UNIT 1 MEANING, NATURE, SCOPE AND

SIGNIFICANCE OF HUMAN RESOURCE

MANAGEMENT
Structure
1.0 Learning Outcome
1.1 Introduction
1.2 Understanding HRM
1.3 Role of the HR Manager
1.4 Future Challenges to HRM
1.5 Conclusion
1.6 Key Concepts
1.7 References and Further Reading
1.8 Activities
1.0 LEARNING OUTCOME
After studying this Unit, you should be able to:
• Discuss human resource management particularly highlighting its
significance to public and private management;
• Bring out its implications; and
• Distinguish related concepts like human resource development, personnel
management and industrial relations.
1.1 INTRODUCTION
Organisations in their functional aspect are treated comprehensively under the
wide, architectonic rubric / discipline of Human Resource Management. Simply
put, human resource management is a ‘management function’ that focuses on the
‘people’ dimension to/ of organisations.
As organisations get larger and sophisticated and processes more complex, it gets
increasingly difficult to coordinate specialisations at various policy and operating
levels. The HR department performs the vital task of weaving sectional and
individual interests and practices into the matrix of group functioning, that is the
‘organisation’. Organisations had hitherto looked at the "Personnel Department,"
for management of paperwork involving hiring and paying people. More recently,
organisations consider the human resource department better suited for the task.
HRM plays a significant part in both regulatory and policy planning functions.
Though in-charge, theoretically, of the traditional POSDCORB functions, HRM
today ventures beyond theoretical postulates. The coverage of HRM has
expanded to more enveloping domains in the discipline and profession, throwing
open possibilities in the art, science and craft of management theory and practice
respectively.

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HRM covers myriad functions such as the specific and defined areas of planning
and control, resource allocation, conflict resolution and settlement of legal claims,
to recount a few. HRM function has evolved so much so that the HRM tag could
eve be held misleading (Mahoney, 1994), as HRM is not limited anymore to
securing 'person power'. Human resource management entails advising,
implementing and organising change, which are identified as the three important
requisites of sound HRM practice.
HRM is at the forefront of management strategy in the contemporary times. It is
expected to be proactive rather than a reactive management function. It plays a
vanguard role and imparts direction to an organisation. The personnel department
does not merely "hand out gift certificates for thanksgiving turkeys" (Mazarres,
1994). It’s a pervasive management function actively involved in managing and
administering organisation wide processes, initiating policy with regard to HR
specifically, and also other sections, collaterally involving the human resource
management function. It is more than a cosmetic or a fringe activity or function.
HR management today involves more than just the management of the HR
function. It extends into areas such as compensation benefits, staffing, HR
forecasting, succession planning, management and executive development,
performance management, employee relations, organisation development, total
quality management, needs analysis, instructional design and development
training programme evaluation, return on investment (ROI), impact studies to
name a few”(Mazarrese, 1994).
Human resource management is therefore understood as the all significant art and
science of managing people in an organisation. It’s significance lies in the fact
that physical and monetary resources cannot and do not sustain increased rates of
return on investments, unless complemented and supplemented effectively by
good human resource practices which reflect in best standards of productivity and
service delivery. Increasing research output in behavioral sciences, new trends in
managing ‘knowledge workers’ and advances in training methodology and
practices have led to substantial expansion of the scope of human resource
management function in recent years, besides adding to its understanding as a
theoretical area of enquiry.
Use of the word ‘management’ is significant here. It is new public management
informing management ethic today. Consequently, ‘administration’ is used to
denote more routine coordination functions while ‘management’ is perceived as
the active or the potent functional aspect of an enterprise; more pertinently, the art
and science of “getting things done” (Simon, 1957). Significantly, management
function is universal in public and private organisations (Fayol, 1959).
HRM is not just an arena of personnel administration anymore but rather a central
and pervasive general management function involving specialised staff as
assistants to main line managers.

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Evolution of HRM
Historically, the beginning of HRM is traced to Robert Owen and his large
spinning mills in Scotland. Charles Babbage and Henry Towde are the other two
names associated with HRM’s early beginnings. Its growth was particularly
marked in the inter-war era which was also the heyday of the human relations and
its subsequent branching into the diagnostic, behavioural movement. The latter
being more applied and scientific in nature, has since then developed along highly
specialised lines. It has branched out specifically along the domains of applied
psychology and sociology. The latter in turn has evolved around the concept of
the ‘welfare state’ while the former has proceeded as the behavioural science
movement. The art and science of personnel management is inclusive and
incorporates the two trends. The diagram beneath illustrates the development or
evolution of personnel management through recorded time (the figure is self-
illustrative).

The theory and practice of human resource management is based primarily in

sociology and economics. For Keeney (1990), human resource management is the
conceptual euphemism to describe all the apparently transformative changes in
the management of employee relations in the 1980s. Blunt (1990) suggests that
in the late 1970s and even into the early 1980s, the discipline concerned with the
human side of the enterprise was largely regarded as covering moribund
housekeeping operational activities. Consequently, there was no status and
influence of the discipline. Guest (1990) attributes the concern with status to the
origins of personnel management “as an extension of scientific management or a
form of welfare management. Hegg (1995) points it out as the contrast between
the high aspirations of the normative model and of the failure to deliver as
reflected in the behaviourist model.” It later developed in stages through
consistent research in the area so much so that at present; it is a pioneering area in
management. New dimensions continue to be added to it, lending it a unique

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dynamic character. It now covers diverse areas, as, mutual understanding at the
work place between employers and employees and the socio technical school of
thought emphasising restructuring of work to match social and technical systems
(Schein 1988). Organisation Development (OD), Human Resources Accounting
(HRA) and Quality of work life (QWL) are the most recent precursors of HRM.
HRA was popularised by Flamholitz (1985) which represented the ultimate quest
for legitimacy through quantification. HRM’s financial implications are studied
under ‘organisational imperatives’ (Kamoche, 1994).

1.2 UNDERSTANDING HRM

We may now attempt to elucidate the subject under study. Before attempting the
same, let us explain the essentials that require finding place in any definition. The
core issues are pointed out as:
- Human resource strategies are derived from the overall business strategy
in the same way as investment or marketing strategies. Decisions relating
to employees need to be integrated and made consistent with other
decisions.

- Organisations are not mere structural entities but ‘social units’ comprising
not just bricks, mortars, machineries or inventories, but, people. It has
been observed by scholars that an organisation is not a complex of matter
but rather a complex of humanity. Personnel management deals with the
effective control and use of manpower as distinguished from other sources
of power.
HRM differs from Personnel Management in treating people as ‘resource’.
People are human capital and are treated as resource, in that tangible and
intangible benefits flow from their utilisation. Organisations have to
effectively harness this resource in order to be productive.

- An organisation must make appropriate use of ‘human capital’ for

achievement of both collective organisational and individual goals,
mutually as well as in tandem. Coincidence and compatibility of the two is
specially stressed for the sake of ‘organisational equilibrium’ in that the
individual and the organisation represent two ‘opposing poles’ of
organisational effort. Though their interests come across as competing
forces, they are not always mutually contradictory and can be reconciled in
the interest of ‘organisational purpose.’ The aim of human resource
management is to balance the equation and bring about required synergy to
reinforce mutuality of effort towards the ‘common purpose.’
Organisational Equilibrium is achieved by matching ‘inducements’
(positive balance’) to ‘contributions’ (negative balance on the part of
workers (Barnard, 1938).

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- The final ‘value’ or ‘end’ in this case is ‘organisational effectiveness’
understood as increasing ‘organisational capacity’ in the face of
environmental dynamics with attendant impacts on organisational and
‘structuring’ and ‘functioning’ (Simon, 1957). There is an unmistakable
reference here to the ‘contingency paradigm’ of administrative theory.
Specific environmental variables could be identified as technology,
available knowledge, physical and material resource, government policy,
etc. Maintaining ‘relevance’ of organisational functioning in the context of
shifting ecological variables is always a challenge and has to be addressed
for the sake of ‘efficiency,’ understood as favourable cost- benefit ratio
(Simon, 1957).Together the two make for ‘effectiveness’ of the
organisation.
Defining HRM
The following four definitions encompass the aforesaid core issues in human
resource management. HRM could thus be referred to as;
1. …..a series of integrated decisions that govern employer-employee
relations. Their quality contributes to the ability of organisations and
employees to achieve their objectives (Milkovich & Boudreau, 1997).
2. … Concerned with the people dimension to management. Since every
organisation comprises people, acquiring their services, developing their
skills, motivating them to higher levels of performance and ensuring that
they continue at the same level of commitment to the organisation are
essential to achieving organisational goal. This is true, regardless of the
type of organisation: viz. government, business, education, health,
recreation, or social action. (Decenzo & Robbins, 1989).
3. … the planning, organising directing and controlling of the procurement,
development, compensation, integration, and maintenance of human
resource to the end those individual, organisational, and social objectives are
accomplished. (Flippo, 1984).
4. “….. The organisation function that focuses on the effective management,
direction, and utilisation of people; both the people who manage produce
and market and sell the products and services of an organisation and those
who support organisational activities. It deals with the human element in
the organisation, people as individuals and groups, their recruitment,
selection, assignment, motivation, empowerment, compensation,
utilisation, services, training, development, promotion, termination and
retirement.”(Tracey,1994 )
From the above definitions, certain new and some of the most important ones
HRM aspects emerge could be stated as:
1. There is an explicit link between managing human resource and
success of administrative or management strategy. Competition forces
management to alter the latter with implications for the former.
2. Sector strategies cannot be appreciated in isolation (mean in Simon’s
terms) but only as parts of the integral whole.

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 3. Senior line managers are required to assume more responsibility with
regard to managing human resource. There is a stress on inter-
personal relations as a determinant of performance.
Versions of HRM
Hard Version
“Human resource management reflects a long-standing capitalist tradition in
which workers are regarded as commodity.” (Guest: 1999). Hard approach to
human resource management is a pragmatic perspective to human resource
management which looks upon people as ‘resource’ and measures the tangible
benefits accruing from their deployment. Human resources have to be acquired,
developed and deployed in ways that maximise their utility. The focus is on
calculative and strategic aspect of managing human resource and the approach is
“rational” (fact- based) with regard to factors of production. The objective is
‘efficiency’ (maximising benefit and minimising cost) and the philosophy is
business-orientation (specifically human resource accounting) with emphasis on
tangible and quantifiable value addition to the organisation. It has been stated that
the drive to adopt human resource management is based on the business need to
respond to the external threat arising from increasing competition. It is a
philosophy that appeals to management’s striving hard at achieving and sustaining
competitive edge and appreciate that to do it they must invest in human resource
as well as they do for other practices or for other areas (for example, procuring
technology).

The emphasis is on:

• drive for economy and efficiency;
• interest of management as opposed to workers;
• adoption of a strategic approach that is in line with business strategy;
• obtaining value-adding services from people through targeted human
resource development practices;
• emphasis on strong people centric organisational culture, expressed or
articulated in the mission or value statement and reinforced by
communications, training and performance management processes; and ;
• the need to obtain agreed commitment of employees towards goals and
purpose (s) of the organisation.
Soft Version
The ‘soft’ model of human resource management traces its origin to the human
relations school of administrative thought and emphasises development of healthy
organisational culture by use of effective communication, motivation and
leadership as primary sources of maximising performance. It looks upon
employees as ‘co-contributors’ rather than adjuncts in organisational culture,
‘objects’ or pieces of automation. It stresses on the need to gain sustained
commitment of employees through democratic means such as participative

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management, meaningful involvement in policy formulation and other methods of
developing ‘high-commitment-high-trust’ culture in the organisation. Attention is
therefore drawn to the key role of organisational behaviour.
Employees are treated as valued assets and a source of competitive advantage
which needs to be optimised by evincing ethical virtues such as commitment,
adaptability and high quality performance in consonance with the ‘collective will’
of the organisation articulated as organisational purpose. Ethics lies in reciprocity
between individual member and the management.
The emphasis is on the belief that the interests of management and employees are
congruent. This approach is also termed as the ‘unitary’ approach’ to human
resource management.
Reconciling the Two
It has been observed that even if the rhetoric of human resource management is soft the
reality is often harsh, with the interests of the organisation prevailing, more often than not,
over that of the individuals’. Practically, we find a mix of hard and soft versions informing
organisational practice. This implies that the distinction between hard and soft HRM is not
as specific or obvious as it is tacit and implied.

Features of HRM
By now we have been able to understand the meaning of HRM. Some of the
main features of HRM include (Keith sis son):
1. There is stress on the integration of HR polices with overall planning and
underpinning latter with the former;
2. Responsibility for personnel management no longer resides with specialist
managers but is increasingly assumed by the senior line management;
3. The focus consequently shifts from management-trade union relations to
management-employee relations; from collectivizing to individuation;
macro to micro; and;
4. To reiterate, with the manager donning the role of “enabler”, or ‘facilitator’,
there is stress on commitment and initiative on the part of the employees.
HRM is based on the following four fundamental principles (Armstrong,
1988:90).
a. Human Resource is the organisation’s most important asset;
b. Personnel policies should be directed towards achievement of
corporate goals and strategic plans;
c. Corporate culture exerts a major influence on achievement of
excellence and must therefore be tempered with consideration of
employee welfare.
d. Whilst integration of corporate resources is an important aim of
HRM, it must also be recognised that all organisations are
‘pluralist societies’ in which people have differing interests and

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 concerns, which they defend and at the same time function
collectively as a cohesive group.
Besides the features mentioned earlier, certain more characteristics of HRM could
be summarised as follows:
1. HRM is a pervasive function. It permeates all levels of decision making in
an organisation. All sections perform human resource management in
some way. Academically, the nature of the subject is inter-disciplinary. It
draws inputs from other social sciences, particularly, sociology,
psychology, political science, anthropology, economics, etc. HRM has a
suggestion of the contingency paradigm here. Chief among contingent
variables is pressure from the government articulated through policy
interventions through directives or orders. The three main areas of
potential pressure are identified as: affirmative action in pursuance of
social justice objectives; concern for occupational safety and health in a
welfare state; and pension regulation for well being of workers
2. HRM is also a comprehensive function, in that it is concerned directly or
indirectly with every decision that in any way relates, even collaterally to
human resource management, irrespective of the section it emanates from
or the level at which it is made.
3. Cost effectiveness is a must to attract, induce and mobilise resources for its
policies, draw the attention of main line management to its policies and
proposals.
4. There is a need to spot trends and tailor personnel requirements
accordingly towards perceived direction or end, to make optimum
utilisation of available human capital.
5. Human resource management department provides for an integrating
mechanism. It attempts to build and maintain coordination between all
operative levels in an organisation. It is indispensable as a clearing house.
Its added significance is due to its being an auxiliary service which is an
indispensable maintenance activity. HR department aids ‘line’ officials
perform their respective allotted tasks, with direct or incidental bearing on
human resource. Policy- making does not proceed piecemeal and
organisational functioning is imparted a coherence that might otherwise be
hard to achieve. Human resource manager is therefore a specialist advisor
and performs vital staff function.
6. HRM is an imperative function for all complex organisations where inter
section interests are inextricably linked. It is action oriented as in it the
focus is on action, rather than record keeping, written procedures or rules.
The problems of employees at work are solved through rational, standard
policies.
7. HRM seeks to maximise employee motivation to make them contribute to
their maximum potential. The same is done through a systematic process
of recruitment, selection, training and development together with worker-
friendly policies like fair wage, bonus and reward system, effective
grievance redressal, etc.

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8. HRM is people oriented. Peoples’ existence is defined or perceived in two
ways, that is, as individuals working for personal satisfaction and members
of a group or collectivity, contributing towards a common objective.
Together they constitute the pillars of organisation or organisation wide
effort. ‘Organisational equilibrium’ is contingent on matching or balancing
personal need satisfaction (inducements offered) with organisational goal
fulfillment (contributions elicited/negative balance). Right man in the right
place at the right time maximises benefit of collective endeavour both in
the interest of the organisation and the individual employee. HRM is
development oriented; it aids institution of employee-friendly activities
like career planning and development which help develop their full
potential. Job enlargement and job rotation practices are facilitated;
employees are assigned a variety of tasks, which helps them to gain
maturity, experience and exposure.
9. Tangible quantifiable benefits result to the organisation as also
externalities, intangibles or unquantifiable gains (improved organisational
culture, management-worker relations, etc.) which optimise organisational
performance. Enhanced productivity is then used to reward employees
monetarily and motivate them further towards better and improved
performance.
10. HRM is continuous activity, consistent function and not a short-term
measure. It requires constant alertness and awareness of human relations
on the part of managers to maintain healthy organisational climate.
Sustenance of ‘organisational ‘rationality’ (with respect to decision
making) and securing ‘organisational effectiveness’ are other pressing
concerns. Organisational survival is the prime concern. Concerns of
efficiency arise only later. Organisations face the challenge or imperative
of arriving at an L.C.M. (least common denominator) of opposing pulls or
conflicting interests within as well outside to ensure and secure compliance
with exogenous directives and compatibility between internal (in-house)
and external (laws, guidelines, implementation regulations) policies.
External pressures need to be adapted to or co-opted for the sake of
‘relevance’ and ‘efficiency’ (Simon, 1957) of organisational functioning.
11. Human resource management function is of importance to Public as well
as private organisations. Fayol’s advocacy of management as a universal
science endorses this idea.
Objectives of HRM
The primary objective of human resource management is to ensure a continuous
flow of competent workforce to an organisation. But this is only a broad view.
Exploring further, we can categorise objectives into four, which are analysed as
follows for a better understanding:
Societal Objectives
The society may constrain rationality with regard to human resource decisions
through laws for example, reservation and other laws that address social

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discrimination, health and safety of workers, morale, ideological bias and other
such issues of societal concern.
Organisational Objectives
The organisational objective is at the forefront of organisational strategy,
coordinating and harmonising organisation wide efforts and stressing on the role
of human resource management in contributing towards organisational
effectiveness.
Human resource management is not an end in itself. It is a means to the end of
increasing organisational capability. It assists the organisation in attaining its
primary objectives. Simply stated, the department serves the rest of the
organisation.

Functional Objectives
On the functional side it sets the department’s contribution at the level most apt
suited in the organisational setting.
Resources are wasted when human resource is either in excess or too scarce. The
department function is to gain ‘organisational fit’ with respect to human resource
requirements.
Empowerment is a core concept of the new management model. In an adaptive
organisation, empowerment is preferred to delegation; ownership to responsibility.
It is contended that authority and responsibility are formal aspects of organising.
They are based on organisational properties and not individual capabilities.
Empowerment and ownership are social aspects of organising. They are based on
efficacy and initiative, and not just on roles and requirements. (Business E. Coach,
2005)

Clear articulation of policy following wider philosophy is imminent for success of

any organisational and that success of the free market. Philosophy binds an
organisation internally, provides a focus to collective effort and helps competitors
anticipate future moves of a company. According to theorists, two main concerns
regarding competitive philosophy are (a) people- centered philosophy, and (b)
unity and focus.
Sound human resource management determines the level of innovation or
creativity in organisational processes. Organisational capability is a dynamic
concept. To what extent it is promoted depends on the premium attached to the
HR function by the management. Bob Garratt (1990) proposes a theory of
organisations as "learning systems" in which success depends on the ability of
managers to become "direction-givers" and on the organisation's capacity for
learning continuously.

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Personal Objectives
It implies assistance rendered to employees in achieving their personal goals in so
far as these goals enhance individuals’ contribution to the organisation.
Personal objectives of employees must be met if workers are to be retained and
motivated towards better performance. If otherwise be the case, employee
performance and satisfaction are likely to decline and employees could even
contemplate leaving the organisation. Managing approach to employee benefits
and compensation, employee records and personnel policies is an important aspect
of human resource management (McNamara, 2005)
There has to be a correlation between objectives and functions. William Werther
Jr. and Keith Davis (1972) have attempted to link the two. This is summarised in
the following table:

HRM Objectives Supporting Functions

1. Legal compliance
Societal Objectives 2. Benefits
3. Union-management relations

1. Human resource planning

2. Employee relations
3. Selection
Organisational Objectives 4. Training and development
5. Appraisal
6. Placement
7. Assessment

1. Appraisal
Functional Objectives 2. Placement
3. Assessment

1. Training and development

2. Appraisal
Personal Objectives 3. Placement
4. Compensation
5. Assessment

Like other issues in public administration, objectives of human resource

management attract divergent views. In fact, due to changing environment and

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 dynamics of relationship among management, employees and trade unions,
human resource management objectives have had new vistas added to its
defining purpose. V.S.P. Rao (2000) recognises some of these changes and
places forth a set of emerging objectives:

1. Research and development is a new facet to human resource

management. HR practices need constant updating in view of changing
legal, political, and social environment. Forethought and fore
planning are vital to keep strategy targeted;
2. The primary purpose of HRM is to realise people’s strengths, turn
them into productive assets and benefit customers, stockholders and
employees at the same time, in an equally effectively manner;
3. HRM requires that employees be motivated to make them exert their
maximum efforts, that their performance be evaluated/ preferably
measured properly and that they be remunerated on the basis of their
contributions to the organisation;
4. HRM helps employees grow to their fullest potential, with reference to
job satisfaction and self-actualisation. To this end, suitable
programmes have to be designed aiming at improving the quality of
work life (QWL);
5. To develop and maintain quality of work life, good working conditions
and good standard of life for the worker makes employment in the
organisation a desirable personal and social condition. Without
improvement in the quality of work life, it might be difficult to elicit
desired level of motivation;
6. It is the responsibility of HRM to establish and maintain
communication well, to tap ideas, opinions and feelings of customers,
non-customers, regulators and other external public as well as in
understanding the views of internal human resources; and
7. HR function helps maintain ethical policies and behaviour in the
organisation. The chief personnel officer of a large American
corporation puts it thus: “personnel’s purpose is to practice morality in
management by preparing people for change, dealing with dissent and
conflict, holding high standards of productivity, building acceptance of
standards that determine progression and adhering to the spirit and
letter of high professional conduct”.
Scope of HRM
The Indian Institute of Personnel Management encapsulates the scope of HRM in
the following three aspects: -
1. Personnel aspect: concerned with manpower planning, recruitment,
selection, placement, transfer, promotion, training and development, lay off
and retrenchment, remuneration, incentives, productivity, etc.;

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 2. Welfare aspect; dealing with working conditions and provision of amenities
such as canteens, crèches, rest and lunch rooms, housing, transport, medical
assistance, education, health, safety, recreation facilities, etc.; and
3. Industrial Relations aspect: the legal part which covers union-management
relations, joint consultation, collective bargaining, grievance redress and
disciplinary procedures, settlement of disputes, etc.
HR function may be categorised into the following sub- sections:
• Employee Hiring
• Employee and Executive Remuneration
• Employee Motivation
• Employee Maintenance
• Industrial Relations
• Prospects of Human Resource Management
Carter McNamara (2005) has outlined the following activities of the HR section:
-deciding what staffing needs an organisation has, and, whether it should use
independent contractors or hire its own employees. Cost considerations matter in
these decisions. Also, in-house promotions and placements are encouraged as part
of organisational policy. Present environment demands more flexibility in policy
formulation and implementation processes for which the HR department is most
suited; and;
- recruiting and training the best employees, ensuring they are high
performers through apprenticeship and training programmes dealing with
performance issues and ensuring personnel and management practices
conform to all formal regulations, managing approach to employee benefit
and motivation and group morale.
Functions of the personnel section encompass the following activity areas:
(Tracey, 1994)
- Total quality management (TQM) applying system’s model or perspective
to organisation theory. For enhancing overall productivity, output levels
and standards. Investing more time in value- adding activities as opposed
to non- value adding is emphasised;
- Organisational structuring and design; suggesting mergers, overseeing
diversification/ expansion schemes, managing implications of
globalisation, cost cutting measures such as downsizing, contract
employment, restructuring, controlling implications thereof, etc.;
- Productivity control, R&D, improved service delivery, customer focus,
quality control, organisational effectiveness;
- Financial control and budgeting;
-- Human Resource Planning and specifics thereof HR; department plays a
vital role in integrating the strategic plan or business plan and also take the
lead in devising and implementing it.

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- Personnel processes viz. recruitment, selection, training, management
development;
- Strategising or planning for overall organisational growth;
- Managing informal work group;
-- Organisational culture ramifications of managing knowledge workers;
articulation of culture in terms of objectified, practicable targets; ensure
meeting of specific targets and objectives; imparting direction to
organisational functioning;
- Managing Diversity; (organisational culture reference and internal
sociology implication);
- Dissemination/internalisation of organisational philosophy among inmates,
controlling culture thereby. Phenomenon of ‘organisational
identification’… (Simon, 1957)
- People management’ referring to policy initiatives regarding, employee
benefit and welfare schemes, retrenchment policy, executive succession,
etc; and
- Spreading awareness and mobilising support to ensure minimum resistance
to change processes and policies; marketing to recover or amortize the
costs of producing products, programs and services.
Functional obligations of personnel department outlined above could be
catalogued under the following general headings: (Tracey, 1994)
- Managing house keeping for its own section-performing all customary
management functions (POSDCoRB) with regard to internal
administration;
- Organisational Development understood as planned, educative effort
towards organisation wide change reflecting concept of organisations as
constantly evolving and developing entities (Keith Davis, 1992) and
- Performance Development, problem sensing, solving, and trouble-
shooting as and when need arises.
Specific functional activities and responsibilities of HR department as outlined by
Tracey include:
• Recruitment, selection, and task assignment;
• Orientation and induction programmes imparting relevant information;
• Compensation; including all compensable factors;
• Employee benefits; monetary and non- monetary; and
• Succession planning (upward mobility of personnel via promotions);

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Addressing Semantics: Related Concepts
Since 1980 the term personnel management has been gradually replaced by a
more suitable term, that is, human resource management to delineate the whole
gamut of activities undertaken towards or with the purpose of maximising human
capital utilisation in an enterprise. Problem of semantics is apparent. It would
serve our purpose to clarify the two related concepts.
Similarities between Personnel Management (PM) & HRM
Similarities between personnel management and human resource management are
recounted as follows:
• Personnel management strategies, like HRM evolves from business strategy.
• Personnel management, like HRM, recognises that line managers are primarily
or in the first measure, responsible for managing people. The personnel section
provides necessary advice/ support service to line managers aiding them carry
out their responsibilities in a better/ more effective manner;
• Values of personnel management and the ‘soft’ version of HRM are identical.
Both stress on self-development of workers, helping them achieve maximum
level of competence both for realisation of individual and collective will and
thereby, achievement of individual and organisational aspirations and
objectives;
• Both personnel management and HRM recognise the need for placing and
developing right people for the right jobs;
• The same range of selection, competence analysis, performance management,
training management development and reward management techniques are
applied in both human resource and personnel management; and
• The ‘soft’ version of HRM, like personnel management, attaches importance
to the process of communication and participative spirit informing employer-
employee or management- worker relations.
Differences between PM and HRM
Differences could be articulated and recounted as:
i) Personnel management is more bureaucratic and directive than
participative and team. It is administered by managers rather than
‘developed’ by management and workers or ‘co-contributors’ in joint
organisational endeavour. Apparently, it may be a set of rules and
procedures that might even constrain senior echelons in managing their
subordinates as they deem fit as per the requirements of the situation. On
the other hand, HRM not only pays attention to employee
development, but focuses on the dynamism of the entire management
function. This shift of emphasis appears related to three specific
differences;
a) While both personnel management and human resource management
highlight the role of line management, the focus in each case is different.
In human resource management, HR function is vested in the line

15
 management and business managers are considered responsible for
coordinating and directing all resources towards achievement of
organisational objectives;
b) Objectives are specified more precisely and co-relation drawn more
clearly and objectively, between results and strategy for proactive use of
human resources for their furtherance and achievement. Personnel policies
are not passively integrated with business strategy but perceived as
integral to and active components thereof in the pursuit of the desired
value or end; and
c) Most human resource management models emphasise organisational
culture as an important variable. Although ‘organisation development’
models of the 1970s proclaimed a similar aim, they were not fully
integrated with normative personnel management models. Organisational
development’ was always seen as a distinct and separate activity standing
apart from mainstream personnel management. Internal structuring also
exhibited this separateness in that it was generally assigned a separate role
in a formal institutional sense in that separate OD consultants were located
within the personnel department, not always with a back ground in the
subject. It was considered/ treated as, only a fringe activity, an initiative
that was nice to have but could be dispensed with at the first indication of
financial stringency. Aswathappa (2002) draws a table and recounts the
differences between personnel management and human resource
management along twenty-three dimensions. The same are outlined
below:
Differences between PM and HRM

Dimension Personnel Management Human Resource

Management

Employment contract Careful delineation of Aim to go beyond contract

written Contracts

Rules Importance of devising Can do outlook,

clear rules impatience with rule

Guide to management Procedures Business need

Action

Behaviour referent Norms/customs and Values/mission

practices

Managerial task Monitoring Nurturing

vis-à-vis labour

Key relations Labour Management Customer

16
Initiatives Piecemeal Integrated

Speed of decision Slow Fast

Management role Transactional Transformational

Communication Indirect Direct

Prized management Negotiation Facilitation

skills

Selection Separate, marginal task Integrated, key task

Pay Job evaluation (fixed Performance related

grades)

Conditions Separately negotiated Harmonisation

Labour Management Collective-bargaining Individual contracts

contracts

Job categories and Many Few

grades

Job design Division of Labour Team work

Conflict handling Reach temporary truce Manage climate and

culture

Training and Controlled access to Learning Companies

development courses

Focus of attention for Personnel procedures Wide-ranging cultural,

Interventions structural
and Personnel strategies

Respect for employees Labour is treated as a tool People are treated as assets
which is expendable and to be used for the benefit
replaceable of an organisation, its
employees and the society
as a whole

Shared interests Interests of the Mutuality of interests

organisation are
Uppermost

Evolution Precedes HRM Latest in the evolution of

the subject

17
For a better understanding of HRM, it shall be worthwhile to know of two more
related terms, that is, Human Resource Development and Industrial Relations.

Industrial Relations (IR) & HRM

Industrial Relations (IR) is a term adding to the problem of semantics. “Industrial
Relations” as the term implies, deals with sociological and legal issues concerning
organisational climate, interpersonal relations, physical and social working
conditions, settlement of disputes, unionisation and other issues dealing with
grievances and their resolution. Use of term industrial relations or human
resource management has more to do with the historical context within which
they arose than with the scope of the two. Human resource management is used
more in the modern context of globalisation and multiculturalism where HR is at
the forefront of management strategy. IR rose in the specific context of the
industrial revolution and the socialist ideology where just and humane conditions
of work were emphasised. Hence, Industrial relations is not different from human
relations or other major school of administrative theory. With many different
labels in use, industrial relations is now used to refer to the legal aspect of
organisations governing employee employer relationship viz. trade unions,
collective bargaining, etc.

