CHAPTER FIVE

HUMAN RESOURCE TRAINING AND DEVELOPMENT

5.1 What is human resource development?

Human Resource Development (HRD) is planned, continuous effort by management to
improve employee competency levels and organizational performance through training,
education, and development programmes (Mondy & Noe, 1990). Training programme is
directed toward helping employees effectively perform their jobs after training, while
developmental programme helps the individual handle future responsibilities, with little
concern for current job duties (Werther & Davis, 1996). It is a programme focused on
leadership competency and organizational issues. Education, on the other hand, is
learning experiences that improve overall competence in a specific direction (Scarpello &
Ledvinka, 1988). The term education mainly is associated with university or college
programmes in a particular field of study. Either in public or private organizations "non
managers are much more likely to be trained in the technical skills required for their
current jobs, whereas managers frequently receive assistance in developing the skills
required in future jobs-particularly conceptual and human relations skills" (Stoner et.al.,
1996). In the subsequent pages emphasis will be given to the discussion of employee
training and management development programmes.

5.2 Why training and development?

Employee Training
Recruiting, selecting, orienting and then placing employees in jobs do not ensure success.
In most cases, there may be gap between employee knowledge and skill and what the job
demand. The gap must be filled through training programmes. Hence, personnel training
and retraining is one of the major way that work organizations attempt to maintain the
competency levels of their human resources and increase their adaptability to changing
organizational demands (Scarpello & Ledvinka, 1988).
Training can bring tangible benefits to both the organization and the employees. Hence,
the major purposes of training (Chatterjee, 1995) are:
¨ It establishes a sound relationship between the worker and his/her job-
the optimum man-task relationship.
¨ It upgrades skills and prevents obsolescence.
To keep pace with changing technology training becomes mandatory for employees in
order to update them, teach them newer skills and increase their efficiency.
¨ It develops healthy, constructive attitudes.
Training programmes are aimed at mounding employee attitudes to achieve support for
organizational activities and to obtain better cooperation and greater loyalty.
¨ It prepares employees for future assignments.
One of the objectives of training is to provide an employee an opportunity to climb up
the promotional ladder or to move on to assignments which will help upward mobility.

¨ It increases productivity.
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 The most efficient and cost-effective ways of performing jobs are taught to the
employees which naturally leads to enhanced productivity.
¨ It minimizes operational errors.
Unnecessary repetition, wastage and spoilage of materials are brought down;
deficiencies in methods of doing work are ironed out in training thereby also reducing
the hazard of accidents. Consequently, a safer and better work environment is created.
¨ It enhances employee confidence and morale.
With better knowledge and skills, the employee approaches his/her job with greater
confidence and sureness. It also improves the morale of the employees.
¨ It brings down employee turnover and absenteeism.
Training is a powerful tool that breeds in the employee a sense of pride as well as of
belonging. Both these contribute in a major way to checking and reducing turnover as
well as absenteeism.
Moreover, training can improve the relationship between the employees and their
immediate supervisor. It also helps in understanding and implementing organizational
policies.

Management Development
Management development is designed to improve the overall effectiveness of managers in
their present positions and to prepare them for greater responsibility when they are
promoted (Stoner, et.al., 1996). In other words, Glueck (1978) defined management
development as the process by which managers gain the experience, skills, and attitudes to
become or remain successful leader in their enterprises. Among other things, making the
organization a better environment to work is the responsibility of a manager. To
effectively discharge this and other managerial responsibilities organizations must provide
an opportunity for managers to improve their knowledge and skills through management
development programme.

Effective management development programme helps managers at all levels to learn to

perform their jobs better. Moreover, among the many good reasons for conducting
development programme the following are the major ones:
¨ To stimulate a more creative and innovative approach to problem solving and
decision making and provide the manager with the latest information on theory and
practice of management.
¨ To broaden the manager's vision and understanding in preparation for additional
responsibility.
¨ To give the managers the opportunity to discuss ideas and problems with other
people. It very often givens people the opportunity to check out their thinking with
other managers and to compare the ways in which they define and solve problems.
¨ To teach managers how to determine the consequences of various specific
managerial actions and behaviors (leadership, planning, controlling,-------).
¨ To reduce or prevent managerial obsolescence. Obsolescence can occur unless
managers are kept up with the changing methods of doing their managerial jobs.

The Human Resource Development Process

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In today's changing environment, employees at all levels need additional training and
opportunity to managers to develop their management thinking. In this respect,
organizations are required to be engaged in continuous employees training and
management development programmes.
As shown in Figure (Mondy and Noe, 1990) below, the steps in the human resource
development process are:

Needs Assessment

Establish Objectives

Select Methods and Media

Implement the actual programme

Conduct Evaluation and Follow-up

Steps in the human resource development process (modified)

1) Identifying training and development needs

2) Establishing training and development objectives.
3) Selecting training and development methods and media.
4) Implementing the actual training and development programme.
5) Conducting evaluation and follow-up.

1) Need Assessment
The first step in human resource development process is to identify training and
management development needs. Since training and development is a need-oriented
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effort, determining the level, type and duration of the training and development is of
prime importance at this stage of the process. If human resource development need
analysis is incorrect at this stage:
- then the later development activity will be inappropriate
- organization could end up in wasting time, resource and also demotivating staff.
- employees will develop negative attitudes towards future programme.

The dominant framework for identifying organization's human resource development

needs has been McGehee and Thayer's three-category need analysis approach (Scarpello &
Ledvinka, 1988),
1) Organizational analysis
2) Task (job) analysis
3) Person analysis

 Organizational Analysis
Organizational analysis is the process of identifying job-related knowledge and skills that
are needed to support the organization's short-range and long-range goals (Scarpello &
Ledvinka, 1988). This implies that organization's strategic goals and plans must carefully
be examined in line with the human resource planning.
In this approach, information related to organizational structure, size, growth, objectives
and other factors is gathered to effectively determine where and how training and
development programmes should be conducted. In other words, according to Chatterjee,
1995), essentially, there are three requirements:
1. Are there an adequate number of people to fulfill organizational objectives?
2. Are these people equipped with the necessary skills and knowledge and is the
general level of their performance up to the required standard?
3. Does the prevailing organizational climate provide a wholesome environment for
the fulfillment of tasks and objectives?
Chatterjee (1995) further pointed out the approaches that can be used to arrive at
meaningful conclusions to each of the above queries. Some of these are:
- Observing employees
- Asking supervisors about employees
- Examining the problems of employees
- Performance assessment and attitude surveys
- Assessment of the organization's public image
- Looking at rules, procedures and systems
Interpretation of the information collected from the above approaches would provide
guidelines and clues to the training need.

 Task Analysis
This approach refers to the determination of skill and knowledge, the job requires. In
collecting job information as input into training decisions, however, the job analysis must
include (Scarpello & Ledvinka, 1984):
¨ A detailed examination of each task component of the job.
¨ The performance standard of the job.
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 ¨ The method and knowledge the employee must use in performing the job task
¨ The way employee learns the method and acquires the needed knowledge.

