Introduction to Human Resource Management (HRM)

Meaning:
Human Resource Management meaning can be defined as planning, organizing, directing,
controlling, compensation, development, integration, maintenance etc. of the human
resources in order to achieve organizational, social and individual objectives.
Concept of HRM
Human resource management (HRM or HR) is the strategic approach to the effective
management of people in a company or organization such that they help their business gain
a competitive advantage. It is designed to maximize employee performance in service of an
employer's strategic objectives.
The scope of HRM is very wide: Personnel aspect-This is concerned with manpower planning,
recruitment, selection, placement, transfer, promotion, training and development, layoff and
retrenchment, remuneration, incentives, productivity etc.

Models of HRM
(i) The Fombrun model
(ii) The Harvard model
(iii) The Guest model
(iv) The Warwick model

The Fombrun model

The four functions are: selection, appraisal, development and rewards. these four constituent
components of HRM and are expected to contribute to organisational effectiveness.

The Harvard Model

One of the most significant and most influential models of HRM, the Harvard model, was
initially developed by several experts lead by Michael Beer in 1984 at Harvard University. The
Harvard Model is operating with five significant components: situational factors, stakeholder
interests, HRM policies, HRM outcomes, and long-term consequences the organisation is set
out to accomplish.

The Guest Model

This model was developed by David Guest in 1997. This model emphasizes on the assumption
that HR manager has specific strategies to begin with, which demand certain practices and
when executed will result in outcomes. These out comes include behavioural performance
related and financial rewards.

The Warwick Model

The Warwick HRM Model was constructed by the researchers Chris Hendry and Andrew M.
Pettigrew at the University of Warwick in the early 1990s. Developed from the Harvard Model,
this HRM framework represents an analytical approach to HRM.

Objectives of HRM
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 provide organization with well-trained and well-motivated employees.
4. To increase the employee’s satisfaction and self-actualization.
5. To develop and maintain the quality of work life.
6. To communicate HR policies to all employees.
7. To increase to the fullest the employee’s job satisfaction and self-actualisation.
Characteristics Of Human Resource Management

1. HRM recruits: Human resource management (HRM) recruits/hires people to fill up the
vacant positions of the organization.
2. Tests and interviews: HRM take various tests and interviews to select people.
3. Communicate with top management: HRM tries to communicate with top management in
helping to formulate strategies to achieve organizational goals.
4. Arranges training: HRM gives or arranges training programs to improve the skills of the
employees.
5. Evaluates the performance: HRM evaluates the performance of the employees. And on
this evaluation, employees get promoted.
6. Exit interview: HRM takes exit interviews when an employee quits his job.
7. Collect various suggestions: HRM tries to collect various suggestions from the employees.
8.Helps the organization’s top management to implement various techniques: HRM helps
the organizational top management in implementing various techniques to help the
organization to go ahead.
9. Arrange various workshops: HRM can arrange various workshops to increase the
knowledge of the employees.
10. Arranges meetings: HRM arranges various meetings and seminars to discuss the
problems that the employees face in the organization.
11. Takes various precautions: HRM takes various precautions to prevent negligent hiring.
12. Gives job specification of employee: HRM gives the job specification of every employee
and the requirements that an employee needs to do it.
13. Does job enrichment: HRM does various job enrichment, job rotation, job enlargement,
and motivates the employees.
14. Develop the relationship between labour and management: HRM gives support to
develop and maintain the cordial relationship between labour and management.

Functions
We have already defined HRM. The definition of HRM is based on what managers do. The
functions performed by managers are common to all organizations. For the convenience of
study, the function performed by the resource management can broadly be classified into
two categories, viz.

• Planning: Preparing forecasts of future HR needs in the light of an organization’s

environment, mission and objectives, strategies and internal strengths and
weaknesses, including its structure, culture technology and leadership.
• Staffing: Obtaining people with the appropriate skills abilities knowledge and
experience to fill jobs in the work organisation. Key practices are human resource
planning, job analysis and recruitment and selection.
• Developing: Analysing learning requirements to ensure that employees possess the
knowledge and skills to perform satisfactorily in their jobs or to advance in the
organisation. Performance appraisal can identify employee’ key skills and
‘competencies.
• Monitoring: The design and administration of reward systems. HR practices include
job evaluation, performance appraisal, pay and benefits.
• Maintaining: the administration and monitoring of workplace safety, health, and
welfare policies to retain a competent workforce and comply with statutory standards
and regulations.
• Managing relationships: Encompasses a range of employee involvement/
participation schemes in non-union or union work place. In a union environment this
includes negotiating contracts and administering the collective agreement.
• Managing change: This involves helping others to envision the future, communicating
this vision, setting clear expectations for performance and developing the capability
to reorganize people and reallocate other resources.
• Evaluating: Designing the procedures and processes that measure, evaluate and
communicate the value-added component of HR practices and the entire HR system
to the organisation.

Difference Between Personnel Management and Human Resource Management

 The main difference between Personnel Management and Human Resource Management
lies in their scope and orientation. While the scope of personnel management is limited and has
an inverted approach, wherein workers are viewed as tool. Here the behaviour of the worker can
be manipulated as per the core competencies of the organization and are replaced when they
are worn-out.
On the other hand, human resource management has a wider scope and considers
employees as the asset to the organization. It promotes mutuality in terms of goals, responsibility,
reward etc. that will help in enhancing the economic performance and high level of human
resource development.

Definition of Personnel Management

Personnel Management is a part of management that deals with the recruitment, hiring,
staffing, development, and compensation of the workforce and their relation with the
organization to achieve the organizational objectives. The primary functions of the personnel
management are divided into two categories:

• Operative Functions: The activities that are concerned with procurement,

development, compensation, job evaluation, employee welfare,
utilization, maintenance and collective bargaining.
• Managerial Function: Planning, Organizing, Directing, Motivation, Control, and
Coordination are the basic managerial activities performed by Personnel
Management.

From the last two decades, as the development of technology has taken place and the humans
are replaced by machines. Similarly, this branch of management has also been superseded by
Human Resource Management.