The legal aspect has now emerged as a significant facet of HRM which
organisations neglect only to their peril. Organisations get sued for alleged
discrimination in their recruitment, selection, hiring, training and development,
promotion, pay and compensation procedures by outside players as also their own
employees, present and prospective. Posers about administrative procedure have
to be addressed unequivocally to obviate conflicts or possible impediments in
organisational functioning. Technically, it falls within the domain of Industrial
Relations though responsibility for the function is aggregated under the HR label,
which today is an enveloping and architectonic field or area of enquiry, practice
and specialisation. Small businesses (for-profit or nonprofit) usually have to carry
out these activities themselves as they can't afford part- or full-time assistance.
Even they need to ensure that employees are aware of personnel policies
conforming to current regulations. These policies are often in the form of
employee manuals, which all employees possess. Procedural simplicity is an
important requirement. Non-compliance can generate unnecessary confusions,
which could easily be dispensed with.
Industrial Relations’ implications for organisational structure would differ. While
some structure it as a specialisation others prefer merging or grouping more
practicable. (Collective bargaining involves administration of formal contract
governing union management relations, laying down of grievance procedure, third
party arbitration, labour unions, etc.) Some companies have separate industrial
relations department responsible for negotiating and administering collective
bargaining agreements with unions. Most often size and complexity of an
organisation are the deciding factors. What is important however is that legal

18
aspect of human resource management is a specific and distinct function,
structural differentiation or specification notwithstanding.
HRM and HRD
Some people distinguish between HRM (a major management activity) and HRD
(Human Resource Development, a profession). However, it should not lead to any
confusion.
Distinction between HRD and other human resource practices is necessary to
avoid undervaluing of the concept both theoretically and in the workplace. HRD
has come to be used in many different contexts. Hence, it is important to clear the
maze and highlight the unique contribution it makes to organisations

ABOUT HRD
HRD is:
-A profession; a specialised activity. HRD vendors are employed by organisations
to plan and administer training programs though now HRD has ventured into other
broader, more significant areas of organisational practice viz. organisational
design, change, planning and development. Latter function has gained increasing
prominence of late,
- HRD vendors are external consultants, though HRD manager is preferably
an insider; and
- Its scope has progressed and moved from micro to macro concerns. In the
present times, it is an important field within the area of human
relations or organisational behaviour.
HRD has now been developed in universities as a postgraduate discipline.
Washington University took the lead in this regard in 1965. However, some
universities have introduced courses in specific HRD methodology such as
communications or human services and labeled them as human resource
development. Confusion can be cleared by looking at the form rather than the
label.
HRD incorporates applied behavioural science. Works of Gordon Lippit, Warren
Schmidt and Robert Blake are noted particularly in the development of the
paradigm .There is increased emphasis on a systems approach to HRD notably
through the work of Leonard Silven and Hughes and contribution of Robert Mager
particularly in pushing for adoption of specific behavioural objectives in framing
objective HRD modules.
It is specialised and technical field with is increasing use of modern technology.
Inventory control is an important feature as there is need for recording and safe
maintaining data. Its working is essentially centralised. There is stress on
individualised instruction. The learning specialist guides trainee like a coach or a
resource person. In it the definitions and understanding of selection, training,
performance evaluation are likely to be revised. They are being seen as
continuously evolving and developing processes that aid individuals and
organisations reach the summit of their potential. In HRD there is shared

19
responsibility between management and individual employees for organisational
effectiveness-diffused rather than focused, permeates through the organisation and
is not restricted to the individual manager or specific levels.
Characteristics of HRD
Characteristics of HRD could be recounted as follows. It is:
- idealistic;
- utilitarian in purpose;
- evolutionary;
The wider objective is integration with the school system through educational
administration and training institutes. HRD cannot make up for lack of basic
skills. It would be highly impractical if it were suggested so.
Gerratt defines learning organisations as “a group of people continually enhancing
their capacity to create what they want to create”. The idea sums up the essence of
human resource development.
Implications of HRM
a. With respect to Organisation Design
There is a long-standing argument on whether HR-related functions should be
organised in the Organisation Development department or elsewhere or
independently?
Reference may be made here to Simon’s concept of ‘mean’, ‘end’ and ’fact’ and
‘value’ as giving the chain of causation of “purposive behaviour”. Decisions are
taken at all levels within an organisation and are ‘mean’ to the extent that they
comprise of ‘fact’ more than the value component and end conversely. Each
decision, in fact, is both mean (more fact) and end (more value) in that every
‘mean’ is an intermediate ‘end’ which is ‘mean’ to a further end and so on. The
chain culminates in pure ‘end’ or final ‘value’ (hypothetical idea since ‘pure
value’ does not exist in practice), which is often the ‘organisational goal’ (could
be social or national goal depending on the level of integration)
The ‘mean’- ‘end’ chain or formulation has implications for organisational
structure. If human resource management is ‘means’ to the ‘end’ of
‘organisational development’, it functions as a section under organisation
development. The question of location is pertinent in the interest of coherence of
organisational functioning.
b. With respect to Personnel Administration
The HR section articulates organisational philosophy and underpins it to practical
strategy. Organisational culture is both a dependent and an independent variable.
It is both impacted upon and in turn impacts organisational functioning and
practice.

20
 At the enterprise level, good human resource practices help attract and retain the
best people in the organisation. Planning alerts management to manpower needs in
the short run ahead.
At the level of the individual, effective management of human resources helps
employees, work with ‘esprit-de corps’ and experience personal growth.
Society, as a whole, is the beneficiary of good human resource policy.
Employment opportunities multiply and scarce talents are employed to the best
use/uses.
Extending the same argument, sound HRM is imperative for nation building.
Human resource planning is integral to socio-economic planning of the State. It is
a vital and an imperative component thereof, more so for developing countries
where human capital waste accrues due to underutilisation of capacity and other
wasteful HR practices.
c. With respect to Policy
The HR section or department is actively involved in business strategy and wider
policy formation so much so that there is not a question of should it or should it
not anymore. Its involvement is accepted as a fact or a ‘given’ of organisational
life. The focus is directed instead to utilising it to the maximum. The objective of
HR thought and practice is geared to this end. This is expected to be more so as
the office evolves towards a more dynamic future role with expansion and or
diversification of business and increasing knowledge resource.
1.3. ROLE OF THE HR MANAGER

Designations of HR Managers are found differently in different organisations. To

quote Frank Lloyd Wright, “form follows function”. HR function therefore draws
content from and follows the strategic plan. The HR manager functions as a
catalyst and a change agent to the extent that he helps the line achieve its
objectives. Job description of the office differs from organisation to organisation.
Form or content of human resource functions have been found to be determined
by the organisation’s history, work culture and the level of differentiation attained
in processes and product. (Tracey, 1994)
The HR manager has to be both a process and a policy specialist. The job
descriptions and specifications entail and demand both policy advice and
implementation specialties.
She / he hyphenates the relationship between the organisation on the one hand and
external players and stimulators of policy (primarily government, strategic
partners) on the other. She / he has to ensure compliance of internal policy and
practice with external regulations via legislations (for example, government
directives) as also attempt to preempt the field in the organisation’s favour by
minimising instances of unnecessary interface.
Academically, the HR person needs to be proficient in related specialties or
disciplines in that HR is a growing interdisciplinary academic field and a vocation,
with cross currents from management science, humanities and even physical

21
sciences. HR manager functions as a consultant to all sections and is a prime
mover or initiator of policy inputs and recommendations.

HR officers can be both generalist (with wide experience in personnel matters to

recommend them) and specialist with technical training or educational
background; either from inside/outside the organisation. Actual practice in this
regard differs from organisation to organisation.

1.4 FUTURE CHALLENGES TO HRM

The question how HRM would change in the post- modern globalised world needs
to be understood in the light of challenges to HRM.
Emphasis on human resource management will be still greater in the coming
years. Companies/organisations are expected to invest more in health/welfare of
workers.
Emergence of transnational/multinational corporations is bringing cross-cultural
work force and the consequent need to ‘manage diversity’ (cultural, ethnic
linguistic, religious, etc.) properly.
Cost constraint and the resultant emphasis on the necessity of output maximising
strategies viz. total quality management, flexible management systems, etc.
Participative management for ‘knowledge workers’; need an active policy to
retain good workers is expected to be increasingly felt in the coming years.
Flexible structuring in organisational design in response to changing requirements
would be needed. Warren Bennis’s futuristic observation (prediction) about linear
organisations giving way to diverse and unconventional matrix is almost a truism
today. Organisations now are less linear, more complex, environment more
uncertain than predictable, traditional Weberian construct more a utopia than a
reality, more cross functional/ networked than vertical/linear; providing more
scope for freewheeling for its knowledge workers rather than insisting and
stressing on a commanding or directive work pattern and culture. Precisely, its
participative management, innovation and self managed work teams that are
desired for a total quality management with emphasise on productive process,
particularly technology. Organisational fluidity and dynamism may no longer be
an exception or feature to be chafed at and resisted but an enduring quality to be
desired which is almost a necessity for organisations’ survival in this environment
of constant change. Organisations are perceived as organic entities constantly and
continuously vitalized and growing, meeting new/emerging challenges and
answering critics in their attempt to avoid being moribund/ redundant in their
operations.
Tackling demographic changes in the work force will be a challenge as more
old/young/women/backward castes are expected to force changes in HR policies.
Vigorous interest articulation will be suggested for business at the policy stage to
minimise incident and / or unsavoury pressures during implementation.

22
In the face of increasing cost constraints, training is expected to get more targeted
than generalised. It would need to be tailored according to changing requirements
viz. customer preferences, specific need of a strategic plan in a given time frame,
etc. Training is only one of the options to learning and development.

1.5 CONCLUSION
The focus in the Unit has been on HRM’s meaning, nature, scope, versions,
clarifications regarding semantics, differences and similarities between HRM and
PM, and its significance. Rather briefly, it could be summed up as;
• HRM is at the forefront of management function;
• HR manager plays a vanguard role in policy making and implementation
functions;
• Semantic differences between HRM and PM and IR and HRD are not of
much practical consequence. Content matters more than form; and
• Scope of HRM differs from organisation to organisation.

1.6 KEY CONCEPTS

Human Resource Development: Human Resource Development is a term

employed for education and training
activities undertaken at micro (in a
department or an organisation) and macro
levels( national, state) for development of
‘human capital’. It involves both short term
and long term planning and has significance
for development administration in that it is
the ‘people resource’ that puts plans into
actions. Refurbishing of education and
training at regular intervals is a must for
replenishing capabilities for planned
development of human resource capability.

Human Resource Management: Human Resource Management differs from

personnel management, in treating people as
‘resource,’ whose effective utilisation leads
to tangible value addition to organisational
productivity. Distinguished from human
resource development, human resource
management is more an administrative
activity while the latter involves more
planning, built integrally into nation- wide,
socio economic planning.

23
Organisational Culture: The culture of an organisation could be
directive, authoritarian, feudal or democratic.
Among determining factors are; principles of
organisational functioning, involving
structuring of an organisation, specialisation
and work division, span of control, unity of
command, leadership, work orientation of
the manager, organisational culture, “legal
rational authority” system, as against,
“traditional” or “charismatic authority”
systems.

Organisation Design: Organisation Design is a primary

management activity involving work
division among constituent units and
structuring an organisation into sections and
sub sections. It is the first step in
specialisation of tasks and responsibilities in
organisations leading to further sophisticated
specifications. On proper design depends the
coherence of organisational functioning.
Organisation Design is also a determinant of
organisational culture in that an organisation
could be structured in a hierarchic
bureaucratic way or imparted a team ethos
by means of lateral coordination and team
work orientation.

Social Capital: The term social capital is an economic

analogy, to determine the economic potential
of social ties. Just as there are physical
capital and human capital, there is social
capital which denotes the advantage or the
utility derived out of filial and other human
ties. Such social ties have ‘utilitarian value’
in that they result in tangible and intangible
value addition to societal development.
Meaningful peoples’ participation in
administration is an attempt at utilising
positive social capital inherent in
‘communities’ for furtherance of
developmental tasks by way of better policy
formulation and cost- effective
implementation processes. Departmentalism
and ‘empire building’ tendency on the part
of bureaucrats is an example of negative
social capital.

24
Organisational Climate: It refers to the extent to which supportive
environment prevails in an organisation. Sound
workings of the informal Organisation, participatory
culture, etc., are indicators of healthy organisational
climate
1.7 REFERENCES AND FURTHER READING

Aswathappa, K, 2002, Human Resource Personnel Management: Text and Cases,

Tata McGraw-Hill, New Delhi.
Bach, Stephen and Keith Sisson, 2000, Personnel Management: A Comprehensive
Guide to Theory and Practice, Third Edition, See Contributions in Part 1
Personnel Management in Context.
Bennis, Warren, 1969, Organisation Development: Its Nature Origin and
Prospects, Addison Wesley Publishing House Co. Readings Mass.
Blunt, P, 1990, “Strategies for Enhancing Organisational Effectiveness in the
Third World”, Public Administration and Development, Vol. 10
Carr, Nicholas, 2004, Does IT Matter? Information Technology and the
Corrosion of Competitive Advantage, Harvard Business School Press.
Cohen, Stephen L, 1994, “The Future and HRD,” William R. Tracey (Ed),
Handbook on Management and Development, Vol. II, AMACOM.
Davis, Keith, 1972, Human Behaviour at Work, Mc Graw Hill, New York.
Decenzo, David A. & Stephens P. Robbins, 1989, Personnel/HRM, Third
Edition, Prentice Hall, New Delhi.
Dickens, Linda, 1994, “Wasted Resources? Equal Opportunities in Employment,”
Keith Sissons (Ed), Personnel Management: A Comprehensive Guide to Theory
and Practice in Britain.
Duncan, Daniel M, 1994, “Organisational Design”, William R. Tracey (Ed),
Handbook on Management and Development, Vol 11, AMACOM.
Flamholitz, Eric G, 1971, “A Model for Human Resource Valuation: A
Schochastic Process with Service Rewards”, The Accounting Review.
Flamholitz, Eric G, 1972, “Towards a Theory of Human Resource Value in
Formal Organisations”, Journal of the Accounting Review, October Issue.
Flippo, Edwin B, 1984, Personnel Management, Fourth Edition, Mc Graw-Hill,
New York.
Garratt, Bob, 1990, “Creating a Learning Organisation: A Guide to Leadership,
Learning and Development” read online at,
www.changezone.co.uk.publications/dynamicspubs.html
Guest, D.E, 1987, “Human Resource Management and Industrial Relations”,
Journal of Management Studies.

25
Guest, David E, 1989, “HRM: Its Implications for Industrial Relations and
Industrial Organisation”, J. Storey (Ed), New Perspectives on HRM, Routledge,
London.
Guest, D. E, 1990, “Human Resource Management and the American Dream,”
Journal of Management Studies, 27(4)
Guest, D.E., 1997, “Human Resource Management and Performance: A Review
and Research Agenda”, The International Journal of Human Resource
Management.
Gupta, R.K, 1988, Human Resource Accounting, Anmol Publications.
Invancevich, J.M. & W.F. Glueck, 1990, Foundations of Personnel/HRM,
Business Publication, Texas.
Kamoche, K, “SHRM within a Resource Capability View of the Firm”, Working
Paper, Birmingham Union Business School.
Keeney, Ralph L, Detlof von Winterfeldt and Thomas Eppel, 1990, “Eliciting
Public Values for Complex Policy Decisions,” Management Science, Vol. 36, No.
9.
Keeney, 1992, “Creating Alternatives for Single and Multiple Decision Centers”,
Sloan Management Review.
Keeney, R, 1992, Value Focused Thinking, Harvard University Press, Cambridge.
Keeney, R.L, 1994, “Creativity in Decision Making with Values Focused
Thinking”, Sloan Management Review.
Leonard, Nadler and Zeace Nadler, 1994, “HRD in Perspective”, William R.
Tracey, (Ed) Handbook on Management and Development, Vol II.
Mahoney, Francis X, 1994, The Future and HRM, William R. Tracey, (Ed.)
Handbook on Management and Development, Vol. II.
Mazzarres, Michael, Z, 1994, “The HRM Manager”, William R. Tracey, (Ed)
Handbook on Management and Development, Vol II. AMACOM.
Milkovich, G.T, B. Gerhart & J. Hannon, 1991, “The Effects of Research and
Development Intensity on Managerial Compensation in Large Organisations”,
High Technological Management Resources.
Milkovich, George T. & W. J. Boudreau, 1997, Human Resource Management,
Irwin, Chicago.
Odiorne, G.S, Personnel Administration by Objectives, Richard D Irwin Inc,
Homewood Illinois.
Rao, V.S.P, 2000, Human Resource Management, Text and Cases, Excel Books,
New Delhi.
Robbins, Stephens, P, 1985, Organisational Behaviour, Prentice-Hall, New Delhi.
Schein, E.H, Process Consultation: It’s Role in Organisational Development,
Addison, Wesley Publishing Company Readings Mass.

26
Schein, E.H, The Art of Managing Human Resources, Oxford University Press,
New York.
Schein, Edgar H, 1969, Process Consultation; Its Role in Organisation
Development, Addison-Wesley, Massachusetts.
Schein, Edgar H, 1983, Organisational Psychology, Third Edition, Prentice-Hall
of India, New Delhi.
Schein, E.H, 1988, “How Career Anchors Hold Executives to Their Career Paths,
R.Katz, (Ed), Managing Professional in Innovative Organizations: A Collection
of Readings, Cambridge, MA: Harper and Row Publishers, Inc.
Stahl and Grisby, 1991, Strategic Management for Decision Making, PWS, Kent.
Story, John & Keith Sisson ,1993, Managing Human Resources and Industrial
Relations, Open University Press, London.
Tracey, William R, 1994, “HRM in Perspective”, Handbook on Management and
Development, Vol. II, AMACOM.
Ulrich, Dave, 1994, “Human Resource Planning” William R. Tracey (Ed),
Handbook on Management and Development, Vol II, AMACOM.
Werther, William B, Jr. and Keith Davis, Human Resource and Personnel
Management.

1.8 ACTIVITIES
1. Discuss the significance of HRM in the context of Globalisation.

2. What is human resource development? How is it an integral aspect

of human resource management?

3. Discuss the scope and significance of HRM.

27
UNIT -2 STRATEGIC HUMAN RESOURCE
MANAGEMENT (SHRM)
Structure
2.0 Learning Outcome
2.1 Introduction
2. 2 Scope of Strategic Human Resource Management (SHRM)
2.2.1 Concept of strategy
2.2.2 Aspects of SHRM
2.2.3 Features of SHRM
2.2.4 Application of SHRM
2.2.5 Implications of SHRM
2.3 Literature on SHRM
2.4 Approaches of SHRM
2.5 Models of SHRM
2.6 Conclusion
2.7 Key Concepts
2.8 References and Further Reading
2.9 Activities

2.0 LEARNING OUTCOME

Study of this Unit will enable you to:
• Understand strategic human resource management;
• Bring out aspects and main features regarding its application; and
• Discuss the major approaches to strategic human resource management and
feature its main models;

2.1 INTRODUCTION
Globalisation has put pressure on governments and businesses to carry out
structural alterations or adjustments, diversify businesses, specialise processes,
optimise ‘efficiency,’ sustain and augment productivity, maintain competitive
edge all in the face of increasing cost constraints. There is need for economical
utilisation of human capital through right capacity building strategy for desired
organisational performance.
To cut costs, unplanned retrenchment of human resource has become a frequent
though by no means a desirable organisational practice. Strategy should be
evolved to maximise the utility of the HR function. HRM management per se
may not be targeted or specific enough to achieve desired accuracy of policy.
For example how targeted are employee benefit policies? What is the impact on
1
productivity? What modifications are needed? Corelations based on empirical
analyses would need to be drawn
Therefore, combining human capital regulation with overall business strategy;
economising operations to maximise ‘efficiency,’ is what is understood in
common parlance as strategic human resource management.
Strategic human resource management is relevant to all organisations- public or
private, irrespective of form, hierarchic or networked fluid or command-control
etc. SHRM has both policy and operative aspects. Understanding of SHRM
ranges from a 'reactive' management field where human resource management
is a tool with which to implement strategy, to a more proactive function in
which HR activities can actually create and shape organisational strategy.
Human resource management being an architectonic activity may not be
targeted or specific enough to achieve desired levels of accuracy and economy
in policy making and implementation. There is therefore need for strategic
human resource management for cost effectiveness of HR programmes.
Hence, SHRM is predicated on two fundamental assertions. First, an idea that
an organisation’s human resources are of critical strategic importance; that the
skills, behaviours and interactions of employees have the potential to provide
both the foundation for strategy formulation and the means of strategy
implementation. Second, the belief that firms’ HRM practices are instrumental
in developing the strategic capability of its pool of human resources. (Colbert,
2004). New perspectives continue to emerge on Strategic Human Resource
Management (SHRM). The SHRM debate has progressed from considering how
personnel management differs from HRM to exploring how HR can lead to
more sustainable competitive advantage.
Strategic human resource management entails integrating HR practices with
discrete specific strategy formulated or articulated towards identified
‘end’(intermediate-end or ‘mean’ or desired ‘value’) through “hierarchic
purposive behaviour” directed towards pursuit of ‘final value’ or ‘organisational
goal’ through intermediate ends as perceived by Simon. Such ‘end’ or
intermediate ‘end’ (also mean) is articulated academically (since public
administration is cooperative rational action) and implemented through strategic
decision making regarding. For instance, cost reduction or better public
relations would form an identified ‘end.’ Human resource practice would need
to be weaved into organisational strategy and implemented by means of specific
strategies crafted towards identified ‘end’. Organisational functioning would
thus proceed as a coherent linear with each sub-policy integrally linked with
overall policy till the objective is reached. SHRM is therefore contingent on (a)
identification of end, (b) articulation of strategy, and (c) integration of sub
strategies into the whole i.e. organisational policy. The important issue is to find
ways of integrating HR strategy with organisational strategy to achieve desired
economy in operations.
Key concerns in strategic human resource management therefore are listed as:
aligning resources with strategies; making strategies adaptable to new courses
and new strategic directions; and periodic renewal of strategic human as well as
organisational resources with a view to sustaining competitive advantage for the
organisation.
Wide array of questions addressed in strategic human resource management are
recounted as follows: (Colbert, 2004)
2
 • “What is the effect of HR practices on the development of a firms’
human resources;
• Which HR practices lead to greater organisational performance;
• To what degree does that depend on a firm’s strategy;
• How does it ensure that its individual HR practices ‘fit’ with one another
or does ‘fit’ at all matter in HR practice?; and
• Must the attributes of a firms’ base of human resources always align
with a priori strategy, or can its stock of skills, knowledge and
interactions drive strategic direction?”
SHRM is recognised as universal academic discipline, currently in need of a
theoretical framework to impart universality to its principles. (Colbert, 2004).
The key constructs and central debates in SHRM, as discussed by Colbert
(2004) have grown out of the above questions, viz. best practice vs. fit,
horizontal and vertical fit, fit versus flexibility, control exerting versus creativity
enhancing aspects of HR systems, single dimensional and multivariate effects
and appropriate theoretical frames. This will be elaborated later in the unit.
2.2 SCOPE OF STRATEGIC HUMAN RESOURCE
MANAGEMENT (SHRM)
The range of activities and themes encompassed by SHRM is complex and goes
beyond the responsibilities of personnel or HR managers into all aspects of
managing people and focuses on ‘management decisions and behaviours used,
consciously or unconsciously to control, influence and motivate those who work
for the organisation; in other words its human resource’ (Purcell, 2001).
Mabey, Salaman and Storey (1998) have studied the subject from four distinct
perspectives:
1. The social and economic context of SHRM, including factors in the
internal (corporate) and external environment that influence the
development and implementation of HR strategies;
2. The co-relation between SHRM and business performance,
emphasising the measurement of performance;
3. Management style and the development of new forms of organisation;
and
4. The relationship between SHRM and the development of
organisational capability, particularly knowledge management.
Before we move any further, it shall be better to understand fully the concept of
strategy because it is from here that the idea of strategic human resource
management (SHRM) emerges.
2.2.1 The Concept of Strategy
A strategy is a pattern or a plan that integrates an organisation’s major goals,
policies and action sequences in a coherent linear of decisions. A well-
formulated strategy helps allocate an organisation’s resources optimally into a
unique and viable matrix based on relative internal competencies, shortcomings,
anticipated changes in the environment, and contingent moves by intelligent
opponents (game theory)

3
The concept of strategy is not a simple one. “Strategy” can have a number of
implications. It can be described either as:
• A plan, or a similar idea; viz. direction, guide, course of action; or
• A pattern that provides for consistent behavior over time; or
• A perspective on an organisation’s fundamental way of doing things; or
• A ploy or a specific “maneuver” intended to outwit an opponent or a
competitor.
Evolution of Strategy
Strategy is basically a “military” term. However, it is not in this sense that it has
implications for human resource management.
It was Peter Drucker who pointed out the importance of strategic decisions in
1955 in his book, The Practice of Management, in which he defined strategic
decision as “all decisions on business objectives and on the means to reach
them”.
However, the importance of the concept was not fully realised until pioneers
like Alfred Chandler (1962) and Michael Porter (1980) developed what could be
regarded as the Classical Approach. This involved the use of formal and
systematic design techniques based on quantifications, focused externally and
concentrated on long-term plans, not being much concerned with
implementation and also more or less ignoring the human element. Later writers
emphasised the human and qualitative aspect of strategy. They saw ‘strategy’ as
essentially evolutionary, as revealed in ‘organisational behaviour’ as part of
organisational processes rather than something endogenous or of external or
formal design. Others developed the concepts of distinctive competences and
resource-based strategy. More recently, academics have stressed both
implementation as well as planning aspects of policy.
This shift in thinking has been ‘from strategy, to structure and systems, to
purpose, process and people’. It is the later development, represented by this
shift that represents the modern thinking on the subject.
Chaffee (1985) considers that academically, strategy is viewed in three distinct
but sometimes conflicting ways, as, linear strategy, adaptive strategy, and
interpretative strategy.
(a) Linear Strategy: The linear model has been used by most researchers. It
focuses on planning and forecasting of likely events. Sequence of events is
traced through past and present activities to its logical culmination in the ‘value’
or ‘end’ to be achieved in the future. The ‘end’ reached or desired is the
‘organisational ‘goal’ to be reached through a well networked matrix of
strategies and “hierarchic purposive behaviour” in pursuance of it.
(b) Adaptive Strategy: The second model is described as the adaptive strategy
model and is most closely associated with the idea of ‘strategic management’.
This model focuses on means and is largely concerned with achieving ‘fit’ of a
strategy with respect to internal and external factors. Public and Private
organisations have to devise strategies to adjust to the changing variables in the
environment to maintain organisational ‘relevance,’ and organisational
efficiency, expressed in favourable cost benefit ratio and ‘effectiveness,’ or
internal and external equilibrium attained by adaptation to the external ‘flux’
4
and internal consistency of policies regarding motivation, inducement of
employees towards willing cooperation.
(c) Interpretative Strategy: Interpretative model represents a minority view.
It sees strategy as a metaphor and, therefore, not as something measured or
measurable but rather, as something perceived in qualitative terms. Strategy is
the visible tip of the iceberg, representing the underlying factors or the
underpinning theme of organisational philosophy. This concept is more
representative as there is a reflection of long- term objectives, which are
glimpsed through the microcosm of specific strategies. Interpretative strategy is
observational and deductive as inferences are drawn from organisational
purpose and culture, precisely, the organisation’s overall mode of functioning.
There could be conflict between linear, adaptive and interpretative concepts of
strategy. Reconciliation may not always be practicable or possible in that short
term and long term objectives may not always be congruent.
Mintzberg (1998) has identified ten ‘schools’ of strategy research which have
developed since strategic management emerged as a field of study during the
1960s:
1. The Design School; where strategy is perceived as a process of
conception through a choice of alternatives. All contextual and
contingent factors are taken into account in arriving at choice(s).
2. The Planning School; whereby strategy is construed a formal process
and a deliberate planned construct. Strategy making is put in a temporal
perspective in that it is seen as evolving gradually out of a series of
steps.
3. The Positioning School; by which strategy is perceived as an analytical
process; contingency of situations is taken into account in framing
suitable strategies.
4. The Entrepreneurial School; which looks upon strategy as a visionary
process. There is a perception of the future and actual strategising
depends on assessment of vulnerability and feasible risk taking.
5. The Cognitive School; which opines that strategy is a mental process. It
is conceived in the mind of the strategist and the degree of success
attained in practice depends on the quality or level of cognition of the
individual strategist. Stress is unmistakably on the quality of human
capital employed at strategic positions by an organisation.
6. The Learning School; where strategy is conceived as an evolving
concept; as constantly growing and developing through the impact and
interplay of internal and external forces and factors. There is a
suggestion of the ‘organic’ view in that organisational activity is seen as
dynamic, as constantly evolving, growing and rediscovering new
dimensions and through interactive strategy.
7. The Power School; views strategy as a process of negotiation resulting
in an L.C.M (least common denominator) through interplay of relevant
forces and factors where bargaining power of the interest or pressure
groups is a factor of consequence. ‘Design’ sequence or stage of the
decision making process (Simon, 1957) entails exploration of

5
 possibilities which are articulated as administrative norms and proffered
as inputs by interested parties to policy design.
8. The Cultural School; whereby strategy is perceived as a reflection of
organisational culture or mode of functioning (whether hierarchical or
team, directive or participatory). Strategy is perceived as a dependent
variable. The functioning of the enterprise determines what kind of
strategy is adopted or considered desirable and feasible under a given set
of circumstances.
9. The Environmental School; which looks upon strategy as a ‘reactive
product’ (responsive to stimuli from the environment). Environment is
the independent variable here and strategy the dependent variable.
10. The Configuration School: whereby strategy is perceived as a process of
transformation from the actual to the desired state of affairs. There is
reference to organisational ‘architecture’ here as, organisational design
(structural configuration) involving segmentation; division and
coordination are altered in the desired way through the instrumentality
of and for the purpose of strategy. Organisational functioning is thereby
imparted required direction. Synthesis of strategy emerges which cannot
be foreseen.
Formulating Strategy
Formulating strategy requires defining intentions (strategic intent) allocating
and matching resources to opportunities (resource-based strategy), achieving
thereby, ‘strategic fit’ or balance with respect to organizational strategy. The
effective development and implementation of strategy depends on the strategic
capability of the organisation, which includes not only determining strategic
goals but also developing and implementing strategic plans employing strategic
management.
Let us now try to clarify the meaning of each of the above mentioned variables:
1. Competitive Advantage;
2. Strategic Intent;
3. Resource-based Strategy;
4. Strategic Fit;
5. Strategic Capability; and
6. Strategic Management
The concept of Competitive Advantage plays an important part in the theory
of strategy. Competitive advantage arises when a firm creates added and
unique value for its customers. A firm selects markets in which it can excel
and presents a moving target in front of its competitors by continually
improving upon its own position.
Strategic Intent refers to the leadership position the organisation wishes to
achieve through articulation of motives and establishes a clear criterion by
which progress towards its achievement has to be measured.
The concept of Strategic Fit implies that in order to maximise competitive
advantage a firm must match its capabilities and resources to the
opportunities and constraints in the external and internal environments.
6
 Resource-Based Strategy means, strategic capability of a firm depends on
practicability, or its resource capability, especially distinctive resources that
fetch it competitive advantage. Barney proposes four criteria for deciding
whether a resource can be regarded as a distinctive capability:
a. It must result in value creation for the customer;
b. Its presence should be a distinguished rarity, compared to the
competition;
c. It should be non-imitable and should have; and
d. Non-substitutability.
Strategic Capability is a concept that refers to the ability of an organisation to
develop and implement strategies that help achieve and sustain competitive
advantage. It is based on a deep understanding of the competitive environment,
the resource base and potential of the organisation and the values that engender
commitment from stakeholders of the organisation.
Strategic Management
Strategic management is operationalisation of the concept of strategy. Strategic
management refers to the managerial decisions that establish the context of
organisational functioning, guide internal activities and determine the path of
organisational long term performance (Stahl and Grisby, 1991). It involves
anticipating changes in the environment and developing proper responses.
Strategic management can be regarded as a continuing process, consisting of a
sequence of activities beginning with strategy formulation, advancing through
strategic planning, implementation and review and culminating in revision and
updating policy. In practice, the logical sequence is not always followed. The
objective of strategic management is to make managers look ahead and plan
accordingly. The concern is with broader issues in organisational functioning.
Strategic management is thus explained as:
• A set of decision and actions resulting in the formulation and
implementation of strategies designed to achieve the objectives of an
organisation (Pearce and Robinson, 1988); and
• Concerned with policy decisions affecting the entire organisation, the
overall objective being to position the organisation to deal effectively
with its environment.
Strategic human resource management may be described as the linking of
human resource strategy with strategic goals and objectives in order to improve
business performance and foster an organisational culture of innovation and
flexibility.
Strategic management deals with both ends and means. As ‘end’, it gives a
vision of how things are likely to shape up. As ‘mean’, it shows the path of the
vision’s realisation in practice.
Strategic management is therefore, visionary management which is concerned
with creating and conceptualising ideas about the future of the organisation. It is
also empirical management, in that it decides how in practice it is going to get
there, bearing in mind that organisations function in an environment of change
and adaptation.