Thus, job analysis is a means by which facts relating to the job are obtained. It includes a
job description and a job specification. If a human resource development programme
mounted for a specific job is to be successful, there is a need for a clear definition of what
the job entails and of the qualities needed for its performance. Furthermore, if
information relating to the nature of a specific job was collected prior to the organization
of all development programmes, then the programmes would have much greater relevance
to the needs of the job and would also enable to produce staff who were much better
prepared for their responsibilities.

 Person Analysis
Another training and development need analysis approach is person analysis. Here the
concentration is on the individual employee. It is used to analyze the substantive
knowledge and skill possessed by the employee (Scarpello & Ledvinka, 1988). This
approach deals with two basic questions. These are:
- Who needs to be trained?
- What kind of training is needed?

Information about the person's job behavior can be obtained by:

1. Directly observing job performance
2. Reviewing supervisory evaluations of performance
3. Using diagnostic tests, such as written ability tests and work samples
4. Comparing the behaviors of well-performing employees with those of poorly
performing employees
5. Discussing with employees their individual job performance and factors that may
inhibit that performance (Bass & Vaughan, 1966):
Once actual employee's performance is identified to be below standard, the next step is to
determine the kind of training or development needed to equip the employee with specific
knowledge and skill required for better performance. Generally, training and development
can improve the individual's performance only when:
1. the employee does not have the knowledge and skill to do the job.
2. the low performance is not due to lack of practice
3. the low performance is not due to other causes (Laird, 1983).
Finally, since training and development costs money, organization must ensure maximum
return in terms of organization current and further performance.

2) Training and Development Objectives:

Once training and development needs are clearly identified, the next process is to establish
objectives. An objective is a specific outcome that the training or the development
programme is intended to achieve (Scarpello & Ledvinka, 1988). In most cases, training
and development objectives are set for the trainees. These objectives define the
performance that the trainee should be able to exhibit after training (Scarpello &
Ledvinka, 1988).

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Human resource development experts suggest that objectives should be stated explicitly
and answer the following questions (Scarpello & Ledvinka, 1988):
1. What should the trainees be able to do after training?
2. Under what conditions should the trainee be able to perform the trained behavior?
3. How well should the trainee perform the trained behavior?

Training and development objectives must be specific, measurable and time-targeted

(Werther & Davis, 1996). Objectives with such characteristics serve a number of
purposes. According to Scarpello and Ledvinka (1988), they assist in developing the
criteria to be used in evaluating the training or development outcome. Objective and the
evaluation criteria also help in choosing relevant instructional method, media, and
material.

3) Instructional Method and Media

The instructional method and media depend on the programme content. The content in
turn is shaped by training or development need identification and established objectives.
The objective here may be to teach specific skill, provide needed knowledge, or try to
influence attitudes (Werther & Davis, 1996). The content, method, and media must match
the job requirement of the organization and the learning style of the participant.

Training and development are more effective when learning is based on principles.
Learning Principles are guidelines to the ways in which people learn most effectively
(Werther & Davis, 1996).

The learning principles and their merits are described as follows:

Participation. Learning usually is quicker and longer-lasting when the learner participates
actively. Participation improves motivation and apparently engages more senses that
reinforce the learning process. As a result of participation, people learn more quickly and
retain that learning longer. For example, most people never forget how to ride a bicycle
because they actively participated in the learning process.
Repetition. Repetition apparently etches a pattern into one's memory. Studying for an
examination, for example, involves the repetition of key ideas so that they can be recalled
during a test. Similarly, most people learn the alphabet and the multiplication tables by
means of repetition.
Relevance. Learning is helped when the material to be learned is meaningful. For
example, trainers usually explain the overall purpose of a job to trainees before explaining
specific tasks. This allows the owner to see the relevance of each task and of following the
correct procedures.
Transference. The more closely the demand of the training programme matches the
demand of the job, the faster a person learns to master the job. For example, pilots usually
are trained in flight simulators because the simulators very closely resemble the cockpit
and flight characteristics of the plane. The close match between the simulator and the
plane allows the trainee to quickly transfer the learning in the simulator to actual flight
conditions.

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Feedback. Feedback gives learners information on their progress. With feedback,
motivated learners can adjust their behavior to achieve the quickest possible learning
curve; without it, they cannot gauge their progress and may become discouraged. Test
grades are feedback on the study habits of test takers (Werther & Davis, 1996).
In selecting instructional methods and media, trade-off exists. That is, no single method
or media is always best; the best method or media depends on (Werther & Davis, 1996):
¨ Cost-effectiveness
¨ Desired programme content
¨ Learning principles
¨ Appropriateness of the facilities
¨ Trainee preferences and capabilities
¨ Trainer preferences and capabilities
The significance of the above trade-offs depends on the situation. For example, a chalk-
board lecture method may be the best technique to communicate academic content in the
most cost-effective manner in a large classroom.

There are many different methods for developing managerial abilities and providing
opportunities for non-managers to acquire job-related skills. Some of the major methods
that can be employed for managers and non-managers are discussed below.

 Information Presentation Method

The aim of information presentation method is to teach fact, skill, attitude, or concept
without requiring trainees to practice the material taught or to experience how the material
taught translates into behavior (Campbell et. al., 1970). The three major methods that fall
into this category are (1) lecture, (2) conference, and (3) programmed instruction.

A. Lecture
The lecture method is applied in both training and development. In a lecture, the material
to be taught is presented by a subject-matter expert to a group of recipients. It is the most
widely accepted method and also economical because a large number of people can be
trained using one instructor. However, participants do not share each other experiences
and hence the learning is confined to what the lecturer has to say (Chatterjee, 1995). This
method can be backed by a number of media such as slide, overhead projector, videotape,
closed-circuit television, motion picture, etc.

B. Conference
A conference is a group meeting conducted according to an organized plan in which the
members seek to develop knowledge and understanding by obtaining a considerable
amount of oral participation (Ahuja, 1988). The objectives of the conference method are:
¨ to share idea and experience and pool information among participants
¨ to solve problem common to a group
¨ to get acceptance of new idea and policy
¨ to increase tolerance and understanding.

C. Programmed Instruction

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Programmed instruction is a highly structured, individualized learning method that:
a) specifies what is to be learned
b) breaks down the learning topic into small step
c) requires the learner to respond to each step of the learning process
d) tests the learner's knowledge at the completion of each learning step
e) gives the learner feedback of whether a correct or incorrect response was given
f) tests the knowledge or skill acquired at the completion of training (Campbell
et.al., 1970)

This method is used to teach a variety of technical and non-technical subjects. For
example it has been used to teach managers the principles of motivation (Scarpello &
Ledvinka, 1988).
Programed instruction as an individualized learning method has several advantages.
It:
 requires the trainee's active involvement and provides immediate feedback to the
trainee.
 permits the trainee to learn without being influenced by other, and at a time that is
convent.
 minimizes or eliminates the need for an instructor (Scarpello & Ledvinka, 1988).