Human Resource Management is that specialized and organized branch of management

which is concerned with the acquisition, maintenance, development, utilization and
coordination of people at work, in such a manner that they will give their best to the
enterprise. It refers to a systematic function of planning for the human resource needs and
demands, selection, training, compensation, and performance appraisal, to meet those
requirements.
 Human Resource Management is a continuous process of ensuring the availability of
eligible and willing workforce i.e. putting the right man at the right job. In a nutshell, it is an
art of utilizing the human resources of an organization, in the most efficient and effective
way. HRM covers a broad spectrum of activities which includes:

• Employment
• Recruitment and Selection
• Training and Development
• Employee Services
• Salary and Wages
• Industrial Relations
• Health and safety
• Education
• Working conditions
• Appraisal and Assessment

The following are the major differences between Personnel Management and Human
Resource Management:

1. The part of management that deals with the workforce within the enterprise is known
as Personnel Management. The branch of management, which focuses on the best
possible use of the enterprise’s manpower is known as Human Resource
Management.
2. Personnel Management treats workers as tools or machines whereas Human
Resource Management treats it as an important asset of the organization.
3. Human Resource Management is the advanced version of Personnel Management.
4. Decision Making is slow in Personnel Management, but the same is comparatively
fast in Human Resource Management.
5. In Personnel Management there is a piecemeal distribution of initiatives. However,
integrated distribution of initiatives is there in Human Resource Management.
6. In Personnel Management, the basis of job design is the division of work while, in the
case of Human Resource Management, employees are divided into groups or teams
for performing any task.
7. In PM, the negotiations are based on collective bargaining with the union leader.
Conversely, in HRM, there is no need for collective bargaining as individual contracts
exist with each employee.
8. In PM, the pay is based on job evaluation. Unlike HRM, where the basis of pay is
performance evaluation.
9. Personnel management primarily focuses on ordinary activities, such as employee
hiring, remunerating, training, and harmony. On the contrary, human resource
management focuses on treating employees as valued assets, which are to be valued,
used and preserved.
HR Mangers Duties and Line Mangers Duties

HR Mangers Duties:
As a manager of an important division of an organization, the duties are usually many and
also hold great importance in a company. Some of them are listed below,
• Correlating and planning to make the best use of the employee talents and skills.
• Administer the work of support staff and specialists of their team.
• Building a relationship between employee and organization management.
• Guide in helping their team in recruiting and hiring employee workforce.
• Moderate and act on employee benefit programs.
• Avoiding and solving different types of conflicts arising in an organization.
• Consulting with department managers over important organizational issues.

Line Managers Duties:

The line manager is a person or employee of an organization who directly directs the
other employees and is in charge of all the individuals working in a department. The
line manager reports to the person in a position ranking higher to him., Following are
the duties of line manager;

• Recruiting and hiring talent to fill team positions

• Providing training and support to new hires
• Cross-training employees to ensure job rotation and minimize assignment coverage
gaps
• Providing coaching and performance feedback to all team members
• Communicating and ensuring understanding of functional or departmental goals
• Measuring individual and team metrics and performance against targets and
monitoring progress
• Identifying the need for corrective actions when necessary
• Ensuring quality standards for all processes on their team
• Evaluating overall team and individual performance and delivering performance
reviews
• Engaging and coordinating with other line managers across the organization
• Providing reports on productivity and other performance indicators to senior
management

Impact Of HRM On Organisation Performance:

HRM practices can enhance employee skills and abilities so that improve organizational
performance. Training is a management tool used to develop skills and knowledge as a means
of increasing an individual’s and ultimately an organization’s current performance in terms of
efficiency, effectiveness and productivity.
HRM affects positively in the following points:

1. Recruiting & skilled individuals.

The recruitment process is a vital aspect in any organization which mainly drives the
output and efficiency of the organization. The recruitment process of any organization
mainly controls by the human management department of the organization.

The major skills are as follow.

• Effective communication skills to coordinates with the other working staffs of the
organization.

• Ability to work in a team to motivate other staffs for productive outcome.

• The ability to analyse the situation is essential for solving any issue in the
organization.

• Ability of control the working staffs.

• The position must aware about the technical thing and computer in order manage
the technical resources in the restaurant.

• The most vital thing is the decision-making capability and the confident to manage
the vital decisions within the organization.

2. Employee retention by developing employees:

Managing for employee retention involves strategic actions to keep employees motivated
and focused so they elect to remain employed and fully productive for the benefit of the
organization. A comprehensive employee retention program can play a vital role in both
attracting and retaining key employees, as well as in reducing turnover and its related costs.

3. Higher productivity, flexibility & innovation:

Flexibility in the workplace has an impact on innovation as well as the efficiency of employees.
Flexibility has a huge impact on how a company attracts, hires and retains top talent.
Innovation can lead to higher productivity. As productivity rises, more goods and services are
produced and the economy grows. Innovation and productivity growth bring vast benefits for
consumers and businesses.

4. Accomplish organisational objectives:

Organizational goals are strategic objectives that a company's management establishes to

outline expected outcomes and guide employees' efforts.

There are two main types of organizational goals:

Official: Goals that an organization aims to achieve.
Operative: Goals that are required to achieve a desired outcome

Job design

Meaning of Job Design:

Job design is the logical sequence of the process of job analysis and involves
conscious efforts to organize tasks, duties and responsibilities into a unit of work so as to
business objectives.

Concept Job Design:

It is believed that a well-designed job motivates the employees for higher level of
performance. Poorly designed jobs often result in boredom and employee frustration, high
turnover, reduced motivation, low level of productivity and increase in operating cost.

Job Characteristics Model

The job characteristics model is one of the most influential attempts to design jobs with
increased motivational properties (Hackman & Oldham, 1975). Proposed by Hackman and
Oldham, the model describes five core job dimensions leading to three critical psychological
states, resulting in work-related outcomes.

Significance of Job Design

Job design is very important because this is the process which makes sure that the job remains
updated and is relevant to the employee. The main objective here is to reduce dissatisfaction
which comes while doing the job on daily basis. This dissatisfaction can lead to employee
leaving the organization and causing issues for the company. Job design has primary
responsibility of regularly updating the job.
1. Job evaluation – Information about the design of the job is needed for job evaluation,

which is the process of comparing the job with other jobs in an organisation to determine the

appropriate grade.