7
2.2.2 Aspects of SHRM
Strategic human resource management (SHRM) includes;
1. All those activities affecting the behavior of individuals in their efforts
to formulate and implement the strategic needs of business. (Schuler,
1992)
2. The pattern of planned human resource deployment and activities
intended to enable the organisation to achieve its goals. (Wright and
McMahan, 1992)
3. That part of the management process that specialises in the
management of human capital. It emphasises that employees are the
primary resource for gaining sustainable competitive advantage, that
human resource activities need to be integrated with corporate
strategy, and that human resource specialists help management meet
both efficiency and equity objectives. (Tracey, 1994).
2.2.3 Features of SHRM
Features of strategic human resource management could be inferred as
mentioned below:
• 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’; people are seen primarily as resources to be managed
towards the achievement of strategic business goals; and
• Framework - Strategies by their very nature provide a unifying
framework that is broad, contingency-based and integrative. They
incorporate a full complement of the HR goals and activities designed
specifically to fit extant environments and be mutually reinforcing and
synergistic.

2.2.4 Application of SHRM

The degree to which the concept of strategic human resource management is
applied within an organisation, its form and content vary in organisations. It is
understood that organisations may be so preoccupied with survival tactics and
managing the here and now of organising that perhaps unwisely, they miss an
articulated corporate or business strategy to plan for human resource
management. In these circumstances, which are typical of many organisations in
the UK, where a ‘short-term’ perspective has prevailed, strategic human
resource management cannot be practiced. Strategic approach to human
resource issues is possible only in an environment where there is a strategic
long- term approach of corporate or business strategy. In many organizations,
planning the human resource function fulfils primarily an administrative and
service role and is not involved in strategic matters.
Mintzberg argues that strategies which are actually carried through in practice
show unintended features, which he terms 'emergent strategies'. This might
8
result from poor strategic thinking, poor implementation or even, a sound state
of realism. It reflects the view that strategic management should not be confined
to the top echelons in an organisation. Emergent strategy rarely comes from the
top, but rather from bright ideas and initiatives emerging from local levels
which are found to work in practice and then adopted.
Modern technology allows us to develop organisations, which are differentiated,
allow for local flexibility and autonomy but are highly integrated at the same
time. (Price, 2004). In modern organisations, HR strategy is supported by
information technology in the form of human resource management information
systems and workforce management systems.
2.2.5 Implications of SHRM
Academically, the area of enquiry is interdisciplinary and as a practical craft,
integrative. Understanding of the political and economic ‘environment of
constraints’ as well as the internal sociological dynamics of the organisation,
specifically the psychological underpinnings to human behaviour at work, are
important in strategic human resource management.
SHRM has the following distinct implications:
1. The use of planning to maximise advantage from human resource
management;
2. A coherent approach to the design and management of personnel systems
based on employment policy and manpower strategy underpinned by
‘philosophy’; and
3. Human resource management activities and policies are aspects of
explicitly formulated business strategy.
SHRM implies accepting the HR function as integral to the formulation of the
companies’ strategies and implementation of the same through specific human
resource processes viz. recruiting, selecting, training and rewarding personnel.
To clarify further, whereas strategic human resource management recognises
HR’s partnership role in the strategising process, the term HR strategies refers
to specific HR policies or practices undertaken or pursued towards clearly
formulated aims. These goals (like any other objectives) need to be expressed
preferably in quantifiable terms so that outcomes can be measured. However,
strategic HR objectives go beyond simplistic calculations and control of staff
numbers and overall cost control. Strategic thinking incorporates ethical and
legal considerations, which have complex implications for the achievement of a
wide range of business objectives. A few are listed below. .
(a) Equity: Applicants and employees should be treated fairly to minimise
complaints or negative publicity.
(b) Consideration: There should be consideration for individual circumstances
and aspirations while taking strategic decisions which affect the security,
prospects and self-respect of employees.
(c) Commitment: Commitment and motivation of employees should be secured
as a priority issue. Staff tends not to be committed to organisations, which are
not committed to them.
(d) Working Conditions: Safe, healthy and pleasant conditions enhance well-
being, minimise stress and improve efficiency. Physical and social working

9
conditions determine work efficiency significantly and need to be included in
strategy.

2.3 LITERATURE ON SHRM

SHRM like any other stream in public administration and business
administration is inter-disciplinary. Academic disciplines and paradigms
involved directly and indirectly in the area of strategic human resource
management are catalogued by Colbert (2004) thus:
-Organisation theory including institutional theory, contingency theory,
configurational approaches, transaction cost analysis, behavioural perspectives;
and, organisational learning.
Wright and McMahan (1992) lament the absence of a theoretical paradigm in
strategic human resource management. Practical advice or presentation of
empirical data to the management may not make for good theory or even
practice. Lack of a strong theoretical foundation potentially undermines the
ability of both practitioners and researchers in the field to optimise human
resource utilisation in support of strategy. Rich integrated theoretical
frameworks help focus and organise research efforts and enable the evolution of
the practice of HR management into a truly strategic discipline. (Colbert, 2004)
Becker and Gerhardt (1996) raised the question of research, and the level at
which it should be taken up; whether at the level of HR principles, policies or
practices. They answer it by advocating an ‘architectural’ approach for
understanding the effects of HR system components on organisational
outcomes. Desired organisational outcome should be articulated and principles,
practices and policies designed in the direction of accomplishing the stated
objective. For example, employees’ participation in decision making would
demand conducive practices, team work, participative management principles,
horizontal coordination, flexible span of control, nature of supervision, etc.
As far as research in strategic human resource management is concerned, there
is need to emphasise creativity over control and tackle the ambiguity and
complexity of dealing with the human element. According to Colbert, the right
approach would be to perceive organisations as ‘organic’ (analogy from
biology) complex systems with a view to tapping intangible resources and
making latent potentialities manifest.
As an area of academic research and policy science, R&D (research and
development) is very much at the focus of SHRM. SHRM literature, presently,
is not prescriptive enough to impart genuine academic credibility to the area of
enquiry. Some even regard it as redundant. They feel that managements need to
act and not waste time strategising; or rather derisively, strategy itself may not
be ‘strategic’ enough to merit so much attention. However, the opinion has not
gained ground and empirical researches show that in the present environment of
competitiveness, information and communication revolution, strategising is
imperative, since customers, employees and employers almost equally share
knowledge resource. Hence, “where customers or buyers get smarter everyday
and business processes and systems more homogenous, strategy will be crucial
in securing competitive edge for organisations” (Carr, 2004)

10
 The aim of researchers is to avoid mere observational judgments and promote
empiricism in order to impart legitimacy to policy recommendations regarding
strategic human resource theory and practice and to make the area of enquiry,
objective and rational. It is felt however, (Colbert, 2004) that ad- hoc
researches need to be replaced with a more integrative, theoretical framework
to build genuine database or ‘policy science’ for more rational ‘choice’ function
in actual decision- making situations.
2.4 APPROACHES OF SHRM
Authors have attempted to provide more analytical frameworks for strategic
human resource management. Delery and Doty (1996), for example, distinguish
between three different theoretical frameworks:
(a) Universalistic; where some HR practices are believed to be universally
effective. This approach proffers common, standard, individual HR practices,
and treats them as principles claiming verifiability and consistent applicability.
Scholars contend that it errs in oversimplifying organisational reality since it
does not explain complex system interactions and has a rather “isomorphic”
than “differentiating” effect (Colbert, 2004).
(b) Contingency; where effectiveness of HR practices is taken as dependent on
organisation's strategy, systems interaction and ‘achievement of ‘vertical fit’
regarding policies. It goes beyond simple linear causal relationships for
prescription of HR practices and allows for interaction effects and varying inter-
variable-relationships (system interaction effects) during strategy formulation.
The stress is on achieving ‘vertical fit’ or integration of policy through
hierarchic levels and its consistent alignment with strategy. The idea of
‘horizontal fit’ envisions HR practices as “hanging together as a coherent self-
reinforcing system.”(Colbert, 2004)
(c) Configurational; where there is believed to be synergistic or mutually
reinforcing relation between HR practices and strategy that are crucial for
enhanced performance, whereby, researchers gather data regarding “multiple
dimensions of organisations such as strategies, structures, cultures and
processes into typologies of ideal types” and treat the types as independent
variables. This approach therefore gives patterns of HR practices that together
form an internally consistent whole. Ideal type model building is attempted,
whereby few possible system configurations are developed. It then correlates
patterns with performance. However, configurational approach confines real life
possibility into two or three system types which might not in practice cover real
life possibilities (Colbert, 2004)
Wright and Snell's (1998) model of SHRM aims to achieve both fit and
flexibility. They emphasise distinction between HRM practices, skills and
behaviour in relation to strategy on the one hand, and the issue of tight and
loose coupling of HR practices and strategy on the other.
The Best Practice Approach
This approach is based on the belief that there exists a set of best HRM practices
which potentially lead to superior organisational performance. Perhaps the best
known set is Pfeffer’s (1994) list of the seven HR practices in successful
organisations.

11
(a) Employment Security: This implies employee security in the face of
exigencies like economic downturns or the strategic errors of senior
management on which they have little or no control. It is fundamental to
the implementation of such high-performance management practices as
selective hiring, extensive training, information sharing and delegation.
Companies are unlikely to invest in the screening and training of
employees who are not expected to stay long enough for the firm to
recoup its investment. And if the policy is to avoid lay-offs, the
company will hire sparingly.
(b) Selective Hiring: Selective recruitment is needed to minimise training
costs. Organisations should look for people with the right attitude,
values and cultural attributes that may be hard to inculcate by training.
Management should also be able to predict the employee’s performance
and the likelihood of the employee remaining with the company for a
long time.
(c) Self-Managed Teams: These are a critical component of high-
performance management systems. They:
(i) Substitute peer-based control for hierarchical control of work;
(ii) Lessen tiers in hierarchy; and
(iii) Permit employees to pool their ideas in order to produce better
and more creative solutions to work problems.
(d) High Compensation Contingent on Performance: Compensation
offered to employees is made contingent on organisational
performance, for example, gain sharing or profit- sharing can be
related to individual or team performance or even unique or particular
individual skills.
(e) Training: Virtually, all descriptions of high-performance work
practices emphasise the role of training in providing needed skills and
creating a motivated workforce that has the knowledge and the
capability to perform required tasks.
(f) Reduction of Status Differentials: The fundamental premise of high-
performance work systems is that organisations should be able to tap
ideas, skills and efforts of its employees. For this to be possible, status
differentials should not be emphasised to the detriment of team spirit
in an organisation.
(g) Sharing Information - This is an essential component of high-
performance work systems for two chief reasons. First, the sharing of
information on the firm’s financial performance and business
strategies sends a positive message across to employees that they are
valued. Second, even motivated and trained people cannot contribute
to organisational performance if they do not have information on
important aspects of performance and training in interpreting and
using that information.
Many scholars do not subscribe to the ‘best practice’ theory. They believe that
the notion of a single set of best practices has been over stated.
Purcell (1999) has also criticised the best practice or the universalistic view by
pointing out the inconsistency between beliefs in best practice on the one hand
12
and the resource-based view (RBV) on the other, since the former focuses on
intangibles, including HR that allows a firm to perform better than its
competitors and the latter on treating people as ‘resource’. While the former
emphasises generalist perspective to achieving high performance, the latter
targets specific resources. He asks; “how the universalism of best practice can
be squared with the view that only some resources and routines are valued
because of being rare and imperfectly imitable?”
In accordance with the contingency theory, it is difficult to accept that there is
any such thing as a universal best practice. What works well in one organisation
may not necessarily work well in another because it may not fit its strategy,
culture, management style, technology requirement or working practice. As
Becker (1997), remarks, ‘organisational high-performance work systems are
highly idiosyncratic and must be tailored carefully to each firm’s individual
requirement in order that it achieves optimum results.’ But knowledge of best
practice as long as it is known what makes it best practice, should inform
decisions on what course of action should be adopted by the organisation, and
Becker and Gerhar (1996) argue that the idea of best practice underlies the
choice of practices as opposed to practices themselves. It is more a choice
criterion rather than the characteristic of practices in an organisation.
Best Fit
For the reasons given above, ‘best fit’ is considered more appropriate than best
practice’. This is not to say that ‘good practice or ‘leading-edge practice’,
(practice that does well in one successful environment) should be ignored.
Benchmarking has its uses as a means of identifying areas for innovation or
development practice applied to good effect elsewhere. But having learnt what
works and what does not work in similar situations, the organisation has to
decide what general policy should be adopted and what lessons can be learnt to
make the adopted idea fit its own particular strategic and operational
requirements. The requirement is an analysis of the business needs of the
organisation within its own particular context, (culture, structure, technology
and processes) indicating clearly what has to be done. Thereafter, it maybe
useful to adopt a mix of various ‘best practice ingredients’, to develop an
approach which applies practices that are appropriate in a way that is conducive
to identified business needs.
However, there are problems with the best-fit approach, as stated by Purcell
(1999), who, having rubbished the concept of best practice proceeded to do the
same for best fit. The search for a contingency or matching model of HRM is
limited by the difficulty of modeling all contingent variables, the difficulty of
showing their interconnections, and the way in which changes in one variable
impact others.
In Purcell’s view, organisations should be less concerned with best fit and best
practice, and be more sensitive to the processes of organisational change to
‘avoid being trapped in the logic of rational choice’. It may be notable, that
‘rational choice’ argument does not always apply in real life situations.
A strategy’s success therefore depends on combining “vertical” or external fit
with “horizontal” or internal fit. A firm with better HR practices should have
higher levels of performance, provided it also achieves high levels of fit with its
competitive strategy.

13
This brings out the importance of “bundling,” that is, the development and
implementation of several HR practices in unison so they are inter-related,
complementing and reinforcing each other. The process is referred to as the use
of ‘complementarities’ or the adoption of a ‘configurational mode’
Implicit in the notion of ‘bundle’ is the idea that practices within bundles are
interrelated and made internally consistent, and that the impact on performance
is positive, because of the overlapping and mutually reinforcing effects of
multiple practices.
One might argue that the logic in favour of ‘bundling’ is a straightforward one.
Since employee performance is a function of both ability and motivation, it
makes sense to have practices aimed at enhancing both. Thus there are several
ways in which employees could be made to acquire the required skills to
augment ‘ability’ and administer multiple incentives to enhance, induce and
reinforce motivation. A study by Dyer and Reeves (1995) of the various models
listing HR practices that create a link between HRM and business performance
revealed that activities appearing in most successful models, were involvement,
careful selection, extensive training, and contingent compensation.
On the basis of his research in flexible production manufacturing plants in the
United States, MacDuffie (1995) noted that flexible production mode gives
employees a much more central role in the production system. They have to
resolve problems as they arise, that is, at the level at which they appear in the
line, which means they have to possess both the conceptual grasp of the
production process and the analytical skills to identify the root cause of
problems. But multiple skills and conceptual knowledge developed by the
workforce in flexible production organisations would be of little use unless
workers are motivated to contribute in both mental and physical capacities.
Such willing effort will only be applied by workers if they ‘believe that their
individual interests are aligned with those of the company, and the company
would make a reciprocal investment in their well-being. Flexible production
techniques have to be supported by high-commitment human resource practices
like employment security and good pay, which if neglected, create barriers
between the management and workers. Company investment in building worker
skills through training and positive reinforcement also contributes to this
psychological contract of ‘reciprocal commitment’. Research indicates that
plants using flexible production systems and human resource practices into a
system integrated with production and business strategy out perform plants
using more traditional mass-production systems in case of both productivity and
quality.
The aim of ‘bundling’ is to achieve coherence in organisational practice.
Coherence is attained when a mutually reinforcing set of HR policies and
practices is developed which contributes to the attainment of organisation’s
strategies, for matching resources to organisational needs, improving
performance and quality and, in commercial enterprises, achieving competitive
advantage.
In a sense, strategic HRM is holistic in that it is concerned with the organisation
as a total entity and addresses what needs to be done across the organisation as a
whole to achieve corporate strategic objectives. It avoids isolated programmes
and techniques and ad- hoc development of HR programmes.

14
David Guest (1989), in his set of propositions for HRM, stresses the idea that
strategic integration is about the ability of the organisation to ensure that the
various aspects of HRM are coherent. One way of looking at the concept is to
say that some measure of coherence will be achieved if there is an overriding
strategic imperative or driving force such as customer service, quality,
performance or the need to develop skills and competences, and this initiates
various processes and policies designed to link together and operate as one
integrated policy to deliver certain specific results. For example, if the driving
force were to improve performance, competence-profiling techniques could be
used to specify recruitment standards, in identifying learning and development
needs, and indicating the standard of behavior or performance required. The
competence framework would be used as the basis for human resource planning
and development activities. The same could also be incorporated into
performance management processes in which the aim is primarily
developmental and in which competence is used as a criterion for reviewing
behavior and assessing learning and development needs.
The major problem with the ‘bundling’ approach is deciding the best way to
relate different practices. There is no evidence that one ‘bundle’ is generally
better than the other, although the use of performance management practices
and competence framework are the two ways typically adopted to provide for
coherence across a range of HR activities. There is no conclusive proof that
bundling actually improves performance.
The general models describing the best practice, best-fit and configurational
approaches, provide a useful conceptual framework, which can help in the
analysis and development of strategic HRM practices. The other models
analysed in this Unit, are prescriptive and should be treated with caution. They
describe best practices under various headings. This may be of interest and be
helpful to practitioners looking for a starting-point in the development of a
people management and development strategy, but for reasons given earlier;
‘best practice’ approach suffers from limitations. Best fit is perhaps more
helpful as it allows for the influence of distinctive business strategies such as
specific sector strategies and adjustment to market or economic forces.
Any one or a combination of these approaches would prove helpful in the
development of strategy although emerging consensus favors what has become
known as the ‘high-performance management’ approach. But it will still be
necessary to consider how such an approach or any other model is likely to be
most appropriate in particular organisational circumstances.
Resource Based View
Strategic human resource management is an extension of the Resource Based
View (RBV) of competitive advantage of a firm or an organisation. (Colbert,
2004) Proponents of RBV argue that sustained competitive advantage originates
in an organisation’s resource base thereby drawing attention to the internal
workings of an enterprise. Strategic human resource management, therefore,
emphasises the role of the manager. Optimising human and material resource
comes under the functions of the executive.
RBV has helped build a productive theoretical bridge between the fields of
strategy and HRM. It has been an integrative framework for optimising use of
human material resources for sustained competitive edge. (Barney, 1991)

15
2.5 MODELS OF SHRM
There are a number of models within the rubric of prescriptive and descriptive,
which within the framework of the concept of strategic human resource
management form various approaches to the concept’s theoretical development
and practical implementation. First, there are those that refer to general
approaches to strategic human resource management; second, there are those
that prescribe particular approaches to the practice of strategic HRM, namely,
resource capability, high –performance management (high performance
working), high-commitment management, and high- involvement management.
The models of SHRM are either prescriptive or descriptive. As per Guest’s
model of 1987, HRM can be derived empirically and conceptually from
analyses of individual practices overtime leading to testable propositions and
finally, prescription of policy. There are four key elements or goals of strategic
human resource management, as identified by Guest. These are: (1) integration;
(2) commitment; (3) flexibility, and (4) quality. Guest’s model however takes
little account of contextual circumstances such as impact of situational and
environmental factors on organisational practice. The other major paradigm is
functionalism, which draws upon functionalist sociology propounded by
Comte. It follows the positive tradition adapting biological concepts to
sociology. Anthropologists Malinowski and Radcliff Brown (1952) emphasised
social order, stability and continuity of the ‘organic whole’; the chief argument
is that society holds together underpinned by the notion of purposive rationality.
Transporting the concept to organisational life, hence functionalism aims at the
establishment of objective knowledge. The purpose of HRM accordingly is to
sustain organisational coherence by way of integration between sections
constituting an organisation through strategy.
The High-Performance Working Model
High-performance working involves the development of a number of
interrelated approaches which together impact favourably on the performance of
the firm in areas like productivity, quality, and levels of customer service,
growth, profits, and delivery of increased shareholder value. This is achieved by
‘enhancing the skills and engaging the enthusiasm of employees’ in goal
accomplishment. The starting point is leadership vision and benchmarking to
create momentum and identify direction for measuring progress constantly. It
involves structural and cultural stipulations to that end. Guest suggests that the
main drivers of support system or culture are:
• Decentralised decision- making, especially at the cutting edge level so as
to constantly renew and improve offers or services made to customers or
people in general;
• Development of people -capacities through induced learning at all
levels, with particular emphasis on self-management and team capability
to enable and support ‘performance improvement’ and enhance
‘organisational potential’;
• Performance, operational and people management processes are aligned
to organisational objectives to build trust, enthusiasm and commitment
towards the direction or course of action adopted by the organisation.

16
 • Fair treatment of those who leave the organisation mid-course, and
engagement with the needs of the community outside the organisation.
This is an important component of trust and commitment based
relationships, both within and outside the organisation; and;
• High-performance management practices that include rigorous
recruitment and selection procedures, extensive and relevant training and
management development activities, and incentive pay systems and
performance management processes.
In the United States, this approach is described as the use of high-performance
work systems or practices. The characteristics of a high-performance work
system have been defined by the United States Department of Labour (1993) as:
• Careful and extensive recruitment, selection and training;
• Formal system for information sharing with individuals who work in the
organisation;
• Clear job design;
• High-level participation process;
• Monitoring attitudes; and studying behaviour;
• Regular performance appraisals;
• Properly functioning grievance redress system; and
• Promotion and compensation schemes that provide for recognition and
financial reward for high performing members of the workforce.
High-performance working involves the adoption of high-performance design
methods. These require certain steps in a logical sequence; as stated below:
• Management clearly defines what it needs by way of new methods of
working and articulation of results expected;
• Management extends success parameters in that it continually sets goals
and standards for enhanced success;
• Multi-skill acquisition is encouraged. Encouragement and training are
provided for employees to acquire new skills;
• Equipment is selected that can be used flexibly and allows easy handling
for optimising the socio-technical system (aspect of organisation);
• Establishment of self-managed teams or autonomous work groups for
better human relations;
• Adoption of supportive rather than autocratic style (this is most difficult
part of the system to introduce) of leadership to support innovation and
initiative on the part of employees;
• Support systems are provided that help teams function effectively as
operating units;
• The new system is introduced with care through employee involvement
and communication programmes for employee empowerment;
• Training is based an objective assessment of training needs;

17
 • Payment system is designed with employee participation to ‘fit’
employee needs as well as those of the management;
• Payment is related to team performance (team pay) but with provision
for skill-based pay for individuals; and
• In some cases, ‘peer performance review’ process is used which
involves team members assessing one another’s performance as well as
the performance of the team as a whole.
The High-Commitment Management Model
One of the defining characteristics of HRM is its emphasis on the importance of
enhancing mutual commitment among co-contributors. High-commitment
management may be described as a form of management that aims at eliciting
commitment so that behavior is primarily self-regulated rather than controlled
by sanctions and pressures applied by the management and relations within the
organisation are based on high levels of trust.
Ways to achieve high commitment are:
• Development of leadership through training, with premium on
commitment as highly valued characteristic at all levels in the
organisation;
• A high level of functional flexibility abandoning potentially rigid job
descriptions;
• Reduction of hierarchies and de-emphasis of status differentials;
• A heavy reliance on team infrastructure for disseminating information
(team briefing), designing and distributing work (team working) and
problem solving (quality circles);
• Understanding job design as an area of management craft to provide
intrinsic satisfaction to workers;
• A policy of no compulsory lay-offs and permanent employment
guarantees with the possible use of temporary workers to withstand
fluctuations in the demand of labour;
• New forms of assessment and payment systems; more specifically, merit
pay and profit sharing; and;
• High degree of involvement of employees in the management of quality.
The High-Involvement Management Model
While commitment might still suggest subjugation, this model is more
democratic in approach, in that it involves treating employees as partners in the
enterprise whose interests are respected and who have a voice in matters
concerning or relating to them. There is focus on communication and
participation with the aim of creating ‘climate’ in which continuing dialogue
between managers and the members of their teams is continually maintained in
order to reiterate or revise expectations as the case may be and consistently
share information on the organisation’s mission values and objectives. This
establishes full mutual understanding of what is desired by both the
management and workers and also establishes the means of managing and
developing employee potential to ensure target accomplishment through better
18
involvement across the region. Specifically, the following structural and
functional attributes are desired.
• ‘On line’ work teams;
• ‘Off-line’ employee involvement activities and problem solving
groups;
• Job rotation;
• Suggestion programmers; and
• Decentralisation of quality efforts.
Clear evidence emerges from the above recount that high-involvement work
practices result in superior performance although there might be tremendous
variance in actual application. High - involvement work practices have a clear
and demonstrated effect on productivity. The effect is ‘large’ enough to be of
economic consequence and significance to the organisations that adopt these
‘new practices’.
2.6 CONCLUSION
The key derivatives from this discussion are:
• Strategic human resource management implies linking HR practices
with organisation’s strategy
• There is need for a theoretical framework for SHRM research and theory
building;
• SHRM is interdisciplinary. Systems and contingency paradigms can be
gleaned from the literature on SHRM.
• As a practical philosophy, its driving force is efficiency, that is more
revenue, less cost
• It is also qualitative as it stresses on augmenting quality of human
resource and ethical practice
• It imparts economy and coherence to organisational functioning.
2.7 KEY CONCEPTS

Cognition: Cognition is defined as the psychological result of

perception, learning, and reasoning. Cognition has
wider oranisational climate ramifications as on
positive cognition depends organisational survival
and health. Cognition develops over time with
education and training. Development of ‘positive
cognition’ on the part of people is a part of
organisational strategy. Negative cognition can lead
to impairment of employee capacity and also
adversely affect his attitude towards colleagues and
organisational ethics in general.

Fit: A strategy is successful if it ‘fits’ with other decisions

in an organisation, in terms of compatibility between

19
 demand and supply, resource use, result oriented ness
and integration with wider organisational functioning.
Organisational policy has to move forward in a
concerted way in that, integrating decisions taken at
different policy and operating levels. A strategy is
‘fit’ if it answers the aforesaid requirements.

Strategic: The word Strategy is used to denote targeted ness of a

policy or a measure. As against ‘general’ policy,
strategic planning or policy involves systematic,
result oriented and methodical activity on the part of
organisations towards ‘pre- determined ‘or preset
goals or ends. Strategy has to be continually assessed
for relevance in face of contingent environmental
factors as per the needs of the situation.

2.8 REFERENCES AND FURTHER REDING

Armstrong, Michael and Angela Baron, 2003, “Strategic HRM: The Key to
Improved Business Performance”, Encyclopedia of Human Resource
Development, Vol. 5.
Becker, B. E, M. A. Huselid, Pickus and M. F. Spratt, 1997, “HR as a Source of
Shareholder Value: Research and Recommendations”, Journal of Human
Resource Management, Spring Vol. 36.
Becker, B. E. & B. Gerhart, 1996, “The Impact of Human Resource
Management on Organisational Performance: Progress and Prospects”,
Academy of Management Journal, Vol. 36, No.4.
Burns, T. and G. M. Stalker, 1961, The Management of Innovation, Tavistock
Publications, London.
Carr, Nicholas, 2004, Does IT Matter: Information Technology and the
Corrosion of Competitive Advantage, Harvard Business School Press.
Chandler, Alfred, 1962, Strategy and Structure, MIT Press, Boston.
Colbert, 1994, “Complex Resource Based View of SHRM”, Academy of
Management Review.
Davis, S.M, 1982, "Transforming Organisations: The Key to Strategy is
Context, " Journal of Organisational Dynamics.
Delery, J & D.H. Doty, 1996, “Modes of Theorising in Strategic Human
Resource Management: Tests of Universalistic, Contingency and
Configurational Performance Predictions”, Academy of Management Review.
Dess, G.G. & Davis P.S. Porter, 1984, “Generic Strategies as Determinants of
Strategic Group Membership and Organisational Performance”, Strategic
Management Journal.
Drucker, P.E, The Practice of Management, Heinemann, London.
Duncan, R. B, 1972, "Characteristics of Organisational Environments and
Perceived Environmental Uncertainty," Administrative Science Quarterly.
20
Duncan, R.B, 1973, "Multiple Decision-Making Structures in Adapting To
Environmental Uncertainty: The Impact on Organisational Effectiveness," The
Human Relations Journal.
Dyer and Reeves, 1995, “Human Resources Strategies and Firm Performance:
What do We Know and Where do We Need to Go?” The International Journal
of Human Resource Management, Vol. 6, No.3.
Dyer, L and G.W. Holder, 1988, Human Resource Management: Evolving Roles
and Responsibilities, Bureau of National Affairs, Washington, D.C.
Dyer, L. & J. Holder, 1988, “A Strategic Perspective of Human Resource
Management”, L. Dyer (Ed), Human Resource Management: Evolving Roles
and Responsibilities, American Society for Personnel Administration/Bureau of
National Affairs, Washington, DC.
Galbraith, J, 1973, Designing Complex Organisations, Reading, MA, Addison-
Wesley.
Ghoshal, H. and C. A. Bartlett, 1999, The Individualised Corporation, Harper
Perennial, New York.
Guest, D.E, 1997, “Human Resource Management and Performance: A Review
and Research Agenda”, The International Journal of Human Resource
Management.
Guest, David E, 1987, “Human Resource Management and Organisational
Relations,” Journal of Management Studies.
Guest, David, 1989, “HRM: Its Implications for Industrial Relations and
Industrial, Organisation,” J. Storey (Ed), New Perspectives on HRM, Routledge,
London.
Jackson, S.E, R.S. Schuler & J.C. Rivero, 1989, “Organisation Characteristics
as Predictors of Personnel Practices,” Journal of Personnel Psychology.
Katz, D. and R.L. Kahn, 1966, The Social Psychology of Organisations. John
Wiley & Sons, New York.
Koontz, H. and O'Donnell, 1955, Principles of Management: An Analysis of
Managerial Functions, McGraw-Hill Inc., New York.
McDuffie, J.P, 1995, “Human Resource Bundles and Manufacturing
Performance: Flexible Production Systems in the World Auto Industry”,
Industrial Relations and Labour Review.
Miles, R.H. & C.C. Snow, 1984, “Designing Strategic Human Resource
Systems”, Journal of Organisational Dynamics.
Miles, R.E. and C.C. Snow, 1988, Organisational Strategy, Structure and
Process, McGraw-Hill, New York.
Miles, R.E, C.C. Snow and Charles C, 1992, "Causes of Failure in Network
Organisations," California Management Review.
Milkovich, G.T, B. Gerhart & J. Hannon, 1991, “The Effects of Research and
Development Intensity on Managerial Compensation in Large Organisations”
Journal of High Technological Management Resources, Vol. II.
Miller, D, 1983, “The Correlates of Entrepreneurship in Three Types of
Firms”, Journal of Management Science.
21
Miller, D. & P.H. Friesen, 1983, “Innovation in Conservative and
Entrepreneurial Firms: Two Models of Strategic Momentum”, Strategic
Management Journal.
Mills, D.Q, 1985, The New Competitors, The Free Press, New York.
Mintzberg, H, 1978, “Patterns in Strategy Formulation”, Journal of
Management Science.
Mintzberg, H, 1979, The Structuring of Organisations, Prentice-Hall,
Englewood Cliffs.
Morris, M.H. & F.F. Jones, 1993, “Human Resource Management Practices and
Corporate Entrepreneurship: An Empirical Assessment from the USA”, The
International Journal of Human Resource Management.
Odiorne, G.S, Personnel Administration by Objectives, Irwin, Homewood
Illinois.
Pearce, J.A. and R.B. Robinson, 1988, Strategic Management: Strategy
Formulation and Implementation, Irwin Inc., Georgetown, Ontario.
Pfeiffer, J, 1994, Competitive Advantage through People, Harvard Business
School Press, Boston.
Porter, M E, 1980, Comparative Strategy, Free Press, New York.
Porter, M.E, 1985, Competitive Advantage: Creating and Sustaining Superior
Performance, Free Press, New York.
Price, Allan, 2004, Human Resource Management in a Business Context,
Second Edition.
Purcell, J, 1989, “The Impact of Corporate Strategy on Human Resource
Management, J. Storey (Ed), New Perspectives on Human Resource
Management, Routledge, London.
Quinn, J. B, 1980, Strategies for Change: Logical Incrementalism, Ontario,
Irwin, Georgetown.
Radcliff-Brown, A. R, ``The Mother's Brother in South Africa’, McGee (Ed),
Richard D. Irwin Inc.
Schuler, R.S. & S.E. Jackson, 1987, “Linking Competitive Strategies with
Human Resource Management Practice,” Academy of Management Journal.
Schuler, R.S, 1987, Human Resource Management Practice Choices, R.S.,
Schuler, and S.A. Youngblood (Eds), Readings in Personnel and Human
Resource Management, Third Edition, St. Paul, MN West Publishing.
Schuler, R.S, 1992, “Strategic Human Resource Management: Linking People
with the Strategic Needs of the Business”, Journal of Organisational Dynamics.
Stahl and Grisby, 1992, Strategic Management for Decision Making, PWS
Kent.
Weick, K, 1979, The Social Psychology of Organising, Second Edition,
Reading, Mass: Addison-Wesley.
Wright, P, et al, 1991, "Strategic Profiles and Performance: An Empirical Test
of Select Key Propositions" Journal of the Academy of Marketing Science.

