DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Compulsory Generic Core Course

203 Human Resource Management

Unit 1 – Human Resource Management: Concept and Challenges

Introduction:-

Human resources means the people. In simple words, HRM is a process of making the efficient and
effective use of human resources so that the set goals are achieved. HRM can be defined as a process
of procuring, developing and maintaining competent human resources in the organisation so that the
goals of an organisation are achieved in an effective and efficient manner. In short, HRM is an art of
managing people at work in such a manner that they give their best to the organisation for achieving
its set goals.

Objectives:

1. To help the organisation to attain its goals effectively and efficiently by providing competent and
motivated employees.

2. To utilize the available human resources effectively.

3. To increase to the fullest the employee’s job satisfaction and self-actualisation.

4. To help maintain ethical policies and behaviour inside and outside the organisation.

5. To establish and maintain cordial relations between employees and management.

Scope:

The scope of HRM is, indeed, very vast and wide. It includes all activities starting from manpower
planning till employee leaves the organisation. Accordingly, the scope of HRM consists of acquisition,
development, maintenance/retention, and control of human resources in the organization

• Human Resources Planning: Human resource planning is a process by which the company to identify
the number of jobs vacant, whether the company has excess staff or shortage of staff and to deal with
this excess or shortage.

• Job Analysis Design: Job analysis gives a detailed explanation about each and every job in the company.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

• Recruitment and Selection: Company prepares advertisements and publishes them in the news papers.
A number of applications are received after the advertisement is published, interviews are conducted and
the right employee is selected.

• Orientation and Induction: Once the employees have been selected an induction or orientation program
is conducted. The employees are informed about the background of the company

• Training and Development: Every employee goes under training program which helps him to put up a
better performance on the job.

• Performance Appraisal: HR department checks the performance of the employee. Based on these
appraisal future promotions, incentives, increments in salary are decided.

• Compensation Planning and Remuneration: There are various rules regarding compensation and other
benefits.

• Motivation, Welfare, Health and Safety: Motivation becomes important to sustain the number of
employees in the company.

• Industrial Relations: Another important area of HRM is maintaining co-ordinal relations with the union
Members.

Features OF HRM :-

Universal Force - HRM is a function that applies across every type of organization there is. For
example, a two-person operation needs some level of HRM, as does a 500-employee operation.
Universality is a core feature of HRM.

Decision Oriented: - Data gathering is relatively easy in today’s world. However, what gets done with
that data is essential. Therefore, a crucial feature of HRM is to crunch data and provide a wealth of
accurate, helpful information.

Having the facts greatly facilitates decision-making. In many cases, this means looking into the future
and analyzing potential outcomes before they happen.

Focus on Individual needs and Aspirations: - Having a plan as a whole is vital for any team. But,
equally important is to keep individual goals in focus. A smart thing to do for smooth HRM is to take
the time to meet individual employees and see if they are happy.

Binding Force of an Organisation :-HRM works as a bond between people and organization.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Role of HRM:-

Communication: -Human resources play a critical role in managing the workplace environment. They
are the first responders for any workplace-related issues among employees. Effective communication
makes it easier for employees to work for a single objective, the company's success. It is the role of the
human resource department to promote better communication among individuals in the company.

Creating HR Strategy:- HR strategy is a long-term plan that focuses on workforce planning and
development. This goes beyond traditional HR functions that are mainly involved in reviewing
candidates, creating a census, and signing up employees for benefits. HR strategy is more forward-
looking and involves aligning employee qualifications with the company's workforce needs.

Service Roles:- Personnel function provides personnel services. These services constitute the main
activities carried out by personnel department, like payroll, disciplinary actions, etc, and involve the
implementation of the policies and procedures described above.

Counselling:- HRM serves as counselling role by knowing people’s concerns, issues and grievances.
And try to solve them and help them.

Importance of HRM :-

➢ Productive Recruitment

➢ Employee Training

➢ Streamlining the on boarding Process

➢ Conflict resolving within a system

➢ Helps an individual to work in a team/group

➢ Better relations between union and management

Policies and practices of HRM :-

1. Safe, healthy and happy workplace

Creating a safe, healthy and happy workplace ensures that employees feel at home and stay with the
organization for a very long time. Capture their thoughts through frequent surveys.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

2. Open book management style

Sharing information about contracts, sales, new clients, management objectives, company policies,
employee personal data, etc. ensures that the workforce is as enthusiastic about the business as the
management. It helps in making people interested in your strategic decisions, thus aligning them to your
business objectives. Be as open as you can.

3. Performance linked bonuses

Awarding bonuses or including a variable component in compensation can be both an incentive and a
disappointment based on how it is administered and communicated. Bonuses must be designed in such
a way that employees understand that there is no payout unless the company hits a certain level of
profitability.

4. 360 Degree performance management feedback system

This system, which solicits feedback from seniors (including the boss), peers, and subordinates, has been
increasingly embraced as the best available method for collecting performance feedback. Every person
in the team is responsible for giving relevant, positive and constructive feedback

5. Fair evaluation system

Develop an evaluation system that clearly links individual performance to corporate business goals and
priorities. Each employee should have well-defined reporting relationships. Self-rating should be a part
of the evaluation process as it empowers employees. Evaluation becomes fairer if it is based on
achievements of the employee, tracked over the year.

6. Knowledge sharing
Adopt a systematic approach to ensure that knowledge management supports strategy. Store knowledge
in databases to provide greater access to information posted either by the company or the employees on
the knowledge portals of the company. When an employee returns after attending any competencies or
skills development program, sharing essential knowledge with others could be made mandatory.

7. Highlight performers
Create profiles of top performers and make these visible though company intranet, display boards, etc. It
will encourage others to put in their best, thereby creating a competitive environment within the
company.

8. Open house discussions and feedback mechanism

Ideas rule the world. Great organizations recognize, nurture and execute great ideas. Employees are the
biggest source of ideas. The only thing that can stop great ideas being implemented in your organization

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
is the lack of an appropriate mechanism to capture ideas. Open house discussions, employee-
management meets, suggestion boxes can help identify and develop talent.

9. Rewards
Merely recognizing talent may not work, you need to couple it with public appreciation. Getting a cash
bonus is often less significant than listening to the thunderous applause by colleagues in a public forum.

10. Delight employees with the unexpected

Last but not least, occasionally, delight your employees with unexpected things in the form of a reward,
a gift or a certificate. Reward not only the top performers but also a few others who need to be motivated
to exhibit their potential.

Functions OF HRM:-

Managerial –
• Planning: This function is very vital to set goals and objectives of an organization. The policies and
procedures are laid down to achieve these goals. When it comes to planning the first thing is to
foresee vacancies, set the job requirements and decide the recruitment sources. For every job group,
a demand and supply forecast is to be made, this requires an HR manager to be aware of both job
market and strategic goals of the company.

• Organizing: The next major managerial function is to develop and design the structure of the
organization. It fundamentally includes the following:

1. Employees are grouped into positions or activities they will be performing.

2. Allocate different functions to different persons.

3. Delegate authority as per the tasks and responsibilities that are assigned.

• Directing: This function is preordained to inspire and direct the employees to achieve the goals. This
can be attained by having in place a proper planning of career of employees, various motivational
methods and having friendly relations with the manpower.

• Controlling: This is concerned with the apprehension of activities as per plans, which was formulated
on the basis of goals of the company. The controlling function ends the cycle and again prompts for
planning. Here the HR Manager makes an examination of outcome achieved with the standards that
were set in the planning stage to see if there are any deviations from the set standards. Hence any
deviation can be corrected on the next cycle.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Operational –
• HR Acquisition - This is the most challenging task for any HR manager. A lot of attention and
resources are required to draw, employ and hold the prospective employees. A lot of elements go
into this function of recruitment, like developing a job description, publishing the job posting,
sourcing the prospective candidates, interviewing, salary negotiations and making the job offer.