2. Recruitment and selection – The process gives you a better understanding about the job

that needs to be filled and helps –

I. The selection panel identifies the job requirements (selection criteria), write the job

advertisement, develop interview questions, and assess the best applicant for the job

II. Job applicants to decide if they should apply for the job and to prepare for the

selection process.

3. Career planning and development – The information helps employees to understand the
requirements of their role, gain insight into the requirements of other roles in the

organisation and identify the capabilities needed for their chosen career paths.

4. Performance management – Clearly defined roles allow managers and staff to develop

shared understanding of work performance expectations. Capability benchmarks help them

identify and meet their professional development needs.

5. Reward and recognition – Clearly defined capability benchmarks make it easier to

recognise work performance which is above expectations.

6. Workforce planning – When aggregated, all the individual roles in the organisation should

meet the organisation’s capability needs.

7. Work allocation planning – Managers can ensure that the work relates to the organisation’s

core business and is correctly allocated.

8. Decisions on training investments – Individual and organisational training are better

targeted.

9. Ensuring workforce safety – The information may help identify hazardous conditions,

unhealthy environments or unsafe work practices/processes which need to be addressed. It

may also be used to identify return to work solutions as part of a rehabilitation plan.

10. Workforce equity and diversity – The process may also identify ways of improving

workforce equity.
Approaches of Job Design
There are fived main approaches to job design, They are following;

I. Work Simplification assume that work can be broken down into simple, repetitive tasks that
maximize efficiency.
II. Job Enlargement the process of expending a job duties.
III. Job Rotation the process of rotating workers among different narrowly defined tasks without
disruption the flow of work.
IV. Job Enrichment the process of putting specialized tasks back together so that one person is
responsible for producing a whole product or an entire service.
V. Team-based Job design focus on giving a team, rather than an individual, a whole and
meaningful piece of work to do.

Job Analysis
Definition:
According to Edwin B. Flippo – “Job analysis is the process of studying and collecting
information relating to the operations and responsibilities of a specific job. The immediate
products of this analysis are job descriptions and job specifications.”
Concept :
Job analysis is essentially a process of collecting and analysing data relating to a job in an
organization. It refers to a scientific and systematic analysis of a job in order to obtain all
pertinent facts about the job. Job analysis has been defined as “the process of determining
by observing and study the tasks, which comprise the job; the methods and equipment’s used,
and the skills and attitudes required for successful performance of the job.”

1. Defining the objectives: The foremost step in the process of job analysis is defining
the objective of the job analysis. The objective could be either of the following:
o Redesign the job description
 o Revise the compensation program
o Change the organization structure
o Redesign the job in a particular department. Once the objective is selected, it
should be well communicated to the top management because with its
support only, the changes can be made in the organization.
2. Preparing the job Analysis: After setting an objective, the kind of jobs that are to be
analysed are selected, whether the clerical jobs, managerial jobs, division specific job,
etc. Also, the members who are included in the analysis and the methods to be used
are identified. At this stage, the complete review of the existing job description is done
to have a fair insight of the duties, responsibilities, organization chart, working
conditions, hazards, etc. that exist in a particular set of jobs.
3. Performing the Job Analysis: The next stage in the process of job analysis is to perform
or begin with the job analysis. Here, the sufficient time should be allotted for collecting
the job details from the employees. The information from the employees can be
collected through questionnaires, interviews, or through an observation method.
Once the information gets collected it needs to be sorted on the basis of its nature,
division, department.
4. Designing Job Descriptions and Job Specifications: At this stage, the job analyst
prepares a draft of the job description and the specifications. After sorting of the
information, the changes that need to be made in the jobs is identified and is written
on paper. Once the draft gets prepared, it is circulated to the managers, supervisors,
and the employees.
5. Control Job Descriptions and Job Specifications: This is the last step in the process of
job analysis wherein the job descriptions, and the specifications are timely checked
and modified according to the changing needs of the organization.

The job analysis results in the job description and the job specification. The Job description
comprises of job duties, the level of responsibilities, working conditions, etc. and whereas the
job specification tells about the skills, education, background, qualification, training,
communication skills required to perform a specific job.
Purpose of Job Analysis

Job Analysis plays an important role in recruitment and selection, job evaluation, job
designing, deciding compensation and benefits packages, performance appraisal, analyzing
training and development needs, assessing the worth of a job and increasing personnel as
well as organizational productivity.

 Recruitment and Selection: Job Analysis helps in determining what kind of person is
required to perform a particular job. It points out the educational qualifications, level
of experience and technical, physical, emotional and personal skills required to carry
out a job in desired fashion. The objective is to fit a right person at a right place.
 Performance Analysis: Job analysis is done to check if goals and objectives of a
particular job are met or not. It helps in deciding the performance standards,
evaluation criteria and individual’s output. On this basis, the overall performance of
an employee is measured and he or she is appraised accordingly.
 Training and Development: Job Analysis can be used to assess the training and
development needs of employees. The difference between the expected and actual
output determines the level of training that need to be imparted to employees. It also
helps in deciding the training content, tools and equipment’s to be used to conduct
training and methods of training.
 Compensation Management: Of course, job analysis plays a vital role in deciding the
pay packages and extra perks and benefits and fixed and variable incentives of
employees. After all, the pay package depends on the position, job title and duties and
responsibilities involved in a job. The process guides HR managers in deciding the
worth of an employee for a particular job opening.
 Job Designing and Redesigning: The main purpose of job analysis is to streamline the
human efforts and get the best possible output. It helps in designing, redesigning,
enriching, evaluating and also cutting back and adding the extra responsibilities in a
particular job. This is done to enhance the employee satisfaction while increasing the
human output.
 HRM
Module – 3
Training and Development

Concept and Significance of Training

Training is an organized activity for increasing the knowledge and skills of people for a
definite purpose. It is also known as the act of increasing the knowledge and skills of an
employee for doing particular job.
Training enables the employees to get acquainted with job and also increase their aptitudes
and skills and knowledge. It makes newly recruited employees fully productive in the
minimum of time. Even for the old workers, it is necessary to refresh them and to enable
them to keep up with new methods and techniques as well as new machines and equipments
for doing the work. So training is not a “one-step process”, but it is a continuous or never-
ending process because it increases the knowledge and skill of new employees in performing
their jobs and serves as a refresher course for the current employees.
The significant importance of training are: -
• Respond to technology changes affecting the job requirements.
• Respond to organizational restructuring.
• Adapt to increased diversity to the workforce.
• Support career development.
• Fulfill employee need for growth.
• Serves as effective source of recruitment.
• It is an investment in HR with a promise of better returns in future.