22
Wright, P. M. & G.C.McMahan, 1992, “Theoretical Perspectives for SHRM”,
Journal of Management Review, Vol. 18.
Youndt, M, D.A. Snell, J.W. Dean & D.P. Lepak, 1996, “Human Resource
Management, Manufacturing Strategy, and Firm Performance”, Academy of
Management Journal.
2.9 ACTIVITIES

1. Discuss the contribution of SHRM in an organisation.

2. Explain main models of SHRM.
3. Discuss the chief approaches of SHRM.

23
UNIT 3 HUMAN RESOURCE PLANNING AND
STRATEGY
Structure
3.0 Learning Outcome
3.1 Introduction
3.2 Manpower Planning
3.2.1 Requirements of Manpower Planning

3.2.2 Process of Manpower Planning

3.2.3 Aspects of Manpower Planning

3.2.4 Advantages of Human Resource Planning

3.3 Shortcomings of Manpower Planning

3.4 Manpower Planning in the Civil Service
3.5 Conclusion
3.6 Key Concepts
3.7 References and Further Reading
3.8 Activities

3.0 LEARNING OUTCOME

After going through this Unit, the learners shall be able to:
• Understand the significance of human resource planning at macro (national, state) and micro
levels (company, department);
• Understand the academic status of human resource planning as an integrated discipline; and
• Understand the need for manpower planning in the civil service.

3.1 INTRODUCTION
The human resource (HR) section is in charge of securing needed integration in organisational
practice. In its essentials, HR planning is simply the formal process of linking organisational
strategy with human resource practices. It is about perceiving organisational practice as a whole
and not piecemeal. In a competitive climate, organisations need to use models and approaches
that secure ‘uniqueness’ of operations along with enhancing ‘organisational capability” (Yake
and Ulrich, 1994). Uniqueness may be defined as the ability to transfer strategy to employee
action, align systems and strategies to make strategies real (Ulrich, 1994).
Implementation of HR planning can take different forms ranging from a mere afterthought or an
appendix to the main organisational plan, to a distinct and separate process, focusing distinctly

59
on the HR function. HR plan is designed to pay attention to shaping the priorities of the HR
function than on supporting activities relating to the organisation’s functioning as a whole. In
extreme cases, HR plan could even be an isolated practice with little or no input from managers
outside the HR function.
HR planning occurs at several levels: aggregated workforce planning at the strategic level;
career planning of homogenous group of employees at the tactical level; posting and deployment
planning of individuals at the operational level. At all these levels, technology has been harnessed
to provide HR managers with sophisticated planning tools to craft effective policies. Tools that
empower them to conduct a more thorough analysis of possible policy options, to evaluate the
effectiveness of alternative schemes prior to implementation and to apply & adjust personnel
plans (for example, deployment of scarce professional resources) in response to real-time business
needs. It employs tools that allow HR managers to make plans quickly and more frequently in
order to keep pace with the dynamic operating environment. (Ulrich, 1994) There is need for a
unifying framework for strategic, tactical and operational HR policies and plans to provide for
internal consistency and coherence in an organisation.
Strategic manpower planning is needed to counteract pulls and pressures of globalisation.
“The strategic manpower planning system ably exploits the available talent in an organisation and
determines the most appropriate sets of personnel policies to develop and retain the right mix of
people to achieve organisational goals.”
The tactical planning system addresses the career planning and development needs of personnel
in the organisation. Career path is mapped out for individual employees and required training
provided to maximise individual and organisational capacities the peculiarities and specific career
needs of professions within the organisation. As such, the key output of tactical model is a career
plan that systematically grooms the right number of individuals to hold the various jobs. The
career plan will spell out the sequence of jobs to assume and the trainings to attend so that the
individuals going through the pace will gain the necessary exposure and experience to discharge
the duties professionally.
Finally, the operational planning system assists the HR managers to formulate optimal personnel
posting or deployment plan for the employees. With the exceptions of very small companies,
where job changes (promotion or lateral move) are generally opportunistic in nature, most
companies (especially the more structured institutions like the Armed Forces) can orchestrate
job changes to ensure that both the individual’s aspirations and the organisation’s objectives (as
represented by the strategic and tactical goals) are well aligned. (IDSC, 2005)
The purpose of HR Planning therefore is optimising efficiency of the Human Resource in an
organisation. Architecture or blueprint of an HR plan reveals the following three different phases
(Ulrich, 1994)
According to William Tracey (1994), the areas covered in HR planning are:
• The mission and vision of organisation, leadership style, objectives, corporate culture, ideal
employee profile, highlighting, incorporating, and integrating organisational and individual
philosophy for maximising welfare of both constituents viz. individual the group of
organisational effort for securing and maintaining internal organisational equilibrium and

60
 contributions procured or elicited from ‘co-contributors’ or employees in an organisational
situation;
• Relating HR and work plans, highlighting resources, instituting cost-effective strategy, binding
strategies with HR philosophy of the organisation, delineating organisational processes viz.
delegation, centralisation, decentralisation, span of control, etc.;
• Articulating HR needs for short-term and long-term purposes;
• Designing HR structure involving written job descriptions, formal organisational charts,
reporting and communication processes, etc;
• Delineating HR policies viz. recruiting, compensation, benefits, evaluation and recognition
programmes, pension, employees’ development, etc.;
• Provisioning HR technology that is, software, HR management systems, workspace and
equipment; and;
• HR management viz. selection, development, advancement and succession planning,
redressing problems of employees, employee integration, teambuilding, motivation and
productivity.
a) Formulation of Strategic Intent: Clear and specific division of labour and job design is the
important requirement of this phase. For that purpose, organisational mission has to be
articulated clearly and internalised by employees. Ideology of an organisation can be inferred
from its mission statement. For example, Avery India’s mission is articulated thus:
“True leadership and flexible approach can ensure customer satisfaction, internal
and external. The objective is to provide high quality of products and services to
customers”
• Reflections would be that besides the organisation being end-oriented, the systems
and processes and flexible.
• The inference would be that since premium is put on flexibility and end-orientation, the
organisation will be innovative, creative, and value adding (Sushil, 2005)
b) Human Resources Integration Phase – Four chief areas of activity in the integration phase
are as follows (Ulrich, 1994):
1. The competence pillar, denoting the staffing and development function, addressing
issues like the competence profile of personnel; skill enhancement techniques that can
be gainfully used for employee capacity building;
2. The performance management pillar, emphasising performance appraisal,
management and reward processes; norm setting, motivation and morale of employees;
3. The governance pillar, concerning, organisation design involving structural functional
postulates, job design, decision making, hierarchy, team work, accountability,
communication etc. the intent being to optimise organisational processes with a
suggestion of the “Critical theory”;

61
 4. The leadership pillar focusing on core and critical areas the leader chooses to stress,
imparting direction to the working of the enterprise.
c) The Making it Happen Phase; involving prioritising action sequences, ‘allocating values’ to
relative ends, thereby charting organisational course. Personnel planning are an ongoing
process in rapidly changing organisations where frequent revisions of strategies are needed.
An effective personnel planning involves systematic prediction of human resource needs
and ensuring timely adjustments.

3.2 MANPOWER PLANNING

Human Resource planning is also known as manpower planning. Personnel management involves
productive exploitation of manpower resources. Manpower management involves choosing the
right personnel as and when the need arises. As aforesaid, it also involves upgrading qualitatively,
the existing human resource.
Manpower is defined as the total knowledge, skills, creative abilities and aptitudes of an
organisation’s work force…the sum total of inherent abilities, acquired knowledge and skills
represented by the talents and aptitudes of the employed persons (Gupta,1988) Planning is
nothing but using the available assets for the effective implementation of production plans. After
the preparing the plans, people are grouped together to achieve organisational objectives. Planning
is concerned with coordinating, motivating and controlling of the various activities within the
organisation.
Manpower planning is a technique of correcting imbalances between manpower demand and
supply in an organisation at a micro level and in the economy at the macro level. Such imbalances
create either the problem of excess supply or shortage of manpower. It is necessary to plan for
long-term growth.
Manpower planning has two aspects – (a) quantitative, and (b) qualitative. The former deals with
the numerical strength of employees required or anticipated over a period of time while the latter
deals with qualifications desired of prospective employees at different levels in an organisation.
Manpower planning has two major objectives:
1. Formulation of recruitment plans to avoid unexpected shortages etc., and
2. Identification of training needs to avoid skill shortages
Narrowly defined thus, manpower planning is the process by which an organisation forecasts the
quantity and requisite qualifications of persons required by the organisation at some future point
and ensures that right number and kind are employed at the right time to ensure unimpeded
functioning of the organisation.
In the absence of such a plan, a business or an organisation would face exigencies like sudden
shortages of labour consequent to diversification and expansion of business, retrenchments,
employee turnover, costly processes, etc. A manpower plan covers up for such contingencies by
providing for future requirements in a planned way. In statistical terms, it is a process of data
collection, analysis and projection to help management match manpower supply with demand in
accordance with the requirements of the organisation and make relevant policies in the area.

62
Manpower planning is not an isolated paper exercise but an integral management function. Inside
an organisation, decisions regarding selection, training, compensation, etc., are taken in the process
of formulating a manpower plan. All activities are integral to it and proceed from job analyses
and descriptions undertaken at each level. Human resource planning has to be in keeping with
organisational objectives.
The scope of the function in different organisations would be different as per the needs of the
specific organisation in question. The scale of human resource or manpower plan would differ
with the scale and breadth of activity of an organisation. The process of manpower planning is
diagrammatically illustrated in the following chart.
Manpower Planning Process: A Framework

Current Curre
Current Services
Developments

Services in
Future Goals Immediate
Future

Future Services
Utilisation of
Staff
Demand for
Staff

Compa

Suffic
Fun
Availa

3.2.1 Requirements of Manpower Planning

Built-in flexibility in HR plan structure has to be provided for. Personnel demand-forecast and
supply requisition change over time with change in technology, job description, cost considerations,
63
etc. The plan must be continuously monitored to carry out timely adjustments. Since objectives
of the organisation have to be modified in accordance with altering environmental factors,
manpower planning is a continuous process and requires reviewing from time to time. People,
jobs, time, and money are the four basic ingredients of the planning process. As previously
discussed, the process is contingent on the organisation’s strategic management decisions and
environmental uncertainties. These two factors determine the length of time for which the plan
has been undertaken, its limits, information available to policy planners and the nature of jobs to
be filled.
On the basis of empirical studies conducted over the period of time, the measures for effective
manpower planning are enumerated as follows:
1. To eliminate haphazard expansion of personnel, there should be adequate manpower
planning so that there is logical forecasting of manpower needs at least ten years in advance.
The micro plan (section wide) should then be related to the macro plan (organisation wide)
and the wider socio-economic policy of the country;
2. It is essential for organisations to have declared and consensual personnel policy which
reflects the total personnel situation in the organisation rather than address it piecemeal;
3. Personnel policy must be developed at the headquarters or comparable level. It would be
good if academic guidance is sought from academic and research institutions;
4. Staffing section must be under the charge of a duly qualified and trained personnel officer. It
is necessary that manpower planners acquire specialised skills, not only through experience
but also by academic learning;
5. Manpower planning should involve proper-mix of different categories of workers. This
proper-mix should be determined by the policy and the socio-economic status of the country;
6. While formulating personnel policy, all possible internal as well as external resources should
be explored for data collection. To supplement internal data, the administration would need
to collect information from external sources, for example, associations or unions of employees;
7. Personnel department should lay down a clear policy and then supervise its implementation.
Obviously, it would become easier to give more responsibility to unit chiefs at head offices
and in the fields. In other words, instead of dealing with countless individual cases, the
department of personnel should confine itself to laying down principles and supervising their
application for economy and efficiency.
8. The personnel department must also design an effective system for evaluating individual and
staff performance. Standards of performance must be set up to measure the quality and
quantity of the work. Writing on politics and public administration at the State and local
levels in the U.S., an astute participant and observer, Louis Brownlow concluded, “I have
become convinced that in all but extremely exceptional instances, the level of performance
once raised, never drops back all the way”;
9. The personnel department must carry out researches into various aspects of personnel
administration in collaboration with training institutions and universities to identify future
requirements and trends (futuristic approach);

64
10. The gap between planning and implementation must be bridged if plans are to be successfully
converted into reality;
11. Training programmes should be need-based, task-oriented and use practical simulations
where trainees work and apply their skills;
12. There is need for role clarity to avoid overlapping and role ambiguity. Ultimate aim of
manpower planning is to ensure optimum utilisation of the capacity of the existing personnel;
13. Manpower planning is a continuous, networked cyclical process requiring constant review
and adjustments.
A standard manpower plan examines the output of the sector in question up to some year in the
future, usually ten or twenty years. Manpower coefficient is applied to the absolute increase in
production to arrive at a forecast of the extra labor requirement. The main objective secured
thereby, is more effective and efficient use of human resource for increased productivity.

3.2.2 Process of Manpower Planning

Manpower plan and objectives of the organisation: Objectives of the organisation have to
be stated objectively and personnel requirements settled in accordance with estimations drawn.
For example, objectives of a health research institute and a hospital are different. For the former,
research personnel are required, for the latter, personnel qualified in the specific activity of patient
care are suitable. Within the broad parameter of objectives, priorities have to be ordered and
performance indicators specified in quantifiable or measurable terms for example, punctuality,
allotted work hours etc. Efficiency should be measured by specific norms.
Assessment of the manpower situation: Manpower inventory has to be prepared, which
involves collecting all possible information regarding educational qualifications, experience, abilities,
aptitudes, performance, date of joining, date of birth and date of retirement etc. of individual
employees. This helps assess basic skills of employees and the resource base of the organisation.
Organisational effectiveness over a period of time can also be assessed by statistics prepared. It
also helps gain perspective for the future in terms of how efficiency levels can be enhanced, what
qualifications need to be prescribed at what level, what training to institute, etc., in order to raise
efficiency to desired/optimum levels.
Projection of manpower requirements: There is need to anticipate future trends in personnel
availability and requirements. Application of statistical methods ranging from simple extrapolation,
regression, or correlation analysis to complex econometric models help the management analyse
past and present trends and estimate future requirements relatively accurately. . A manpower
plan has two components: 1) Manpower Demand Plan, and (2) Manpower Supply Plan. The
supply plan deals with the source of proposed manpower. A personnel inventory is prepared
which helps in determining the desired ratio in which direct and indirect recruitments will be
combined. Personnel placements from inside and outside sources are separately catalogued. A
manpower plan should spell out the manpower requirements of an organisation in totality. It
should have temporal, locational, and job positional dimensions (in case of field offices) besides
qualitative and quantitative (Dwivedi, 1990). The process of manpower planning involves use of
techniques such as quantitative analysis, multivariate skills analysis, operations research, PERT

65
& CPM, orthogonal polynomials, etc. Outsourcing, multi-skill training of workers and downsizing
are some of the activities undertaken. In smaller organisations, departmental heads themselves
have to assess manpower requirements on the basis of their own judgment and experience.
Classification and interpretation of information: Information collected must be classified to
facilitate analysis. Data have to be read properly and inferences drawn accurately to derive
correct conclusions and formulate objective policy based upon such conclusions.
Developing work standards and performance norms: A serious drawback in personnel
administration is under- utilisation of capacity expressed as underemployment, lay offs and general
below par performance of employees. This happens when work norms are not standardised and
laid down objectively. There is no measuring rod to judge performance by or examine causatives
behind perceived inadequate or insufficient performance. To improve objectivity, work norms
need to be developed and should be framed realistically in that the limitations or constraints of
‘bounded rationality’ should be provided for. Standards must be developed in the light of all
available information, in conformity with the requirements at specific levels. Objectives should be
laid down clearly in that they should be intelligible to the ordinary worker and should not in any
way result in ambiguity or lack of role specificity. The reference is to have effective communication.
Besides, necessary flexibility should be built-into them so that changing requirements could be
provided for. Precisely, standard laid down should be (i) realistic, (ii) provisional, (iii) appropriate,
(iv) flexible and (v) clearly defined. Hence the order in manpower planning is to set up hierarchy
of objectives, stipulate qualifications for each level, set up a manpower plan, assign weights to
performance indicators, work- out plan, judge efficiency by performance indicators, review plan,
etc.,
Anticipating manpower problems: Comparison of current and future manpower needs reveals
the quantitative and qualitative gaps in performance of personnel. The information is useful in
writing job descriptions and specifications and also plugging ‘gaps’ to reduce the efficiency ‘lag’
by discovering requirements at different levels and making provision for the same.
Costing Inventory: For manpower planning, information is also needed regarding:
a) Materials available in the organisation;
b) Buildings in use;
c) Availability of computers;
Supply of Personnel: Entire exercise would be futile if ultimately personnel with requisite
qualifications cannot be made available in time. Policy planners need to work in close co-operation
with educational and training institutes to ensure adequate supply of personnel. Besides, policy
should be sustainable in that the organisation must have sufficient funds to pay for new and added
services. To meet resource constraints, less expensive alternatives need to be tried. One way
could be to avoid employing highly trained personnel for tasks that can be accomplished by less
qualified staff. The Thai ministry of public health, for example, employed trained mid wives in
family planning programmes to reduce costs and free doctors who were in short supply for more
skilled tasks. The measure reduced costs and pilot studies revealed that performance of nurse-
midwives was as good as qualified doctors’.

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Research Studies: Research studies are important to monitor and evaluate a manpower plan.
It is only on the basis of empirical studies that future changes can be advised. Policy has to be fact
based and as objective as possible to maximise rationality and avoid ‘satisficing’ solutions or a
priori judgments in decision making. The economic dimension of policy making and implementation
is increasingly in focus. Research is needed to assess the effectiveness of training programs by
application of tools like post training surveys. Sophisticated analysis is needed to examine
discrimination claims and complaints.
Manpower Planning and the Budget
Manpower planning and its integration with the PPBS are vital to secure consistent effectiveness
right through, till the feedback stage. Manpower needs and implementation costs have to be
documented under appropriate activity heads or cost centers (management accounting system)
and integrated at each stage with objectives of other sections to build coherent policy. Monitoring
and evaluation mechanisms also have to be integrated to get the ‘big picture’ and ensure cost
effectiveness at succeeding stages. Knowledge of the principles of budget and manpower planning
is particularly critical at the formulation and monitoring stages.
The need for careful budget and manpower planning is crucial for the success of any project,
programme or policy. Poor formulation and monitoring of budget and manpower needs can, for
example, result in the following problems:
• The rejection of projects, programmes or policies because of over-stated budget and
manpower requirements at the formulation stage.
• Non- or incomplete implementation of projects due to understated costs and manpower
needs, leading to chronic shortages of human and physical resources.
• A tendency for personnel costs to rise with time, “squeezing out” other important project
cost items and preventing effective implementation.
In developing countries, budget and manpower planning are attended to only at the implementation
stage. Plan implementation consequently loses way. There is need to continually adjust plan
priorities to changing requirements. The central problem of budget and manpower planning in
developing countries is how to deal with contingencies. Careful formulation and monitoring are
imminent to minimise uncertainties, which are exacerbated by financial, and manpower shortages
at crucial times
Four important considerations in budget and manpower planning are identified thus:
– Understand relationships between recurrent and capital costs, and personnel costs and
non-personnel costs;
– Identify resources critical to project success and find out the possibility of project modification
in case of non-availability of these resources;
– Understand the relationship between inputs; and
– Include contingency measures for all project inputs.
The following issues need to be considered by manpower planners:

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• Capital expenditure incurs future recurrent costs. Likewise, staff costs breed non-staff costs
( managing revenue expenditure);
• During formulation, it is important to identify which inputs are crucial for the success of the
project and to negotiate to secure them. (assigning values);
• When assessing the future availability of manpower, allow for wastage and for the time
required to train replacements and additions. ( avoiding waste);
• If crucial resources are not available, modify the project (adjusting end to means adopting a
pragmatic approach);
• Think about phasing inputs. Bar charts can be a useful tool for scheduling operations (
managing time; securing lead time);
• As a safety measure, include contingency allowances in budget projections. Contingency
measures are of two types: physical contingencies (inventory) and price contingencies
(demand fluctuations); and
• Effective time management is achieved through a well documented pre- prepared plan.
Planning the labour is an important part of accomplishing service work profitably. The
manpower section of the tasking software can help to streamline the work assignment process
for the manager.

3.2.3 Aspects of Manpower Planning

Having discussed the various steps and requirements essential for human resource planning, the
question arises, what strategy should be employed to make the workforce creative, innovative
and dynamic? Mentioned here in brief are the aspects of manpower planning.
I. Organisational Planning and Development
i) Establishing organisational objectives, goals and targets.
ii) Redesigning organisational structure.
iii) Building inter-personal relationships intra and inter agencies and thereby in the total
system.
II. Career Development
a) Staffing
i) Recruitment and selection
ii) Placement and transfer
iii) Promotion
b) Training
i) Training
ii) Refresher courses

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 iii) Briefing
iv) Sabbatical leave
III. Terms of Employment
i) Salary administration
ii) Incentive
iii) Fringe benefits
iv) Retirement benefits
IV. Employee Welfare
i) Medical Facilities
ii) Leave
iii) Recreation
iv) Housing
v) Leave travel concession
vi) Children’s education
V. Personnel Records
i) Personnel files
ii) Personnel data for decision-making
iii) Performance appraisal
VI. Morale and Motivation
i) Financial and non-financial incentives
ii) Conduct and discipline
iii) Professional standards
iv) Satisfaction of social and psychological needs.
VII. Management Staff Relations
i) Professional associations and union
ii) Participative management
iii) Effective joint professional association
VIII. Personnel Research and Review (PER)
i) Planning and determining programme areas

69
 ii) Analysis and interpretation
iii) Development of more appropriate personnel programmes and policies
iv) Development and integrated personnel approach
v) Follow-up improvement action: and;
IX. Effective Communication
The department of personnel must provide for effective communication between the staff and the
management. Proposed organisational change may actually give counter results if personnel are
suspicious or resentful of contemplated change. It is not official queries or statements of confidential
reports that earn staff loyalty. It is the extent to which the average staff member appreciates and
understands the objectives and purposes of communication, especially regarding proposed
changes, that solidarity is achieved.
The administrator must encourage employees to participate in developing solutions. To quote
Ted R. Brannen, (1998) “Only by an understanding of the individual, his habits, expectations,
and beliefs, can the administrator know what is needed to induce his spontaneous co-operation
for the benefit of the organisation.”
X. Motivation through Decentralisation Delegation and Job Enlargement
There is need to induce proper motivation to optimize output and thereby productivity. This
would require judicious decentralisation, delegation, and job enlargement and performance
appraisal. Employees or unions or associations should be dealt with sternly in case of non
compliance or alleged insolence on the part of any worker.
Bottom up policies and increased involvement of lower level staff in the affairs of the organisation
is the only way to instill confidence among staff workers and increased commitment on their part
towards the organisation. This can only be achieved through sound human resource management.
Macro Manpower Planning
Broadly, manpower planning represents a ‘systems approach’ to personnel administration with
the emphasis on integration of personnel policies and programmes framed at micro levels
(organisations) into macro level (state, national level) policies. Such progression continues till the
wider socio- economic planning of the country wherein all such micro plans are integrated and
provided for. There are macro plans for the state, country, and micro plans for smaller units, viz.
a department or a section. The major plan comprises and evolves out of micro plans. The process
can be envisioned as one progressing through a series of concentric circles with the larger circle
(macro level) moving outwards, encompassing smaller ones (planning at micro level). Logical
culmination of the process is in the socio-economic plan of the country, annual or five year, as in
the case of India. Manpower planning is concerned not only with the balancing demand and
supply of different categories of personnel but also with overall development and utilisation of the
human resource in the country. Development administration is not a mechanical process. It is a
human enterprise and its success depends on the skill, quality and motivation of people involved
in it. Manpower planning is significant for development administration.

70
In the third five year plan, the planning commission observed, “of all the resources for development,
perhaps the most fundamental at the present time is trained manpower…the extent of manpower
available and the training facilities established constitute a major determinant of the measure of
advance which can be achieved in different directions…in each field, personnel requirements
have to be estimated carefully and over a long period. This calls for improved statistical information
and development of techniques of manpower assessment so that the necessary estimates can be
made with reasonable accuracy and a comprehensive picture built up for the economy as a
whole…manpower planning is thus an integral part of the economic plans formulated by the
central and state governments and their agencies and within their own specific fields by industrial
associations and other organisations representing different activities or interests as well as by
individual undertakings and institutions setup”.
The Institute of Applied Manpower Research aims at providing a broad perspective of requirements
of trained manpower for economic development in different fields in India. It arranges for facilities
for training and building up the existing workforce to evolve methods of identifying and developing
talented persons and generally to secure the most effective utilisation of the country’s human
resource.

3.2.4 Advantages of Human Resource Planning

Human capital transforms passive resources into active agents of production. Most developing
countries confront the immense task of reforming their personnel administrations to ensure better
implementation of development programmes. The more important task is the improvement of
policymaking and implementation capabilities of personnel units. Organisations that fail to do an
adequate job of personnel planning take incorrect decisions regarding personnel functions involving
hiring, promotion, transfer, and other related issues. There are specialist and professional agencies
involved in providing expert technical assistance in formulating, implementing and evaluating HR
plans.
Frictional process like organisational change and development (OD) are made cogent through
concerted human resource planning with HR department at the helm of affairs.
Hence, Human Resource Planning:
• Is essential to optimise human capital utilisation;
• Is scientific in nature;
• Involves tracking supply of personnel to match with estimated demand;
• Has organisation- wide impact. The result is improvement in all spheres of administration;
• Furthers employee motivation. Employees apply themselves to their task and remain
innovative and active throughout their work lives. Their activities are constantly monitored
and supervised. According to Merle Fainsod improvements in development administration
depend on the quality and training of public servants running it and on the social and political
environment, which emancipates latent energies. Structural adjustments will not deliver results
unless complemented with effectively administered personnel policy, more specifically, a
manpower plan since growth is the result of human efforts.

71
• Human resource planning avoids inter-personal tensions, role-conflicts and overlapping.
Job descriptions and specifications are clearly laid down. Job design is innovative and ensures
fulfillment at job for workers
• Cost cutting is applied through human resource planning. Adverse features signaling the
need for a human resource plan would be “high employee turnover, difficulties attracting
competent staff, difficulties in delegating or internal communications, procedural bottlenecks,
“problem” departments, and inconsistent productivity”.(Price, 2002)
• It helps management forecast long-term manpower supply and demand. It also helps in
formulating succession plans and provides lead-time for the identification and development
of suitable personnel to move up the organisation ladder. At the level of individual employees,
it helps them attain their maximum potential with effective career planning and development
policies. From the point of view of management, desired motivation packages for
reinforcement of desired organisational behaviour on the part of employees can be
administered.
• A crucial factor in improving coverage and quality of services rendered by an organisation
is adequate number of personnel with task-oriented training. Requirements of training and
the resources required are engineered through the manpower plan (WHO Chronicle, 2005).
• Many organisations are either over-staffed or under-staffed as public sector units hardly
practice manpower planning. Most investments in development programmes not generate
expected results because human capital is not harnessed optimally. Manpower planning
helps management avoid manpower shortage/ surplus provision by ensuring advance
preparation for future personnel requirements.
• Manpower planning incorporates the idea of performance budgeting in that the emphasis in
either case is on specifying objectives in measurable terms, breaking up broad objectives
into sub- sections/parts till the minutest classification is reached, allocating resources,
establishing/tracing the relationship between inputs/ and outputs, physical and financial targets,
monitoring implementation while providing for in-built flexibility/contingencies and finally
period revisions. In fact, a manpower plan in its operational aspect is integral to the planning,
programming, budgeting (PPBS) process to provide for personnel requirements, present /
future to ensure optimal resource allocation and cost effectiveness in implementation.
• Manpower planning helps organisations develop uniformity and consistency in personnel
policy, in consonance with socio- economic plan of the country. It is concerned with
organising, in a systematic fashion, the goals, objectives, priorities and activities of manpower
development. It helps organisations design tools of personnel appraisal and avoid
contingencies or ad-hocism in personnel functions.