• Training and Development :- Training and Development: On the job training is the responsibility of
the HR department. Fresher training may also be provided by some companies for both new hires
and existing employees. This Fresher training is mainly done to make the employees up to date in
their respective areas as required by the company. This function makes the employees understand
the process and makes it easy for them to get on their jobs with much ease.

• Performance Appraisal: The employees of any organization will be evaluated by the HR department
as per the performance. This function of Human Resource Management is to help the organization
in finding out if the employee they have hired is moving towards the goals and objectives of the
organization.

• Compensation and Benefits: A company can attain its goals and objectives if it can acclimatize to
new ways of providing benefits to the employees. Some of the benefits given by companies are listed
below for our understanding:

1. Working hour flexibility

2. Extended vacation

3. Dental/Medical Insurance

4. Maternal/Paternal Leave

5. Education Reimbursement for children.

• Occupational Health and Safety:- Employees while on the work location expect safety. HRM ‘s
function is to provide all health-related safety measures to employees.

• Integration and Maintain of Employee Relations: - Relation among employees should be healthy. It
‘ll be useful for increased productivity and efficiency of employees’ is bound to integrate all
employees efforts together and maintain the employees relations.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Challenges OF HRM:-

• Challenges due to Globalization - Globalization is a process by which a business firm or organization

starts operating on an international scale, creating international influence. Internationalization of
firms is obviously a Sign of Success but it is a challenge at the same time because globalization
invites issues related to unknown language, laws, work ethics, attitudes, management approach,
culture and tradition.

A human resource manager will need to deal with more heterogeneous functions such as scheduling
meetings, holiday management, human resource outsourcing, etc to overcome the challenge.

• Skill Shortage - HR professionals need to figure out which skills are needed to achieve business
success today (and in the future), and how to acquire and apply them in a timely manner. A skills
gap analysis will help with the first part of that, and effective training strategies and tools will make
the latter possible.

• Knowledge Management - Now a days, as people are getting diversified and technology acquainted
,their knowledge is increasing day by day.HRM’s challenge is to use this knowledge in proper
direction so that both individual and organization will be benefited.

• Challenges related to training - A planned execution of training programmes and managerial

development programmes is required to be undertaken to sharpen and enhance the skills, and to
develop knowledge of employees.

• Changing workforce dynamics - The composition of the workforce is getting diverse at present
situation. Here diversity is not only created by age, gender, educational background and religion but
also by the nature, personality and background of workers. With more diversification of workforce,
issues related to bullying, harassment, discrimination, etc may arise, to control which HRM should
formulate and implement strict rules and regulations.

• Changed employee expectations - Providing with wages and salaries to employees is not sufficient
in today’s world. The human resource manager should maintain proper emotional balance of
employees. They should try to understand the attitude, requirements and feelings of employees, and
motivate them whenever and wherever required.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
• Talent Retention - In the current scenario, a major challenge for an organization is to retain its
valuable and talented employees. The management can control the problem of employees quitting
the organization within no time to a great extent but can’t put a complete full stop to it.

Introduction To SHRM :-
Strategic human resource management (SHRM) is about the formulation of HR strategies in alignment
with the overall corporate strategy to achieve the goals of the organization

➢ Definition by Gary Dessler :

“Strategic human resource management means formulating and executing human resource policies and
practices that produce the employee competencies and behaviors that the company needs to achieve its
strategic aim”

➢ Definition by R. S. Schuler :

“Strategic human resource management is concerned with all those activities that affect the behaviour of
individuals in their efforts to formulate and implement the strategic needs of business."

Importance OF SHRM ;-

• Helps in exploring Emerging Opportunities - It allows in the identification, prioritization and

exploration of futute opportunities. It assists in the development of core competencies and
competitive advantage, that helps in the business survival and growth.

• Develops, manages, sustains skills and knowledge

• Provides Direction and future focus. - Strategic HRM refers to the overall direction the organisation
wishes to pursue in achieving its objectives through people. Strategies are business-driven and focus
on organisational effectiveness; thus in this perspective people are viewed primarily as resources to
be managed toward the achievement of strategic business goals

• Enables firm to meet changing needs – SHRM encourages favorable attitude towards change.

• Enhances coordination – Represents framework for improved co-ordination and control.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
Nature of SHRM:

• Long Term Focus

• Organisational Level: Because strategies involve decisions about key goals, major policies and the
allocation of resources, they tend to be formulated at the top.

• Focus: Strategies are business-driven and focus on organisational effectiveness; thus in this
perspective people are viewed primarily as resources to be managed toward the achievement of
Strategic business goals.

HRM Models :-
1. Harvard Model –
Harvard Model- by Michael Beer
It is based on
• Stakeholder interest. These stakeholders include …. These interests define the HRM policies.

• situational factors influence these interests. Situational factors include workforce

characteristics, unions, and all the other factors.

• Situational factors and stakeholder interest influence HRM policies. These include the core
HR activities, like recruitment, training, and reward systems.

• When done well, HRM policies lead to positive HRM outcomes. These include the previously
mentioned retention, cost-effectiveness, commitment, and competence.

• These positive HRM outcomes lead to long-term consequences. These can be individual,
organizational, and societal

It has discussed

1. line managers have to accept more responsibility for ensuring the alignment of competitive

strategy and HR policies.

2. The second point is that human resource in the organization should have a mission for

fulfilling the objectives of the organization in a more coherent way(How HR policies are

developed and implemented to achieve the objectives.

3. This model is composed of elements like mutual respect, mutual commitment, mutual

responsibility and it relies with teamwork approach and certain elements in soft view of

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
HRM.

4. Emphasizing the utility and inter-relationships of those elements are so valid and reliable in

achieving the objectives of HRM

2. Matching Model of SHRM –

- by Fombrun Devanna et.al – Strategic Human Resource Management “Matching Model’:
Michigan model of HRM has originated from the writings of C. Fomtbrun. Noel Tichy and M./t.
Devanna in Michigan school .

The model shows how activities within HRM can be unified and designed in order to support the
organisations strategy.

It is divided into two parts: first which shows HR-strategy integration and second which depicts
the HR cycle.

Important HR issues to achieve such a match:

• Selection of the most suitable people to meet business needs.

• Performance in the pursuit of business, objectives.

• Rewards for appropriate performance.

• Development of skills and knowledge required to meet business objectives

The main focus was on the four functions of HRM

1. Selection,
2. Appraisal,
3. Development
4. Reward
Matching model ensures way to achieve the organizational objectives is the applying of above
five major functions of HRM very effectively.

The work and contribution of properly selected human resource has to be evaluated in using
appropriate techniques.

Some kinds of rewards have to be offered on the basis of results of appraisal and the performances
of employees.

According to matching model this process is totally dependent on the HRD procedures and
programs of the organization.

It is believed that the whole of HRM is a cyclical process which every function is interdependent
hence value of each function is very identical for acceding the organizational

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
objectives. In matching model, it tries to encapsulate all key functions of HRM and to utilize in
a more comprehensive manner.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Unit 2 HR Acquisition and Retention

Human Resource Planning : -

Human Resource Planning (HRP) refers to the process of evaluation and identification of HR requirements
for meeting organizational goals to ensure competitive advantage in the marketplace.

Definition :-

Bulla and Scott “Human resource planning is the process for ensuring that the human resource requirements
of an organisation are identified and plans are made for satisfying those requirements.”

Wendell French “HR planning may be defined as the process of assessing the organization’s human resources
needs in the light of organisational goals and making plans to ensure that a component, stable workforce is
employed.”