 Simulation Method
Simulation method present trainees with an artificial representation of an organizational,
group, or personal situation and require them to react as though the situation were real
(Campbell et.al., 1970). Some of the methods that are included in this category are (1)
case study, (2) role-playing, (3) in-basket exercises, and (4) management games.

A) The Case Study Method

In the case method, the trainee is given a well-developed description of a situation,
instructed to identify the problem, analyze the situation, and devise a solution for the
identified problem (Scarpello & Ledvinka, 1988). When cases are similar to work-related
situations, trainees can develop decision-making and problems-solving skills, as well as
increase their abilities in judgment.

B) Role Playing
It is a method, which involves the spontaneous acting of realistic situation by two or more
participants. The participants are provided the role script or "write up their own role
plays, which can make them totally relevant and realistic (Scarpello & Ledvinka, 1988).
In the role play method issue and problem that emerged during the enactment are
examined, so that both the role players and the observers understand the underlying
principles that were demonstrated and their organizational implications (Chatterjee, 1995).
Moreover, the following are some of the major advantages of role playing:
1. Practice in trying out new behaviors.
2. immediate feedback from other participants and the instructor
3. a high degree of transfer of learning to future job behavior (Scarpello & Ledvinka,
1988).
C) In-basket Exercise
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In-basket method is mainly used to develop decision making ability. It is a method in
which participant act out the role of a manager in an organization. Then after, he/she is
given various materials, such as reports, memos, letters, and other documents, which
contain important and routine matters. As a manager, the participant is required to
examine the materials in the in-basket and take action. In the in-basket exercise the
participant is "analyzed and critiqued on the number of decisions made in the time period
allotted, the quality of decisions, and the priorities chosen for making them (Glueck,
1978).

D) Management Games
This method is used to develop the decision-making skill of managers or to transmit
information about how a real organization operates. The game allows two competing
management groups to make decisions about product/service, people, technology and other
variables. The decisions taken are computed to determine each group's performance. This
simulation exercise is used to help the participants understand "the integration of several
interacting decisions, the ability to experiment with decisions, the provision of feedback
experiences on decisions, and the requirement that decisions be made with inadequate
data, which usually simulated reality" (Glueck, 1978).

4) Implementing the Human Resource Development Programme

Human resource development programme should aim at enabling organizations to achieve
their objectives. Hence, the programme should be set up after having clear-cut objectives
in mind. In every programme decisions have to made as who should be trained, who are
the instructors, where and when the programme is to be conducted and what are the
material requirements. Moreover, according to Chatterjee (1995), providing answers to
questions like what skills are going to be taught, what kind of employee development is
sought, what long or short term objectives are proposed will determine the design and
details of the programmes.

Since human resource development programme decisions are based on cost

considerations, the management must believe that the programme will:
- increase the skill and knowledge of employees and hence, they will perform better
towards organizational success.
- motivate employees to learn and attain their personal goals.
- provide feedback to improve the programme.

5) Evaluation of Training and Development

Evaluation is the final phase of the training and development programme. It is a means to
verify the success of the programme, i.e. whether employees in the programme do the jobs
for which they have been trained. As Ahuja (1988) noted, the concept of evaluation is
most commonly interpreted in determining the effectiveness of a programme in relation to
its objectives. Human resource development is an investment in people. The major reason
why management invest in training and development programme is to help employee to
perform better in the achievement of organizational objectives. Hence, evaluation is a
means to assess the cost/benefit of the programme to the organization. However, as
Milkovich and Boudreau (1991) noted, evaluation is like brushing your teeth after every

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meal everyone advocates it but few actually do it. Evaluation can be done for various
purposes. It may be done:
- To increase effectiveness of the programme while it is going on.
- To increase the effectiveness of the programme to be held next time.
- To help participants to get feedback for their improvement and efficiency.
- To find out to what extent the objectives are achieved (Ahuja, 1988).
In evaluating the worth of specific programmes, sets of measurement criteria should be
identified. These, according to writers in the area, are:
1. Reaction
What did the participant think about the programme? Participants react to the
learning experience by forming opinion and attitude about the instructor, the
methodology, participation in the learning session and how well he liked the
programme.
2. Learning
Did the participant learn what was intended? Learning evaluation requires the
measurement of what participant has learned as a result of his/her training i.e. the
new knowledge and skill he/she has acquired or the change in attitude.
3. Job behaviors
Did the learning transfer to the job? Job behavior evaluation is concerned with
measuring the extent to which participant has applied his/her learning back on the
job.

4. Organizational impact
Has the training helped organizational performance? This evaluation attempts to
measure the effect of change in the job behavior of the trained employees on the
functioning of the organization and the behavior of other employee. The changes
may be ascertained in such terms as improvements in service delivery, productivity
or reduction in costs.
5. Ultimate Value
Has the training affected the ultimate well-being of the organization? Here
evaluation aims to measure how the organization as a whole has benefited from the
training in terms of goal achievement, survival or growth.

To measure the effect of human resource development programme using the criteria
mentioned above requires to use data gathering method such as questionnaire, interview
and observation. Other measures like management audit, survey, analysis of record and
performance data, expert opinion, test and the like can be used to collect evaluation
information.
In sum, human resource development to be useful to both the organization and the
employee the management concerned should:
- properly assess needs
- formulate clear objectives
- design programme to meet the needs and to attain objectives
- conduct cost/benefit evaluation

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If the training and development shaped the employees in such a way as to fit the job
requirements, then it can be concluded that organizations have achieved their objectives
and in turn they have also justified the investment made in human resource.

TYPE OF HRD PROGRAMMES

1) TRAINING PROGRAMME

Training is one of the most important tools available to organizations. Management can
make use of training programmes to enable the organizations achieve their objectives.
This is possible by developing the skills and competencies of their employees. There are
different types of training programmes. The most common ones are briefly discussed
below.

 ON-THE-JOB TRAINING

On-the-job training is conducted on the job, to develop the skills of non managerial
employees. The employee is placed into the real work situation and shown the job and the
tricks of the trade by experienced worker or the supervisor (Glueck, 1978). According to
Werther & Davis (1996), on-the-job training includes several steps.
First,
the trainee receives an overview of the job, its purpose, and its desired outcomes,
with an emphasis on the relevance of the training.
Then,
the trainer demonstrates the job to give the employee a model to copy.
Next,
the employee is allowed to imitate the trainer's example. Demonstrations by the
trainer and practice by the trainee are repeated until the job is mastered.
Finally,
The employee performs the job without supervision.

 OFF-THE-JOB TRAINING

Off-the-job training programme takes place outside the employee work environment.
These can be course work at local colleges or other training establishments like that of the
Ethiopian Management Institute which have been specially equipped and staffed for both
managerial and vocational training. On the other hand, Regions that wants to develop the
skill of their accountants and lawyers are sent to the Ethiopian Civil Service College
(ECSC) for short-term off-the-job training.

 VESTIBULE TRAINING

Vestibule training is a form of intense education held in proximity to the actual work
environment (Holt, 1933). For example, the ECSC new instructor might move to Kotebe
College of Teachers' Education to develop their teaching methodology skills. The

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computer center and the language laboratory of ECSC can be used as vestibule center to
train typists and other administrative staff.

