 ° appraisal. The most popular methods that are being used as performance appraisal process are: Management by objectives (MBO) 360 degree appraisal Thus performance appraisal is important for effective human resource management. Performance appraisal is a process of evaluating employee performance in order to guide and develop the employees potential. In many extension organizations which are government departments, the performance appraisal is nothing more than a confidential judgement of work done and a character report used to facilitate disciplinary action or promotion.The employees do not get feedback about their performance. Extension organizations need to have an open appraisal system to provide feedback and opportunities for open discussion with employees on their performance, because they have immense potential to grow and develop. This system can create a healthy working climate and employee motivation. The performance appraisal which aims at facilitating employee development has the following major purposes: (1) to provide feedback and guidance, (2) to set performance goals, (3) to identify training needs, and (4) to provide inputs for management of pay administration, rewards, and promotion.The steps involved in effective performance appraisal are (1) identification of key performance areas and setting yearly objectives under each KPA, (2) identification of critical attributes for effective performance, (3) periodic review of performance, (4) discussion of performance with employees, and (5) identification of training and developmental needs (Pareek ; Rao, 1992). Potential Appraisal The potential appraisal is a future-oriented appraisal by which the potential of an employee to occupy higher positions and to assume higher responsibilities is evaluated.The potential appraisal can help the extension staff to know their streng ths and weaknesses and can motivate them to further develop their skills. Thus the potential appraisal helps in planning overall career development of employees. Some of the techniques used for the appraisal are self-appraisals, peer rating, the management by objectives (MBO) approach, psychological test and simulated work exercises, case analyses, and leadership exercises.

India on the Move Essays

India on the Move Essays India on the Move Essay India on the Move Essay Why did India experience relatively slow economic growth from independence until 1991? India became an independent country in 1947 and from that moment until the first years of the 1990’s, the government adopted the Import Substitution Industrialization model (ISI) in order to protect the economy against foreign competition. The model was based on regulations in the private and public sector, trade and foreign direct investment that made the economy very closed compared to other economies in the world. The system was not sustainable in the long term because it encouraged inefficiency in the industry performance. For instance, the average GNP per capita at that period of time was as low as $2301. Moreover, India’s growth performance plan has been written in a five year scope in which the actual growth from the periods of 1956-1961, 1961-1966, and 1969-1974 did not surpass the target (see Exhibit 1). The â€Å"Hindu rate of growth† around 3. 5% prevailed in the period of 1950-1980 and then with oriented market reforms the growth rate change to approximately 6-8%2. Why did Rao adopt the post crisis, â€Å"Washington Consensus† strategy? How is it working? The Prime Minister Narasimha Rao, elected in 1991, had to ask for urgent help to the International Monetary Fund (IMF) as a result of a balance of payment crisis due to high interest rates, inflation driven by the fall of its principal trading partner: the Soviet Union. The IMF authorized the loan under the condition of adopting ten prescribed reforms. These policies were focused to stimulate growth and reach a stable macroeconomic environment; but most important, to minimize the role of the government in economic decisions. One of the most important results from these market reforms was the reduction of India’s fiscal deficit from 9. 4% of GDP in 1990-19913 to 6. 5% of GDP in 1998 (Vietor and Thomson, 2008). On the other hand, the average inflation rate dropped from 7. 5% in the 1980’s, to 6. 3% in the 1990s, and from 4. 7% in the period of 1996-1997 to 2002-20034. Foreign Direct Investment is another main variable in the process of adjustment that shows positive highlights, since the opening of capital inflows in 1991, the investment rose from $74 millions to $5,626 millions in 2002, a 75% increase (Vietor and Thomson, 2008). Nevertheless, there are still challenges that must be overcome beyond macroeconomic indicators, for example a reduction of bureaucracy, lower entry barriers, good leadership to eradicate corruption, investment in infrastructure, and most important, the investment on the people through health programs and education especially in the highest illiterate states. How big a deal are Hindu-Muslim frictions? Demographic fragmentation? Deficits The Hindu-Muslim conflict is affecting in many ways to India. First, the friction promotes a bad climate of business to foreign investors. For instance, Thomas Friedman in his book â€Å"The World is Flat† describes how a state of emergency in 2002 worried American companies due to rumors of a nuclear exchange attack against Pakistan. The book also quote N. Krishnakumar, President of MindTree a leading Indian knowledge firm who stated: â€Å"What we explained to our government, through the Confederation of Indian Industry, is that providing a stable, predictable operating environment is now the key to India’s development†. Secondly, the conflict affects the country through a high fiscal deficit. Only in 2002, the military spending rose around 10% of the government expenditures (Vietor and Thomson, 2008). The mayor concern is that inefficient expenditure raises the budget and makes the economy more vulnerable. Lastly, the trade off between allocating money to the military defense is affecting the people urgent needs in social issues. In fact, In 2002 India ranked # 124 in the Human Development Indicator (Vietor and Thompson, 2008). That is the reason why health, education, and literacy have to be priorities to the government in order to maintain a sustainable growth. Is India an attractive site for foreign direct investment? India is an emerging country which is getting worldwide attention for its quickly growing economy. It has been growing in an average of 6%-8% in the last years. Many large companies are taking advantage of the skilled labor force at low cost, the vast number of people who speak English as a heritage from the British colony, as well as the cheaper costs in telecommunication. In fact, India is considered by many as the back-office of world servicesa. There are approximately 40% of the 500 Fortune companies that have outsourced part of its services to India5. According to the FDI Confidence Index 2005, India top as one of the best countries to invest in manufacturing, telecommunication, financial and non-financial services, and wholesale and retail (see Exhibit 2). However, even though there are positive outcome from the implemented reforms, there are still important activities to improve Foreign Direct Investment. The government has to emphasize more in infrastructure and simplify the procedures to make easier the establishment of a company in the country.