Objectives:-
1. Assesss Future Manpower Needs- Human resource planning helps the organization in identifying
future manpower requirements for organizations. In view of organizational objectives to be achieved
in the future, this process analyses the precise manpower required for the functioning of the
organization. This process ensures the right number of peoples at the right time in an organization to
derive requisite output.

2. Identify Manpower Gap- Identification of the gap between the manpower supply and manpower
demand is a must for every organization. Human resource planning helps in finding out the surplus
or deficit of employees in an organization. Accordingly, it makes a plan to overcome these gaps. In
case of the deficit its plans for hiring new employees and in case of the surplus it reduces the number
of employees by retirement, termination, layoff, etc.

3. Determination Of Training And Development Needs- Human resources planning aims at providing
various training to all employees as per the requirement of market needs. These training and
development programmes are meant for both new and existing employees. It focuses on updating and
improving skills of manpower to derive the requisite productivity from them. This way it aims at the
advancement of employees and serves the high skilled employees need of an organization.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
4. Ensures Optimum Use Of Manpower- Human resource planning process helps in the full utilization
of human resources. The right man at the right place is a must to achieve high productivity and
efficiency. This process aims at providing job to individuals according to his knowledge, skills, and
experience. Job positions are properly analyzed before deputing persons and it is checked whether a
person is capable of delivering roles or not. This way Human resources planning ensures fuller
utilization of human resources within the organization.

5. Meet Expansion And Diversification Needs- Expansion and diversification are activities that every
organization needs to follow as they achieve progress over time. Human resource planning supports
the organization in its various expansion, diversification, and modernization programs. It formulates
plans for meeting the employee requirements as per the expansion plan. This ensures that skilled and
knowledgeable people are available at the right time that is able to face the challenging job roles.

6. Estimates Human Resource Cost- Human resource planning controls the cost of human resources of
an organization. It facilitates the preparation of the budget for meeting these expenses by estimating
the cost of each and every human resource working in the organization. Formulation of appropriate
budgets will ensure timely payment to employees and also avoids a shortage of funds.

7. Monitors Human Resource Performance- It monitors and controls the performance of employees
from time to time. Human resource planning measures the actual performance of manpower with
planned performance. If any deviations are found in performance it aims at removing them by taking
appropriate corrective measures. It ensures whether human resources are performing as their defined
roles and responsibilities. This way it helps in the achievement of organizational goals and objectives
timely.

Importance Of HRP :-
1. It helps the organisation to cope with changes in competitive forces, markets, technology, products
etc.

2. It anticipates redundancies of labour force and avoids unnecessary dismissals.

3. It is a continuous process concerned with planning and development of human resources.

4. It helps the organisation to function smoothly and successfully not only in the short-period but also
in the long period.

5. It enables the organisation to cope with changes in competitive markets, market forces, technology,
products etc.

6. Man-power planning is an essential component of strategic planning.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Human Resource Planning Process :-

1. Analysing Organizational Objectives: The objective to be achieved in future in various fields such as
production, marketing, finance, expansion and sales gives the idea about the work to be done in the
organization.

2. Inventory of Present Human Resources: From the updated human resource information storage
system, the current number of employees,their capacity, performance and potential can be analysed.
To fill the various job requirements, the internal sources (i.e., employees from within the
organization) and external sources (i.e., candidates from various placement agencies) can be
estimated.

3. Forecasting Demand and Supply of Human Resource:

4. The human resources required at different positions according to their job profile are to be

5. estimated. The available internal and external sources to fulfill those requirements are also

6. measured. There should be proper matching of job description and job specification of one

7. particular work, and the profile of the person should be suitable to it.

8. Estimating Manpower Gaps:

9. Comparison of human resource demand and human resource supply will provide with the surplus or
deficit of human resource. Deficit represents the number of people to be employed, whereas
Prof.Shrawani Parse www.dimr.edu.in
 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
surplus represents termination. Extensive use of proper training and development programme can

be done to upgrade the skills of employees.

Formulating the Human Resource Action Plan:

The human resource plan depends on whether there is deficit or surplus in the organization.

Accordingly, the plan may be finalized either for new recruitment, training, interdepartmental

transfer in case of deficit of termination, or voluntary retirement schemes and redeployment in case

of surplus.

Monitoring, Control and Feedback:

It mainly involves implementation of the human resource action plan. Comparison between the

human resource plan and its actual implementation is done to ensure the appropriate action and the

availability of the required number of employees for various jobs.

Barriers to HRP: -

1. Lack of Overall Expertise: HR practitioners are perceived as experts in handling personnel matters,
but are not experts in managing business.

2. Incompatible: HR information often is incompatible with other information used in strategy

formulation.

3. Ineffective in Some Cases: Non-involvement of operating managers renders HRP ineffective. HRP is
not strictly an HR department function.

4. Inaccuracy: HRP involves forecasting the demand and supply of personnel required. Its effectiveness
depends upon accurate projection which are not cent per cent accurate.

Job Analysis Process

Job analysis is the systematic study of jobs to identify the observable work activities, tasks, and
responsibilities associated with a particular job or group of jobs. It is the process of collecting information
relating to the operations and responsibilities pertaining to a specific job.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Purpose of job analysis Job analysis is used in preparation of job descriptions and job specifications which
help in the hiring of right personnel for the job. The general purpose of job analysis is to establish and
document the requirements of a job. The aim of job analysis is to answer questions such as:-

▪ What is the purpose of the job?

▪ What physical and mental task does the job holder undertake?

▪ When is the job to be performed?

▪ Where is the job to be performed?

▪ What are the conditions required for the job to be performed?

Importance of Job Analysis

1. HR Planning : It is the foundation for forecasting demand for and supply of human resources in an
organization.

2.Recruitment And Selection : Recruitment generates a pool of candidates who are willing to perform in the
organization, whereas selection selects the best suited candidate out of the available candidates who are
supposed to perform well in the organization.

3.Training And Development : By comparing knowledge and skill of current employees with the expected
level of performance, the need of training and development requirement can be assessed.

4. Performance Appraisal : Job analysis helps in determining performance standards in critical parts of job.

Job Description

Job description is a written list of a job's duties, responsibilities, reporting relationships, working

conditions, and supervisory responsibilities involved in a job.

Job description is an important document, which is descriptive in nature and contains the final

statement of the job analysis. This description is very important for a successful recruitment

process.

Job description provides information about the scope of job roles, responsibilities and the

positioning of the job in the organization. And this data gives the employer and the organization a

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
clear idea of what an employee must do to meet the requirement of his job responsibilities.
Contents: -

• Job Title

• Job Location

• Job Summery

• Job Duties

• Equipments,Machines, Tools

• Relation To other Jobs

• Nature of Supervision

• Working Environment

Job Specification

A job specification defines the knowledge, skills and abilities that are required to perform a job in an
organization. Job specification covers aspects like education, work-experience, managerial experience etc.
which can help accomplish the goals related to the job. Job specification helps in the recruitment & selection
process, evaluating the performance of employees and in their appraisal & promotion.

Job specification, along with job description, is actually derived from job analysis. Collectively, job
specification and job description help in giving a overview of the job in terms of its title, position, roles,
responsibilities, education, experience, workplace etc.

Contents :-

• Educational Qualification

• Experience

• Skills and Knowledge

• Personality traits and characteristics

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Job Design

Job design is the process of establishing employees’ roles and responsibilities and the systems and procedures
that they should use or follow. The main purpose of job design, or redesign, is to coordinate and optimise
work processes to create value and maximise performance.

However, it’s also a central element in creating good quality jobs or ‘good work’ which benefit workers
themselves as well as their employers.

Factors Affecting Job Design

• Organizational Factors –Can be work nature or characteristics, work flow, organizational practices.