2) MANAGEMENT DEVELOPMENT PROGRAMMES

The realization of organizational objectives depends to a greater extent on the quality of

leadership provided by administrators/managers. To this effect, organizations need to
improve supervisory, managerial, and executive skills so that they may lead and motivate
employees for the betterment of their organizations. There are many types of development
programmes for managers/administrators. The most common types are briefly discussed
below.

 Formal Training

Formal training courses of managers can be conducted in classroom using instructors from
within the organization or by experts from other institutions. The classroom instruction
may be coupled with field assignments. Subjects that are going to be covered may include
decision-making, financial management, setting objectives and priorities, motivation
techniques, performance appraisal, communication, holding meetings and other
managerial topics. Field assignments may consists of controlled exercises in simulated
situations or actual work with colleagues who act as coaches, often called monitoring
(Holt, 1993).

 Off-the-job Formal Training

In this programme, managers/administrators are removed from their work situation for
concentrated programmes. With a view to increase the capacities of their leaders,
organizations send them to colleges or universities or get them enrolled in seminars,
workshops, conferences and other programmes conducted by training institutions. The
Ethiopian Management Institute is a professional organization serving many organizations
with development courses and seminars.

 Job Rotation
This involves rotating trainees for one job to other related jobs to broaden their managerial
experience. Besides, giving an opportunity to acquire new managerial skills, rotation
enables the organization when resignation, retirement, death, transfer or vacation occur.
Advocates of job rotation assets that this approach:
- broadens the manager's back ground,
- accelerates the promotion of highly competent individuals,
- introduces more new ideas into the organization, and
- increases the effectiveness of the organization (Glueck, 1978).

 Development Position
In this management development programme, organization assigns less experienced
administrator to work temporarily as an assistant to more experienced administrator. This
learning programme involves the implication that experienced administrator will create a
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condition whereby the assistant acquire knowledge and skill needed for effective
performance of the world of managing. It is also a means through which organizations
develop employees' managerial skills to provide a pool of competent administrators to
meet future needs.

CAREER DEVELOPMENT
Definition

A career is a sequence of positions, jobs, and/or occupations that one person engages in
during his/her working life (Cascio, 1978).

Career development is the personnel activity which helps individuals plan their future
careers within the organization, in order to help the organization achieve its objectives and
the employee achieve maximum self-development (Glueck, 1978).
Everyone aspires a better life in society. So do employees in an organization. Employees
often ask questions like:
¨ How do we advance our career?
¨ What are the bases for promotion?
¨ Do organization human resource development programmes enable our chances for
promotion?
¨ Do we have a job security?
¨ Why have not our organization given us career counseling?

The answer to the above questions enable to identify the actions required to further one's
career. Based on staffing need, organization can facilitate the career planning process and
help answer employees questions about career progress within the organization. This
being as it is, ultimate responsibility for career development and planning rests on
employees' shoulder. As Werther & Davis (1996) observed:

The principal aim of career development programmes has been to help

employees analyze their abilities and interests to better match personnel
needs for growth and development with the needs of the organization. In
addition, career development is a critical tool through which management
can increase productivity, improve employee attitudes toward work, and
develop greater worker satisfaction.

When organization encourage career planning, employees will try to identify their career
objectives and determine what they need to do to achieve them. Hence, the career
objectives may motivate employee to pursue further education, training and development
activities. This, in turn, will provide the organization internal pool of qualified personnel
for promotion.

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From employees stand point, organization should be fair in matching its aspirations and
abilities with its needs. What other things do employees want? According to Werther &
Davis (1996), a study of one group of employees revealed the following factors:

- Career equity
Employees want equity in promotion system with respect to opportunities for
career advancement.
- Supervisory concern
Employees want their supervisors to play an active role in career development and
provide timely feedback on performance.
- Awareness of opportunities
Employees want knowledge of opportunities for career advancement.
- Employment interest
Employees need different amounts of information and have different degrees of
interest in career advancement, depending on a variety of factors.
- Career Satisfaction
Employees, depending on their age and occupation, have different levels of career
satisfaction.

Values of Career Development

Why should organization design a career development programme? With regard to

effective career development programme four positive results can be offered. These are:
- Aligns strategy and internal staffing requirements.
By assisting employees with career planning, organizations can better prepare them
for job openings identified in the human resource plan.
- Develops promotable employees
Career planning helps develop internal supplies of promotable talent to meet job
openings caused by retirement, resignations, and growth.
- Lowers turnover
Increased attention and concern for individual careers may generate more
organizational loyalty and lower employee turnover.
- Taps employee potential
Career planning encourages employees to tap more of their potential abilities
because they have specific career goals.
- Further personal growth
Career plans and goals motivate employees to grow and develop.
- Satisfies employee needs
With improved growth opportunities, an individual's esteem needs, such as
recognition and accomplishment, are more readily satisfied. (Werther & Davis,
1996)

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 CHAPTER SIX
COMPENSATION AND BENEFIT ADMINISTRATION
Compensation

Employees are the backbone of the organization. The attainment of organizational

objectives largely depends when employees are motivated to work. Among other things,
employees are motivated to work when they are provided a fair financial and non-
financial compensation for work rendered to the organization. What, then, is
compensation? What is its significance?

Compensation is reward employees receive in exchange for their performance. It is

concerned with wages and salaries, pay raises, and similar monetary exchange for
employees’ performance (Holt, 1993). Well-designed pay or compensation system enables
the organization:
 To attract qualified employees required
 To retain and motivate the existing workforce toward its goal achievement.
On the contrary, if compensation is not tied to work, employees are likely to look for a
better paying job. Moreover, other implications of pay dissatisfaction are illustrated in the
figure (Werther & Davis, 1996) below.

A Model of the Consequences of Pay Dissatisfaction

Performance
Desire for
more pay
Strikes

Absenteeism
Grievance
s
Search for a
higher-paying job Turnover

Psychological
Pay Lower withdrawal
Dissatisfaction attractiveness
of the job
Job Dispensary
Dissatisfaction visits

Absenteeism Poor mental

health

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As can be seen from the above figure, in organization where employees are dissatisfied
with the types of compensations, their contribution toward goal achievement tend to be
lower. In severe cases, pay dissatisfaction may lower performance, cause strikes increase
grievances, and lead to forms of physical or psychological withdrawal ranging from
absenteeism and turnover to increased visits to the dispensary and poor mental health
(Werther and Davis 1996).

Objectives of Compensation

The objective of a compensation administration is to establish fair and equitable rewards

to the employees, so that they are motivated to do the job in a better way for the
organization. Moreover, Werther and Davis (1996) listed the following objectives, which
are sought through effective compensation management.