The Training Process

The Training Process comprises of a series of steps that needs to be followed systematically
to have an efficient training programme. The Training is a systematic activity performed to
modify the skills, attitudes and the behaviour of an employee to perform a particular job. The
most important training processes are: -
1. Needs assessment:
The first step in the training process is to assess the need for training the employees.
The need for training could be identified through a diagnosis of present and future
challenges and through a gap between the employee’s actual performance and the
standard performance. The needs assessment can be studied from two perspectives:
Individual and group. The individual training is designed to enhance the
individual’s efficiency when not performing adequately. And whereas the group
training is intended to inculcate the new changes in the employees due to a change
in the organization’s strategy.

2. Deriving Instructional Objectives:

Once the needs are identified, the objectives for which the training is to be
conducted are established. The objectives could be based on the gaps seen in the
training programmes conducted earlier and the skill sets developed by the
employees.

3. Designing Training Programme:

The next step is to design the training programme in line with the set objectives. Every
training programme encompasses certain issues such as: Who are the trainees? Who are the
trainers? What methods are to be used for the training? What will be the level of training?
etc. Also, the comprehensive action plan is designed that includes the training content,
material, learning theories, instructional design, and the other training requisites.
 4. Implementation of the Training Programme:
Once the designing of the training programme is completed, the next step is to put
it into the action. The foremost decision that needs to be made is where the training
will be conducted either in-house or outside the organization. Once it is decided,
the time for the training is set along with the trainer who will be conducting the
training session. Also, the trainees are monitored continuously throughout the
training programme to see if it’s effective and is able to retain the employee’s
interest.

5. Evaluation of the Training Programme:

After the training is done, the employees are asked to give their feedback on the
training session and whether they felt useful or not. Through feedback, an
organization can determine the weak spots if any, and can rectify it in the next
session. The evaluation of the training programme is a must because companies
invest huge amounts in these sessions and must know it’s effectiveness in terms of
money.

Training Methods

There are two types of training methods:

1.On the job training methods:

This type of training is also known as job instruction training, this training is most commonly
used as a method, where the individual is placed on a regular job & taught about the skills
and necessary things to perform the job.

These are some of the on-the-job training methods:

1. Job Rotation:
It involves the movement of the trainee from one job to another. The trainee receives
job knowledge & gains experience from his supervisor or trainer. This type of training
gives an opportunity to the trainee to understand the problem of employees on other
jobs & respect them.

2. Coaching:
The trainee is placed under a particular supervisor who functions as a coach in
training the individual. The supervisor provides feedback to the trainee on his
performance & offers him some suggestions for improvement.

3. Job Instruction:
This method is also known as step-by-step training. Under this method, the trainer
explains to the trainee the way of doing the jobs, knowledge & skill and allows him to
do the job. The trainer appraises the performance, provides information & corrects the
trainees.
 4. Committee Assignment:
Under this method, a group of trainees is given and asked to solve an actual
organization problem. The trainees solve the problem jointly and develop teamwork.

2. Off the Job Methods:

Under this method of training, the trainee is separated from the job situation and his attention
is focused on learning the material related to his future job performance.

These are some of the off- the- job training method

1. Vestibule training:
In this method, actual work conditions are simulated in a classroom. Material files and
needed equipment are also used in training. This type is used for training personnel
for clerical and semi-skilled jobs.

2. Role-Playing:
It is defined as a method of human interaction that involves realistic behaviour in an
imaginary situation. This method of training involves action doing the practice. This
method is mostly used for developing inter-personal interaction and relations.

3. Lecture Method:
The lecture is a traditional & direct method of instruction. The instructor organizes the
material & gives it to a group of trainees in the form of a talk. This is beneficial to
train a large group of trainees.

4. Conference:
It is a method for clerical, professional & supervisory personnel. This involves a
group of people who put forth ideas, examine & share facts, ideas assumptions &
draw a conclusion. The success of this method depends on the leadership qualities of
the person who leads the group.

5. Programmed Instructions:
In recent years this method has become popular the subject matter to be learned is
presented in a series of carefully planned sequential. This method is expensive &
time-consuming.

Difference between Training and Development

Training

Training refers to an education process in which employees get a chance to develop skills,
competency and learning as per the post duty requirements. So simply we can say it is a process
of increasing knowledge and skills of an employee. Trainings are performed in an aim of
improving knowledge and skill that are needed to perform their existing jobs. That’s why it is
short time/term focused and for a fixed duration. Mainly it is the result of initiatives, taken by
management and it is a result outside motivation.

Development

Development refers to an informative process which mainly helps in understanding about the
overall growth and improvement of the skills of the employee. So simply we can say it is a
process of learning and growth. Developments are performed in an aim of improving
knowledge and skill to face future challenges. That’s why it is long time/term focused, which
takes place throughout the life of a person. Mainly it is the result of initiatives, taken by self
and it is a result of self-motivation.

The other differences are: -

1. Training refers to an education process in which employees get a chance to develop skills,
competency and learning as per the post duty requirements. Development refers to an
informative process which mainly helps in understanding about the overall growth and
improvement of the skills of the employee.

2. So simply we can say training is a process of increasing knowledge and skills of an

employee. So simply we can say development is a process of learning and growth.

3. Training is short time/term focused and for a fixed duration. Development is long time/term
focused, which takes place throughout the life of a person.

4. Training is a job-oriented process and Development is a career-oriented process.

05.Trainings are performed in an aim of improving knowledge and skill that are needed to
perform their existing jobs and Developments are performed in an aim of improving knowledge
and skill to face future challenges.