3.3 SHORTCOMINGS OF MANPOWER PLANNING

Diane Steel (2005) discusses the shortcomings of manpower planning and the emerging area of
labour market. It has been stated that:
Manpower planning stresses more on quantification techniques than education requirements,
and social study making it less useful to developing countries where idealistic workforce, more
than mere numbers is significant
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It relies on manpower input- output norms that are never static. Traditional manpower planning is
being replaced by a better technique of labor market analysis considered far more relevant to
policy planning. Labour market analysts, instead of committing themselves to an uncertain future,
try to be more responsive to changing economic conditions. There is more stress on quality. The
emphasis is less in defining training needs and more in defining training priorities. Assessing the
relative priorities for training investments can lead to a training strategy more conducive to long-
term sustained development.
The focus of manpower planning is on the number of people with desired skills. It also addresses
the imperative of equity by changing focus to the work force, a much wider concept, which
includes those with no skills and the unemployed.
Rather than counting the number of bodies required to fill some projected need, labour market
analysts measure the wages in both the public and private sectors. There may be work shortages
in the public sector because wages offered for similar positions in the private sector are higher or
more flexible. Manpower planning typically uses data only from the formal employment sector of
the economy. This is not very relevant in developing countries where the majority of the staff is
engaged in agriculture and informal activities. Labor market analysis, on the other hand, is based
on household surveys which capture the characteristics of the entire labor force, including the
unemployed.
In addition, the analysts rely more on statistical information than speculations of the skills
entrepreneurs are going to want, often without asking at what price such skills cease to be
wanted. Such effort aids the wider purposes of social engineering. Hence labour market analysis
has more spatial coverage and also operates at a more macro level.
Focusing on the educational profile of workers, rather than their occupation results in analyses
using education as a classification criterion and leads directly to policies on schools and universities.
An occupational taxonomy, as used by manpower planners, is redundant from the point of view
of policy although it is useful for other purposes (e.g. male-female dissimilarities in employment).
While manpower planners stress technical efficiency, that is, the best technical way of producing
a particular product, labor market analysts stress economic efficiency. In some cases it may be
more economically efficient to have more or different individuals to provide a given level of
service while from a technical efficiency perspective, fewer individuals are required.
Manpower planning typically recommends increases in the supply of workers with specific
vocational or technical qualifications, but general training, which enhances the overall competencies
of the trainee, might be more cost-effective and safer in the long run.

3.4 MANPOWER PLANNING IN THE CIVIL SERVICE

There is an imminent need to right size civil services. The World Bank has enjoined on India the
need to curb its fiscal deficit. The important thing is, however, planned reduction and unthinking
phase out which may actually be inimical to State interests. Fundamental questions such as the
number of ministries and internal cohesion and the integration of functions within each ministry
have to be looked into. Although limited guidelines exist on the appropriate size and structure of
a ministerial administration, it is possible to make some tentative recommendations. (Satish, 2005)

73
• The number of ministries should be kept low so as to contain administrative costs. Even if
political considerations warrant the appointment of new ministers, they should be kept as
ministers with a major portfolio within an existing ministry.
• The critical point is to retain the viability and integrity of a ministry by keeping all the closely
related activities in the context of a government’s priorities within one administrative structure.
This enables ministry officials to carry out their responsibilities efficiently and to be held
accountable for their performance.
• The administrative reforms must look into the role clarification, core governance issues so
that optimum number of functionaries are available for effective service delivery without any
spillage or leakage.
• In several departments, there is a need to induct more officers for service delivery rather
than for supervision. The location of field staff and the number of employees in many
departments are skewed. In many cases, more officers are located in the state or district
headquarters, when the need is to have officers at the actual implementation or cutting edge
levels. An effective system of panchayats can help in combining the functions of several field
departments in a single individual, whose work can be supervised by the higher functionaries
of the panchayati raj system (Meenakshi, Sundaram, 2005).
• With the changing role of government, the size and scale of civil service should also change.
Efforts must be made to identify surplus staff, set up an effective redeployment plan and
devise a liberal system for exit. For the time being, recruitment should be limited only to
functional posts while vacancies at the secretariat and clerical levels should not be filled
(ibid).
• Lateral entry into the civil service, on a contract basis, can also be considered to enhance
mobility. There has to be a conscious effort to prune the size of bureaucracy especially at
the clerical levels. Reducing the number of general holidays as recommended by the Fifth
Pay Commission should help in better utilisation of the existing staff. Officers must be
encouraged to join voluntary organisations of repute as well as educational and research
institutions during mid-career. Besides reducing the size of the bureaucracy, this will also
help in widening the knowledge base of the officers concerned (ibid).
• A malaise afflicting civil service has been the instability of tenure, leading to reduced
involvement and respect for authority. If an incumbent is not sure how long he will stay in a
particular position, he will never be able to pay attention to details or master the situation at
his work place. While employees such as teachers, village accountants, ANMs etc., need
not be transferred at all, except on promotion, there has to be a minimum tenure prescribed
for other field level functionaries like district collectors, superintendents of police, project
officers etc. For higher ranks in civil service, like secretaries to government, the posting can
be contractual for a fixed period and systems evolved to ensure that they are not removed
before their period of contract expires without their consent or explanation. (ibid). The
Indian civil service in its present form is corrupt and unwieldy and redundant in its orientation
and mode of operation. It is through manpower planning that specialist development
administrators can be bred in the civil services.

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3.5 CONCLUSION
To summarise, Manpower Planning is required to:
• Attract and retain the best employees;
• Increased employee commitment and satisfaction;
• Improve communications, teambuilding, productivity, and integration;
• Lower employee turnover;
• Establish short- and long-term HR policies and organisational structure to match your growth;
and
• Maintain competitive, industry-standard compensation & benefits

3.6 KEY CONCEPTS

Human Resource : Modern approach to personnel management involves
treating people as ‘resource’, which needs to be
deployed effectively, in order to gain maximum utility
for the enterprise. The analogy offered is economic, in
that resource needs to be developed and then
productively deployed to exploit other material and
physical resources optimally in organisations. The
perspective has a positive implication in that the
purposes of both the individual and the organisation
are served effectively, though the term has been
employed with a disparaging connotation.
Human Resource Planning : It is the process of continuing supply of internal and
external human resource by advance planning to secure
lead time in recruitments. Human Resource Planning is
both an internal and an external process, since personnel
inventory is prepared of available personnel from both
internal and external sources and proper placement
policy devised accordingly. It is also known as
manpower planning.
Planning : Planning is an interactive process involving sieving and
sifting myriad interests, wherefrom, an alternative is
selected, foregoing other possibilities. Planning imparts
direction to an organisation and to the economy at large.
The major issue in planning is achieving strategic ‘fit’
between policies and resources. In macro terms,
planning represents the political economy school of
thought, which believes in governmental regulation of
the free market.

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3.7 REFERENCES AND FURTHER READING
“HR Planning and Development”; Business Development Bank of Canada, read online at, http:/
/www.bdc.ca/cu/no_navigation/generalinfooform.htm
“Staff and Non Staff Costs: The Crisis of Animal Health Services” read online at, http://
www.ilri.org/html/trainingmat/policy_x5547e/x5547el;.htm
“Towards Integrated Human Resource Management”, Integrated Decision Systems Consultancy
Private Limited, read online at, http://www.idsc.com
Brannen, Ted R, 1998, “The Organisation as a Social System,” Paper Presented at the Midwest
Regional Members’ Conference of the College, Kansas City, Missouri.
Chadha, Narender K, 2000, Human Resource Management Issues, Case Studies and
Exercise, Shri Sai Printographers, Delhi.
Desiber, Gary, Human Resource Management, Seventh Edition, Prentice Hall, New Delhi.
Doeringer, P. & M. Poire, 1971, Internal Labour Markets and Manpower Analysis, MA:
Heath, Lexington.
French, Wendell, 1997, Human Resource Management, Third Edition, Houghton Mifflin
Company, USA.
Ghosh, P, 1993, Personnel Administration in India, Sudha Publications, New Delhi.
Goel, S.L. and Shalini Rajneesh, 2002, Management Techniques, Principles and Practices,
Deep & Deep Publications, New Delhi.
Gupta, R.K, 1988, Human Resources Accounting, Anmol Publications.
Lead, Terry L. & Michael D. Crino, 1990, Personnel / Human Resource Management,
Macmillan, New York.
Mishra, R.K, 1997, “National Civil Service System in India: Comparative Civil Service Systems”
read online at, http://www.indiana.edu/~csrc/mishra5.html
Satish, M, 2005, “Civil Service Reforms, Knowledge Manager (Human Development)”, read
online at, http://www,civilservantsquovadisfiles/fecol.css
Saybo, L. R, George Strauss, Managing Human Resource.
Steel, Daniel, 1991, HRO Dissemination Notes, based on, What Work Requires Of Schools:
A SCANS Report For America, U.S. Department Of Labor, Washington, D.C., And “From
Manpower Planning To Labor Market Analysis”, International Labor Review, Vol. 130.
“Steps in Budget and Manpower Planning”, read online at, http://www.ilri.org/html/trainingmat/
policy_x5547e/x5547el;.htm
Tripathi, P.C, 2003, Human Resource Development, Sultan Chand and Sons, New Delhi.
Tyagi, A.R, 1969, Civil Services in a Developing Society, Sterling, Delhi.

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Ulrich, Dave, 1994, “Human Resource Planning”, William R. Tracey (Ed), Human Resource
Management and Development Handbook, Vol II, AMACOM.
Verma, S.P. and S.K. Sharma, 1980, Managing Personnel Administration: A Comparative
Perspective, IIPA, New Delhi.
WHO Chronicle, 1976.

3.8 ACTIVITIES
1. What is human resource planning? Discuss its role in economising organisational process.
2. Discuss the process of manpower planning; highlight its importance in civil service
restructuring.
3. What are the shortcomings of a manpower plan? How can you improve upon it? Give
concrete suggestions.

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UNIT 4 JOB ANALYSIS AND JOB DESIGN
Structure

4.0 Learning Outcome

4.1 Introduction

4.1.1 Purpose of Job Analysis

4.1.2 Outcome of Job Analysis

4.1.3 Aspects of Job Analysis

4.1.4 Methods to Obtain Data for Job Analysis

4.1.5. Limitations of Job Analysis

4.2 Job Description

4.3 Job Specification

4.4 Job Design

4.5 Conclusion

4.6 Key Concepts

4.7 References and Further Reading

4.8 Activities

4.0 LEARNING OUTCOME

The study of this Unit will help you to:

• Understand the meaning and process of job analysis;

• Explicate Job description, specification and design process; and

• Understand methodologies with respect to previously mentioned processes.

4.1 INTRODUCTION
A job is a collection of tasks, duties, responsibilities, which as a whole comprise the
established assignment to an individual employee. Job analysis is the determination through
observation and study of comprehensive information regarding a job, with a view to
specifying tasks and necessary abilities, knowledge, and skills required to perform it.
Job analysis is the procedure by which facts with respect to each job are discovered and
systematically noted down. (Yoder. 1969) Job analysis is sometimes called Job Study,
suggesting the care with which, tasks, processes, responsibilities and personnel requirements
are inquired into (Yoder, 1969). It is essential to understand the nature and all requirements;
content related and behavioral, of a job, for writing job descriptions and preparing job
design. Wendell French (1997) defines job analysis as the systematic investigation and
delineation of job content, including the physical circumstances in which a particular job is
carried out and the qualifications needed to carry out job responsibilities. Categories of
information usually obtained for job analysis are;

• What activities are performed and the requirements of performing them, viz. the
necessary skills, machines, tools and equipment used;

• Pattern of interaction (formal or informal) prescribed; physical and social working

environment provided; and

• The training, skills, and abilities required for a job.

Although, the terminology and specifics employed for job analysis vary for each job, most
include comparable categories, so that methods of job analysis have been possible to
develop. The information is used to establish what is required of a worker at a particular
level. Job analysis may also be called task analysis or skills analysis.

4.1.1 Purpose of Job Analysis

For optimum organisational performance, it is essential to have suitable persons operating a

job, which makes it necessary to understand the job in all its aspects to develop work
standards and prescriptions. All physical, mental and behavioural requirements need to be
stipulated to achieve desired excellence at the job. Job analysis helps promote individual
excellence along with organisational, in that targets for accomplishments are known by
employees in advance and performance can be measured up in accordance. Job analysis is a
process, which details the criteria for successful job performance, not just the basic
minimum required. The worker knows what is expected in terms of quantity and quality and
makes adjustments needed.

The process entails detailed study of a job by which ‘work- related’ information is processed
as well as documented and the required method and procedures of doing a particular task
and related activities are developed and laid down. It is a process of arriving at a
description of all ‘performance elements’ (task) constituting a job. Analysis is done with the
aid of research tools such as questionnaires, direct observation of performance, and
interviews with incumbents and supervisors.

Job analysis is intended to reveal what is actually done as opposed to what should be done
on a job. Therefore, if a worker is found covering activities not specified in a job, it would
still form part of his job analysis, except where immediate removal of that activity is
possible.

Various points on which information is procured in a job analysis programme are as follows:

1. Job titles

2
 2. Alternate titles

3. Activities undertaken

4. Material equipment and tools employed

5. Time used for each activity

6. Rest and recreation time

7. Reports and records work

8. Relation of job to other jobs

9. Educational (general, technical and on-the-job) stipulations

10. Experience (type and duration) required

11. Physical competence requirements

12. Mental effort required

13. Visual attention required

14. Responsibility (in forms of typical damage, money value and normal
consequences) for equipment, tolls, materials and records.

15. Discomforts

16. Hazards (in terms of typical injury and preventive measures taken)

17. Supervision (close or general) received

18. Supervision (close or general) applied

19. Any other details (e.g. number of persons employed)

20. Reporting

21. Contacts with clients

4.1.2 Outcome of Job Analysis

Although a well-formulated job analysis programme does not guarantee trouble-free

personnel operation, it goes a long way in preventing many problems. Should problems
arise, a high-quality job analysis programme is useful in providing necessary solutions.

Dale Yoder (1969) summarises the uses of job analysis as follows:

1. Organisation and integration of the whole workforce in organisational

planning
3
 2. Recruitment, selection and placement

3. Transfer and promotions

4. Training programmes

5. Wage and salary administration

6. Settlement of grievances

7. Improvement of working conditions

8. Setting product standards

9. Improvement of employee productivity through work simplification and

methods improvement

10. Optimising utility of personnel. It also helps identify job relationships for
smooth functioning

Job analysis ensures ‘job relatedness’ of employment procedures, viz. recruitment, training,
performance appraisal, compensation administration, placement and promotion. Job
descriptions and specifications are used in advertisements issued and as guidelines in
interviews, to ensure right selections. Written tests are designed on the basis of requirements
brought out in job study judge, the suitability of an aspirant.

Job analysis is useful in formulating training modules. Training content is devised on the
basis of ‘needs assessment’ done through job analysis. Duration of a training programme
and choice of methodology are also devised, as per requirements articulated in job analysis
(whether group or individualised, generalised or specialised); treating each level or sub
group or individual (depending on the organisation) as a specific case in view.

Job analysis is used for ‘measuring’ the effectiveness of training programmes by evaluating
tangible outcome by a comparison of pre and post training situations. This is particularly
relevant to judge the cost effectiveness (in the sense of cost-benefit analysis or CBA) of a
training programme and time investment on a module against output or benefit procured,
specific requirements, such as determining equipment to be used to deliver training (as per
requirements specified in job analysis), developing suitable methodology (formal, on- the-
job, lectures, T-group, simulation depending on the particular case).

For better understanding of the concept, it would be in order to clarify important related
terms:

Job analysis is usually the term used for the complete set of duties that a person performs on
the job, whereas task and skills analysis are subsets of the complete job.

A job is a collection of tasks, duties, responsibilities, which as a whole form the established
assignment to an individual employee at a specific position.

Job description is a formal, written explanation of a specific job, usually including the job
title, tasks, relationship with other jobs, physical and mental skills required, duties,
responsibilities, and working conditions; a part of the job evaluation process wherein a
4
review of the nature of work occurs in relation to other jobs, working conditions, the degree
of responsibility required, etc.

Job evaluation is most often used to arrive at a rational system of wage differentials between
jobs or classes of jobs. A system wherein a hierarchy of jobs is created based on such factors
as skill level, responsibility, experience level, time and effort expended, etc.

Job specification includes stipulation of desired behaviour attributes at a job viz. skills
requirement, knowledge of the job, behavioural and mental attributes required on a job.
Hence job specification is a description of the qualifications necessary for a job, in terms of
education, experience, and personal and physical characteristics.

Job classification is cataloguing of job based on an analysis of each job’s requirements. It is

achieved through information garnered through the job analysis process. {Yoder, 1969}

Job Evaluation has been discussed I detail in Unit 7 of the course. Job Description and
Specification have been discussed later in the text.

4.1.3 Aspects of Job Analysis

Aspects of job analysis are brought out as follows:

It is detailed, specific and exhaustive job study in that the ‘whole’ (job) is broken down into
constituent factors, (components, and aspects) down to minute details (as per the level of
specificity desired in each case).

It entails analysing the job and not the person employed. It describes work processes in
detail, as per scientific management precepts, viz. physical demands at work, (kneeling,
crawling), physical conditions of work viz. lighting, ventilation, automation, etc., as also
human relations and behavioural, addressing the important area of social work conditions
and human behaviour at work.

Job analysis establishes the structural-functional delineation of an organisation as per the

classical paradigm of administrative theory. It puts a position into context highlighting
broad responsibilities, defining roles, delineating scope, authority and responsibility at each
level, specifying critical tasks involved, identifying result areas, establishing reporting
relationships, stating behavioural requirements and formal/informal stipulations of team
work, communication, coordination, supervision etc. It can, therefore, be described as a
formal tool for making organisational processes dynamic.

Job analysis answers the important utilitarian call of optimising organisational efficiency
through maximising individual capabilities, as per the systems paradigm of organisational
theory. Organisational performance is optimised by matching personnel capabilities to
requirements at each level, appraising performance as per specific requirements, specific
training through needs assessment, recruitment policy as per information collected by job
description and specification (from job analysis).

As per the situational or contingency perspective, changes in policy are brought about in
response to changing requirements, which can be readily incorporated through revisions in
job design. Changes are also accounted for economically, through cost accounting and also
with respect to procedural reform (Organisation and Methods, O&M).

5
4.1.4 Methods to Obtain Data for Job Analysis

There are seven methods to obtain data. They are:

I. Interview and Questionnaire

Interview is understood as a two-person conversation initiated by the interviewer for

obtaining information on the subject matter, focused on content specified by the research
objectives of systematic description, predication or explanation. (Moser and Kalton, 1961)

Interview may be of two types: formal and informal. Formal interviewing is one in which set
questions are asked and answers recorded in a standardised form. Conversely, informal
interview is not charted. It is more in the nature of an informal conversation. Interviews
could be incumbent interviews or supervisor interviews.

The success of survey depends upon the questionnaire. Questionnaire design is of prime
significance for any survey based research programme. Care has to be taken in formulating
questions, wording subject matter, sequence, format, etc. It is important to avoid vague,
ambiguous, or presumptuous questions. Questions are either ‘pre-coded’ or ‘open’. In case
of pre-coded questions, the respondent is given a limited number of answers from which to
choose his response and questions are put in the appropriate code category. In open
questions, the respondent is left free to decide on the format of his answer, its form, detail,
length etc.

Structured questionnaires are used to gather work related information from incumbents,
which may not ordinarily be, covered in job analysis tool kits of professionals employed for
the exercise. Responses help cover minutest details of a job.

Open-ended questionnaires: Such questionnaires give incumbents freedom to report about

the job in the manner they feel facilitated. Responses aid development of job design
Questionnaire can be used by the interviewer personally, or mailed through post or
electronic mail. The design of mailed questionnaire should be user friendly so that the
respondent is able to handle it without trouble. In a mailed questionnaire, there is no
opportunity for the interviewer to explain or supplement arguments by observational data. It
has therefore to be a self-sufficient document. Questionnaire should also be tested before
being put to use.

II. Observation and Collection of Data

Observation and collection of data serve the purpose of scientific investigations. As is

famously held, science begins with observation and returns to observation for validation.
Science is defined as “a systematic and deliberate study through the eye of spontaneous
occurrences at the time they occur.”

Observation serves the investigator’s purpose in the following ways:

(a) It enables the observer gain insight into the actual phenomenon that
can be later tested by other techniques;
6
 (b) Observation may be used for supplementing data that helps interpret
findings obtained by other techniques;

(c) It may also be used as the primary method of data collection in

studies for providing accurate first hand information or testing
casual hypotheses;

(d) Observation is used to perceive significant interrelated factors

determining complex social phenomena, culture or behaviour; and;

(e) It provides clear and authentic picture of a given situation. One does
not have to depend too much on people’s co-operation as is the case
in the interview method.

III. Participation

In this method, the job analyst actually performs the job himself to perceive it first
hand. In this way he is able to see what characterises the job under study. This method
is fairly suitable for studying simple jobs but in case of complex jobs, advance training
of the analyst may be necessary, which may not be practicable. The method can also
be time consuming and expensive.

IV. Technical Conference

In this method, information about the job is collected from experts, usually supervisors, and
not procured directly from actual job incumbents. One important drawback of this method is
that experts at time show poor knowledge of the job since they do not perform it themselves
or supervise it only disinterestedly. They might give answers based on past experience or
abstract perception.

V. Self-recording or Dairy

In this method, the incumbent is asked to record his daily activities, each day, using some
type of logbook or diary. The method is useful in systematically collecting information
about a job, particularly time spent on various activities during a day. It might be time-
consuming and incumbents are heard complaining that they spend more time writing diaries
than actually doing the job. This method is particularly useful for studying high-level
managerial jobs.

VI. The Position Analysis Questionnaire (PAQ)

It contains a hundred and ninety four (194 by latest count) job elements. The human
resource manager rates a job on 194 ‘descriptors’ by judging the degree to which each count
is present in the job. These counts are grouped into six general categories. PAQ has been
thoroughly researched and enables statistical comparison of job elements. PAQ is an
extremely practical job analysis method, which enables comparison of specific jobs with
other jobs classified in the occupational group (s).

VII. Management Position Analysis Questionnaire (MPAQ)

7
 It is a highly structured questionnaire designed with two hundred and eight items (208, by
latest count) used in describing, comparing, classifying and evaluating executive white-
collar jobs. The latest version of MPAQ is classified into thirteen parts (Chadha, 2000)

Several other methods are also used separately or in various combinations to aid job analysis
exercise. These include:

• Expert panels: Job Analysis experts are hired by organizations for conducting job
analysis. Analysis is done on the basis of Critical Incidents of good and poor
performance and Job Elements. Job Element is defined as a worker characteristic
which influences success in a job, including combination of abilities, skills,
knowledge or personal characteristics( Primoff 1975)

• Task Inventories- A task inventory is an exhaustive account of the operations

involved in a job. It provides vital information about the skills, knowledge, and
abilities required to perform a job. This information is valuable for developing
employee selection procedures and training programs, performance appraisal and
pay determination. For hiring, it informs the selection committee and applicant of
what the job entails. For training purposes, it tells the developer what the job
requires. It is also valuable for setting standards in performance appraisals and
evaluating jobs to determine the correct pay level. Again, this document may already
have been created. Workers are involved in preparation of task inventories.(Job
Analysis, Colorado)

• Check Lists: Check- list is used to order tasks sequentially and classified, as logistic
support, service delivery, sales etc. Check lists are used to avoid duplication of work
across tiers. If duplication is actually taken place, concerned employee can be
advanced in the career ladder on the basis of his experience of the added task. A
good check list is a result of collaborative effort of the supervisor and the employee.
Both workers emerge with a better understanding of the expectations of the job. It
also helps in the selection of employees. Candidates can be asked to pick the tasks
they are better qualified to perform from the check- list. (Job Analysis, Colorado)

4.1.5 Limitations of Job Analysis

There are limitations to job analysis. Even in case of organisations with well-established job
analysis programme, it is pertinent to remember that job analysis information provides only
a snapshot of a particular job. Jobs change over a period of time, due to forces such as
technological innovations, organisational restructuring, expansions, diversifications, mergers
following changes in customer preferences, need for product-differentiation, etc. A well
formulated job analysis programme facilitates organisational change by providing an in-built
mechanism for periodically assessing jobs. This reassessment may be done through
observations, interviews, or by using a brief questionnaire or a checklist. Unlike performing
job analysis from scratch, keeping the programme up to date is a much less expensive and
time-consuming effort (Leap and Crino, 1990)

8
4.2 JOB DESCRIPTION
Job descriptions are prepared on the basis of job analysis. Job descriptions, sometimes called
position descriptions, are written summaries, usually one or two pages long, of the basic
tasks associated with a particular job. They are prepared on the basis of information gathered
from job analysis. A model job design includes the title of the job, information about duties,
responsibilities, facilities, pay scale etc. Job descriptions usually have a label, called a “job
title,” and a section describing the qualifications needed to perform the job. These
qualifications are encoded as job specifications. (French, 1995)

Job descriptions are well written duty statements which accurately describe what is being
done on a job. Job description clarifies work functions and reporting relationships, helping
employees understand their jobs better and approximate performance to desired levels.

Duty statements focus on primary duties and responsibilities of the position and not
incidental duties. Related or similar duties are combined and written as one statement.

Job description includes an employee’s qualifications or performance and even temporary

assignments.

Each duty statement is a discreet, identifiable aspect of the work assignment, written
precisely, and is outcome-based, allowing for alternate means of performing the duty,
changes in technology, preferences of employees and supervisors, accommodations of
policy changes, changing nature of duty etc. Employees are also credited for innovations
made by them.

Purpose of Job Description

According to Wendell French (1995), a job description is useful for the following processes
of personnel administration: -

¾ Recruiting, interviewing, and selection.

¾ Orientation and training

¾ Setting performance standards and / or goal statements

¾ Designing performance appraisal forms

¾ Job evaluation

¾ Clarification and renegotiation of roles

¾ Career progression ladders

Advantages of Job description

Role specificity and clarity are provided for. As a corollary, role ambiguity is avoided and
organisational processes are simplified. Consequently, job descriptions, as a management
tool can greatly simplify an organisation's human resource management function. Job
9
descriptions clarify work content, helping employees understand their work better and
employers, institute performance appraisal and development process, maneuver job design
for job rotation, enrichment(vertical loading), and enlargement(horizontal loading)
exercises for overall performance improvement and organisational effectiveness.

The focus is on job outcomes, which makes job description a result oriented exercise. It
helps lay down what is expected of a job in terms of all logistical, and behavioural (training,
supervision) requirements so that they can be secured with proper lead time.

Cost effectiveness and time management at work are the two important considerations in a
job description exercise.

Work study and method study are applied on the basis of job descriptions. Core areas for
procedural reform can be easily identified and procedural improvements brought about. The
effect of procedural innovations, if any, is examined easily. The worker can be rewarded for
successful innovations.

Job descriptions aid in maintaining a consistent salary structure. It leads to job evaluation,
which is used specifically for compensation administration.

4.3 JOB SPECIFICATION

Job specification spells out desired attributes of prospective job incumbents. Job
specification is a statement of the physical, mental and temperamental qualities necessary
for the performance of a job. This exercise helps us in cataloguing requirements of the job in
question in terms of:

(a) Qualifications required for the job can be general educational qualifications
or technical qualifications, or both;

(b) If the job requires any specific skill, ability or aptitude, the same will have to
be determined;

(c) The degree and extent of job experience required can be laid down;

(d) Personal and physical attributes desired; and

(e) Age and domicile requirements.

A typical job description shows three categories: (1) specifying activity (e.g. collecting), (2)
object involved (data); and (3) purpose (medical research) for which undertaken. Level of
specification of activities into constituent elements differs from case to case according to the
requirement.

Two essential requirements of job descriptions are; (1) simple language; and (2) allowance
for flexible operations to enable adjustments to changing requirements; for example
changing customer preferences, demand and supply situations, new process or management
technology, etc.,

10
4.4 JOB DESIGN
Job structuring entails job design which is the process of determining the specific tasks and
responsibilities to be carried out by each member of the organisation. It is understood as the
fundamental organisational process which evolves out of the complex flow of events that
establishes the responsibilities assigned to each member of the organisation, including the
physical circumstances in which an employee is expected to carry out these responsibilities.
Examples of physical working conditions are temperature, lighting, safety. Hence job
design refers to the philosophy with which a firm approaches the organisation of work.

A company can allocate duties and responsibilities consistent with common practice and
tradition. However, emphasis on efficiency, standardisation, and simplification might
require the services of an industrial engineer. An industrial psychologist, on the other hand,
provides a company insight into how an individual would react to jobs at a psychological
level and how they should be modified.

The worker on his part also imparts content to a job. Both the content of a job and the
opportunity it affords to influence the content and level of performance, affect a person’s
motivation and job satisfaction.

The effect of work on the economic health of the company and the psychological health of
the employee are equally important. Changes in job design can effectively solve such
problems. (Leap & Crino, 1990).

There are two major components of job design. Job content is the set of activities to be
performed on the job, including the duties, tasks, and job responsibilities to be carried out;
the equipment, machines, and tools to be used and required interactions with others. The
other major aspect of the responsibility established through job design is the set of
organisational responsibilities attached to a job, that is, responsibilities relating to the
overall organisation such as complying with rules and regulations and work schedules.
Examples are filling out time sheets, following safety procedures, and adhering to the
established schedule of the workday.

Job rotation, enrichment and enlargement processes are carried out, based on information
procured from job analysis. Job profile refers to the development of a prioritised set of
capabilities or success factors for a particular job or group of jobs. It may include the use of
proficiency ratings for each capability.

Job Enlargement and Job Enrichment

Job design grew in importance with the scientific management movement championed by
Taylor and Gilbrith. It had positive impact on cost saving but affected human relations
adversely. To improve upon the concept, job enrichment, job enlargement and job rotation
were introduced in the 1950s to motivate employees. Today, jobs are being designed
innovatively to attract and retain good workers. In addition, work teams, autonomous work
groups, and the idea of quality circles is being introduced to improve productivity via
flexible job design.

It is obvious that the most important condition for achieving better work performance from
employees is to give them interesting, worthwhile, and challenging jobs. To prevent

11
frustration from meaningless, uninteresting and purposeless tasks, fundamental rethinking of
both the process and purpose of management are required.

If the additional responsibilities to enhance variety are added horizontally, the terminology
used is job enlargement; if additional responsibilities are added vertically, involving
delegation and decentralisation the term employed is job enrichment.

Job enrichment can be said to have been provided if the work is meaningful, worker has
knowledge of work and is entrusted with requisite responsibility through proper delegation
and job structuring. Job enlargement entails addition of more tasks to a job. It treats a job as
a whole instead of treating each component task as separate. Interconnectedness or
integration of work is stressed. Job enrichment is the incorporation of motivational factors,
such as opportunity for achievement, recognition, responsibility, and advancement, in a job.
The exercise treats the work as whole and not in parts thereby improving efficiency and
making the employee responsible for the entire job.

Job rotation is the movement of employees from one job to another in an effort to relieve
the boredom often associated with job specialisation. It also taps employee potential better
by offering more opportunities for better task accomplishment.

Job sharing is performance of one full-time job by two people on part-time hours. It is
useful in case of large and complex processes.