- Acquire qualified personnel

Compensation needs to be high enough to attract applicants. Pay levels must
respond to the supply and demand of workers in the labour market since
organizations compete for employees.
- Retain current employees
Employees may quit when compensation levels are not competitive, resulting in
higher turnover.
- Ensure equity
Compensation management strives for internal and external equity. Internal equity
requires that pay be related to the relative worth of a job so those similar jobs get
similar pay. External equity means paying employees what comparable employees
are paid by other organizations in the labour market.
- Reward desired behavior
Pay should reinforce desired behaviors and act as an incentive for that behavior to
occur in the future. Effective compensation plans reward performance, loyalty,
experience, responsibility, and other related behaviors.
- Control costs
A rational compensation system helps the organization obtain and retain employees
at a reasonable cost. Without effective compensation management, employees
could be overpaid or underpaid.
- Comply with legal regulations
A sound wage and salary system considers the legal challenges imposed by the
government and ensures the employer's compliance.
- Facilitate understanding
Human resource specialists, operating managers and employees should easily
understand the compensation management system.

Further administrative efficiency

Wage and salary programmes should be designed to be managed efficiently,
making optimal use of the organization’s human resource.

Types of Compensation

16
In general, there are two types of compensation. These are:
1) Financial
2) Non financial
1. FINANCIAL COMPENSATION
Financial compensation, as shown in the figure next page, includes direct compensation,
which is paid to employees in the form of wages, salaries, bonuses, and commission in
exchange for their performance, and indirect compensation includes all financial rewards
that are not included in direct compensation (Mondy & Noe, 1990). Genet, an employee
of the Ethiopian Civil Service College, for example, will receive indirect financial
compensation because her college pays 50 percent of all medical and hospital costs.

Compensation

Financial Non financial

Direct Indirect The Job Job Environment

Wages Insurance Plans: Interesting Duties Sound Policies
Salaries Life, Health, Challenge Competent Supervision
Commissions Social Assistance Responsibility Congenial Co-Workers
Bonus Benefits: Opportunity Appropriate Status
Retirement For Recognition Symbols
Educational
Assistant, Feeling of Comfortable Working
Employee Services Achievement Conditions
Paid Absences:
Vacations, Holidays Advancement Job Sharing
Sick Leave, etc. Opportunities

Components of Compensation
Source: Mondy & Noe, 1990

It is important here to distinguish wage from other forms of direct financial

compensation. Wages are payments based on the number of units (hours, days) that a
person works for the organization or the number of units produced (piece rate system)
(Baird, et, al, 1990). It is a payment to manual workers. Salaries are money paid on
monthly or annual basis to employees whose output can not be easily quantified. Clerical
and administrative staff receives salary. Bonuses, on the other hand, are lump-sum
payments offered to employees in recognition of successful performance, whereas
commission is a special form of incentive in which payments to sales representatives are
made on the basis of a percentage of the sales value they generate (Armstrong, 1996).

Non financial Compensation includes any satisfaction, which employees receive from the
job, such as the need for recognition, responsibility, personal growth and the like or from
environment in which they work. This job environment consists of comfortable working
conditions, competent supervision, pleasant work companions and other related physical

17
and social needs of employees. For example, being an accepted member of the work
group results in social motive satisfaction.

1.1 DETERMINANTS OF FINANCIAL COMPENSATION

Financial compensation system is influenced by a series of internal and external factors.

As Monday & Noe (1990) pointed out the Organization, the Labour Market, the Job
and The Employee have an impact on the job pricing and the ultimate determination of
employee’s financial compensation. The major parties and issues of concern are shown in
the figure (Scarpello and Ledvinka, 1988) below.

PARTIES MAIN ISSUES OF CONCERN

Government Ensure that financial compensation supports the social
and economic interests of the broader society.
Occupational groups Protect members’ human capital investment
Unions Protect, maintain, and increase the welfare of the worker.
Individual Ensure that a balance is maintained between contributions
to work and the outcomes received from work.
Organization Within budget constraints, attract individuals into the
organization, retain employees, and motivate behavior
toward achievement of organizational goals.

1.1.1. Organizational Interest in Compensation

Why are organizations interested in compensation? Organizations view compensation

mainly as a means:

- To attract qualified candidates for vacant positions

- To retain competent and dedicated employees
- To facilitate performance
- To comply with government employment policies.

Moreover, compensation is an expense in the sense that it reflects the cost of labour
(Mondey & Noe, 1990). Organization often has compensation policies. As organizations
differ in size and purpose, so do in pay levels. According to Glueck (1978) there are three
alternative strategies, this might be chosen by organizations. These are high, low, and
comparable.

The high-pay-level strategy

In this strategy, the organization chooses to pay higher than the average pay levels.
The assumption is that paying a higher salary or wage will enable organizations attract
and retain competent employees and this, in turn enhance employees' productivity.

The low-pay-level strategy

18
 In this alternative, the organizations pay a minimum salary or wage to employees.
This may be because of poor financial condition or the work does not require highly
qualified personnel. The low compensation policy does not save money; rather it is
quite expensive. In addition to being unproductive, low paid workers usually damage
their work instruments because of insufficient knowledge and skill. On the other hand,
organizations using low pay strategy may also have a high labour turnover rate.

The comparable-pay-level strategy

This strategy requires organizations to follow “equal pay for equal work”. Here
employees are paid based on comparable value of jobs they are performing.

The choice of any of the above pay-level strategies may be affected by factor internal or
external to the organization. The following are some of the major factors that affect
compensation decision.
 Quality and quantity of needed skill
 The organization’s current financial position and financial prospects for the
coming year.
 Cost of living index
 Employees behavior, such as performance, turnover, absenteeism, unionization
attempts, and sabotage (Scarpello & Ledvinka, 1988).
Furthermore, the profit levels of an organization can also affect employees’ salaries or
wages. This being the case, who is a pay policy-decision maker? In most organizations,
the top-level management makes pay decisions by considering the above factors.

1.1.2. Labour Markets Influence on Compensation

The number and types of employees indicated in the organization’s human resource
planning are mainly drawn from the labour market. Since the market directly affects the
pay-levels, analysis of the demand for and supply of labour is imperative. The demand for
human resources largely depends on organization's ability to pay. On the other hand, the
supply focuses on the number of persons of work age; the attractiveness of the job in
pay, benefits, and psychological rewards; the availability of training institutions, and so
on (Glueck, 1978). When the supply of employees exceed the demand, the initial pay-
levels tend to go down. On the contrary, when the demand for employees exceed the
supply, the initial pay-levels tend to go up.

1.1.3. Job Influence on Compensation

Organizations appear to attribute similar values for similar jobs and different values to
different jobs. In other words, jobs employees are assigned to perform are a major
decisive factor of the amount of pay they will in turn receive. Organizations pay for the
value they attach to certain duties, responsibilities, and other job-related factors (Mondy &
Noe, 1990). If this is the case, the question of what are the techniques used to determine
the value of jobs is an important one that requires an answer. Compensation techniques
used by organizations for determining the relative value of jobs are job analysis and job
evaluation.
 Job Analysis

19
If compensation policy is to be based on the nature of job, a job analysis activity must be
conducted to identify the similarities and differences among the various jobs in the
organization. As we discussed earlier, job analysis is a systematic process of determining
the skill and knowledge required for performing jobs. It reveals the major tasks, duties
and responsibilities, the relationship of a job to other jobs, the skill and knowledge
required for each job, the outcomes that are expected and working conditions. The basic
premise underlying job analysis is that jobs are more likely to be described, differentiated,
and evaluated consistently if accurate information is available to reward managers
(Bratton & Gold, 1995).