6. Training helps individual to learn how to perform his/her present job satisfactory.
Development prepares individuals for future job and growth in all aspects.

7. Training is a reactive process. Development is a proactive process.

8. Training is the result of initiatives, taken by management and Development is a result outside
motivation.

9. Trainings are mainly attended by individual. Development is mainly attended by individual.

10. Mainly training refers to learning new things and refreshing old one. Mainly development
refers to implementing learned sessions and finding new ones.
11.Training focuses on technical skills and it has a narrow scope and Development focuses on
conceptual and human ideas and it has a wider scope.

12.Training focuses on the role while development focuses on the person.

13.Training revolves around present need.Development revolves around future.

Concept of Management Development

Management Development is a systematic process of training and growth by which individuals

gain and apply knowledge, skills, insights, and attitudes to manage work organizations
effectively. Executive or management development is a continuous process of learning and
growth designed to bring behavioural change among the executives. It implies that there will
be a change in knowledge and behaviour of the individuals undergoing development
programme.

The individual will be able to perform his present assignment better and also increase his
potential for future assignments through the acquisition, understanding and use of new
knowledge, insights and skills. The learning process involves the implication that there will be
changed behaviour on the part of the individuals given the adequate training and education.
Managers develop not only by participating in formal courses of instruction drawn by the
organization, but also through actual job experience in the organization. It should be recognized
that it is for the organization to establish the developmental opportunities for its managers and
potential managers. But an equal, perhaps more important, counterpart to the efforts of the
organization are those of the individuals. Self-development is an important concept in the
whole programme of management development.

The important assumptions and concerns behind management development are as follows:

1. An executive needs development throughout his work life and his professional career. Thus,
management development is an on-going activity.

2. There always exists a gap between ‘required performance level’ and the ‘capacity’ of an
individual. Management must fill in the gap to provide an opportunity for improvement.

3. Some personal variables (such as age, habits, level of motivation, state of mind, etc.,) retard
the growth of an individual.

4. In work situation, growth involves stresses and strains. Development can seldom take place
in a completely peaceful atmosphere.

5. Involvement and participation are inescapable for growth.

6. In addition to the methodology of achievement, there must be defined objectives and goals
required to be achieved.

7. Shortcomings must be identified. Feedback and counseling to junior colleagues mentioning

the shortcomings and applying suitable HRD instruments to overcome the shortcomings are
essentially required.

Performance Management (Definition)

Performance management is a corporate management tool that helps managers monitor and
evaluate employees' work. Performance management's goal is to create an environment where
people can perform to the best of their abilities to produce the highest-quality work most
efficiently and effectively.

A formal performance-management program helps managers and employees see eye-to-eye

about expectations, goals, and career progress, including how individuals' work aligns with
the company’s overall vision. Generally, performance management views individuals in the
context of the broader workplace system.

Concept and Objectives of Performance Management

Concept

As a communication system, it is developed to assist employees in succeeding. It not just

requires direction, from the end of managers and supervisors, but also needs active
participation on the part of employees.

It makes sure that employees are known about their key job functions, aware of the
performance level expected, get constant feedback on their performance, have opportunities
for training and development, get ratings on their performance and reward thereon, in just and
fair manner.

Objectives

The main goal of performance management is to ensure that the organization as a system and
its subsystems work together in an integrated fashion for accomplishing optimum results or
outcomes.

The major objectives of performance management are: -

▪ To enable the employees towards achievement of superior standards of work

performance.
 ▪ To help the employees in identifying the knowledge and skills required for performing
the job efficiently as this would drive their focus towards performing the right task in the
right way.

▪ Boosting the performance of the employees by encouraging employee empowerment,

motivation and implementation of an effective reward mechanism.

▪ Promoting a two-way system of communication between the supervisors and the

employees for clarifying expectations about the roles and accountabilities,
communicating the functional and organizational goals, providing a regular and
transparent feedback for improving employee performance and continuous coaching.

▪ Identifying the barriers to effective performance and resolving those barriers through
constant monitoring, coaching and development interventions.

▪ Creating a basis for several administrative decisions strategic planning, succession

planning, promotions and performance-based payment.

▪ Promoting personal growth and advancement in the career of the employees by helping
them in acquiring the desired knowledge and skills.

Performance Management Process

The performance management process is a collaborative, communication-based process

where employees and management work together to plan, monitor and review the employee’s
objectives, long-term goals, job trajectory and comprehensive contribution to the company

1. Planning

1.1 The defining stage

The performance management process begins with the planning stage.HR and management
need to define the job itself, including a comprehensive description, long and short-term
goals, identify key objectives and develop a clear metric for how those objectives and goals
will be assessed.
Goals should be clear, done in the SMART format (specific, measurable, attainable, relevant,
time-based) and clear performance standards should be set.

1.2 The feedback stage

Once management has completed the defining stage, employees should have the opportunity
to give input on this material. They are the one doing their job and will have a key insight
into what skills, competencies and goals will best assist the company to achieve
organizational goals.

1.3 The approval stage

Management and employees both agree to the definition of the role, goals and objectives.

By making this first step of the performance management process collaborative, management
sets the stage for the process as a whole to be collaborative, and the employee feels that they
are involved in goal setting - an important thing, as evidenced by the Gallup study.

2. Coaching

2.1 Organize meetings on a timely, regular basis

Once the parameters of the job and objectives for the future have been set, the next step of the
performance management process begins.

The coaching process is extremely important and must be done on a regular basis. Meetings
should be at least quarterly, although monthly meetings are the ideal.

2.2 Provide necessary training, coaching and solutions

These meetings should focus on solutions and coaching opportunities, rather than punitive
measures for lackluster performance.

If accountability is made into a negative, then employees will avoid it rather than being
honest about where they are struggling.

In some cases, management training in this area can be very helpful to an organization.

2.3 Solicit feedback on both sides

Management should be able to give - and receive - honest feedback and work with employees
rather than adopting a combative stance. The ability to give actionable feedback is important
here.

2.4 Revisit objectives as necessary

As the performance management process continues, management should revisit objectives to

see if adjustments should be made, as well as pay attention to career development
opportunities for their employees.