• Environmental Factors :- These factors include both external as well as internal factors. They include
factors like employee skills and abilities, their availability and their socio- economic and cultural
prosects.

• Behavioral Factors :- These factors are those pertain to the human need and that need to be satisfied
for ensuring productivity at workplace. They include autonomy, feedback, diversity etc.

Recruitment

Recruitment process is a process of identifying the jobs vacancy, analyzing the job requirements,

reviewing applications, screening, shortlisting and selecting the right candidate.

Edwin Flippo “ Recruitment is the process of searching for potential employees and stimulating them to
apply for the jobs.”

Recruitment Process :-

• Recruitment Planning: - It stats with the determination of number of applicants and type of applicants
to be contacted.

• Sources of Recruitment: - After the finalization of recruitment plan, applicants must be attracted to
offer themselves for consideration to their employment. This necessitates the identification of
sources from which these candidates can be attracted either internal or external.

• Contacting Sources :- Recruiter must decide the information which must be shared with the
candidates.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
• Application Pool :- whatever the method of recruitment is adopted, the ultimate objective is to attract
as many candidates as possible so as to have flexibility In selection. An organization having better
perceived image is able to attract more no. of applicants.

• Selection Process – Various applications received for a particular job are pooled together which
become the basis for selection.

• Evaluation and Control – In any process, it is required to ensure that the process has gone well in the
light of its stated objectives and goals.

Selection:-

Dale Yoder :

“Selection is the process in which candidates for employment are divided into two classes- those who are to
be offered employment and those who are not.”

Induction:-

Induction is the process of welcoming, introducing and socializing the new entrants to the existing group of
people. It is also called orientation programme. It is done to make the new employees feel welcome at the
new workplace and with his senior employees. It helps overcome a ‘reality shock’.

Reality shock is experienced by the new employees when there is a gap between his/her expectations and
the real situation. It facilitates interaction amongst employees and helps them to get to know each other and
develop a better inter personal relationship and rapport with colleagues.

According to R.P. Billimoria, “Induction is a technique by which a new employee is rehabilitated into the
changed surroundings and introduced to the practices, policies and purposes of the organization”.

Career planning:-

Career planning is a step-wise process which enables an individual to focus on where to want to be in life
professionally. With the short-term goal and the long-term goals in place, career planning can help to plan
their journey in their professional life. Career planning is the process of enhancing an employee’s future
value. A career plan is an individual’s choice of occupation, organization and career path.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
Career Planning Process :-

1. Individual Needs and Aspirations – When an individual joins an organization as an employee, he does it
to satisfy his own needs and fulfill his aspirations. Career planning meant for an individual should aim
at providing such satisfaction.

2. Organizational Needs and Opportunities: - While going through career planning process, the organization
is concerned with own needs and opportunities that it can provide to individual employees. If
organization prepares its long-term human resource plan, it will come to know what kind of opportunities
it can provide to employees.

3. Assessment of Individual strengths and weaknesses: - There is a need for objective assessment of
individual strengths and weaknesses in light of organizational needs and opportunities.Strenghts should
be assessed both in terms of present and potential in terms of learnability and motivation to learn.

4. Placement on Career Path :- Placing an individual on a career path indicates how the individual will
progress to those positions. This placing is essentially determined by the alignment of individual needs,
his strengths, weaknesses and organizational opportunities.

5. Review of Career Plans :- A periodic review of career plans is necessary to know whether the career
plans are contributing to the effective utilization of uman resources by matching employee needs and job
needs.

Succession Planning: -

Definition: Succession Planning is defined as the systematic process of recognizing and creating future
leaders who are able to take the position of the old ones when they leave the organization due to retirement,
resignation, termination, transfer, promotion or death.

Importance of Succession Planning :-

• Availability of Employees for Key Roles - Effective business succession planning increases the number
of skilled people who are prepared to take up key positions according to their availability. As senior
executives retire or senior management positions become vacant owing to the departure of important
officers, leadership positions are readily replaced.

• Retention of Experienced Employees - It reduces the risk of experienced employees leaving. They have
been in the system for many years and have adapted to the organisation’s culture. Hence, they are
valuable assets to the company. With effective succession planning, organisations can reduce the need
for an external search for competent successors for specific positions.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

• Reduction in Expenditure - It also reduces the amount of time and money spent seeking new employees
to fill top management roles in the firm. Since suitable internal candidates have already been identified
and trained, there will not be a need of recruiting from outside the organisation, inducting them and
providing them with the needed training and development.

• Boosts Morale -Individuals feel motivated and increase their productivity if they see a career path that
has some growth for them.

Succession Planning Process: -

1. Identifying Key Business Areas and Positions: First and foremost, the key business areas are identified,
i.e. the areas which are significant with respect to the operational activities and strategic objectives. After
that, those positions are identified which if vacant can cause difficulty in achieving business objectives.

2. Ascertaining Competencies for Key areas and positions: Next, you need to determine the required
competencies for key business areas and position, in order to create the selection criteria, establish
performance standards and fill the difference between what the viable successors know and what they
need to know, through the training and development process.It determines the knowledge, skills, ability
and experience required to achieve business goals.

3. Find out the interested and potential candidates and assess them as per the competencies: After
competency is analysed, the next step is to identify among various employees working in the
organization, who are interested as well as they have the capability to fill key business areas and
positions.The Human Resource Manager discusses future career plans and interests with the candidates
and identifies the potential successors who are ready to replace the old ones and can be trained and
developed for future contingencies.

4. Develop and Implement Succession Strategies: Strategies for learning, training, development, knowledge
transfer, experience sharing is developed and implemented for potential successors.

5. Evaluate Effectiveness: The last step to the succession planning process is to evaluate the succession
planning and management, to ensure that all the key business areas and positions are covered under the
succession planning. Further, it also ensures that in case of any sudden vacancies in future, key positions
can be filled as soon as possible and the successors perform effectively when they hold the position.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Transfer: -
Transfer implies movement of an employee from one job to another without /with any increase in pay, status
or responsibilities.

Definition According to Dale Yoder “A transfer involves the shifting of an employee from one job to another
without special reference to change in responsibilities or compensation”.

Promotion means advancement in terms of job designation, salary and benefits.

According to Prof. Khanka,

Promotion is vertical movement of an employee within the organization.

In other words, promotion refers to the upward movement of an employee from one job to another
higher one, with increase in salary, status and responsibilities.

Retention Of Employees: -

Employee retention refers to the ability of an organization to retain its employees.

Retention is defined as the process by which a company ensures that its employees don't quit their jobs.
Every company and industry has a varying retention rate, which indicates the percentage of employees who
remained with the organization during a fixed period.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Unit 3 Managing Employee Performance and Training

Performance Appraisal -
Meaning: Performance appraisal is a process of evaluation and employees’ performance of a job in the terms
of requirements. Performance means the degree of accomplishment of the task which is assigned to the
individual. In other words, performance appraisal gives us an idea about the completion of job. In every field,
the technique of performance appraisal is applied e.g. bankers evaluate the performance of their creditors or
loan holders, teachers evaluate the performance of students or parents evaluate the behavior of their children.

Objectives:-

• To effect promotions based on competence and performance.

• To Assess the training and development needs of employees.

• To decide upon a pay raise.

• To improve communication.

• To determine whether HR programmes have been effective or not.

Importance Of Performance Apprisal :-

1. Improving Performance - An effective appraisal system can contribute to competitive advantage by

improving employee job performance in two ways - by directing employee behavior towards
organisational goals and by monitoring that behavior to ensure that the goals are met .

2. Marking Correct Decisions- Appraisal is a critical input in making decisions on such issues as pay raise
, promotion , transfer , training , discharges and completion of probationary periods . Right decision on
each of these can contribute to competitive strength of a firm . If promotion , for example made on
performance , the promotee feels motivated to enhance his or her performance .