As can be seen in the figure next page, to develop job descriptions, job specifications, and
job standards, information relevant to the jobs to be analyzed must be collected through
questionnaires, interviews, operation, and other related methods of data collection.

What are job description, specification and standard? If we recall, job description is
written document that describes the duties and responsibilities of a specified job. Job
specification is a statement that explains the skill, knowledge, and experience needed to
perform the job. Job standard, on the other hand, is a minimum acceptable level of
performance.

It is based on job analysis that organizations assign a financial value to each job. Thus,
unless there is a clear definition of the job and job performance standards it would be
difficult to imagine how pay can be linked to individual performance (Bratton & Gold,
1995). It is worth noting that job evaluation is also a means to compare the relative
values of various jobs in an organization. Hence, the next pages briefly examine how it is
used to determine financial compensation.

 Job Evaluation
A certain public enterprise may hire a chief administrative officer, accountant, mechanic,
engineer, janitor, economist, and so on. Here it is necessary to get a clear understanding
of how is compensation determined for various jobs in an organization. Compensation
within an organization is determined by comparing one job to other job. This comparison
is made possible with job evaluation. Thus, what is job evaluation? Job evaluation is that
part of a compensation system in which a firm determines the relative value of one job in
relation to another (Henderson, 1985). The major reason of job evaluation is to maintain
internal pay equity among various jobs in the organization. Moreover, job evaluation is
used to:
 Identify the organization’s job structure
 Bring equity and order to the relationships among jobs
 Develop a hierarchy of job value that can be used to create a pay structure
 Achieve a consensus among managers and employees regarding jobs and pay with
in the firm (Plachy, 1987).

Job evaluation rates the job and not the employee performing the job. It is, therefore, a
process of analyzing the worth of a job to that of another, without regard to personalities
on the jobs. In this process accurate job descriptions and job specifications must be
20
available to analyze and assign monetary value to organizational jobs. As Ahuja (1988)
noted, the more skill, education and responsibility required in a job, the more it worth.

Organizations use four major types of job evaluation methods. There are:
1. Job Ranking
2. Job Grading
3. Factor Comparison
4. Point System

1. Job Ranking Method

The simplest method of job evaluation is ranking. A committee or evaluators review the
job descriptions and rank each job from the simplest to most challenging job in the
organization. This job-ranking method is based on subjective evaluation of relative value.
Compensation for each job will be based on the job hierarchy. The ranking method is
more suitable for small organizations having a limited number of employees.
2. Job Grading Method
The job grading or the classification method works by having each job assigned to a grade
by matching standard descriptions with each job’s description, as shown below.
A Job classification Schedule for Use with the Job Grading Method
Directions: To determine appropriate job grade, match standard description with job
description.
JOB STANDARD DESCRIPTION
GRADE
I Work is simple and highly repetitive, done under close supervision, requiring minimal
training and little responsibility or initiative.
Examples: Janitor, file clerk
II Work is simple and repetitive, done under close supervision, requiring some training or
skill. Employee is expected to assume responsibility or exhibit initiative only rarely.
Examples: Clerk-typist I, machine cleaner
III Work is simple, with little variation, done under general supervision. Training or skill
required. Employee has minimum responsibilities and must take some initiative to
perform satisfactorily.
Examples: machine oiler, clerk typist II
IV Work is moderately complex, with some variation, done under general supervision. High
level of skill required. Employee is responsible for equipment or safety; regularly exhibits
initiative.
Examples: Machine operator I
V Work is complex, varied, done under general supervision. Advanced skill level required.
Employee is responsible for equipment and safety; shows high degree of initiative.
Examples: Machine operator II, tool specialist.
Source: Werther & Davis, 1996.
Here jobs are assigned to grades by comparing the job description with the standard
description. The sample above indicates five grades. Jobs, which might be classified
under grade I, are simple and routine. Jobs become more difficult as the grade level
increases. For example, jobs under grade IV are believed to be complex and require

21
high-level skill. In attaching monetary values to the various jobs, the rater makes pay-
level differentials between jobs, based on their complexity. More challenging jobs in an
organization are paid more. In this non-analytical method “complex jobs are difficult to
fit into the system; a job may seem to have the characteristics of two or more grades
(Bratton & Gold, 1995).

3. Factor Comparison Method

This method demands a more quantitative analyses of the jobs involved. In this method,
each job is broken down into factors, which are considered common to all types of jobs.
The compensable factors used to compare jobs in the organization are skill, mental
requirements, physical requirements, responsibilities and working conditions. For each
job in the organization, the factors are “ranked according to their relative importance in
each job (Brotton & Gold, 1995) and then the job evaluator assigns a monetary value to
each factor. For example, a job with worth of Birr1,200 per month may have its different
contributing factors costed as follows:

Compensable Factor Allotted Birr

Skill Requirements 240
Mental Requirements 360
Responsibility 240
Physical Requirements 192
Working Conditions 168
Total Job Value Birr1,200/=P.M.

As can be seen above, the monthly salary Birr1,200 is allocated among the five factors.
Though its application is complex in the sense that, each factor has to be costed, the
criteria for evaluating job are explicit.

4. Point Method
The point rating system is the most accurate and widely used method of job evaluation.
This system resembles the factor comparison method in that, in both cases, jobs are broken
down into factors like skill, mental effort, responsibility, physical effort and working
conditions. However, unlike the factor comparison where monetary value is assigned to
each job, here points are used to determine the worth of jobs in the organization.

In allocating range of points to each job factor, the following steps may be followed.
1. Assign a number (between 1 and 100) to each factor.
2. Closely examine each factor in terms of its importance in relation to the other. For
example, as shown in the figure below, the physical effort requirements for the job of
labour is thrice as important as skill requirements.
3. Finally, each factor point value is added, to place job in order of importance.

22
 Factor
Job Title Mental Respons- Physical Working
Skill effort ibility effort conditions Total
Inspector 20 20 40 5 5 90
Secretary 20 20 35 5 5 85
File clerk 10 5 5 5 5 30
Labourer 5 2 2 17 9 35
Point System Matrix Source: Bratton & Gold, 1995.

As can seen from the above table, it would mean that the inspector’s salary rate is thrice
that of the file clerk. In this manner, point-rating system would result into a logical
monetary job-worth for all jobs in organizations.

1.1.4. Employee Influences on Compensation

The major goals of compensation are to attract and retain qualified employees to the
organization. In most cases, employees are willing and cooperative to do their jobs to the
best of their abilities if they believe that pay is relatively equitable to performance. In
other words, compensation affects employee decision to stay or leave the organization, to
work effectively and to accept additional responsibilities. An effective compensation
system is designed to satisfy employee needs and reinforce job behavior consistent with
organizational objective (Brattin & Gold, 1995).