Job rotation plan seeks to maximise the individual’s experience by shifting him periodically
from one job to another. Individuals selected for such programmes are moved at the end of
the stipulated period, say one year, and the particular positions they hold at any given time
are viewed as training positions. A less formalised variation of job rotation is also used by
many organistions. In promotion and transfer decisions an attempt is made to move
individuals in such away as to facilitate development. (Sahni, 1988)

The increase and enhancement of the number of tasks accomplished by the individuals in
organisations along the flow of work is job enlargement. It is the lengthening of the time
cycle required to complete one unit of operation. Enhancing the quantity of formal tasks
allocated to him makes him utilise more of his abilities and capabilities resulting in more
satisfaction at his level. A study ahs established that augmented satisfaction is attained by an
employee through job enlargement. Researches by Katz and Kahn, Hoppock (1935) Super
(1939) and Marks (1954) have revealed that when the work becomes more skilled and
complexed through job enlargement and satisfaction of the employees increases James C
Worthy (1951)on the basis of his studies covering over 10,000 employees suggests
that”…through job enlargement the employees been able to reduce the ‘negative’ impact of
specialisation by decreasing the concentration of employees on lower jobs levels that tends
to occur with overspecialisation, by increasing the degree of variety and interest in the work,
and by providing the employee with an increased opportunity to participate in larger chunks
of the production process thereby increasing the psychological meaning work has for
employees.

Job Enrichment has been defined as the process of permitting the individual employee to
decide his own working place, but in limits; permitting the employees to serve as their own
supervisors by fixing responsibility for quality control to the employees; permitting the
employees to repair their own mistakes; permitting lenience in the selection of methods; and
permitting them to be responsible for their own machines setting up. (Hulin, Blood,
12
1968)The number of variables and concepts used to account for the success of various job
enrichment efforts; such as, accountability, authority, closure, delegation, efficiency, job
challenge, motivation, opportunity for growth, advancement, and self
actualisation,participation, presence or absence of anomie, proprietorship, recognition,
responsibility etc.

Human Resources Management is understood as, personnel management based on the

notion that individual needs, values and abilities have to be balanced with the goals and
culture of the organisation. The manager is such a dispensation works as an Integrator,
which denotes that part of the work of an operational manager, which involves the managing
of human resources, comprising motivating, conciliating, coordinating, coaching, appraising
and authorising staff.

Significance of Job Enlargement and Enrichment

Public service modernisation has been a theme running across the whole developed world
during the last decade. The modernisation of public HRM is of great importance because
governments recognise the link between public sector performance and performance of the
overall economy. In private organisations there is a trend towards decentralisation and
delegation of powers and collaterally, HRM. It is not easy for public organisations driven by
public accountability, consistency and equity concerns to embrace the new public
management ethic. Classic bureaucratic model is not conducive to flexible decentralised
HRM. This view of a flexible decentralised HRM is based on the experience that public
administration faces more and more a need for all round managers instead of the
traditionally specialised civil servants (Metcalfe & Richards 1993).

Organisational Design is defined as the way in which work is organised, both horizontally
(layers of hierarchy) as well as, vertically (by function, operation or matrix) involving
organisational structure and functional delineation. Traditional linear design of organisations
is not held conducive to organisational efficiency, as per the modern understanding of HRM.
In the knowledge era, tasks cannot be managed efficiently by traditional hierarchal task
ordering, as could be possible in traditional organisations. There is need for specialisation
but at the same time, variety in job design, to make tasks more meaningful and interesting
for workers.

The fact that bureaucratic/ pyramidal values still dominate most organisations, according to
Argyris, has produced many of our current organisational problems.

According to Argyris (1964), seven changes should take place in the personality of
individuals if they are to develop, in time, into mature people

• First, individuals move from a passive state as infants to a state of increasing activity
as adults.

• Second, individuals develop from a state of dependency upon others as infants to a

state of relative independence as adults.

• Third, individuals behave in only a few ways as infants, but as adults they are
capable of behaving in many ways.

13
 • Fourth, individuals have erratic, casual, and shallow interests as infants but develop
deeper and stronger interests as adults.

• Fifth, the time perspective of children is very short, involving only the present, but as
they mature, their time perspective increases to include the past and the future.

• Sixth, individuals as infants are subordinate to everyone, but they move to equal or
superior positions with others as adults.

• Seventh, as children, individuals lack an awareness of a "self," but as adults they are
not only aware of, but they are able to control "self."

Argyris postulates that these changes reside on a continuum and that the "healthy"
personality develops along the continuum from "immaturity" to "maturity." The figure
below (Accel Team, 2005) is illustrative of it.

IMMATURITY- MATURITY CONTINUUM

Immaturity Maturity

Passive Active

Dependence Independence

Behave in few ways Capable of behaving in many ways

Erratic Shallow Interests Deeper and Stronger Interests

Short Time Perspective Long Term Perspective

Subordinate Position Equal or Super ordinate Position

Lack of Awareness of Self Awareness and Control Over Self

Organisation design and job design impact upon the self- perception of workers and
organisational behaviour at large. Stifling bureaucratic /pyramidal work environment
inhibits employee self -development and jeopardises long- term organisational growth.
Maturation of a personality proceeds in seven successive steps, which represent stages of
maturation

Design of the Formal Organisation

As per the classical approach, particularly, scientific management precepts, organizational

and job design is based on the following four considerations.

• Task specialisation,

• Chain of command,

• Unity of direction, and

14
 • Span of control.

Behaviour, accordingly, is tailored as per organisational structuring, in such a way that

power and authority rest in the hands of a few at the top of the organisation, and those at the
lower end of the chain of command behave in conformity with regulations/directives from
the top.

This implies directive, task- oriented leadership, where decisions about the work are made
by the superior, and workers only carry out these decisions. This type of leadership evokes
managerial controls such as budgets, some incentive systems, time and motion studies, and
standard operating procedures, which can restrict the initiative and creativity of workers.
Steve Margetts (2005) tabulates the difference of approach between bureaucratic/pyramidal
and humanistic/democratic systems of organisation and leadership as follows:

Bureaucratic / Pyramidal Humanistic / Democratic

Important human relationships-the crucial The important human relationships are not
ones-are those related to achieving the only those related to achieving the
organisation's objectives, i.e., getting the job organisation's objectives but those related to
done. maintaining the organisation's internal
system and adapting to the environment as
well.

Effectiveness in human relationship Human relationships increase in

increases as behavior becomes more rational, effectiveness as all the relevant behavior
logical, and clearly communicated; but (rational and interpersonal) becomes
effectiveness decreases as behavior becomes conscious, discussible, and controllable
more emotional

Human Relationships are most carefully In addition to direction, controls, and

motivated by carefully defined authority and rewards and penalties, human relationships
control as well as appropriate rewards and are most effectively influenced through
penalties that emphasise rational behavior authentic relationships, internal commitment,
and achievement of the objective. psychological success, and the process of
confirmation.

The systems approach to design of organisations regards organisations as groups of inter-

relating elements that require co-ordination and information to turn a wide range of inputs
into a variety of outputs. This approach acknowledges the dynamic nature of business and
recognises that static organisational structures are at times wholly inadequate for decision-
making. Example of such approach is the matrix structure, which involves compromising on
the principle of unity of command and stresses on teamwork, rather than linearly ordered
superior subordinate relationship.

Job design and work organisation is the specification of the contents, method and
relationships of jobs to satisfy technological and organisational requirements, as well as the
personal needs of jobholders.

Taylor’s framework for organisation was:

15
 • Clear delineation of authority

• Responsibility

• Separation of planning from operations

• Incentive schemes for workers

• Management by exception

• Task specialisation

Taylor's developed a concept of work design, work-measurement, production control and

other functions that impacted organisation design in major way. Before scientific
management, such departments as work- study, personnel, maintenance and quality control
did not exist. What was more his methods proved to be very successful.

The negative impact of the classical approach was seen in the 1970's in;

ƒ The loss of productive effort due to industrial action and absenteeism

ƒ Increased demands for employee participation and industrial democracy and

imposition of employment legislation, which appeared to make the task of
controlling the workforce more difficult. (Accel Team, 2005)

In the 1980's, major changes took place in the workplace. Consequently,

• Recession, with attendant retrenchments;

• Increased competition;

• Recognition of the need to introduce new technology, and;

• Shift in relative costs away from the worker to the machine. The challenge, now and
in the future for managers, is the optimum design of jobs and work organisation to
meet unsteady circumstances, brought on in the workplace by changes in human
resource development technique with emphasis on job design and work organisation.
The 4Ps, namely, purpose, process, persons and place are the basis of work division in
organisations. The application of the principles needs to be more flexible, in matrix
form of organisation design (networked organisations) where structuring is changed as
per changing requirements. (Accel Team, 2005)

According to Flippo, 1984, job autonomy can be secured if the following are ensured:

(1) Setting one’s own work schedule and allowing work breaks;

(2) Varying work place;

(3) Alternating duties with others;

(4) Making crisis decisions in problem situations rather than relying on the
boss; and

16
 (5) Making one’s own quality checks, etc.

Koontz and O’ Donnell (1972) have suggested the following measures to ensure job
enrichment:

(a) Giving workers more latitude in decisions regarding work methods,

sequence, and pace, accepting or rejecting materials etc.;

(b) Encouraging participation of subordinates in decision making and interaction

between workers;

(c) Giving workers a feeling of personal responsibility for their tasks;

(d) Taking steps to make sure that people can see how their tasks contribute to a
finished product and the welfare of the enterprise;

(e) Giving people feedback on their job performance, preferably, before their
supervisors get it; and;

(f) Involving workers in analysis and change of physical aspects of the work
environment such as layout of office or plan, temperature, lighting and
cleanliness.

Positive Reinforcement

Positive Reinforcement means channelising the energies of the employees in a desired

direction through extrinsic and intrinsic reinforcements. Harvard psychologist, B.F. Skinner,
successfully applied this technique. Job satisfaction may or may not be tied to happiness.
But we know we are doing something right if we can alter conditions at job in order that
employees stay on and work productively.

It is based upon the principle that employees are not motivated simply by changing external
conditions; for example, pay, hours of work, etc. Employees develop lasting motivation only
through positive perception of work content and work environment. This demands, at times,
restructuring of job or job redesign to make the job interesting and challenging enough for
the employees concerned.

4.5 CONCLUSION
Work specialisation has considerably increased in recent years. Consequently, scientific
understanding of jobs and their effective coordination is essential for procedural efficiency.
It is also important to secure personnel with needed specialisations for each level. As a
corollary, people need to be matched up with jobs to ensure optimum organisational
performance. Job analysis is needed to promote organisational efficiency by promoting
specialisation and keeping possible disadvantages of breaking work into components at bay.

4.6 KEY CONCEPTS

17
Job Analysis: Job analysis entails detailed study of a job with a view to writing
detailed position descriptions with respect to different positions.
Information procured issued is used in interviews and devising
written selection tests, internal placements, as per requirements of
a job and performance appraisal of employees. Research
techniques are used for job analysis.

Job Description: Job description are prepared based on the information gathered in
job analysis. Job descriptions entail written specifications of the
nature of job, duties and qualifications required. Information is
issued in job advertisements; application forms are devised based
on the requirements specified therein.

Job Specification: Job specification also emerges out of a job analysis. Job
Specification lists the behaviour stipulations and accordingly,
specifications, with respect to a job. In other words character traits
expected of prospective incumbents are listed as job
specifications.
4.7 REFERENCES AND FURTHER READING
Argyris, Chris, read online at, http://www.accel-team.com/scientific/scientific_.o2 html,
_.01 html, _.00html

Chadha, Narender K, 2000, Human Resource Management Issues, Case Studies and
Exercise, Shri Sai Printographers, Delhi.

Concepts of Job Analysis read online at,

http://www.wps.prenhall.com/wps/media/objects/213/218150/glossary.html

Definitions of Job Analysis, read online at http://www.nciu.edu/~dbehrlic/hrd/glossary.htm:

Desiber, Gary, 1984, Human Resource Management, Seventh Edition, Prentice Hall, New
Delhi.

Flippo, E.B, 1984, Principles of Personnel Management, McGrawhill College.

French, Wendell, 1995, The Personnel Management Process, Houghton Mifflin Company,
Boston.

French, Wendell, 1997, Human Resource Management, Houghton Mifflin Company, USA,

Galbraith, J, 1973, Designing Complex Organisations, Addison Wesley.

Ghosh, P, 1993, Personnel Administration in India, Sudha Publications, New Delhi.

Goel, S.L. and Shalini Rajneesh, 2002, Management Techniques, Principles and Practices,
Deep & Deep, New Delhi.

Hoppock, R, 1935, Job Satisfaction, Harper, New York.

18
http://www.caw110.org/definitions.htm

http://www.crpcanada.com/cu/phasselreport/glossary.esp:.socialcar,

http://www.eassoc.com/resources/glossary/j.htm

Hulin, C.L. and M.R.Blood, 1968, “Job Enlargement, Individual Differences and Worker
Responses”, Journal of Psychological Bulletin, USA.

“Job Evaluation” read online at,

http://www.mhhe.com/business/busadmin/ferrell/ferrell4e_glossary.html

Katz, D. and R. Kahn, 1966, The Social Psychology of Organisations, John Wiley and
Sons, New York.

Koontz and‘O’ Donnel, 1972, Principles of Management, Mc GrawHill, New York.

Margett, Steve, read online at http://[email protected]

Marks, A. R, 1954, An Investigation of Modification of Job Design in an Industrial Situation

and their Effects on Some Measures of Economic Productivity, Ph.D. Thesis, Berkeley,
University of California.

Metcalfe, Les, and Richards Sue, 1993, “Evolving Public Management Cultures”, Eliasson
A. Kjell &Jan Kooiman (Eds), Managing Public Organisations, Sage Publications.

Moser, C.A. and G. Kalton, 1961, Survey Methods in Social Investigation.

Primoff, 1975, “How to Prepare and Conduct Job Element Examinations”: Job Analysis,
Published by Workforce and Staffing Consultants, Division of Human Resources,
Department of Personnel and Administration, Colorado.

Sahni, Pardeep, K.K. Sharma, 1988, Organisational Behaviour, Deep and Deep
Publications, New Delhi.

Super, B, “Occupational Level and Job Satisfaction”, Journal of Applied Psychology, USA.

Taylor Frederick W, The Principles of Scientific Management, Harper, New York.

Terry, Leap L. and Michael D. Crino, 1990, Personnel / Human Resource Management,
Mac Millan, New York.

Tripathi, P.C, 2003, Human Resource Development, Sultan Chand and Sons, New Delhi.

Tyagi, A.R, 1969, Civil Services in a Developing Society, Sterling, Delhi.

Verma, S.P. and S.K. Sharma, 1980, Managing Personnel Administration: A Comparative
Perspective, IIPA, New Delhi.

Worthy, James C, 1951, “Factors Influencing Employee Morale”, S.D.Hoslett (Ed), Human
Factors in Management, Harper, New York.

19
Yoder, Dale, 1969, Personnel Management and Industrial Relations, Prentice Hall, New
Delhi.

4.8. ACTIVITIES
1. Discuss various applications of job analysis by quoting illustrations from nearby
organisations.

2. Do you feel the job analysis is an imperative organisational function? If yes,

substantiate your answer with examples.

3. Write short notes on:

a. Job enlargement

b. Job enrichment

c. Job design

20
UNIT-5 RECRUITMENT, SELECTION, APPOINTMENT
AND PROMOTION
Structure
5.0 Learning Outcome
5.1 Introduction
5.2 Essentials of Recruitment
5.3 Steps in Recruitment
5.4 Civil Service Recruitment in India
5.5 Recruiting Agency in India
5.6 Idea of Promotion
5.7 Features of Promotion in Selected Countries
5.8 Methods to Ascertain Merit
5.9 Conclusion
5.10 Key Concepts
5.11 References and Further Reading
5.12 Activities

5.0 LEARNING OUTCOME

After studying the Unit, you will be able to:

• Understand the theory and practice of recruitment, particularly highlighting its
significance in civil service;
• Highlight the methods and procedures of recruitment;
• Appreciate the theory and practice of promotion;
• Analyse constitutional provisions with regard to recruitment and promotion in
India; and
• Understand the main methods to ascertain merit.

5.1 INTRODUCTION

Human capital utilisation in an economy is contingent on sound recruitment. Recruitment

is “the cornerstone” of the entire personnel structure. Proper selection and placement of
new employees is a pre-requisite for the development of an effective work force. “Unless
recruitment policy is soundly conceived, there can be little hope of building a first rate
staff”. (Stahl, 1966) The aim is to ensure, as far as possible, that employees are engaged
in jobs wherein they have a fair chance of succeeding and at the same time feel well
adjusted to their work environment.
1
Fairness and impartiality in recruitment are absolutely vital in public services. A.B.
Vajpayee, former prime minister of India, in a message to the platinum jubilee souvenir
(1926-2001) of Union Public Service Commission, observed, that free, fair and impartial
selection of personnel for posts in the government is critical, not only for good
governance but also for instilling confidence in people about the impartiality and
neutrality of civil service. Faulty recruitment inflicts a permanent weakness on the
administration. A theoretically sound civil service structure is of no avail if those who
man the structure are incompetent or apathetic.
In this context, one of the United Nation’s Reports rightly states that, “the core design of
progressive recruitment policy in any organisation is the reduction, if not the elimination
of favouritism, nepotism and incompetence in the selection process.”
Since the efficiency of the civil services depends to such a great extent on the quality of
manpower selected, the UPSC has taken meticulous care to ensure selection of persons
with high caliber through a transparent, fair and objective selection process. The systems,
procedures and methods for recruitment to the civil service are being constantly reviewed
for tapping the ‘best available’ talent. There is a firm recognition of the fact that the
quality of public services in India and the quality of administration on the whole remains
high and has been maintained solely because the commission has so steadfastly adhered
to the principle of merit. (UPSC; 47th report)
The need for fool- proof civil service recruitment is stressed for many reasons. The
institution is the bed rock of ‘modernity’ in that it coalesces together separate entities
(owing to poly communalism) into the facsimile of a nation-state. Its effective
functioning, in turn, is contingent on the quality of manpower. Efficient functioning of
the civil service has positive spin-off effects on other sectors especially in predominantly
‘political economy’ countries like India, where government retains monopoly over goods
and services provision in the majority of sectors and continues to play a vanguard role in
the development of the economy.
Other personnel processes such as training, placement, promotion, etc., are dependent on
sound recruitment for built- in efficacy. Training cannot make up for faulty recruitment;
as also on- the- job training requires sound recruitment to be effective.
Manpower planning is practiced through the recruitment process (it has been discussed
at length in Unit No. 3). Overstaffing and imbalance through tiers has reportedly plagued
the functioning of the Indian civil service in recent years. Fiscal deficit has consequently
bourgeoned and efficiency standards fallen. Empirical analysis of recruitment data
reveals manpower requirements over a time frame in specified sectors in the civil service
and career planning and development followed by the organisation, on which, depends,
the targeted character of the recruitment policy of the organisation and the country as a
whole, and most importantly, organisational health.
Study of recruitment trends overtime reveals placement preferences of youth in the
country. Analysis of personnel inventory depicts the socio-economic composition of the
workforce with implications for academic disciplines and practical sciences of sociology
and economics as well as the art and science of public administration. Data collected
serves as ‘rational’ bases for objective theory formulation, heuristic model building, and
proffering policy inputs or recommendations based on objective research based, ‘rational’
criterion, trends in demographic composition of the civil service; for example, age
structure, socio economic preferences of youth concerning employment in the
government sector, need for consequent modifications in work content via enlargement,
enrichment, change in working conditions, etc; change preferences in accordance with
ideological preferences or orientation of the ruling elite are revealed.

2
Civil service recruitment policy is an indicator of the value system prevalent in the
country, for example, whether driven by ‘equity’ concerns or powered by the ‘efficiency
myth.’ It gets revealed by pursuance or otherwise of, or the extent of ‘affirmative action’
if at all pursued in favour of disadvantaged groups viz. minorities, women, economically
backward etc.
The equity objective is being served via the recruitment process. India for example is
committed to the cause of social and economic justice ensured through the constitutional
provision of ‘equality of opportunity’. Disadvantaged sections of society are provided job
reservations as ‘equality’ is interpreted as a virtue inhering between people placed in ‘like
circumstances’ and not as subsisting been ‘unequally’ circumstanced people. Historically
marginalised people have not been on an equal footing with their more privileged
brethren. Equality does not therefore, obtain between people disadvantageously
positioned.
In the same vein, organisational culture and philosophy and ‘environmental’ values co-
opted in internal policy of an organisation also get revealed in the recruitment literature.
Degree of autonomy enjoyed by organisations and the functioning of democracy are
indicated by recruitment policies of independent organisations.
Lastly, but no less significantly, recruitment involves continuous review and
improvement of the examination process on the basis of facts gathered through research
and development regarding implementation, relevance of the process in changing times
and need for review of the process. Evaluation and feedback lead to better ‘craft’ or
articulation of policy inputs. The reform exercise might be important from the point of
view of morale of prospective employees, quality of selections, considerations of justice
and equity in the selection process, besides organisation design and sociological theory
implications.

Above enumeration is by no means exhaustive; new facets continue to emerge as

understanding of personnel processes deepens.
Two terms need elaboration viz. recruitment and appointment, in that they require
discrete usage though are often used interchangeably. ‘Recruitment’ covers the entire
gamut of activities relating to entertainment, acceptance, selection and approval for
appointment and not the actual appointment itself or posting in-service. Appointment
refers to the actual posting assigned to a person, post-selection, to a particular office. The
first instance of a sound recruitment policy comes from China where people were
recruited through competitions centuries ago. Prussia was the first country in modern
times to adopt an objective recruitment system. The merit system was introduced by the
East India Company in 1853 for recruitment of civil servants in India. England accepted
this system in 1857. In the U.S.A., it was the spoils system at work. The system came to a
partial end after the assassination of President Garfield in 1881 by a disgruntled job-
seeker.

5.2 ESSENTIALS OF RECRUITMENT

Notable essentials of recruitment are;

1. All personnel process, viz. recruitment, training, career planning and
development, performance appraisal, etc., are inter-linked and should be
appreciated in totality; not piecemeal, for overall improvement of organisational
3
 practice. As a prerequisite to sound personnel management, planning and
development of recruitment policies and procedures should be in consonance with
national personnel policy and the broad organisational, state and nation- wide,
socio- economic goals involving ‘authoritative allocation of values’ on the part of
the ruling elite. In this context, dilemma concerning ‘liberty’ and ‘equality’
postulates may not always be easily resolvable. The reference here is to equity
requirements vs. merit considerations in public employment.
2. The recruitment process should be linked with the organisation-wide manpower
or human resource plan for purposes of economy and ready availability of
personnel with attendant implications for organisational efficiency. The
progression of the process of manpower planning is from micro to macro,
envisioned as a series of concentric circles moving outwards.
3. The net for recruitment should be cast wide to reach out widest in pursuance of
‘the best available’ talent, to the extent practicable.
4. Management should encourage staff participation in formulation and
implementation of recruitment plans to make them real.
5. The recruitment process should be carefully planned, organised, directed and
controlled. POSDCoRB delineates specific administrative activities as it does the
whole (at successive macro levels), organisational, or at the level of the state.
6. Recruitment should employ fair and impartial criteria to build the confidence of
the people, particularly prospective employees. Legal aspect should also be taken
care of. Both organisational and individual interests should be addressed through
responsive and benevolent policy.
7. Minimum time and money cost should be incurred. For example, methods and
procedures which aid quick disposal of applications should be used. All methods
employed should ensure economy apart from efficiency as also clarity with regard
to objectives of the effort or practice.
8. Recruitment agencies should show positive interest in incorporating theoretical
postulates delineated as ideal. Academic and practical worlds should conjoin
effectively.
Sources of Recruitment
There are two sources of recruitment; inside and outside source. The first method entails
promotion and the second, recruitment, in the literal sense of the term. These two
methods are not mutually exclusive and all governments take recourse to either or both at
the same time, to meet personnel requirements. Indeed, the best solution to the problem is
in a happy combination of the two approaches in the light of administrative requirements,
past experience, academic deliberation and value impingement from the environment
(specifically government directives)

Advantages of Direct Recruitment

(1) Direct recruitment is in accord with democratic stipulates as it affords ‘equal

opportunity’ to all prospective employees.
(2) It widens the ambit of selection and makes it possible to tap a wider market for
supply of desired human resource.
4
(3) Redundancy in an organisation is checked. Direct recruits infuse new blood into
the system by their fresh perspective, new ideas and approaches. In the same vein,
public services are kept in tune with the changing socio-economic environment in
the country through continuous supply of fresh graduates. Reform comes by
easily and change is not resisted, as is otherwise apprehended (arguable
though; referring to the hypothesis that bureaucracy is by its very nature,
change resistant)
(4) Technical updating of personnel is imperative, specifically in case of ‘process’
organisations where latest technical know- how is imminent. Young men supply it
easily. Training cost may be lowered in such cases;
(5) Direct recruitment motivates employees already working for the organisation to
keep themselves up-to-date with the new and the latest information, lest they lose
in the run for higher posts to outside players. It is therefore conducive to
maintaining as also augmenting efficiency standards.
Disadvantage of Direct Recruitment
(1) Direct recruits lack experience and practical know-how. Prolonged and intensive
training might be required to cover the ‘competence- lag,’ which entails cost. This
argument may, however, be contested on the ground that ‘competence lag’ is
found among all employees irrespective of source; new recruits may not be
singled out for treatment. Besides, adaptability may be a personal, individualised
attribute. Nevertheless, a commonplace argument is put forward that inexperience
proves a costly disadvantage since organisations vie for competitive edge in the
market place.
(2) Recruitment from outside source kills the initiative of internal candidates. They
feel discouraged which impedes organisational morale with attendant impact on
morale and work efficiency.
(3) Direct recruitment places young people over old; inexperienced over experienced
This might not be good for development of positive ‘social capital’ with its
organisational culture implications (articulate in the working of the informal
organisation) with attendant impact on organisational solidarity, and esprit -de
–corps.
(4) Older people cannot compete successfully with young entrants as they get out of
touch with studies. Older people also cannot "mug up" easily which may be
required for success in examinations.
The question arises as to which of the two methods should be adopted for recruitment to
public service? It may be said that neither of these methods can be preferred to the total
exclusion of the other; a mix of approaches may be recommended as sound
organisational strategy; practice endorses the viewpoint.
Both these methods are followed in practice. In India, there is direct recruitment for the
All India services (I.A.S.) and other central services but a certain proportion of posts are
reserved for recruitment by promotion (from inside source). The proportion of indirect
recruitment varies from service to service, class to class, department to department. Civil
servants are not only recruited through open competitive examination, but certain
officials from the state governments also get promoted. There are differing opinions,
however, on the practice. There is a feeling that promotions from state services dilute the
quality of all India services personnel. Besides, the whole idea of all India civil services
gets lost when other state officers are promoted to civil services and work in the state
itself. It should be made mandatory for the officers who are promoted to civil service to
5
serve in other states to maintain the ethos of All India Civil Services (Misra, 2005). The
fifth pay commission made the following recommendations to ameliorate the situation.
• When state officers are promoted to the AIS, 50% of them should be allotted to
contiguous states of the same region and the balance 50% should be allotted to
their own state.
• All AIS officers should be compelled to do at least one stint of deputation with
the center during the first 15 years of their service.
• The Central Government should have the authority to change the state of
allotment for any officer, if there is evidence to show that he has developed a
close nexus with either the politicians or other elements in a state.

In the U.S.A., direct recruitment for higher posts is more limited in comparison to Britain
and India, since there is more recourse to promotion from ‘below’ for higher echelons.
Evaluating the Practice
It is contended that extensive direct recruitment at higher levels may be a poor reflection
on the ability and talent available ‘within.’ It also undermines the career idea. On the
other hand, complete absence of direct recruitment for the positions might reflect poorly
on organisational practice since it might signal ‘complacency’ on the part of the
organisation with impacts on ‘organisational effectiveness.’
Balance between the ‘Closed’ and ‘Open’ system model theories with respect to
organisation theory, instead of one or the other extreme might be a more practicable idea.
Compatibility between ‘closed’ and ‘open’ model perspectives of organisation theory
might be significant for both academic learning via heuristic analysis (model building).
There is an urgent need to arrive at a compatibility of the two approaches to
organisational structuring. Practice indicates that one method cannot be preferred
absolutely to the other.
The various methods of Recruitment followed in India as illustrated in the fifth pay
commission report are as follows:

ƒ Promotion
ƒ Direct Recruitment
ƒ Deputation
ƒ Transfer
ƒ Reemployment
ƒ Short Term Contract

Contract employment is prevalent in a limited measure in government departments.

Consultants can be appointed to the tune of 19% of the total strength with relaxations in
case of the Planning Commission. Lateral entry and contract service have been in
consideration of late and have also been recommended by the fifth pay commission in
view of increasing specialisation of work and the need for networking knowledge.

6
Legal Position
Legally, the source of recruitment with respect to any post is entirely a matter of
discretion with the government. An authority competent to recruit can also lay down
policy with regard to the number of posts to be filled by direct recruitment and by
promotions, and, if the authority decides that a post should be filled by direct recruitment,
persons eligible for promotion cannot claim any priority.

In the absence of any statutory rules governing appointments to any state service, the
appropriate state may recruit members to that service in any manner it likes, in exercise
of its executive powers under Article 162 of the Indian constitution, provided the
guarantee contained in Articles 14 and 16 of the constitution are not infringed. So long as
the action of the government does not violate any fundamental or statutory rights of the
persons concerned, mere absence of a statute or a rule justifying a particular manner of
appointment will not invalidate it. If, however, there is in existence any valid law or
statutory rule relating to appointment, the executive is bound to abide by the relevant law
or rule and has no jurisdiction to ignore, out step or violate the same under the guise of
executive powers. (Roshan Lal Sharma vs. Union of India, 1968, Punj 47)

5.3 STEPS IN RECRUITMENT

Recruitment Process is diagrammatically illustrated as follows:

Plan and Develop

Organisational Personnel Recruitment Policies
Goals Policies And Procedures

Designing of Job Requisition

Advertisement Job Analysis
Application
forms Job Specification

Performance

Interview Tests Examinations

Communication
Scrutiny of Selection Appointment letter
Application Or Rejection

7
Recruitment process consists of the following steps:

a. Job Requisition

The first essential step is job requisition, which gives the recruiting agency information
regarding each job. This is done through 'job analysis' and 'job specification'. Job
analysis is the study of all facts relating to a job and its work environment; physical and
social which potentially impacts performance. Job specification is a statement of the
physical, mental and temperamental qualities desirable for accomplishing a job. (These
have been discussed in Unit No. 4 in detail) This exercise helps in categorising the
requirements of a job, detailing facts regarding:

(a) Qualifications required of the job; general educational qualifications and

technical, whichever specified;
(b) Specific skill, ability or aptitude (if) required has to be determined and laid down
to help chose the right selection test;
(c) Previous job experience if required to put premium on continuity;
(d) Personal and physical attributes desired; and;
(e) Age and domicile requirements if any.