3. Ensuring Legal Compliance :- Promotions made on factors other than performance might land up a firm
in legal battle , thus diverting its focus on non - productive areas .Companies can minimize costly
performance - related litigation by using appraisal systems that give fair and accurate ratings.

4. Minimizing Job Dissatisfaction and Turnover: - Fair and accurate appraisal results in high motivation
and increased job satisfaction. An organization having satisfied and motivated employees will have an
edge over its competitors.
Prof.Shrawani Parse www.dimr.edu.in
 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

5. Values and behavior: - An organization needs a strategy consistent with the behaviour of its employees
if it were to realize its goals. People engage themselves in behaviors that they perceive will be rewarded.
They tend to occupy themselves more with those activities on which organization emphasi. For example,
if the focus is on service, employees will behave in ways that rewards associated with service delivery.
If the focus is on rewarding productivity, employees will strive for productivity. The performance
appraisal becomes not only a means of knowing if the employees behaviour is consistent with the overall
strategic focus, but also a way of bringing to the fore any negative consequence of the strategy -
behaviour fit .

6. Organisational Strategy and Performance Appraisal :- The performance appraisal system serves many
organisational objectives and goals . Besides encouraging high level performance , the evaluation
system is useful in identifying employees with potential , rewarding performance equitably , and
determining employees needs for development . These are all the activities that should support the
organization’s strategic orientation.

Performance Appraisal Process : -

1. Objectives Of Performance Appraisal:- Promotions, transfer, training needs,awarding pay increases.

2. Establish Job expectations: - It includes informing the employee what is expected from him or her on
job. Normally ,a discussion is held with the superior to review the major duties contained in the job
description. Individuals should not be expected to begin the job until they understand what is exected
from them.

3. Design an appraisal Programme :- Includes many factors such as 1) Formal vs informal appraisal 2)
Whose performance is to be assessed 3) Who are the raters 4) What problems are encountered 5) How
to solve the problems 6) What should be evaluated 7) When to evaluate 8) What methods of appraisal
are to be used ?

4. Appraise the Performance: - We need to measure the perform not mere activities. What then is
performance? Performance is essentially what an employee does or does not do. Employee performance
common to most jobs include the following elements:

5. Quantity of output :- Quality of output, Timeliness of output, Presence at work, Cooperativeness

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

6. In addition to these, other elements that deserve assessment, are job knowledge, leadership abilities,
judgement, supervision , versatility and health . Assessment should also include one's potential to
perform and not just actual performance.

7. Performance Interview :- Performance interview is another step in the appraisal process .Once appraisal
has been made of employees , the raters should discuss and review the performance with the ratees so
that they will receive feedback about where they stand in the eyes of superiors .Feedback is necessary
to bring improvement in performance, specially when it is inadequate.

8. Archive Appraisal Data: - Organisations need to archive or store the appraisal data so that at any point
in future , the information can be retrieved and used . For example, if an employee has been told that he
or she was not promoted because of below average performance and he or she would be considered
favorably for a jump in status and remuneration provided the performance improves . The HR manager
should have those details to convince the employee concerned when he or she joins issue with the
management on matters relating to promotion. Other issues such as pay hike, confirmation of
probationary services , affirmative actions and the like deserve reference to the past information .
Archiving appraisal data is not just desirable but essential too.

9. Use of Appraisal Data:- The final step in the evaluation process is the use of evaluation data . The data
and information generated through performance evaluation must be used by the HR department . It may
be recollected that the most significant rewards employers offer to employees are :-

1. Money to purchase goods and services required not only for current and future survival but also for
the luxuries modern life has to offer .

2. The opportunity to use innate and learned skills and talents in a productive manner that the individual
and his or her managers and co - workers recognise as valuable .

3. Opportunities to interact with other people in a favourable working environment 4. Opportunities to

learn , grow , and make full use of their potential .

Appraisal Methods: -

1. Rating Scale: - It’s the most popular technique for appraising employee performance. The typical rating
scale system consists of several numerical scales, each representing a job related performance criterion
such as dependability, initiative, output, attendance ,attitude-operation and the like. Each scale ranges
from excellent to poor.
Prof.Shrawani Parse www.dimr.edu.in
 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
Advantages – Adaptability, relatetively easy use and low cost. A large no. of employees can be valuated
in a short time and the rater does not need any training to use the scale.

2. Checklists: - In this system, a large number of statements that describe a specific job are given. Each statement
has a weight or scale value attached to it. While rating an employee the supervisor checks all those statements that
most closely describe the behavior of the individual under assessment. The rating sheet is then scored by averaging
the weights of all the statements checked by the rater. A checklist is constructed for each job by having persons
who are quite familiar with the jobs. These statements are then categorized by the judges and weights are assigned
to the statements in accordance with the value attached by the judges.

Advantages of Checklists

i. Most frequently used method in evaluation of the employee’s performance.

Limitations of Checklists:-

i This method is very expensive and time consuming .

ii Rater may be biased in distinguishing the positive and negative questions.

iii It becomes difficult for the manager to assemble, analyze and weigh a number of statements about the employees
characteristics, contributions and behavior.

3. Forced Choice/Distribution Appraisal: - This is a ranking technique where raters are required to allocate a
certain percentage of rates to certain categories (eg: superior, above average, average) or percentiles (eg: top 10
percent, bottom 20 percent etc). Both the number of categories and percentage of employees to be allotted to each
category are a function of performance appraisal design and format. The workers of outstanding merit may be
placed at top 10 percent of the scale, the rest may be placed as 20 % good, 40 % outstanding, 20 % fair and 10 %
fair.

Advantages of Forced Distribution: -

i. This method tends to eliminate rater’s bias

ii. By forcing the distribution according to pre-determined percentages, the problem of making use of different
raters with different scales is avoided.

Limitations of Forced Distribution: -

i. The limitation of using this method in salary administration, however, is that it may lead low morale, low
productivity and high absenteeism.

ii. Employees who feel that they are productive, but find themselves in lower grade(than expected) feel frustrated
and exhibit over a period of time reluctance to work.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

4. Critical Incident techniques :- Under this method, the manager prepares lists of statements of very effective and
ineffective behaviour of an employee. These critical incidents or events represent the outstanding or poor
behaviour of employees or the job. The manager maintains logs of each employee, whereby he periodically records
critical incidents of the workers behaviour. At the end of the rating period, these recorded critical incidents are
used in the evaluation of the worker’s performance. Example of a good critical incident of a Customer Relations
Officer is : March 12 - The Officer patiently attended to a customer’s complaint. He was very polite and prompt
in attending the customers problem.

Advantages of Critical Incident techniques

i. This method provides an objective basis for conducting a thorough discussion of an employee’s performance.

ii. This method avoids recency bias (most recent incidents are too much emphasized)

Limitations of Critical Incident techniques

i. Negative incidents may be more noticeable than positive incidents.

ii. The supervisors have a tendency to unload a series of complaints about the incidents during an annual
performance review session.

iii. It results in very close supervision which may not be liked by an employee.

iv. The recording of incidents may be a chore for the manager concerned, who may be too busy or may forget to
do it.

5. BARS : A BARS can be developed in following steps.

• Collecting samples of effective and ineffective job behavior from the experts by analyzing the
critical incident method

• Converting these samples into performance dimension

• Relocating the performance dimension (from unacceptable to outstanding)

• Rating the performance dimension accordingly, starting from 1.

• Finally, using the scale anchor to evaluate employee’s performance.

6. Field Review Method: - This is an appraisal done by someone outside employee’s own department ,usually from
corporate or HR department.