This step involves reviewing the overall performance of the employee, how well the process
itself worked, and it also includes the reward - which is an extremely important part of the
overall process.

3. Reviewing

3.1 Reviewing employee performance

At the end of the yearly performance management cycle, there should be an employee
review, which is sometimes also called a performance appraisal. Typically, these are held
once a year, to look at how well the employee performed over that span of time.

There should be a clear record from previous check-ins to show the employee’s progress
throughout the year. The monthly check-ins are to help the employee with problem-solving,
adjusting goals and other future-looking tasks. This performance review is the only step that
looks backward, to assess the behavior of the past year.

3.2 Reviewing the performance management process

At this stage, it is important for both management and employees to look over the previous
year and see how well the performance management process worked.

Questions that can be asked are:

• Were personal and organizational objectives met? If not, why?

• What challenges did the employee face?

• What training would help the employee perform better?

• How did management feedback help? If not, why?

• How could the process be made better?

 • Was the time spent on this process effectively?

3.3 Reviewing overall goal completion

Of course, one of the main questions to answer is ‘did the employee reach their goals?’ How
well did the employee succeed at the tasks given to them throughout the year?

It is important to look at both smaller and larger goals, as this can give an indication to
problem areas where training or interventions can be applied.

3.4 Giving actionable feedback

A key part of the review is to give and receive feedback.

Management should give actionable feedback for the employee so that they know areas
where they can improve future performance.

The employee should also be invited to give feedback on the process, and how management
can do better on their end.

4. Action

4.1 Reward and recognition

The last step of the performance management process is the reward and recognition.

This step is absolutely key - employees will not stay motivated if they are given no reason to.
This does not necessarily have to be monetary, although it likely will include monetary
compensation. Other rewards could be new projects, company-wide recognition, time off, or
leadership opportunities.

4.2 Setting the stage for next year’s performance management cycle

The end of the performance management cycle gives management and employees one last
chance to offer feedback on the process as a whole and asks for thoughts and feedback for the
planning stage for the next year’s cycle.

Performance management vs Performance appraisal

The major differences between performance appraisal and performance management are: -

1. An organized way of evaluating the performance and potential of employees for their
future growth and development is known as Performance Appraisal. The complete
process of managing the human resources of the organization is known as
Performance Management.

2. Performance Appraisal is a system while Performance Management is a process.

3. Performance appraisal is inflexible, but performance management is flexible.

4. Performance Appraisal is an operational tool to improve the efficiency of employees.
However, performance management is a strategic tool.

5. Performance Appraisal is conducted by a human resource department of the

organization, whereas managers are held responsible for performance management.

6. In performance appraisal, corrections are made retrospectively. In contrast to

performance management is forward looking.

7. Performance Appraisal has an individualistic approach which is just opposite in the

case of Performance Management.

8. Performance Appraisal is carried on eventually, but Performance Management is an

ongoing process.
 MODULE – 4
TALENT MANAGEMENT & COMPENSATION MANAGEMENT
TALENT MANAGEMENT
Talent management indicates the skills of attracting highly skilled workers, integrating
new workers, and improving and retaining current workers to meet the current and
future business objectives.

Companies involved in a talent management strategy shift the duties of employees from
the human resources department to all managers throughout the company. It is also
called Human Capital Management (HCM).
Talent management is basically concerned with coordinating, collaborating and
managing the different talents people have to offer within a company. This is done by
studying and examining each individual on the basis of their skills, talent, personality and
character in relation to filling a particular vacancy within the company.
Every individual has different skills to offer and the difficult part for a company is choosing
those individuals who fit in with the existing company culture. Effective HR procedures
will be able to identify these individuals and appoint them appropriately.

CONCEPT OF TALENT MANAGEMENT/ TM MODEL

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1.Planning: Planning is the initial step in the process of Talent Management. It involves
the following:

• Identifying the human capital requirement.

• Developing the job description and key roles.
• Proposing a workforce plan for recruitment.

2. Attracting: Deciding whether the source of recruitment should be internal or external

and seeking for the suitable individuals to fill in the vacant positions through:

• Job Portals such as Naukri.com, Timesjob.com, etc.

• Social Network such as LinkedIn and Twitter.

3. Selecting: Recruiting and selecting the personnel. It involves the following steps:

• Scheduling written test and interviews.

• Scrutinizing the most suitable candidate for the profile.

4. Developing: In this stage, the employee is prepared according to and for the
organisation and the profile. Following are the steps involved in the process:

• Carrying out an onboarding programme or an orientation programme.

• Enhancing the skills, aptitude and proficiency of the personnel to match the
profile.

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 • Counselling, guiding, coaching, educating, mentoring employees and job
rotation.

5. Retaining: Employee retention is essential for any organisational existence and

survival. Following are the ways of employee retention:

• Promotions and increments.

• Providing opportunities for growth by handing over special projects.
• Participative decision making.
• Teaching new job skills.
• Identifying the individual’s contribution and efforts.

6. Transitioning: Talent management aims at the overall transformation of the

employees to achieve the organisational vision. It can be done through:

• Retirement benefits to employees.

• Conducting Exit interviews.
• Succession Planning or Internal Promotions.

SIGNIFICANCE OF TALENT MANAGEMENT

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The basic purpose of talent management is to recruit, develop, and retain best talent in the
organization. The HR Department always endeavors to ensure that employees with the right
skills and qualities stay with the organization for a long time.

The most important functions of Talent Management are as follows:

• Establishing a high-performance workforce.
• Attracting individuals with high potential and retaining them through proper training
and refreshment.
• Increasing the productivity of the organization.
• Proper time management, as untrained and unskilled workforce lead to wastage
of time and commitment of errors, which is not cost-effective.
• Retain talented and high-performing employees.
• Ensuring growth and innovation in the organization.
• Developing skills and competencies in employees.

TALENT MANAGEMENT LIFE CYCLE

Talent Management Life Cycle is a continuous process that deals with human capital in
a comprehensive, holistic way ensuring that both employee and employer gain the
maximum benefit from their mutual association.