Recall from the earlier discussion that organization, labour market, and the job influence
compensation system. Moreover, factors related to employee like performance, seniority,
and experience also determine pay levels in an organization.

1.2. COMPENSATION AND PERFORMANCE

As Armstrong (1996) put it, paying for performance is the process of providing a financial
reward to an individual, which is linked directly to his/ her performance. Nothing is more
demotivating to productive employees than to be paid equal salary as less productive
employees. If this is the case, organizations need to practice varies method to improve job
performance. The most common once are piecework, bonus schemes and commission.
Piecework (Payment-by-Results) is a reward system in which rewards are related to the
pace of work / effort (Bratton & Gold, 1995). That is, the faster an employee works, the
higher the output and the greater the reward. Bonuses are rewards for successful
performance and are paid to employees as lump sum. Commission, on the other hand, is a
reward paid on the performance of individual, typically salaried/sales (Bratton & Gold,
1995). The commission earned is a proportion of the total sales and may be added to basic
salary. As discussed above compensation system serves as an incentive for employees to
do their jobs to the best of their abilities and efforts. Therefore, organizations must have a
reasonable standard against which performance can be compared. This, among other
things, enables organizations to have a fair determination of reward. Otherwise, the
incentive system may rather demoralize employees if it does not reflect expected
performance levels.
Seniority and Experience
23
Seniority refers to the length of time employees have been working in an organization.
Employees are more likely to be committed to the achievement of organizational
objectives, if their long services are considered as a basis for pay increases or have some
value during promotion. Advocates of paying for seniority believe that it enables the
organization to maintain stable workforce without excessive turnover. The seniority must
be linked with experience on the job. Organizations compensate employees on the basis of
experience, because “sometimes the practice is justified because of the valuable insights
that can only be acquired through experience on the job" (Mondy & Noe, 1990).

Pay Structures
In the process of considering the values of jobs in an organization, attention must paid to
the job evaluation results and the pays in the labour market. The relative value of jobs, in
the organization, is determined by the job evaluation whereas its absolute value is
determined by the labour market (supply and demand). To set the pay level the job
evaluation and pay survey rates are combined using graph. As shown in the graph next
page, the horizontal axis shows job structure originated through job evaluation. All
similar jobs are classified in one grade and they have the same range.

Pay

* * *
External * * ** * * *
Competitiveness *
*
* *

Key Jobs ABC DEF GHO JKL MNO

Grade/point values Job structure
The construction of pay levels Source: Bratton & Gold, 1995

A pay grade is the grouping of similar jobs to simplify the job pricing process (Mondy and
Noe, 1990). For example, as can be noted from the graph, key jobs ABC (grade 1) have
lower pays and pay range than jobs DEF (grade 2). The pay range defines the lower and
upper limits of pay for jobs in a grade (Bratton & Gold, 1995). The range allows
organizations to pay according to seniority and or performance.

The vertical axis in the graph represents the pay rates. The midpoint can be established by
the use of pay-survey data from similar jobs. In the graph, on the vertical axis the pay
level policy line has been set to equal the average paid by the organization’s competitors
for each of the jobs: a matching-competition policy (Bratton & Gold, 1995). Here, if the
organization wants to lead or lag behind the market rate, the pay policy line can be shifted
up or down. The pay policy line represents an organization’s pay level in the market and
24
serves as a reference point around which pay structures are established (Bratton & Gold,
1995).

1.3 Benefits (Indirect Compensation)

In addition to financial compensation, employees aspire various benefits because of their

membership in the organization. What then are benefits? Employee benefits are the
indirect form of the total compensation; they include paid time away from work, insurance
and health protection, employee services, and retirement income (Milkovich, 1991). Recall
that direct compensation such as salaries, wages or bonuses are based on the nature of the
jobs and employees performance. Benefits, however, are indirect compensation that
organizations provide to their employees and are not directly related to performance.

Objectives
What do organizations gain from benefits? Benefits enable organizations to retain and
attract qualified personnel. Moreover, employee benefits policies of an organization are
to:
- Reduce fatigue - Aid recruitment
- Discourage labour unrest - Reduce turnover
- Satisfy employee objectives - Minimize overtime costs
(Werther & Davis, 1996).

Major Categories of Benefits

Employee benefits, according to Werther and Davis, can be divided in the following major
categories:
1. Insurance Benefits
The financial risks encountered by employees and their families can be spread by
insurance. These risks are shared when funds are pooled in the form of premiums. Then,
when insured risks occur, the covered employees or their families are compensated. Here
organizations can purchase life, health and work related accident insurance.
2. Security Benefits
These are non-insurance benefits that provide income protection to employees before and
after retirement. Provision of such benefits is based on earnings and years of services in
the organization. The benefits are effective during separation, retirement, death, and
disability.
3. Time-off Benefits
In this type of benefit employees are paid for time not involved in performance. Time-off
benefits include sick leave, holidays, vocations, maternity leave, education leave and other
related leave of absence. Here employees are provided with an opportunity to rest and
refresh their minds.
4. Employee Services
These services include educational assistance, subsidized food services, financial and
social services and the like.

2. Non-financial Compensation

25
So far, we have discussed employee benefits, which cost the organization money either
directly or indirectly. Advocates of motivation claim that employees are not only be
satisfied with basic needs, but other subsequent needs such as social, ego, and self-
actualization are becoming more important (Mondy & Noe, 1990). These higher order
needs may be satisfied through the job or job environment or both. The benefits each
employee would value depend on their personal preferences. In most cases, employees
may get personal satisfaction if the job provides them opportunities for recognition,
feeling of achievement, and above all advancement opportunities. Jobs to be
challenging, meaningful, and interesting, organizations must attempt to match the job
requirements and individual abilities. The selection and placement processes are
extremely important in this context (Mondy & Noe, 1990). In addition, organizations
must establish the proper working environment so that employees perform their jobs
effectively. By creating a conducive job environment, supervisors should enable their
subordinates to do their jobs to the best of their abilities. Other major factors that are part
of job environment include sound policies, congenial co-workers, appropriate status
symbols and comfortable working conditions. These factors, among other things are
hoped to lead to job satisfaction, improve morale and increase employee commitment.

CHAPTER SEVEN

26
 EMPLOYEE / LABOUR RELATIONS

What is Employee Relations?

Management of all organizations is mainly concerned with what should be done to

enhance the contributions of its employees to achieve objectives. This means maintaining
good employee relations through creating good working atmosphere, providing attractive
rewards, having good leadership, and assigning employees to interesting and
challenging jobs. An employee relation is the interactions between the employer
(represented by management) and the work-force (represented by trade unions) (Beech &
McKenna, 1995). Here, interactions imply that management must support and address
issues of employee job satisfaction and employees must show commitment towards the
success of the organization. Moreover, according to Armstrong (1996) employee relations
is concerned with:
 Managing and maintaining formal and informal relationships with trade unions
and their members.
 Sharing information with employees and involving them in decision making on
matters of mutual interest
 Creating and transmitting information of interest to employees.