Advantages of Field Review Method

i. Useful for managerial level promotions, when comparable information is needed.

Disadvantages of Field Review Method

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
i. Outsider is generally not familiar with employees work environment.

ii. Observation of actual behaviors’ not possible.

7. Tests and Observations: - Employee assessment may be based upon a test of knowledge or skills. The test may
be of the paper and pencil variety or an actual demonstration of skills. The test must be reliable and validated to
be useful. In order for the test to be job related, observations should be made under circumstances likely to be
encountered.

8. ACRS: – Confidential records are maintained mostly in government departments, though its application in the
industry is not ruled out. A typical Confidential Report (ACR) shall have items like attendance, leadership, ability
to work with others, initiative, integrity etc.

9. Essay: - Here, rater must describe the employee within a number of broad categories such as raters overall
impression of the employee’s performance, the promotability of employee, the strengths and weaknesses of
employees etc. It is extremely useful in filing information gaps about the employees that often occur in the better
structured checklist method.

10. Cost Accounting: - This method evaluates performance from the monetary returns the employee yields to his
company. A relationship is established between the cost included in keeping the employee and the benefit the firm
derives from him or her.

11. MBO: - It is a strategic management model that aims to improve the performance of an organization by clearly
defining objectives that are agreed to by both management and employees. As per this method, more attention is
given towards responsibility, accountability and achievement of goals.

12. 360 Degree: - 360-degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates,
team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide
valuable insights and information or feedback regarding the “on-the-job” performance of the employee.

13. Psychological Appraisal: - It focuses on individual’s future potential and not actual performance. Industrial
psychologists are employed for conducting the appraisal.

14. Assessment Centers:- Mainly used for executive hiring, assessment centers are now being used for evaluating
purpose. It’s a central location where managers may come together to have their participation in job related
exercises evaluated by trained observers.

Performance Management :-
Performance management is the process of continuous feedback and communication between managers and
their employees to ensure the achievement of the strategic objectives of the organization.

Purpose :-

1) To provide meaningful, ongoing feedback

2) To encourage teamwork, collaboration and communication.

Prof.Shrawani Parse www.dimr.edu.in
 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

A performance management system looks at the present and the future of an employee’s position with the
organization and provides ways for employees to do better in their role with the future in mind. Performance
management can be defined as “all activities which enable staff to perform to the best of their abilities.”
Performance management can mean everything from HR’s activities in choosing the right candidates, to
giving staff access to training and courses to build core competencies, to assigning a mentor that will give
feedback, and more.

In contrast to performance appraisals, performance management is an ongoing process of evaluating

employee performance and providing constructive criticism to encourage and support the progress of staff
toward organizational goals.

Training and Development: -

Training - Refers to the process of imparting specific skills, abilities and knowledge to an employee.

Development - Refers to learning opportunities designed to help employees grow.

Dale S. Beach. : “Training is the organized procedure by which people learn knowledge and / or skill for a
definite purpose.”

▪ Michael J. Jucius. : "Training is a process by which the aptitudes, skills and abilities of employees to
perform specific jobs are increased.”

Scope
1) In problem solving skill
2) Human Relations skill
3) Managerial and supervisory Skill
4) Particular skill
Objectives: -
1) Enhancing Employee Performance
2) Updating Employee skill
3) Gaining Organizational skills
4) Preparing for Promotion and Managerial Successions
Role of Training in Organizations
1) Increased Productivity
2) Performing Better Leaders
3) Reduced Cost
4) Reduction in Supervision
5) Improved Quality of Service and Products

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Training Process:-
1 ) Training Need Assessment –

A systematic approach to TNA is required for training to be effective.

Organization – The organizational analysis consists of considering how training can help to attain

organizational goals and where in the organization training is needed.

Task :- The task analysis focuses on what the employee must learn in order to perform well in the job

and thus what the training should cover.

Person – Person analysis identifies who, in the organization, will need training and for what purpose.

2) Training Content -

Objectives Of Training: - Objectives of the training should be clear for both employees and employer.

Training Methods: - Training methods means by which we intend to communicate information, ideas, skills,
attitudes and feelings to learners. It depends on the organization which training method does an organization
adopts.

Designing Training Content - Designing training content includes ADDIE (Analysis, Design, Develop,
Implement and Evaluate)

• Analyse – It includes evaluating learner characteristics and the tasks to be learned.

• Design - A training plan has to be designed.

• Develop - The develop phase basically fleshes out all the previous content built in the prior two
phases (analysis and design) into a complete learning solution. The final output is the training
courseware – the content as well as the media to be used for loading the content.

• Implement – All steps in training should be designed in such a way that not much is left to
imagination.’ Train the trainers ‘should be designed and conducted and an invigorating learning
environment should be engendered. Training should then be conducted the way it was planned to be.

• Evaluate - Evaluation can be defined to be a systematic determination of the attainment of objectives

set out for each sub process of the training design process. Evaluation will be checking whether
learners have achieved the learning objective or not.

3) Training Delivery: -

Who will be the trainer: As per the skill and knowledge required for effective training; it should be decided
upon who will conduct the training program. It can be a supervisor, university faculty, Industrialist, HR staff,
Prof.Shrawani Parse www.dimr.edu.in
 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
consultants, etc.

Who needs to be trained: It is to be decided who all needs to be trained to fill the learning gap. It can be on
the basis of self-motivation, recommendation by supervisors of HR department itself.

Training Methods: Trainer should have complete information about the participants and their profile so that
he can choose the learning methods that best suits their requirements. The training content is prepared based
on the specific areas that need development.

Training Evaluation:-

• Reaction - Reaction refers to the attitude of employees about the training, whether the employee
considers training to be a positive or negative one. If the reaction is positive, then people have
accepted the program, and changes will be possible.

• Learning- Another method of judging effectiveness is to identify levels of learning, i.e., how much
the people have learned during the training. This can be found out by trainers mark sheet, the report
submitted by the employee, and actual performance.

• Behavior- The HR department needs to understand the behavior of the employees, to understand the
effectiveness of training. The behavioral change can be seen in how the person interacts with juniors,
peer groups, and seniors. They mark the behavior change and inform the HR department of the
success of the training program.

• Result- Results provided by the employee in monetary terms also determine the effectiveness of the
training program, i.e., employee success in handling the project, the group performance before and
after training, etc

Types Of Training: -
• On the Job Training :- On the job training is concerned with developing employees in the present
job. It involves assignment of the new employee to a specific job at a machine or workplace in the
shop, office, or laboratory. The worker is trained while he is engaged in the work by utilizing the
actual work situation for the purpose

• Apprenticeship: - On the job training is concerned with developing employees in the present job. It
involves assignment of the new employee to a specific job at a machine or workplace in the shop,
office, or laboratory. The worker is trained while he is engaged in the work by utilizing the actual
work situation for the purpose.

It combines classroom instructions, demonstrations and on-the-job training. A trainee has to work in

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
direct association and under the direct supervision of his masters. Learning is by imitation and
experience.

• Coaching Training by Supervisors: The fresh employee is trained by the supervisor, who
familiarizes him with the input and outputs of the work and techniques of operation of equipment
etc. The supervisor guides and instructs or supervise the employee, whenever needed. The employee
has also opportunity of remaining doubts. The method develops good relationship between worker
and supervisor. The method proves to be ineffective, if the supervisor is incompetent and does not take
interest in the training.

• Job Rotation Method : It is broad-based training, wherein the employee has to rotate from one job
to other, from one department to other department, from are work to other work, or from one section
to other section, so that he may learn the working of various departments.

It is the movement of the trainee from one job to another. The trainee receives job knowledge and
gains experience from his supervisor or trainer in each of the different job assignments.