1. The Organizational Plan :

• Defines the categories of people you are going to need in the future to meet
and/or exceed your business plans.
• Defines the specific skills and skill levels required for each position.
• Defines the job goals and standards for each position type.
• Determines the average cost (salary & benefits) for each position type.
• Quantifies how long individuals remains in each job type.

2. The Recruiting Plan :

• Based on the Organizational Plan, the recruiting plan determines when to begin
the recruiting process for job types in the business plan.
• Identifies sources where you have been most successful in finding each category
of employee.
• Formalizes the process for initiating, approving and commencing a recruiting
program.
• Determines why candidates decide to join or not to join your organization and
documents this information.
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3. The Development Plan :

• Ensures each job type has objective standards of performance and that career
directions for each position can be clearly identified.
• Ensures each employee has an individual development plan and that managers
and supervisors hold direct reports accountable for achieving each objective in
their plan.
• Ensures every employee has a formal career plan.
• Structures regular coaching sessions between managers/supervisors and their
direct reports.
• Rewards managers/supervisors for achieving developmental success with their
direct reports.

4. The Retention Plan :

• Aligns rewards and recognition systems with individual performance and

development plans.
• Surveys employees regularly to benchmark employee satisfaction and determine
changes in attitudes and motivators.
• Ensures action on survey results.
• Rates and rewards managers/supervisors for successfully retaining qualified,
successful employees as well as for achieving the traditional business metrics of
the position.
• Ensures all key positions in your organization have a formal, active succession
plan in place.

5. The Assessment Plan :

• Ensures each employee is formally assessed periodically throughout each year.

• Compares each employee to established standards, behavioral and cultural
norms, and rates each employee within a job type against their peers.
• Ensures that development plans are in place for all employees and that
corrective action plans exist for under performing employees.

6. The Outplacement Plan :

• Determines when a job type is no longer required by the organization and moves
to eliminate it immediately.
• Determines when a job type has changed sufficiently to warrant a reassessment
of the employees currently filling those positions.

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 • Determines when an employee is no longer meeting requirements in a given job
type and move to improve performance, transfer the employee to another job
type or out-place the employee.
• Determine why people are leaving the organization on their own and take steps
to improve negative situations.

7. The Feedback Loop :

• Design a feedback system that has input points throughout the employee life
cycle and that captures relevant data, establishes trends and provides managers
and supervisors with usable data.
• Determine the most common reasons employees leave.
• Build a database to identify and track trends.
• Provide individual managers/supervisors with detailed feedback on employees
who leave their areas of responsibility.

Talent Management Life Cycle looks at the entire human resource cycle from the
business planning phase to the recruiting and employment event, through the
individual’s development cycle to the last day of employment of that employee and
beyond.

TALENT MANAGEMENT INITIATIVES

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The managers and the higher authorities need to take the initiative to pave the way for
the personal development and long-term association with the organisation. Some of the
ways in which a manager can motivate and retain employees are as follows:

• Recognition: Recognising employees’ contribution and their work on individual

grounds, boost up self-confidence in them.
• Remuneration and Reward: Increasing pay and remuneration of the employees
as a reward for their better performance.
• Providing Opportunities: Giving the charge of challenging projects to the
employees along with the authority and responsibility of the same, makes them
more confident.
• Role Design: The role of employees in the organisation must be designed to
keep them occupied and committed, it must be flexible enough to inculcate and
adapt to the employee’s talent and knowledge.
• Job Rotation: Employees lack enthusiasm if they perform the same kind of work
daily. Thus, job rotation or temporary shifting of employees from one job to
another within the organisation is essential to keep them engaged and motivated.
• Training and Development: On the job training, e-learning programmes, work-
related tutorials, educational courses, internship, etc. are essential to enhance
the competencies, skills and knowledge of the employees.
• Succession Planning: Internal promotions helps identify and develop an
individual who can be the successor to senior positions in the organisation.
• Flexibility: Providing a flexible work environment to the employees makes them
more adaptable to the organisation and brings out their creativity.
• Relationship Management: Maintaining a positive workplace where employees
are free to express their ideas, take part in the decision-making process,
encourage employees to achieve goals and are rewarded for better performance
leads to employee retention.
• Self-motivation: Nothing can be effective if the employee is not self-determined
and motivated to work.

COMPENSATION MANAGEMENT

Compensation Management refers to the establishment and implementation of sound

policies, programs and practices of employee compensation.

It is essentially the application of a systematic and scientific approach for compensating

the employees for their work in a fair, equitable and logical manner.

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Compensation Management is concerned with the compensation to employees for their
work and contribution for attaining organisational goals.

Obviously, it is concerned with designing and implementing total compensation

package. It is also known as wage and salary administration or remuneration
management.

DEFINITION: According to Cascio (1995) the “Compensation includes direct cash

payments and indirect payments in form of employees benefits and incentives to
motivate employees to strive for higher levels of productivity”.

CONCEPT OF COMPENSATION MANAGEMENT

Compensation management, also known as wage and salary administration,

remuneration management, or reward management, is concerned with designing and
implementing total compensation package. The traditional concept of wage and salary
administration emphasized on only determination of wage and salary structures in
organizational settings. However, over the passage of time, many more forms of
compensation entered the business field which necessitated to take wage and salary
administration in comprehensive way with a suitable change in its nomenclature.

SIGNIFICANCE OF COMPENSATION MANAGEMENT

A good compensation is a must for every business organization, as it gives an employee
a reason to stick to the company.
An organization gains from a structured compensation management in the following
ways:
• It tries to give proper refund to the employees for their contributions to the
organization.
• It discovers a positive control on the efficiency of employees and motivates them
to perform better and achieve the specific standards.
• It creates a base for happiness and satisfaction of the workforce that limits the
labor turnover and confers a stable organization.
• It enhances the job evaluation process, which in return helps in setting up more
realistic and achievable standards.
• It is designed to abide with the various labor acts and thus does not result in
conflicts between the employee union and the management. This creates a
peaceful relationship between the employer and the employees.
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 • It excites an environment of morale, efficiency and cooperation among the workers
and ensures satisfaction to the workers.
In short, we can say that compensation management is required as it encourages the
employees to perform better and show their excellence as well as provides growth and
development options to the deserving employees.