Employee Relations Objectives

Milkovich and Boudreau (1991) noted that employee relations activities are those, whose
objective is to create an atmosphere of trust, respect, and Cooperation. Further more,
employee relations:
 Provide a conducive work environment in which employees can do their jobs better
 Help management to mutually solve employees problems which otherwise might
affect performance
 Helps employee to control over important aspects of work life.

Trade Unions and Collective Bargaining

Trade Unions
Trade union is an organization of workers whose purpose is to protect and maintain the
interests of union members. As workers representative, trade unions “provide workers
with a 'collective voice' to make their wishes known to management and thus bring actual
and desired conditions closer together (Armstrong, 1996). This worker organization is
established to bargain with management about pay, working hours, conditions of
employment and to make joint decisions with management on matters affecting their
members' well being. Furthermore, the following broad objectives characterize the trade
unions as a whole.
 To secure and, if possible, improve the living standards and economic status of its
members.

27
  To enhance and, if possible, guarantee individual security against threats and
contingencies that might result from market fluctuations, technological change, or
management decisions.
 To create mechanisms to guard against the use of arbitrary and capricious policies
and practices in the workplace (Mondy & Noe, 1990).

Collective Bargaining

Collective bargaining is basic to labour- management relations. It is a joint process of job

regulation undertaken by management and trade unions who negotiate to establish pay and
conditions of employment (Beardwell & Holden, 1996). This contractual agreement is
hoped to give workers and management an identity of purpose and provide an atmosphere
in which both focus their attentions towards the achievement of organizational objectives.
Such union-management agreement enables to negotiate better position to urge workers to
do their jobs as per the contract.

In an organization where a trade union is established and recognized by the management,

collective bargaining will take place. For the bargaining to take place, according to
Beardwell and Holden (1996) the following conditions must exist:
 Employees must be prepared to act collectively and recognize their common
interests.
 Management must recognize trade unions and their representatives as legitimate
bargaining agents for labour,
 Trade unions must be free to organize employee without pressure from state or
employer control.

Collective bargaining is a means to reach negotiable agreements on matters pertaining to

employment. This joint labour-management agreement has two outcomes. These are:

Substantive agreements- agreed terms and conditions of employment covering pay and
working hours and other aspects such as holidays, overtime regulations, flexibility
arrangements and allowance (Armstrong, 1996).

Procedural agreements - an agreed up on course of actions for various eventualities such

as equal opportunities, recruitment, redundancy, discipline etc. (Howe, 1995).
The process of bargaining is carried out by negotiation where workers' representative
(union) and management discuss issues with a view to relating a common agreement. ,
According to Howe (1995), formal negotiations often follow the following stages.

Preparation:
 Set objectives. These are normally prioritized into three levels. These are:
- The basic minimum requirement that must be achieved,
- The desirable requirements that the negotiator would like to achieve,
- The optimum requirement or best level of achievement;

28
  Research the background to the negotiation including the bargaining power of the
other party. Prepare the case to be argued.
 Select the negotiators who should be good communicators, persuasive, acceptable
to the other party, and authoritative.
Negotiation
- Exchange information;
- Listen to the other party's position;
- Signal likely compromise points
- Propose ways forward.
Closing
- Summarize positions;
- Propose a final offer, which meets the needs of both parties;
- Reach agreement.

Although the aim of collective bargaining is to reach a common agreement, sometimes

there may be disputes that need resolution. How can such disputes of two parties be
resolved? Various methods can be used to resolve disputes. These are conciliation,
mediation or arbitration.
 Conciliation - a means where by a neutral third party acts as a go-between to settle the
disputes.
 Mediation - a means where by a third party propose recommendations which enable
the two parties to resolve the disagreement.
 Arbitration - the submission of a dispute to a neutral third party. Both sides of the
issue are heard by an arbitrator who acts as judge and jury. After weighing the facts,
the arbitrator renders a decision (Werther & Davis, 1996).

Employee Relations Practices

In many organizations, the immediate bosses are responsible for assigning tasks,
counseling and providing information to employees. This being the case, concerning
issues related to the entire organization “managers and human resources departments
directly affect employee relations through communication, counseling, discipline
practice" (Werther & Davis, 1996). In-addition, employee participation can also affect
employee relations.

 Counseling
Many organizations provide a number of services to their employees. Thus, counseling is
one of the many services organizations offer to employees. Counseling is a discussion of a
problem with an employee that is intended to help the worker resolve or cope with the
problem (Werther & Davis, 1996). Family troubles, stress, financial and other personal
problems are likely to affect employee's performance. In such situations, it is the
responsibility of the management to arrange counseling services to help them do their jobs
in a better way.
Counseling services usually are provided by human resource department because the
department is in constant contact with employees. All matters discussed during counseling
session are confidential. The counselor is responsible to follow whether the employee

29
avail the counseling programmes to solve the problem encountered. When counseling an
employee does not resolve performance-related issues, discipline may be the next step
(Werther & Davis, 1996).

 Discipline
The organizational rules and regulations are intended to direct and control the effective
functions of employees. Thus, to ensure compliance with organizational standards rules
and regulations must be communicated to all employees. This will enable employees to
maintain desired discipline in the workplace. Discipline, according to Mondy and Noe
(1990), is the state of employee self-control and orderly conduct and indicates the extent
of genuine teamwork within an organization. Werther and Davis (1996) suggest two ways
to handle disciplinary cases in an organization. These are:

Preventive discipline is an action taken to encourage employees to follow standards and

rules so that infractions are prevented. Its basic objective is to encourage self-discipline.

Corrective discipline is an action that follows a rule infraction. The corrective or

disciplinary action is a penalty, such as warning or suspension without pay. These actions
are initiated by the employee immediate supervisor but may require approval by a higher-
level manager. In principle, disciplinary action should aim at correcting unaccepted
behavior. Most organizations take progressive disciplinary action in order to give
employees opportunities to learn from their mistakes. These are:
1. Informal talk or counseling is used for minor first-time infractions. A friendly
discussion will often clear up the problem. The supervisor explains what is expected
from the employee and allows employee to express his/her views. The discussion is
documented.
2. Oral reprimand or warning is used for second offenses or more severe first-time rule
violations. The employee is told the interview is an oral reprimand. Previous
violations are mentioned. The employee is also told that his/her behavior could lead to
serious disciplinary action if not corrected. The employee is left with the feeling that
he/she must improve in the future. The interview is documented.
3. Written reprimand or warning is a letter or memorandum written to the employee
listing prior accidents, specifies on what behavior is expected, how the employee is not
meeting the expectations, what will happen if the behavior is not corrected, and period
of time for correcting the behavior. A copy of the letter is placed in the concerned
employee's file.
4. Suspension or disciplinary layoff occurs if the behavior is not corrected. The
employee is suspended or laid off for one to thirty day(s). This is the final step that
attempts to correct behavior before discharge.
5. Discharge is the most drastic form of disciplinary action as it separates the employee
from the job. It is reserved for the most severe offenses and is taken after other
corrective efforts have failed.

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