• Off – the Job Training: Vestibule Training: New workers are trained for specific jobs and special
machines or equipment are provided in a separate location, near the actual place of work under
practical work situation. Here more emphasis is on teaching the best method than on production.
Trainees have an opportunity to get accustomed to work routine and recover from their initial
nervousness before going on to the actual job

• Simulation:- Its an attempt to create a realistic decision making environment for the trainee.
Simulation present likely problem situations and decision alternatives to the trainee. For eg. Activities
of an organization may be simulated an d the trainee may be asked to take decision in support of
these activities.

• Role Playing: Under this method of training practical Knowledge of the work is imparted through
assigning notes of manager, supervisor, worker, customer etc. The employee learns how to deal with
the complexities of interdependence and interaction involved in different roles.

The trainees act out a given role as they would in a stage play. Role players are informed of a situation
about the respective roles that they have to play

• Conference and Seminar: The seminars and conference may be arranged to achieve the training
purpose. Under this method, a particular topic is followed by discussion and exchange of view under
a chairman, who sums up the discussion by his fruitful advices and comments.

• Brain Storming: Through collective analysis process we can solve all the business problem. A group

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
of people from various fields are invited to put forward their ideas, Knowledge, and experience. In
other words, the training is imported by pooling of collective Knowledge and experience of trainees.

Evaluation of Training Program

Training evaluation is a systematic process to analyze if training programs and initiatives are

effective and efficient. Trainers and human resource professionals use training evaluation to assess

if the employee training programs are aligned with the company's goals and objectives.

Kirkpatrick Training Evaluation Model :-The Kirkpatrick Four-Level Training Evaluation Model is designed
to objectively measure the effectiveness of training. The model was created by Donald Kirkpatrick in 1959,
with several revisions.

Level 1 Reaction measures how participants react to the training (e.g., satisfaction?).

Level 2 Learning analyzes if they truly understood the training (e.g., increase in knowledge, skills or
experience?)

Level 3 Behavior looks at if they are utilizing what they learned at work (e.g., change in behaviors?), and
Level 4 Results determines if the material had a positive impact on the business / organization.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

Unit 4 Compensation Management

Concept: -

The term compensation means money and other benefits received by employee for providing services to his
employer. It is the result of agreement between the employer and employee, whereby for a specified work
or service, rendered by the employee, the employer agrees to pay a specified sum of money.

Terry Leap : “Compensation is a board term pertaining to financial rewards received by persons through
their employment relationship with an organisation.”

R. Wayne Mondy : “Compensation is the total of all rewards provided to employees in return for their
services. The overall purposes of providing compensation are to attract, retain and motive employees."

Objectives: -

1. To attract competent and qualified persons towards organization by offering fair wage and incentive.

2. To retain present employees by paying competitive remuneration.

3. To establish fair and equitable remuneration so as to avoid pay disparities.

4. To improve production, productivity and profitability of the organization.

5. To minimise un-necessary expenditure and to control cost through a device of internal check and
establishment of standard.

6. To improve and maintain good human relation between employer and employee through a process of
payment of bonus, profit sharing and other fringes benefit.

7. To enhance the name and fame of the company through a proper system of wage payment.

8. To ensure prompt and regular payment of wage and salary to all the employees.

Importance Of Compensation Management: -

• To increase job efficiency

• To increase job satisfaction.
• To create talent pool.
• It is essential for integrating employee efforts with organizational goals and objectives.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

COMPENSATION MANAGEMENT PROCESS

1. Organizations Strategy - Companies operating in different types of market/product having varying

level of maturity, adopt different strategies and matching compensation strategy and blend of
different compensation methods.

2. Compensation Policy - Compensation policy is derived from organizational strategy and its policy
on overall human resource management. In order to make compensation management to work
effectively, the organization should clearly specify its compensation policy, which must include the
basis for determining base compensation, incentives and benefits and various types of perquisites to
various levels of employees. The policy should be linked with the organizational philosophy on
human resources and strategy. Besides, many external factors which impinge on the policy must also
be taken care of. 13

3. Job Analysis and Evaluation - Job analysis provides basis for defining job description and job
specification with the former dealing with various characteristics and responsibilities involved in a
job and the latter dealing with qualities and skills required in job performer. Job analysis also provides
base for job evaluation which determines the relative worth of various jobs in the organization. The
relative worth of various jobs determines the compensation package attached with each job. 14

4. Analysis of Contingent Factors - Compensation plan is always formulated in the light of various
factors, both external and internal, which affect the operation of human resource management system.
Various external factors are conditions of human resource market, cost of living, level of economic
development, social factors, pressure of trade unions and various labour laws dealing with
compensation management.  Various internal factors are organization’s ability to pay and
employees' related factors such as work performance, seniority, skills, etc. These factors may be
analyzed through wage/salary survey.

5. Design and Implementation of Compensation Plan- After going through the above steps, the
organization may be able to design its compensation plan incorporating base compensation with
provision of wage/salary increase over the period of time, various incentive plans, benefits and
perquisites. Sometimes, these are determined by external party, for example, pay commissions for
Government employees as well as for public sector enterprises. After designing the compensation
plan, it is implemented. Implementation of compensation plan requires its communication to
employees and putting this into practice.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
6. Evaluation and Review -A compensation plan is not a rigid and fixed one but is dynamic since it is
affected by a variety of factors which are dynamic. Therefore, compensation management should
have provision for evaluating and reviewing the compensation plan. After implementation of the
plan, it will generate results either in terms of intervening variables like employee satisfaction and
morale or in terms of end-result variable like increase of productivity. However, this latter variable
is more important. The evaluation of compensation plan must be done in this light.

Factors in Compensation Plan: -

1. Internal factors - The internal factors exist within the organization and influence the pay
structure of the company. These are as follows:

(i) Ability to Pay- The prosperous or big companies can pay higher compensation as compared to the
competing firms whereas the smaller companies can afford to maintain their pay scale up to the level
of competing firm or sometimes even below the industry standards.

(ii) Business Strategy- The organization’s strategy also influences the employee compensation. In
case the company wants the skilled workers, so as to outshine the competitor, will offer more pay as
compared to the others. Whereas, if the company wants to go smooth and is managing with the
available workers, will give relatively less pay or equivalent to what others are paying.

(iii) Job Evaluation and Performance Appraisal- The job evaluation helps to have a satisfactory
differential pays for the different jobs. The performance Appraisal helps an employee to earn extra
on the basis of his performance.

(iv) Employee- The employee or a worker himself influences the compensation in one of the
following ways. • Performance- The better performance fetches more pay to the employee, and thus
with the increased compensation, they get motivated and perform their job more efficiently. •
Experience- As the employee devotes his years in the organization, expects to get an increased pay
for his experience. • Potential- The potential is worthless if it gets unnoticed. Therefore, companies
do pay extra to the employees having better potential as compared to others.

2. External Factors - The factors that exist out of the organization but do affect the employee compensation
in one or the other way. These factors are as follows:
(i) Labor Market- The demand for and supply of labor also influences the employee compensation.
The low wage is given, in case, the demand is less than the supply of labor. On the other hand, high
pay is fixed, in case, the demand is more than the supply of labor.

(ii) Going Rate- The compensation is decided on the basis of the rate that is prevailing in the industry,
i.e. the amount the other firms are paying for the same kind of work.
Prof.Shrawani Parse www.dimr.edu.in
 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
(iii) Productivity- The compensation increases with the increase in the production. Thus, to earn
more, the workers need to work on their efficiencies, that can be improved by way of factors which
are beyond their control. The introduction of new technology, new methods, better management
techniques are some of the factors that may result in the better employee performance, thereby
resulting in the enhanced productivity.

(iv) Cost of Living- The cost of living index also influences the employee compensation, in a way,
that with the increase or fall in the general price level and the consumer price index, the wage or
salary is to be varied accordingly.