COMPONENTS OF COMPENSATION MANAGEMENT

Compensation is the reward or remuneration paid to the employees in return for the
service rendered. Such compensation package includes both monetary and non-
monetary component.

1. Wage or Salary

2. Dearness and other allowances

3. Incentives

4. Fringe benefits and perquisites.

1. Wage or Salary:

Wage: The term wage refers to the remuneration paid to the workers appointed on
hourly, daily or weekly basis in return for the service rendered.
It varies according to physical and mental requirement of the job. Wage may be
minimum wage, fair wage and living wage.

i. Minimum Wage: It is that wage which is sufficient to meet the basic need of a worker
and his family. This minimum wage has to be paid to the worker irrespective of the
capacity of the industry to pay. The Committee on fair wage has defined minimum wage
as “the wage must provide not only for the bare sustenance of life, but for the
preservation of the efficiency of the workers. For this purpose, minimum wage must
provide some measures of education, medical requirements and amenities”.

ii. Fair Wage: According to committee on fair wage “fair wage is the wage which is
above the minimum wage but, below the living wage”. It is fixed between the minimum
wage and capacity to pay by the industry. The lower limit of the fair wage is the
minimum wage; the upper limit is set by the capacity of the industry to pay.

Fair wage depends on several factors like:

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 • The productivity of labour

• The prevailing rates of wage in the same or neighboring localities.

• The level of national income and its distribution.

• The place of industry in the economy of the country.

Thus, fair wage is determined on the basis of capacity of the industry to pay and region
in which industry is located.

iii. Living Wage: It is the wage that provides some of the comforts of life. It provides
certain amenities considered necessary for the well-being of the worker. According to
Fair Wage Committee “the living wage should enable the male earner to provide for
himself and his family not merely the bare essentials of food, clothing and shelter but
also a measure of frugal (using only as much money or food as is necessary) comfort
including education for children, protection against ill health, requirements of essential
social needs and measure of insurance against the more important mis-fortunes
including old age”.

Salary: The term salary refers to remuneration paid to the employees appointed on
monthly or annual basis in return for the service rendered. Thus it refers to monthly rate
of pay irrespective of number of hours put in by employees.

Take Home Salary: It is the net amount of salary received by an employee after making
all the deductions towards the payment of income tax, LIC premium and contribution to
P.F. etc.

2. Dearness Allowance (DA):

Under section 3 of the Minimum Wages Act, DA is described as cost of living allowance.
It is given to protect the real wages of workers during inflation. In India it has become
integral part of the wage system.

Along with DA other allowances like City Compensatory Allowance (CCA), House Rent
Allowance (HRA), Medical Allowance (MA), Education Allowance (EA), Conveyance
Allowance etc., also form the part of compensation package.

However, inclusion of all these allowances in the compensation depends on nature and
type of job, contents of job, place of job, terms and condition of appointment, capacity of
employer etc.

3. Incentives:
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Incentive is a reward paid in addition to wages whether monetary or not that motivates
or compensates an employee for performance above the standard. Payment of
incentive depends on productivity, sales and Profit of the organization.

4. Fringe Benefits and Perquisites:

Fringe Benefits: It is a general term used to describe any of a variety of non-wage or

supplemental benefits that employees receive in addition to their regular wages. These
include such employee benefits as provident fund, gratuity, medical care,
hospitalization, accident relief, paid holidays, health and group insurance, pension etc.

Perquisites (Perks): Perquisites also called perks are the special benefits made
available only to the top executives of an organisation. These may include company car,
furnished house, stock option scheme, club membership, paid holidays etc.

FACTORS INFLUENCING COMPENSATION

According to the Jain, the number of factors influences the remuneration payable to
employees. They can be categorized into: (i) external and (ii) internal factors.

A.External Factors
Followings are external factors which influence compensation:

i. Labor Market: Demand and supply of labor influences the fixation of wage and
salary. A lower wage fixed when the labor demands were less than the labor supply. A
higher wage will have to be paid when the labor demand more than labor supply it
happened as in the case of skilled labor. A paradoxical situation is prevailing in our
country excessive unemployment is being juxtaposed with shortage of skilled labor.

ii. Cost of Living: Next in importance to labor market is the cost of living. This matters
is criterion during periods of rising prices but it is forgotten when prices are stable or
falling. When the cost of living is rise and it required to be remunerated by payment of
dearness allowance, basic pay to continue uninterrupted.

iii. Labor Unions: The presence or absence of labor organizations often determine the
substantial wages paid to the employees. Employers of non-unionized organization
enjoy the liberty to fix wages and salaries as they want. Because of larger-scale
unemployment, these employers hire workers at little or even less than legal minimum
wages. An individual nonunionized company may be pay more to its employees if they
want to discourage them from forming one. The employees of strongly unionized
companies too have no freedom in fixation of wage and salary. They are forced to

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vintage the pressure of labor representatives in revision and determination of pay
scales.

iv. Union Influences on Compensation Decisions: Unions and labor relations laws
also influence compensation design. The various labor legislations and court decisions
were legitimized the labor movement.

v. Labor Laws: We have a various labor laws at the central and as well as at the state
levels. These legislations are for protection of employees interests.

vi. Society: Compensation paid to employees is imitated the prices fixed by an

organization for their goods and services. The Supreme Court, from its very inception,
has had to adjudicate industrial disputes particularly disputes relating to wages and
allied problems of financial concern to the worker- an ethical and social outlook liberally
interpreting the spirit of the Constitution.

vii. The Economy: The economy has its impact on wage and salary fixation is the state
of the economy. While it is possible for some organizations to thrive in a recession,
there is no question that the economy does not affect remuneration decisions.

B. Internal Factors
Following are the internal factors which influence compensation:

i. Business Strategy: The overall strategy of a company which pursue the

determination of employees compensation. The strategy is to sustain and protect
current profit because of the declining fortunes of the company the compensation level
were needs to be average or even below average.

ii. Performance Appraisal: The Performance appraisal helps to reward, compensation

hike for the employees who show better performance.

iii. The Employee: Several employee-related factors interact to determine his or her
remuneration. These include performance, seniority, experience, potential, and even
sheer luck.

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