Based upon these facts, the head of the organisation submits to the recruiting agency,
requisition for the staff required.

b. Designing Application Forms

Application forms may be designed to procure the required information from applicants,
as per job descriptions and specifications. A well designed application form is a
prerequisite for the success of the recruitment process. If employees send applications on
plain sheets of paper, all facts may not be procured making some kind of alternate
arrangement such as correspondence with candidates necessary to get additional
information. A well designed application form obviates the need for contingent measures.
Hence application design is about both fact and value. The two are intermixed in real life
situations.
Sole or over- reliance on applications, however, could be counter productive in many
ways and management has to guard against its excessive use. Form design can potentially
disadvantage people who may not meet formal criterion but might otherwise have
excellent work skills. Management has to ensure short listing of such candidates who
might not even, otherwise, make it to the interview (HR Guide, 2005).
Some Other Important Guidelines are noted thus:
While including minimum educational qualifications or specific work experience as key
criteria, consider whether these are really essential to the position. Essential and optional
requirements may ideally be separately catalogued. Economical use of paper is also
important.

8
Significantly, applications contain value input from the environment. Hence they reflect
organisational philosophy and value impingement from the ruling elite (particularly
government in power). For example, employment of disabled people or women under
quota policy, or labour contract laws might be put as a statutory requirement if stipulation
to that effect is made by the government. Job descriptions and specifications are being
used in developed nations like U.K to afford equal opportunity in employment to disabled
candidates. The extent to which an advertisement includes or excludes disabled people
depends on the job description and specification listed therein. Physical, educational and
behavioural requirements could be so laid down as to enable or prohibit disabled
applicants from applying. Careful drafting can help integrate them in the mainstream by
opening up to the extent possible, regular sectors of employment. Compliance with
government policy and enforcement of corporate social responsibility is also secured
through advertisements.
Standard application forms might militate against diversity and pluralism of/ about the
workforce. Letter of the form, and categories under which information is asked for,
should be formulated carefully. In-built flexibility is therefore, needed and organisational
culture and human relations implications also need to be considered.
Application and advertisements are tools to achieve the needed balance between
organisational and individual goals and thus ‘organisational equilibrium’. The
advertisement should highlight the salient points of the job and lay down the
requirements of the job clearly. Applicants should be able to look at organisational goals
and match them with their personal goals.

c. Advertisement
The recruiting agency notifies vacancies to identified sources through well- articulated
advertisements. Care should be taken in drafting advertisements as well, as there are legal
implications inherent. Advertisement is an attempt to secure best talents for the post and
fulfill constitutional requirements of giving equal opportunity to all eligible candidates.
Advertising does not imply an obligation that the post will be filled (Daya Ram vs. State
of Haryana AIR, 1974 P&H 279)

The cost factor has to be especially considered in issuing advertisements and in the
process of sifting applications and communicating thereafter. It should both be speedy as
well as cost efficient. The information communication revolution has altered the scenario
considerably in the present day times. Paper work has been minimised considerably,
especially in developed countries. Online submission of applications is very much in
vogue.

Modes of Inviting Applications

There are many ways in which vacancies can be announced to interested people. The
most commonly employed are;

(i) Newspapers,
(ii) Trade or professional journals,
(iii) Notice boards in field offices
(iv) Employment exchange
9
 (v) Employment job centers,
(vi) Department of social welfare (in vacancies reserved for scheduled castes
and tribes backward classes, etc.),
(vii) Directorate general of re-settlement, ministry of defense, in respect of
vacancies reserved for ex-servicemen.

Technique of Advertising
The best techniques for writing effective job advertisements are the same as for other
forms of marketing. (Chapman, 2001-04) The aim of the job advert is to attract interest,
communicate quickly and clearly the essential (appealing and relevant) points, and to
provide a clear response process and mechanism. Design should concentrate on the
clarity of text, text layout, and on conveying a professional image. Information must be
communicated effectively one way or another to the target group.
• Advertisement should have simple formatting. It should not be over designed or
too graphic. Care should be taken to ensure that the job advertisement is easy to
read and includes all relevant categories of information. Also, information should
be asked for in a logical order in all job advertisements.
As with application design, language used in advertisements should be simple,
comprehendible, and clear; all required information should be made available, which is
consistent, timely and adequate, free of bias or ambiguity on any count or fraught with
legal complications. All required and relevant information should be supplied to the
applicant and also elicited as per organisational requirements.
Evaluation is necessary. It is necessary to monitor the extent to which job
advertisement attracts a wide range of candidates. If there are too few candidates
for a particular post or too many who do not possess relevant skills or experience
there might be need to review the advertisements (Chapman, 2001-04).R&D
activity in the organisation is stressed here.
d. Scrutiny of Applications

The next stage is scrutiny of applications. The purpose of scrutiny is to sift out less
desirable candidates. Scrutiny of eligible candidates can ensure if information required of
a candidate is complete and whether he fulfils all requisite criteria of eligibility apart
from meeting essential minimum prescribed qualifications. If scrutiny indicates that the
number of applicants is large, some criteria may be designed to keep the number of
candidates to a manageable proportion. Sometimes there are rules which require that
number of applicants to be examined may be four times of all applicants. The appointing
authority is not barred from adopting a ‘rational procedure’ for short-listing the eligible
candidates. This can be done either through the written examination or interview or by
fixing some other rational criteria. The balance of power is unmistakably tilted towards
the organisation in this case. If a candidate is not called he cannot therefore have any
grievance of hostile discrimination. (Jayant Kumar Chauhan vs. PSC MP 1979 Lab
10(NOC), 17, MP (HC) .Time taken for scrutiny is also not prescribed in most cases
resulting in considerable, often too much discretion, with the management.

10
e. Selection

The recruiting agency arranges an examination or interview or both, to select the suitable
candidate(s). After selection, a list of selected candidates is prepared in the order of merit
and published. The list generally contains more names than the actual number of
vacancies as sometimes some candidates may not join for some reason. The appointing
authorities cannot depart from rankings given in the test. The list generally remains valid
for a period ranging from six months to one year depending upon the rules of the
organisation concerned. So long as the selection list is in operation, the appointment is to
be made from this list. However, there is no guarantee to appoint candidates from the
selection list only. Rules are often framed to minimise legal interface with employees
(present and prospective). Undoubtedly, this is an important emerging branch of human
resource management.

f. Communication

The suitable candidates selected are informed while unsuccessful candidates may or may
not be informed. The information given to selected candidates must not be ambiguous.
Terms and conditions governing appointment should be clearly spelt out.

Letter of appointment is issued after selection. It is a communication to the employee that

she/he has been selected for the job. The appointment letter, depending on the rules of
the organisation, is subject to police report and medical examination. The same should be
drafted carefully as conditions of service of an employee are governed by the
communication in the appointment letter or service rules specified therein. Many legal
complications can be avoided if appointment letters are drafted and issued carefully.

g. Placement

The progress of the new employee is observed during the probation period and followed
by confirmation of service of the employee, if found fit. According to Flippo, (1976) the
success in the function of recruitment can be judged by a number of criteria: (1) the
number of applicants; (2) the number of offers made; (3) the number of hiring; and (4)
the number of successful placements. (Flippo, 1976)

Appointment in Civil Service

At the outset, it may be desirable to clarify that the word ‘public service’ includes both
civil and military personnel. Article 311 of the Constitution of India does not include
defence personnel as they do not hold civil posts. (Hidaytullah, 1986)

Permanent or Temporary Posts

11
“With respect to government employment, the word ‘post’ means a position in service.
Permanent post means a post carrying a definite rate of pay sanctioned without the limit
of time. Appointment to a permanent post may be substantive, or on an officiating or ad-
hoc basis. A substantive appointment to a permanent post confers lien on the appointee.
Lien means title to hold a post substantively.

Temporary post is a post created for a certain period without intending it to be permanent.
An appointment to a permanent post on probation means that the servant is taken on trial.
Confirmation is usually granted after that period unless the servant so appointed on trial
is found unsuitable and his service is terminated by a notice. Ad hoc appointment is a
“stop gap, fortuitous or purely temporary arrangement” without considering all eligible
persons for the post. Ad hoc employees have no right to the post. Period of ad hoc
appointment is not to exceed six months, though there have been instances of it having
stretched up to nine years. (ibid)

Quasi permanent service

“Under rule 3 of the central civil service (temporary service rules, 1949), a person who
having been appointed temporarily to a post has been in continuous service for more than
three years or has been certified by the appointing authority as fit for employment in a
quasi permanent capacity, such person is to be deemed to be in quasi permanent service.
He then gets a right to the post though he has no lien and cannot claim permanency.
Unless the employee acquires the status of a quasi permanent, he cannot claim the
protection of Article 311 of the Indian Constitution” (Hidaytullah, 1986).
5.4 CIVIL SERVICE RECRUITMENT IN INDIA

The determination of the recruitment authority is one of the essential features of the
process. Article 309 of the Indian Constitution empowers the Central Government and
State Governments to regulate recruitment and conditions of service of persons appointed
to public services and posts through an act of appropriate legislature. The Parliament
made the All India Staffing Pattern Services Act in 1951, which governs the conditions of
service of All India Service Officers. The recruitment and employment of civil servants is
regulated by the rules made by the respective governments under the provisions of the
constitution.

The power conferred by Article 309 on the legislature and the executive, is subject to
limitations. Neither the laws nor the rules made under the article can override
constitutional provisions, which limit legislative power. They are liable to be struck down
if they violate constitutional provisions. Other relevant articles are; articles 14, 19, 144,
310(1) and 311. Article 14 guarantees the right to equal protection of laws, and article 19
safeguards the seven fundamental freedoms. Under article 144, civil and judicial
authorities have to act in aid of the Supreme Court. Further, the application of articles
310(1) and 311 is altogether excluded by some other articles such as 76, 148 and 124-5.
These articles provide for the mode of appointment and conditions of service of certain
officers, namely, the Attorney- General of India, the Comptroller and Auditor-General of
India and the Judges of the Supreme Court. Similarly, Article 309 of the constitution is
12
not applicable to some other class of public servants, for example, those covered by
articles 229(2), 312(1) and 324(5). They deal respectively with the officers of the High
Courts, members of All India Services and the Election and Regional Commissioners.
Their conditions of service, etc., are laid down in the manner prescribed by these articles.

Qualifications of Employees
The question of qualifications required for public employees are of enormous importance,
as, on it, rests largely the general efficiency of the public services. These qualifications
may be divided into two parts: general and special. General qualifications apply to all
public employees, and are, thus, of universal application. They relate to civic status,
domicile, sex and age. Special qualifications deal with education, experience, technical
knowledge and personal status.
Merit and Suitability
The most important problem with regard to recruitment is finding a suitable method of
determining the ‘merit’ and ‘suitability’ of candidates. It is very difficult to define merit.
All the qualities of 'an employee’, which lead to a more efficient performance of his
duties, are elements of merit. The components of merit can be competence, capacity,
efficiency, initiative, dependability, straightforwardness, integrity, missionary zeal,
effective supervision, leadership, alertness of mind, physique and personality, academic
attainments, etc. Merit also includes suitability. In suitability, we are more concerned
with the relationship between the applicant and requirements of the job; viz. tasks, duties
and responsibility. The examination and interview methods have been adopted to
determine the merit and suitability for recruitment. Articles 16(1) and (2) guarantee to all
citizens an equal opportunity and a right to make an application for employment in any
post under the government and also a right to be considered on merits for the post for
which the application is made. But it does not extend to being actually appointed. “The
European countries fall distinctly into two categories. The first category consisting of
International perspective might be pertinent here. France Belgium Spain and Italy, that is
those recruit personnel by competitive written examinations (not necessarily through
centralised agencies) and the second consisting of Sweden, Switzerland, Holland
Denmark and Germany where entry into the civil service is determined on the basis of an
examination of the available records of the candidates’ attainments.” (Jain, 1976)

Articles 14, 15 and 16 supplement each other. Article 16 is only an application of the
general principle of equality laid down in Article 14. Therefore, the concept of
“reasonable classification” enters into the application of Article 16.The equality of
opportunity guaranteed by Article 16 is equality as between members of the same class of
civil servants and not equality between separate and independent classes. Thus if there is
difference of procedure or rules concerning recruitment and promotion in different
classes the same cannot be challenged on grounds of denial of equal opportunity.

Equality of opportunity includes all matters in relation to employment or appointment

both prior and subsequent to the appointment viz. salary, periodical increments,
promotion, seniority, terms of leave, gratuity, pension, age of superannuation etc.
Equality of opportunity guaranteed in articles 16(1) and (2) does not mean that the
government is not entitled to pick and chose from among the candidates for employment
under the government. The appointing authority may lay down the rules or notifications
prerequisite conditions of service or qualifications of selection or making the
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appointment. The conditions should however be such as would be conclusive to proper
discipline among the government employees. Such conditions must be applicable to all
citizens subject however to the exceptions in clauses (3) to (5) of article 16.They must
have a reasonable relation to or a relevant connection with the suitability for a post or
employment in the public service.

There can be different treatment of employees differently situated or seeking different

employment. There can be reasonable classification. But if there are no reasons for
separate treatment, the discrimination would be unconstitutional. Violation of article
16(1) can be claimed by a person only if he has the necessary qualifications or satisfies
all conditions validly prescribed. He cannot rely merely on erroneous orders that may
have been passed in other cases.
Examinations
Written examinations are of two types:
(a) Essay Type Test
The purpose of this test is to judge the caliber of the candidate about command over
factual knowledge and his ability to logically reason and argue. In India, there was a
compulsory essay test for all India services’ recruitment. This method is costly and less
reliable. Subjectivity is difficult to avoid as judgment of a subject matter would differ
from examiner to examiner.

(b) Short-Answer Objective Test

A candidate takes a test in which a large number of questions are given and he answers
'yes' or 'no'. This test is objective as there is only one correct answer to a question. The
advantage is that they are cheaper to administer. The results can be compiled quickly
through electronic devices. Such tests have a serious disadvantage; they offer no scope
for test of positive ability, creativity, and imaginativeness.
5.4.4 Tests in Business
Businesses employ intelligence, aptitude and performance tests to judge suitability with
respect to a particular job. The succeeding analysis points it out as:
(a) Intelligence Test
Intelligence or mental alertness tests are designed to measure the inherent intellectual
capabilities of the applicant. Though recognised value is provided to intelligence tests
sole reliance is not placed upon them. They are used for other purposes in dealing with
employees like selection for special training for technical positions and for classifying
persons for formal training classes. Multiple-choice questions are used, for example,
antonyms, synonyms, simple quantitative skills, analytical reasoning, common sense,
general understanding, etc.

Intelligence tests are administered to assess the mental maturity of the candidate. The
intelligence quotient, commonly referred to as the I.Q. is indicative of mental age. The
Intelligence quotient is judged on the basis of mental age which might be different as
compared to physical age. In some jobs, more intelligence is required than in others. It
has to be ensured that persons with right intelligence are recruited for suitable jobs, for
example, if a person of higher intelligence joins a job requiring low intelligence quotient,
he is likely to either leave the job or suffer low job satisfaction.
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(b) Personality Tests
Different jobs require different traits of temperament and emotion. These should be
identified and measured, for example, for supervisory jobs, emotional stability is
important. Different types of personality tests have been devised by scholars, which can
be used to ensure the right selection for a job.

Special aptitude tests are meant to assess the suitability of a candidate with respect to
physical and mental qualifications. These tests require use of specialised equipment and
testing appliances. Some of the subject areas include:
• Space comprehension
• Distance judging
• Quickness of motor responses
• Steadiness of hands or arms
• Ability to assemble parts
• Ability to distinguish colours
• Lateral or peripheral vision
• Quickness of recovery of vision after exposure to blinding light
• Ability to distinguish sounds or pitch
• Strength of finger, hand, wrist or arm
• Manual or finger dexterity
• Memory
• Ability to drive a motor vehicle
• Ability to manipulate mechanical devices
• Maintain balance when subjected to rotary motions ( Owen,1987)

(c) Aptitude Tests

Aptitude tests seek to discover the natural talent of an aspirant in a specific area of
learning or practice associated with the job. Different jobs require different aptitudes and
selection must be done as per requirements. Aptitudes may be, word fluency, reasoning,
spatial, numerical or memory aptitude etc.

(d) Performance Test

To recruit personnel for skilled trade or crafts, the performance test device is employed.
An employee is asked to perform the work for a short period and his output, skill and
performance are watched. Example can be given of the test for the work of a
stenographer, typist, machine operator etc. This test, however, does not give a complete
picture of the potential of an employee. It cannot assess his will to work. What is
actually applied in practice is a mix of approaches tailor made for a specific job or an
occupational group. Such tests are known as balanced tests.

15
(e) Interview
An interview consists of systematically trying to find out the information, skills or views;
a candidate has for the job for which he has sought the selection. Oral tests can gauge
intangible qualities of character like, smartness, alacrity, emotional stability, confidence
and fortitude. The technique of an oral test is that of a natural purposive conversation
intended to reveal the qualities of the candidate. Group discussions can also form part of
oral interviews. Oral tests are considered as a necessary complement to written tests as
the latter will always have limitations.

5.5 RECRUITING AGENCY IN INDIA

The question remains what administrative machinery shall be employed to hold the
various tests described above? Obviously, these tests should be held by an independent
and impartial body of persons. The departmental boards are subject to political pressure
and do not inspire confidence. Therefore, to inspire public confidence in the recruitment
system, it is necessary that judicious, impartial and independent commission with
adequate constitutional safeguards to protect its impartiality should be set up for selecting
candidates to various public services.

The Union Public Service Commission (UPSC) and the Staff Selection Commission
(SSC) are the two designated recruitment agencies, the former for Group A and B service
posts and the latter for non-technical Group C "posts". The SSC also conducts the
Assistants Grade C and Stenographers' open examination for Group 'B' non-gazetted
posts.

Union and State Public Service Commission in India

It was the Government of India Act, 1919, which for the first time, made a mention of the
public service commission in the dispatch of Indian constitutional reforms. The
government of India Act, 1935, provided not only for a federal public service
commission but also for public service commissions in the provinces. In the Indian
constitution, Article 315 provides for the establishment of a Union Public Service
Commission (UPSC) and State Public Service Commissions (SPSC) but two or more
states may agree to have a common commission.
Composition and Qualifications of Members
The constitution of India does not fix the number of members of the Union or the State
Public Service Commissions but has left the matter to the discretion of the President of
India and the Governor in the case of union or states respectively. The Union Public
Service Commission has a chairman and ten members, who are appointed by the
president of India. At least, one-half of the members should be persons with a minimum
of ten years experience in government service. The tenure of office is fixed for six years
or until the attainment of 65 years of age in the case of Union Public Service Commission
and 62 in the case of State Public Service Commission. A member can be removed from
office only by an order of the President in the case of Union Public Service Commission
and the state Governor in the case of State Public Service Commission on the grounds of
insolvency, infirmity of mind or body, or engagement in paid employment outside the
16
duties of his office. In order to ensure the impartiality and independence of the members,
the constitution provides that, upon ceasing to be a member of the commission in due
time, the incumbent will be ineligible for any further appointment in the same office or in
any office under the government except a higher appointment in the same commission.
The President of India determines the salary and other conditions of service of the
members of the commission through regulations. It is provided that the conditions of
service of a member of the commission cannot be varied to his disadvantage after his
appointment. The entire expenses of the commission including salaries and allowances of
its members are charged on the consolidated fund of India. Member of the Union Public
Service Commission can be removed from office only by an order of the President on the
ground of misbehavior. The President will refer the matter to the Supreme Court and the
court will conduct an enquiry under Article 145 and submit the report to the president,
who can suspend the member concerned. It may be kept in mind that public service
commissions are only advisory bodies and it is up to the government to accept or reject
the recommendations (Mukherjee v. Union of India, 1994 Supplement (i), SC, C. 250).

Functions
The functions of the commission under Article 320 may be summarised as follows:
1. To advise the government on all matters relating to the method of recruitment and
principles to be followed in making appointments to the civil services either
directly or by promotion.
2 To conduct examinations for appointment to the All India and Union Services.
3 To interview candidates for direct recruitment.
4 To advise the government on the suitability of candidates for promotion and
transfer. Recommendations for such promotions are made by the departments
concerned and the commission is requested to ratify them.
5 The commission is also consulted on matters like temporary appointments for
periods exceeding one year but not exceeding three years, grant of extension of
services and re-employment of certain retired civil servants.
6. The commission is also consulted on matters relating to regularisation of
appointments, claims for the award of pensions, claims for reimbursement of legal
expenses incurred by government servants in defence in legal proceedings
instituted against them in respect of alleged omissions and commissions in the
course of execution of their official duties, claims for pension, or compensation in
respect of injuries sustained on duty.
7. The commission is consulted regarding disciplinary matters in case of:
(i) censure;
(ii) withholding of increments or promotion;
(iii) reduction to a lower service, grade or post; (iv) compulsory retirement; and
(v) removal or dismissal from service.

8. To advise the government on any other matter specifically referred to it by the

president or the governor.

17
Though it is obligatory on the part of the government to consult the commission on these
matters, failure to do so does not render the action invalid. The President has the
authority to exclude posts, services and matters from the purview of the commission. But
all such regulations have to be laid by him before each house of parliament, as soon as
possible, or repeal these regulations. Moreover, under Article 321 there is a provision in
the constitution to authorise the parliament to extend the functions of the commission.
Certain other matters have also been brought under the purview of the UPSC. These
include proposals for upgradation / downgradation of posts, constitution of DPCs for
promotion to pots in central civil services and group A posts in based on the principle of
selection and not on seniority cum fitness, special recruitment to the scientist pool, etc.
The UPSC (Exemption from consultations) Regulations, 1958 specify the matters, which
are, excluded fro its purview. These envisage that if the rules governing recruitment to
the civil service or civil post concerned do not explicitly provide for consultation with
UPSC, it is not necessary to consult the commission about selection for appointment in
categories. It is also not necessary to consult the commission about selection for
temporary or officiating appointment to a post if such appointment is not likely to
continue beyond a period of one year.

The fifth pay commission has expressed concern at the work load presently on the
UPSC and has called for reducing it by dispensing with the involvement of the UPSC in
case of many civil posts in Group A (if less than 15)which could be delegated to
concerned ministries. The government could also consider the option of expanding the
UPSC opening regional branches of UPSC or establishing other commissions. In
addition, regulations should be amended to provide that consultation with the commission
should, not be necessary about selection for appointment to posts in scales of pay below
or above the Senior Administrative Grade (Rs. 5900-6700) in all services/ cadres. The
fifth pay commission however recommended continuing the practice of consulting the
UPSC in cases of promotion from a Group ‘B’ post to a Group ‘A’ post or from a lower
post to senior administrative grade in Group ‘A’.

The constitution requires the commission to submit to the President, an annual report on
work done during a year. The report, accompanied by a memorandum explaining the
action taken by the government on the recommendations of the commission, is to be
placed before parliament. The memorandum should explain the reasons for the non-
acceptance of the recommendations of the suitability of candidates for promotion and.
transfer. Recommendations for such promotions are made by the departments concerned
and the commission is requested to ratify them.

Quasi -Judicial Jurisdiction of the Commission

The quasi- judicial jurisdiction of the UPSC is limited both in scope and extent. “In fact,
it has no true appellate jurisdiction. It can only advise on disciplinary actions then against
employees. According to the constitution, the government should consult the commission
on the following matters1) All disciplinary actions affecting a government employee
including positions relating to such matters (320(3) (e) (2). Claims for reimbursement of
costs incurred by an employee and any question as to the amount of any such award.”
(Jain, 1976)

18
It may be noted that the constitution does not provide an aggrieved civil servant any right
of appeal to the UPSC against any disciplinary action taken by the government. A
government employee has a right to appeal only in matters of dismissal removal and
reduction in rank and that too not to the UPSC. The Constitution merely prescribes that
the government should consult the commission on certain matters. However, the
consultation prescribed by sub clause (c) of Article 320(3) is only to afford assistance in
assessing guilt or otherwise of the delinquent officer as well as suitability of the penalty
to be imposed.

Other Agencies for Recruitment

In addition to the UPSC, the government of India has set up the Staff Selection
Commission, Railway Recruitment Boards and other agencies and entrusted them with
responsibility of recruitment to Group C posts in central ministries, departments and their
attached and subordinate offices and for recruitment to certain specified Group B posts
like assistants and stenographers in the central secretariat. Vacancies in the central
government establishments other than those filled through the UPSC or the respective
departments through notification to the nearest employment exchange fill agencies like
the Staff Selection Commission and no department can fill any such vacancy by direct
recruitment unless the employment exchange issues a no availability certificate. In the
event of a conscious effort to reduce workload on the UPSC, the fifth pay commission
has recommended that the recruitment responsibilities shall need to be increased for staff
selection commission. Recruitments should be decentralised to concerned ministries for
various posts and staff selection commission should b expanded with more regional
offices and better infrastructure.

Recruitment in some lower category posts is done by departments themselves and while
recruitments in the higher categories is made by the UPSC. However, some agencies like
the Council of Scientific and Industrial Research have been authorised to recruit and
select directly for Class 1 and Class 2 posts(UPDSC Exemption from Consultation
Regulations, 1958 although the CSIR has very often requested the UPSC to help it select
candidates for inclusion in the Scientist’s posts.

The constitution requires the commission to submit to the President, an annual report on
work done during a year. The report, accompanied by a memorandum explaining the
action taken by the government on the recommendations of the commission, is to be
placed before parliament. The memorandum should explain the reasons for the non-
acceptance of the recommendations of the suitability of candidates for promotion and.
transfer. Recommendations for such promotions are made by the departments concerned
and the commission is requested to ratify them.

5.6 THE IDEA OF PROMOTION

According to L.D. White (1926), promotion is “an appointment from a given position to
a position of higher grade, involving a change of duties to a more difficult type of work
19
and greater responsibility, accompanied by change of title and usually an increase in
pay."
A good promotion system is useful to employees individually as well as to the
administration as a whole (Arthur). The task of devising a good promotion system is
difficult. Promotion system might breed “discontent, be diminutive of incentive, and lead
to general impairment of morale (Meyers)
The basic urge of human beings for recognition and advancement is met by promotion.
Promotion adds to the goodwill of the government. It also develops the feeling of
belongingness in the employees. It has been felt that a good promotion system is useful to
the employees individually as well as to the administration as a whole. If promotion is not
effected judiciously, there is a danger that it might breed discontent, diminution of
incentive, and general impairment of morale. This will ultimately affect the efficiency of
the organisation. A single promotion frequently results in a chain of opportunities for
several staff members and encourages their orderly progression in a career service. If
vacancies are too frequently filled by outside recruitment, staff morale might suffer.

Legal Perspective
With regard to promotion, certain notable aspects are recounted as follows:
-It is apparent that the concept of promotion implies that the employee is already in
service;
-Incumbent’s appointment from a lower or inferior post to a higher or superior post
amounts to promotion;
- Promotion amounts to a fresh appointment. It involves progression to a higher grade.
Mere special pay or allowances attached to a post do not imply promotion. For example,
appointment to a selection grade is promotion;
- Up grading a post is different from promotion. When a post is upgraded, the person
holding the post before up gradation has no right to hold the new post. Even if he is
allowed to hold the upgraded post, it does not amount to promotion as he cannot be said
to leave his existing post and occupy a new post as no question of appointment is
involved.
-Similarly upward revision of pay scale is different from upgrading, as upgrading
involves, not only raising the time scale but also changing the status of grade. Thus,
upward revision of pay scale does not amount to promotion. (Basu)

Essentials of a Promotion System

W.F. Willoughby lays down the following conditions, which form the backbone of a
sound promotion system:

1) Adoption of standard specifications.

2) Classification of positions into distinct services, classes and grades.
3) Inclusion of all positions except those having a political character.
4) The adoption of the principle, as far as possible, that superior positions will be
filled by promotion from lower positions.

20
 5) The adoption of the principle that merit alone shall determine the selection of
employees for promotion.
6) The provisions of adequate means for determining the relative merits of
employees eligible for promotion.

The first and second conditions ensure adherence to the merit principle. The third and
fourth ensure that all employees are eligible for promotion. The fifth emphasises that
promotions should be made on the criterion of merit. The last factor stresses the adoption
of a scientific approach to promotions.

Features of Promotion

The Features of Promotion are:

1. Management Function
Promotion is at the discretion of the competent authority and no employee can claim a
legal right to be promoted. Hence courts or tribunals cannot interfere in the management
function in the absence of mala fide or victimisation. An employee may claim the right to
a promotion only if such a right is granted by the terms and conditions of service or by
service rules. (C.K Awasthi vs. IIT kanpur, AIR 1969 A11 213 Lab IC518-)

2. Optional in Nature

Promotion can be brought about with the consent of both the parties. An employee may
refuse to accept the promotion if the nature of work in the higher post does not suit him.

Constitutes Fresh Appointment

Appointment through promotion is a new appointment. (Ramkaran vs. Union of India,
1976, Lab, IC 1263 (1975)2, SLR 683(Delhi)) This means that an authority subordinate
to the authority, which had promoted him, cannot dismiss an employee. It is a substantial
alteration of the earlier contract of employment which was deemed as brought about by
the consent of both parties.

Governed by Rules
In the absence of statutory rules, the executive can frame instructions regarding the
principles to be followed for promotion. However, the executive has no power to amend
or supersede statutory rules by administrative instructions. (Naidu vs. State of Mysore,
19th Lab IC 73: AIR 1971MY1) When statutory rules are framed regarding promotions,
such rules will override the administrative instructions or departmental orders.

Fundamental Right
Article 16 of the constitution applies to promotion. The fundamental right, however,
extends only to consideration for appointment and not to the actual promotion. Equality
of opportunity in the matter of promotion only means that all employees holding posts in
21
the same grade shall be equally eligible for being considered on the merits for
appointment to a higher grade. The employee has no legal right to be promoted from the
moment a vacancy arises in the higher post. The government can keep it vacant for as
long as it chooses. Even where there are rules framed, they can be enforced only if the
particular rule is mandatory. If the rule, even though it is a statutory rule, is only directory
or gives discretionary power to the administration as distinguished from a duty, no legal
right arises for the government servant, and cannot therefore, be enforced by legal
action. The ‘equality of opportunity’ (Article 16) does not apply to employees belonging
to different classes or when two posts cannot be treated on the same footing. To obstruct
an employee’s path of promotion amounts to infringement of the fundamental right under
Article 16 (Gurudev Singh vs. State of Mysore, 19th Lab SLR 995 (P&H). The purpose
is to ensure similarity and equality of treatment and not identity in case of different
circumstances. (Madhusudan Nair vs. State of Kerela AIR 1961 (Kerela 203; 1960,
KLT).1179)

Article 16 does not forbid fixation of reasonable qualifications to determine merit. Article
16 of the constitution never excludes ‘selection’ and should not be confused with
absolute equality. The guarantee under Article 16 of the constitution does not take away
the right of the state to choose the best candidate. (K.Gopala Pillai vs. state of Kerela,
AIR 1966, Ker 262).Promotion is overriding in that a person on promotion is
automatically exempted from penalties earlier imposed on him.

An authority competent to lay down qualifications for promotion is also competent to

change the qualifications. The rules regarding qualifications can be changed with
retrospective effect unless it is specifically provided in the rules the employees who were
already promoted before the change of rules cannot be reverted or their promotions
cannot be upset.

The power to relax any of the qualifications and the criteria for such relaxation may be
provided by rules. A relaxation made in accordance with the rules in a given case cannot
be questioned unless facts are stated to show that an undue favour was shown to that
employee.