(v) Labor Unions- The powerful labor unions influence the compensation plan of the company. The
labor unions are generally formed in the case, where the demand is more, and the labor supply is less
or is involved in the dangerous work and, therefore, demands more money for endangering their
lives. The non-unionized companies or factories enjoy more freedom with respect to the fixation of
the compensation plan.

(vi) Labor laws- There are several laws passed by the Government to safeguard the workers from the
exploitation of employers. The payment of wages Act 1936, The Minimum wages act 1948, The
payment of Bonus Act 1965, Equal Remuneration Act 1976, Payment of Gratuity Act 1972 are some
of the acts passed in the welfare of the labor, and all the employers must abide by these.

Thus, there are several internal and external factors that decide the amount of compensation to be
given to the workers for the amount of work done by them.

Wage and Salary Differentials: -

WAGE: The dictionary meaning of the term ‘wage’ is the pay of artisans or labourers receiving a fixed
sum by hour, day, week or month, or for a certain amount of work. In a narrow sense ‘wage’ is the
remuneration paid to blue-collar workers for their services, usually on hourly rate or daily rate. Thus we
find that –

i. Wage is remuneration

ii. It is paid to workers, especially maintenance and production workers

iii. It is payment in exchange for service / labour

iv. It is paid generally on fixed hourly / daily rate.

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
SALARY: Salary is a periodic, fixed payment for services, especially for official or professional services.
It usually refers payment to weekly or monthly rated employees like clerical, technical, supervisory and
managerial employees. From the above it is observed –

i. Salary is economic compensation

ii. It is a periodic fixed payment

iii. It is paid to white-collar employees like office staff, technical staff, managerial staff,
professional staff

iv. It is paid by employer in exchange for services rendered by above categories of employees
Thus, ‘Salary’ is defined as economic compensation paid by employer to his monthly /
weekly rated white-collar employees for their services, under any contract / agreement.

Components of Salary: -
1. Basic Salary – Basic Salary is the minimum salary given by the employer to employee keeping in
mind his qualifications, experience and technical skills. Basic salary is always given under grade
system. This is a fixed component in your salary portion or CTC package (cost to company).

2. House Rent Allowance (HRA) – It is a component of the salary portion, which is provided by the
employer to his/her employee. Employeed or Salaried Individuals who live in a rented house property
can claim full or partial HRA exemption under section 10(13A). However, HRA is fully taxable in the
hands of employees if they don’t live in a rented accommodation.

3. Conveyance Allowance – Conveyance Allowance is to be given to the salaried individuals for

meeting travel expenses from their residence to work/office. From FY 2015-16, the conveyance
allowance has been exempted up to Rs.1600 per month or Rs.19,200 per annum u/s 10 of Income Tax
Act’1961.  You can claim this exemption only if it is provided by your Employer and not at the time
of filing Income Tax Return.

4. Leave Travel Allowance (LTA) – It is an allowance given to an employee from his employer for his
travel expenses. LTA is also known as Leave Travel Concession (LTC). Salaried Individuals can claim
exemption of LTA u/s 10(5) of Income Tax Act, 1961. Salaried employees are required to submit the
proof of travel bills to their employer to claim the exemption. The exemption on LTA cannot be
claimed in your Income Tax return. LTA can only be claimed from your employer.

5. Medical Reimbursement – A Salaried Individual can claim medical expenses up to Rs.15,000 for
which you must submit bills to your employer. Under this Employers reimburse the portion of the

Prof.Shrawani Parse www.dimr.edu.in

 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
medical expenses incurred by the employee. Deductions can be claimed for the medical expenses
incurred on your dependents. Out of Rs.15000, unclaimed amount of Medical Reimbursement will be
added to your taxable salary.  6. Special Allowance – The amount of special allowance is fully taxable
in your salary.

6. Special Allowance – The amount of special allowance is fully taxable in your salary.

7. Bonus – Any bonus paid to employees as performance incentive is fully taxable. This is all based on
company polices. Bonus received by the employee is fully taxable in the hands of the employee on
receipt basis and will be included in the gross salary of employee.

8. Fringe Benefits: - Fringe benefits are the additional benefits offered to an employee, above the stated
salary for the performance of a specific service. Some fringe benefits such as social security and health
insurance are required by law, while others are voluntarily provided by the employer.

Examples of optional fringe benefits include free breakfast and lunch, gym membership, employee
stock options, transportation benefits, retirement planning services, childcare, education assistance,
etc.

Employees Separation: -

An employee who works for an organization has to leave the organization one day or the other. Separation
is the act of an employee leaving his organization because of any of the reasons viz., superannuation,
turnover, transfer, dismissal, retrenchment, etc.

According to Yoder, separation is a negative recruitment. It may be In the form of resignation, dismissal or
discharge, suspension, retrenchment or lay-off

Retirement: Retirement is the major cause of separation of employees from the organisation. It can be defined as the
termination of service of an employee on reaching the age of superannuation.

For example, at present the superannuation age for the teachers working in the Central Universities is 62
years and in case of some state government employees, it is 58 years. Some people characterize retirement
as ‘role less role’.

Resignation : Resignation is termination of service by an employee by serving a notice, called ‘resignation’ on the
employer. Resignation may be voluntary or involuntary. A voluntary resignation is when an employee himself/herself
decides to resign on the grounds of ill health, marriage, better job prospects in other organisations, etc.

Voluntary Retirement Scheme (VRS) : VRS means the nicest possible way to tell your employees to terminate
employment. The voluntary retirement scheme(VRS) is the most humane technique to provide overall reduction in the
existing strength of the employees. It is a technique used by companies for trimming the workforce employed in the
industrial unit.
Prof.Shrawani Parse www.dimr.edu.in
 DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH
A golden handshake: - is a clause in employment contracts that provides a severance package if an employee loses
their job. It is usually offered only to top executives who may lose their job through retirement, layoff, or even firing.

Suspension: A suspension is when you remain employed but are asked to not attend your place of work, or engage in
any work at all (such as working from home). Employee may be suspended on full pay if allegations of misconduct
have been made against you and are being investigated. Suspension on full pay is not a punishment, but part of the
investigation process in a disciplinary procedure for many employers. Employer should give a clear reason for the
suspension and explain what other options have been explored instead of suspension. If an employee is suspended
because of allegations against him, he is entitled to know what the allegations are.

Grievance: - A grievance is any dissatisfaction or feeling of injustice having connection with one’s employment
situation which is brought to the attention of management.

Grievance is any dissatisfaction that adversely affects organizational relations and productivity According to Michael
Jucious, ‘grievance is any discontent or dissatisfaction whether expressed or not, whether valid or not, arising out of
anything connected with the company which an employee thinks, believes or even feels to be unfair, unjust or
inequitable’.

GRIEVANCE PROCEDURE IN INDIAN INDUSTRY

STEP 1: In the first step the grievance is to be submitted to departmental representative, who is a representative of
management. He has to give his answer within 48 hours

STEP 2: If the departmental representative fails to provide a solution, the aggrieved employee can take his grievance
to head of the department, who has to give his decision within 3 days.

STEP 3: If the aggrieved employee is not satisfied with the decision of departmental head, he can take the grievance-
to-Grievance Committee. The Grievance Committee makes its recommendations to the manager within 7 days in the
form of a report. The final decision of the management on the report of Grievance Committee must be communicated
to the aggrieved employee within 3 days of the receipt of report. An appeal for revision of final decision can be made
by the worker if he is not satisfied with it. The management must communicate its decision to the worker within 7
days.

STEP 4: If the grievance still remains unsettled, the case may be referred to voluntary arbitration.

Prof.Shrawani Parse www.dimr.edu.in