Criteria for Promotion

When a certain post is a selection post, promotion to it is primarily based on merit and
not seniority alone and therefore, the employee cannot claim promotion as a matter of
right on the basis of seniority. In these cases, seniority is to be regarded as a criterion
where the merits of employees are found to be equal. The criterion practiced is thus merit
cum seniority.

For non selection posts, the criterion for promotion is seniority- cum- fitness (or seniority
cum merit). In other words, seniority is the primary criterion and must be considered first,
subject to the employee being fit and not having any demerit.

For other posts in the absence of any rule governing promotion, the criterion of seniority
cum fitness is not arbitrary or mala fide.

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The appointing authority is the only competent authority to issue promotion orders. The
competent authority can seek the guidance of a specially constituted departmental
promotion committee but the ultimate certification must be of the competent authority.

Promotion from State Civil Services to All India Services

There is a provision for promotion to the I.A.S. from the state civil services to the tune of
33 per cent of the total vacancies. The promotions are made by a committee instituted for
each state. To take the example of Haryana, the selection committee for this purpose
comprises the chairman of the Union Public Service Commission or his representative, a
senior officer of the government of India, the Chief Secretary to the Government of
Haryana, the Senior Financial Commissioner in the Haryana civil secretariat, the
Development Commissioner and the senior most Divisional Commissioner. There is a
feeling among the persons promoted that they are not given fair treatment by direct
recruits to the All India Services. Besides they do not feel fully integrated with the
system. This feeling should be removed as it lowers the morale of promoted civil
servants.
Promotion in State Civil Service from Allied Services
This system can be illustrated with the help of promotions to the Haryana State Civil
Service (executive branch). Promotion to this service is made from tehsildars, persons
holding ministerial appointments, block development and panchayat officers, etc. Under
the existing procedures, a committee is appointed consisting of the chief secretary as
chairman and two other such officers as members nominated by the state government.
The committee makes a selection out of the eligible officials and then forwards to the
State Public Service Commission for its 'views' on the names of candidates thus selected
for the posts to be filled. This procedure has curtailed the powers of the Commission and
made it a rubber stamp to endorse the decision of the state government. This needs to be
reviewed to ensure fairness and impartiality of the State Public Service Commission.
Principles of Promotion

The Principles of Promotion are as listed below:

1. Principle of Merit
In case of promotion to higher level posts, merit is the only consideration to the total
exclusion of seniority.
2. Principle of Merit cum Seniority
In case of promotion to middle level posts, merit is the determining factor and seniority a
secondary one; and
3. Principle of Seniority
In case of promotion to lower rung posts, seniority carries weight but even here care is
taken to ensure that exceptional merit is rewarded by quick promotion.

23
In fact, a compromise between the two extremes of pure seniority and pure merit is
followed. Flippo phrases this principle as "when ability is substantially equal, seniority
will govern.”

As per observations by the fifth pay commission report, in public services, reasonable
promotion opportunities ranging from 2-4 promotions in one’ s career have formed the
accepted norm. Merit is stressed on as is evident from limited departmental competitive
examination (LDCE) followed by different departments. A concept of benchmark for
grading of Annual Confidential Reports for promotion purposes has also been introduced
with a view to ensuring that merit is given due consideration in promotions. The concept
of ‘selection’ is also based on the idea of promoting merit as against the usual, seniority.
However practice suggests that promotions have been irregular, generally based on
seniority and entirely dependent on availability of vacancies in the higher grades. Wide
disparities between practices followed in different departments with respect to
promotions and cadre management has also been evident.

Empanelment for Joint Secretary

At the level of posts of joint secretary and equivalent, the Civil services board finalises
the panel for submission to the Appointments committee of the Cabinet (ACC). In this
work, a screening committee of secretaries assists the CSB. The panel approved by the
ACC on the recommendation of the CSB is utilised for making appointments to posts
under the government of India.

Empanelment for Additional Secretary/Special Secretary

Selection for inclusion on the panel of officers adjudged suitable for the posts of
additional secretary or special secretary/secretary to the government of India and
equivalent posts equivalent is approved by the ACC based on proposals submitted by the
cabinet secretary. The Cabinet Secretary is assisted by a special committee of secretaries
for drawing up proposals for consideration of the ACC.

Eligibility to hold posts of Under Secretary, Deputy Secretary, Director and Joint
Secretary

For the above posts, eligibility starts after completing 5 years, 9 years, 14 years and 17
years of service in group A, irrespective of the service to which they belong.

Career Advancement for Group C and D employees:

A scheme of in situ promotion for group C and D employees was introduced in 1991 to
provide at least one promotion grade to those who are directly recruited to a group C and
D post and who could not get a promotion even after reaching the maximum of the scale.
Such scheme is an ad hoc measure and tackles the problem of stagnancy only
temporarily. This reveals the general lack of career planning affecting our public services.

24
Flexible Complementing scheme

A Flexible complementing scheme (FCS) was introduced in 1983 on the recommendation

of the third central pay commission to ensure that promotion of an officer in a scientific
service in Group A, from one grade to the next higher grade took place after a prescribed
period of service on the basis of merit and suitability irrespective of the availability of a
vacancy in the higher grade. The scheme is available now in many of the scientific
departments’ organisations and institutions under the government of India. A number of
functional promotions were made under this scheme in scientific departments notified as
such by the Department of Science and Technology. The Commission has widened the
scope of the scheme to cover all Research and Development professionals whether they
are scientists, technologists or medical and computer professionals, at the same time
taking out of the scheme certain non-entitled categories that had managed to get the
benefit undeservedly.

5.7 FEATURES OF PROMOTION IN SOME SELECTED

COUNTRIES

A. United Kingdom
In U.K., since the publication of the Northcote Trevalyan report (1853) merit has been
given due weight in promotions. Factors of performance are identified and the employees
are rated on each ‘stipulated count’ as outstanding, very good, satisfactory, indifferent, or
poor during their service. A consolidated rating is prepared at the time of promotions.
Reporting officers have to give reasons for grading personnel outstanding or poor to
ensure fair play. There are three important features of the promotion system in U.K.

(1) Vacancies to be filled through promotion are announced well in advance

(2) Recommendations for promotion are assessed by a departmental board
rather than a single individual; and
(3) Provision exists for appeal by the aggrieved party.

b. United States of America

In the United States, performance is assessed through well designed 'efficiency ratings'
resulting in a mathematical gauge. Four types of efficiency ratings are prevalent. These
are:
1. Training according to production record used for repetitive and mechanical work
like typing, etc;
2. Trait-rating which includes fifteen qualities to be judged under five grades;
3. Substantiating evidence reports popularly known as ‘Laffan System’; and

25
4. Analytical checklist wherein the rating officer has only to check or mark the
presence of qualities in the employee under consideration.

c. India
Largely, seniority-cum-merit has been the governing principle of promotion. The relative
weight given to these factors varies from one organisation to another. Besides, the service
records of the official, discretion of the competent authority may be a determining factor
in ascertaining suitability for promotion. Departmental promotional committees have
been set up to screen promotions at the department level. There is a form to help the
promotion committee wherein all annual reports of the candidates are compiled. In the
form, an officer is graded as A plus (outstanding); A (very good), B plus (good), B
(average) and C (below average). These reports are drawn up in the first instance by a
reporting officer who is usually the immediate superior. The reports are treated as
confidential but there is a provision to inform the person concerned if he is below average
grade or not fit for promotion.

In case of promotions in State Civil Services from Class III to Class II and Class II to
Class I, departments are required to get the concurrence of the Public Service
Commission. It is done to ensure adherence to minimum qualifications, required for a
job.

5.8 METHODS TO ASCERTAIN MERIT

The four main methods to ascertain merit are discussed below:

I. Written Examination
Written examinations are conducted for open competitions and the objective to select a
few out of the total applicants... The efficacy of this system is linked with the merits and
the demerits of the examination system. The chief merit of the system is that chances of
corruption, favoritism and arbitrariness are minimised. On the other hand, it may be
argued that a written examination is not the true test of one's ability and is also not
favourable to the older generation who may not appreciate memorising for exams.

2. Personal Judgment of the Head of the Agency

According to this system, only those persons are promoted, who in the judgment of the
head are fit for promotion. This system has advantage because the head is expected to
have full knowledge about the capacities of all those who work under him. This system is
also open to serious objections. It is arguably highly subjective but in spite of
shortcomings, can be used with modifications. For example, a promotion board,
constituted from amongst the officials of his own department, might assist the head. This
board may review the record of the concerned employee. Moreover, a system of appeals
can also be instituted in case of alleged foul play. The actual promotion, however, would
rightly be in the hands of the head of the agency, though appeal against controversial
promotions could be made to an outside agency.
26
3. Efficiency Rating
The efficiency rating system is the product of the scientific management movement. It is
widely used in the United States of America. There are three major systems of efficiency
ratings: (1) The Production Record System, (2) The Graphic Scale System, and (3) The
Personality Inventory System. Output record is documented against set standards to
assess efficiency over a period of time against traits like knowledge of work, personality,
judgment, initiative accuracy, willingness to take responsibility, neatness, punctuality,
organising ability, etc., In UK and India ratings are as follows:

(a) Outstanding
(b) Very good
(c) Satisfactory
(d) Indifferent
(e) Poor

In the U.S.A., ratings are;

(a) Highest possible
(b) Very good
( c ) Ordinary
(d) Bad
(e) Very bad.

Sometimes giving of grades like 'A', 'B', 'C', 'D', etc. is also employed.

4. Viva Voce
The written examination, personal judgment and efficiency rating could be combined
with viva voce tests. The viva test has the advantage of holistic appreciation of person and
his work by a group of seniors, competent to judge. In a case decision, it was held that
promotion shall be regulated on the following conditions: (i) length of service; (ii) proved
efficiency and special merit; (iii) regularity of attendance; (iv) integrity and good
behavior; (v) seniority shall be a predisposing factor for promotion and not
predetermining factor. As against these positive' conditions, slackness of work and
disorderly behavior shall operate as discounting or retarding factors for promotion of an
employee (Nellimarala Jute Mills Co. Ltd., v. Staff (1950), ILLU 394 (IT)

The second central pay commission (CPC) of the Government of India, 1960, preferred
functional requirements of public service to career prospects as the area of emphasis. The
third CPC was of the view that standard of recruitment need not be disturbed to open up
promotion avenues. Fourth CPC recommended cadre reviews to enhance promotion
prospects but this did not improve promotional avenues. The fifth central pay
commission in its Report has made certain recommendations relating to the Assured
Career Progression (ACP) Scheme for the central government civilian employees in all
27
Ministries/Departments. The government has decided to introduce the ACP Scheme
recommended by the fifth central pay commission with certain modifications as indicated
hereunder:-
While promotion shall continue to be duly earned, it is proposed to adopt the ACP
Scheme in a modified form to mitigate hardship in cases of acute stagnation either in a
cadre or in an isolated post. The ACP scheme needs to be viewed as a ‘Safety Net’ to deal
with the problem of genuine stagnation and hardship faced by the employees due to lack
of adequate promotional avenues
There shall be no benefits under the ACP scheme for Group ‘A’ Central services
(Technical/Non-Technical). Cadre controlling authorities in their case would continue to
improve the promotion prospects in organisations and cadres on ‘functional grounds’ by
way of organisational study, cadre review, etc. as per prescribed norms.
For Group ‘B’, ‘C’ and ‘D’ services and posts and isolated posts in Group ‘A’, ‘B’, ‘C’
and ‘D’ categories, it has been decided to grant two financial upgradations .Grant of
financial up-gradations under the ACP Scheme shall, however, be subject to the
conditions such as relating to length of service (first financial upgradtion after 12 years
and second after 24 years) completed and others as stipulated.
Introduction of the ACP Scheme is not to affect the normal (regular) promotional
avenues available on the basis of vacancies or on functional grounds as per prescribed
norms. Vacancy based regular promotions, as distinct from financial upgradation under
the ACP Scheme, shall continue to be granted after due screening by a regular
Departmental Promotion Committee as per relevant rules and guidelines. Existing time-
bound promotion schemes, including in-situ promotion scheme, in various
ministries/departments may, as per choice, continue to be operational for the concerned
categories of employees. However, these schemes shall not run concurrently with the
ACP Scheme. The administrative ministry/department -- not the employees -- shall have
the option in the matter to choose between the two schemes, i.e. existing time-bound
promotion scheme or the ACP Scheme, for various categories of employees. However, in
case of switch-over from the existing time-bound promotion scheme to the ACP Scheme,
all stipulations (viz. for promotion, redistribution of posts, upgradation involving higher
functional duties, etc) made under the former (existing) scheme would cease to be
operative. The ACP Scheme shall have to be adopted in its totality.
A departmental screening committee is to be constituted for processing the cases for
grant of benefits under the ACP Scheme. The composition of the screening committee is
to be the same as that of the Departmental Promotional Committee prescribed under the
relevant recruitment service rules for regular promotion to the higher grade to which
financial upgradation is to be granted.
Upgradation to the officer is on a ‘personal basis’ hence neither amounts to functional or
regular promotion nor requires creation of new posts for the purpose. The financial
upgradation under the ACP Scheme shall be purely personal to the employee and shall
have no relevance to his seniority position. As such, there shall be no additional financial
upgradation for the senior employee on the ground that the junior employee in the grade
has got higher pay-scale under the ACP Scheme.
The issue of career development of employees was considered by the four pay
commissions appointed by the government of India. As per views expressed by the first,
second, third and fourth pay commissions, posts in organisations should be created in
keeping with the functional requirements of organisations and not just to improve the
promotion prospects of employees disregarding the issue of organisational growth and
development. Accordingly, the fourth pay commission recommended cadre reviews in
28
organisations, especially in respect of posts in Groups B, C and D to be conducted by
respective administrative ministries. Efforts in this regard have been rather discouraging.
Many organisations have undertaken no cadre reviews at all, and those that did, did not
complete the exercise in time or did not do it with certainty. Following the schemes’
failure there has been demand for introduction of time bound schemes for promotions.
Availability of time bound schemes in different organisations such as P&T, Railways,
Health, Scientific Departments and certain state governments, namely, Arunachal
Pradesh, Kerela,Rajasthan, Karnataka, Punjab, Haryana, and Himachal Pradesh, as noted
by the fifth pay commission has given strength to this demand.

5.10 CONCLUSION

Recruitment, selection appointment and promotion are of great significance as the entire
functioning of government depends upon persons selected and placed at various positions
in the organisation. Human resource is the most important in an organisation and
effective career planning and development are imperative for its effective utilisation.
Sound recruitment and proper placements serve the said end. Technical efficiency may
not make up for poor human resource management. There is an imperative need to be
objective and impartial as regards the process to sustain organisations in ‘good health’.
Thus;
(a) Proper selection and placement of new employees is a pre-requisite for the
development of an effective work force.
(b) Recruitment can be done either by direct or indirect methods (Promotion)
(c) Merit is determined by examination, performance test, interview and
personality tests.
(d) Recruitment for senior posts is done by Public Service Commission.
(e) Promotion means an appointment to a higher position having higher duties
and responsibilities.

5.10 KEY CONCEPTS

Appointment: Appointment entails placement of an employee, post selection.
Appointment involves legal right, for the employee to hold the
post, which is termed lien in legal, terminology. Such legal
right depends on policy framed in this regard. In case of ‘hire
and fire’ policy and free entry and exit of firms, labour laws are
modified to alter legal terms and conditions of employment.

Recruitment: Recruitment is the process of arranging manpower from

internal and external sources. Recruitment is distinguished
from appointment in that the former involves processes
preceding appointment. Appointment is a legal concept,
involving ‘lien’ (right to post) for the appointed employee.

Selection: Selection is a part of recruitment. It entails tests of performance

aptitude or general ability as per the requirements of the post
29
 followed usually by an interview. The Industry employs
scientifically devised recruitments tests based on efficiency and
skill parameters to ensure the right man in the right place in an
organisation. Civil Service employment policies are based on
policies issued by the central government as per its ideological
proclivity. Affirmative action in favour of disadvantaged
sections of society is a case in point.

5.11 REFERENCES AND FURTHER READIING

Basu, Durga Das, 1982, Commentary on the Constitution of India, Sixth Edition.
Chadha, Narendra K, 2000, Human Resource Management Issues, Case Studies and
Exercise, Shri Sai Printographers, Delhi.
Chapman, Alan, 2001-04, “Job Adverts” read online at http://www.business balls.com.
Desiber, Gary, Human Resource Management, Seventh Edition, Prentice Hall, New
Delhi.
Flippo, Edward B, 1976, Principles of Personnel Management, McGraw Hill, New York.
French, Wendell, 1997, Human Resource Management, Third Edition, Houghton Miffin
Company, USA.
Ghosh, P, 1993, Personnel Administration in India, Sudha Publications, New Delhi.
Goel, S.L.and Shalini Rajneesh, 2002, Management Techniques: Principles and
Practices, Deep and Deep, New Delhi.
Hidaytullah, M, 1986, Constitutional Law of India, Vol II, Bar Council of India Trust.
HR Guide, read online at http://www.hr-guide.com
Jain, R.B, 1976, Contemporary Issues in Indian Administration, Vishal Publications.
Lewis, Meyers, The Federal Services: A Study of the System of Personnel Administration
of the US Government, Institute for Government Research Studies in Administration,
Stahl, Glenn ‘O’, 1966, Public Personnel Administration, Oxford &JBH, New Delhi.
Terry, Lead L. and Michael D. Crino, 1990, Personnel/Human Resource Management,
Macmillan, New York.
The Fifth Pay Commission Report, 1999, Nabhi Publications, Vol 3, Reprint Edition.
Tripathi, P.C, 2003, Human Resource Development, Sultan Chand and Sons, New Delhi.
Tyagi, A.R, 1969, Civil Services in a Development Society, Delhi Sterling.
UN Development Administration, 1975, Current Approaches and Trends in Public
Administration for National Development.
White, L.D, 1968, Introduction to the Study of Public Administration, Eurasia Publishing
House P. Ltd., Delhi.
Willoughby, W.F, Principles of Public Administration, Indian Edition, Allahabad,
Central Book Depot.
Yoder, Dale, 1969, Personnel Management and Industrial Relations, Prentice Hall, New
Delhi.
30
5.12 ACTIVITIES

1. Do you feel that recruitment is the cornerstone of Public Personnel

administration? Illustrate with suitable examples.
2. Analyse how promotion promotes organisational excellence?
3. Discuss the main functions of the UPSC (Union Public Service
Commission) in connection with Civil Service Recruitment.

31
UNIT - 6 PERFORMANCE APPRAISAL

Structure

6.0 Learning Outcome

6.1 Introduction

6.1.1 Requirements of Performance Appraisal

6.1.2 Objectives of Performance Appraisal

6.1.3 Approaches of Performance Appraisal

6.1.4 Need for Performance Appraisal

6.1.5 New Imperatives

6.2 Related Ideas

6.2.1 Performance Measurement

6.2.2 Performance Management

6.3 Methods of Performance Appraisal

6.3.1 Traditional Methods

6.3.2 Modern Methods

6.4 Performance Appraisal of Public Services in India

6.5 Proposed Improvements

6.6 Conclusion

6.7 Key Concepts

6.8 References and Further Reading

6.9 Activities
6.0 LEARNING OUTCOME

After studying this Unit, you should be able to:

• Understand the meaning, need and significance of performance appraisal;

• Define methods of performance appraisal;

 • Explain related ideas of performance appraisal; and

• Analyse performance appraisal of public services in India.

6.1 INTRODUCTION

Performance appraisal entails assessment of an employee’s performance on the job. It

involves measuring quantitatively and qualitatively, an employee’s past and present
performance, with reference to his specified role and the potential he imparts to an
organisation. What is important is the human factor under judgment. Criteria for
adjudging performance have to be carefully devised and employed prudently to
ensure a just assessment of employee performance. Needless to assert, there is a
difference between checking a machine for repairs and assessing human capacity for
work. Performance appraisal is recognised as an important aspect of human resource
management.

Scholars use different terminologies to denote it. Meggioson (1967) prefers to use the
term “employee appraisal” while Cunning (1972) uses the term, “staff assessment”.
Pertinent questions put in the aforesaid context are: Can performance parameters be
objectively laid down or specifically delineated and measured? Can performance be
limited to the strict construct of job design? To what extent do workers redefine their
roles as per subjective role preferences, imparting their own unique understanding to
it the sense of emphasising certain aspects and deemphasising certain others?; To
what extent are jobs ‘mean’ or ‘end’ with respect to purposive behaviour in an
organisational situation?

Does role constitute ‘fact’ to the exclusion of value? How can value be articulated
and assessed for better study of organisational behaviour? To what extent do workers
impart ‘value’ to ‘fact’? It is an accepted fact of organisational life that workers do
impart personal values to job performance as per their perception of issues. Also, is
value imparted by an employee to an organisation measurable? Fact and value are
inextricable in real life situations (purposive behaviour). In the same vein, can
‘behaviour’ be catalogued along specifically crafted indices? Is it at all possible to
have ‘scientific’ performance appraisal?

Aforesaid questions are some of the challenges for human resource management
today. Ideally, performance should be appraised by indices. All aspects of a job
should be articulated clearly, as; inter- personal relations punctuality, quality of work
etc should be used to allot marks or grade with a view to measuring them. A one
shot statement may not make for objective performance appraisal though,
disquietingly, forms organisational practice at lower levels in many government
organisations.

2
6.1.1 Requirements of Performance Appraisal

Requirements of performance appraisal could be specifically stated thus:

1. Employees should be apprised of expected standards and level of

performance articulated specifically, both quantitatively and qualitatively, in
terms of goals, targets, behaviour, etc., expected at their particular levels. This
helps them match personal contributions to expected output;

2. Personal equation of trust and compatibility is important for good informal

interface between the employer and the employee. There should also be broad
agreement over criteria to be adopted for appraisal;

3. Employees should be encouraged to express themselves freely about

performance reports;

4. The organisation should ensure that the appraisal system is job-related,

performance-based, uniform, consistent, fair, just and equitable and that
appraisers are honest, rational and objective in their approach and judgment
and have the desirable behavioural orientation for ethical judgment.

5. Supervisors responsible for performance appraisal should be well trained in

the art and science of performance appraisal to ensure uniformity, consistency
and reliability of the process. Success of the evaluation ultimately depends on
the evaluator and not on any system however perfect a support it may
provide;

6. Performance appraisal reports should be examined meticulously, before any

action, positive or negative, is proposed to be initiated;

7. To promote consistency and uniformity regarding performance standards, line

and staff co-ordination is vital;

8. There should be provision for appeals against appraisals to ensure confidence

of the employees and their associations and unions; and

9. Performance appraisal is a continuous activity which also evolves over time.

Continuous study and review are therefore a must.

10. If an appraisal system is to achieve objectives academically delineated ‘ideal,’

the content should include both work- related and trait- related components.
It should highlight significant achievements or any special traits exhibited at
work with due emphasis on ethical behaviour; spirit of humanism and
enquiry, demonstrated learning capability and enthusiasm for work shown by
the employee. There should be an equal emphasis on the process of
performance appraisal. Procedural justice is a recognised factor in job
satisfaction at the work place. The process should stimulate two way
communication of appraisal content between superiors and subordinates;

3
 emphasise on institution of feedback and follow-up action, ensure that
appraisal results are taken into account in administrative decision-making
relating to placements, career planning and development and finally, appraisal
systems should be evaluated from time to time to ensure desired stipulations
(both theoretical and practical) are duly properly followed in practice every
time.

6.1.2 Objectives of Performance Appraisal

Performance appraisal serves the three- fold purpose of monitoring, evaluation, and
control. It is an imperative exercise to achieve the many objectives of personnel
administration. Performance appraisal is more than mere work assessment. It is a
management development activity, and is understood as a process, which facilitates
development of an organisational climate of mutuality, openness and collaboration
towards achievement of individual as well as organisational goals. To quote Heigel
(1973), “Performance appraisal is the process of evaluating the performance and
qualifications of the employees in terms of the requirements of the job for which he
is employed; for purposes of administration; including placement, selection for
promotion, providing financial rewards and other actions which require differential
treatment among the members of a group as distinguished from actions affecting all
members equally.” The primary purpose of performance appraisal is to help each
man handle his current job better.. (Rowland, 1970). It is the principal medium
through which human talent in organisations is most effectively utilised. Performance
appraisal’s multifarious objectives need to be clearly classified under the following
heads:

4
 Control Efficiency Assignment Job
Evaluation

Work Control
Control Related
Efficiency
Efficiency
Objective of Career
Administrative Performance Development
Appraisal
Assignment
Assignment
Communication
Job Job
Evaluation Evaluation

Control Efficiency Assignment Job

Evaluation

(a) Work -related objectives:

(i) Provision of control over work;

(ii) Improvement of work efficiency;

(iii) Assignment of work scientifically, as per specialisations and

expressed proclivity of personnel and planning further organisational
expansion and diversification as per internal manpower planning; and

(iv) Job evaluation for compensation administration.

(b) Career development objectives:

(i) Identifying strong and weak points of personnel and aiding remedial
measures for perceived weaknesses through need based training;

(ii) Encouraging, motivating, controlling, organisational behaviour,

identifying training and development needs, and rewarding, correcting
or punishing employees;

(iii) Determining career potential of an employee with respect to his area

of specialisation and aptitude and chart future course accordingly.

(iv) Planning performance development activities for total improved

organisational performance; and

5
(c) Communication objectives:

(i) Provide timely feedback on performance, and facilitate informal

communication

(ii) Clearly establish goals in terms of what is expected of a staff member,

possible job enrichment for the future; mutual setting of goals for
better interaction through hierarchic tiers;

(iii) Provide counseling and job satisfaction, through open and free
discussion regarding performance; and

(iv) Aiding self-assessment of employees in terms of where they stand in

the organisation, by comparing expected and actual performance.

(d) Administrative objectives:

(i) Serve as a basis for promotions, rewards and penalties

(ii) Serve as a basis for incentive administration. Performance is not a

unidirectional but a two way interactional process, whereby
organisational equilibrium is secured by the management balancing
inducements and contribution on the part of employees. Offering an
economic analogy, Barnard has stated that ‘equilibrium’ as attained at
a level where negative (contributions through effort put in
organisational work) and positive balance (inducements received)
with respect to an individual employees equalises. Organisation has to
strategise effectively to ‘doctor’ such balance. To that end,
organisation has to reinforce positive behaviour on the part of
employees by way of rewards, welfare measures and employee benefit
schemes to secure sustained and willing cooperation towards
organisational purpose and restore internal equilibrium in case of any
divergence;

(iii) Serve as a basis for transfer and placement policy with regard to
suitability of each employee as discovered through the performance
appraisal; and

(iv) Serve as a basis for termination in case of imminent staff reduction

due to cost considerations.

Key elements of performance appraisal could be summarised as follows:

• Linking individual goals with organisational goals;

• Regular review of job descriptions to keep jobs in tune with changing

requirements;

• Organisational Development (OD)

6
• Performance development plan;

• Continuous monitoring and review

• Establishing causal link between performance and reward;

6.1.3. Approaches of Performance Appraisal

Performance appraisal has been significant activity since ancient times. Earlier,
performance appraisal was perceived primarily in the negative sense of punishing
employees and was restricted to formal remarks used for promotions. Today,
performance appraisal is viewed as a positive management development tool
intended to help employees develop to their full potential. The trend has changed
significantly so much so that almost a paradigm shift is discernable. The main
purpose of performance appraisal, as per modern understanding of the concept, is to
promote individual excellence in order that employees function better as a
collectivity and elevate the general level of organisational performance, while in the
process re-energising them and manifesting and rediscovering their latent potentials
as partners in collective endeavour. Establishment of conducive climate of mutual
trust between the two ‘opposing poles’ of organisational effort, employees and
employer, is absolutely imperative for the efficacy of the process.

There are both formal and informal aspects to the process of performance appraisal in
the sense that formal observations and mutual discussions are involved in developing
parameters through positive deployment of social capital and de-emphasis of
hierarchy. The main purpose is to develop and refine human capital with more
emphasis on intent and less on process.

6. 1.4 Need for Performance Appraisal

Need for performance appraisal arises out of sub-optimal performance evidenced,

particularly among government employees. The Supreme Court has recently upheld
the right of the government to deny two year’s extension in service to a civil judge in
Orissa on grounds of ‘poor performance’. Masses are fed up with the attitude and the
work culture of the government and “if things don’t improve the public might take
the law into its own hands or there could be a mass movement of civil disobedience”.
(Malhotra, 2000). Even the minister of state for labour, Government of India,
publicly alleged that forty to forty five per cent of central government employees are
virtual ‘non-performers’. There is imminent need for a reliable system of
performance appraisal either to weed out under performing and erring officials or
improve their work orientation, both work and trait related. (Munni Lal, 2005)

Motivating employees to involve their heart and soul in work is absolutely essential
for securing quality output. In government, though the skeleton of performance
appraisal system oriented to said end is available, actual practice remains largely
farther from the objective. There are prescribed criteria but application differs
considerably between departments and superiors. Target articulation and the process
of pursuing achievements are often left to the officials for detailing. (Ramaswamy,
2000)

7
To motivate employees to put in their best effort, performance appraisal system has
to be non-discriminatory and objective to the extent possible. Targets and goals to be
achieved should not be left to officials for subjective articulation. Instead, they have
to be related to the actual work content and all quantitative and qualitative aspects
and measurements thereof should be included and worked out in consultation with
workers prior to the commencement of the schedule for the year.

6.1.5 New Imperatives

There is the impact of the New Public Management paradigm to administrative

theory and practice on performance appraisal. In the entrepreneurial era, the
emphasis is on end- orientation, client- orientation, goal- orientation, innovation and
customer satisfaction. There is a growing body of evidence suggesting a shift from
‘government’ to ‘governance’, in that the emphasis is on the relevance of multi-
agency working, public-private partnerships and policy networks. The shift from
‘government’ to ‘governance’ referred above, raises new challenges both for
democracy as a macro concern and effectiveness and efficiency (govern ability) of
individual enterprises (at different levels along the macro-micro scale). The public
sector primarily refers to 'the state' (that is, the national, local government). It also
includes a large variety of ‘other organisations’ (Article 12 of the Indian constitution,
for example, the health care sector, schools, housing corporations and public
utilities), which, although private or non government, perform work of a ‘public
nature’ or are involved in public tasks in varying degrees. The organisational and
managerial problems faced by the public sector are a matter of concern in the
political arena. The general complaint is that effectiveness, and responsiveness are
lacking. The concern is how can public tasks be managed more effectively and
efficiently? Since HR is strategically most important in securing organisational
effectiveness, these issues are at the heart of the new public management. Civil
servants have been accused of lackadaisical performance and evasion of
accountability. In the new paradigm, there is an emphasis on ‘means’ adopted in
pursuance of ‘ends’ in that there is emphasis on ethics in strategy.

New management orientation is encapsulated in the following chief paradigms:

• There is increasing emphasis on the economic dimension; better provision of

choice, minimising ‘rent seeking’ in government operations, measuring by
EVA or economic value added in that higher EVA means a better level of
resource unitisation, assessing training, selection procedures by public choice
paradigm, employing decentralised decision making techniques. Result based
management (RBM) is the latest paradigm. Instead of result measurement and
management by objectives (MBO), emphasis is placed on quality and flexible
work processes for achieving desired quality of output. Comparison across
jobs or units allows less for comparable standards

• There is encouraging inventiveness in work culture; a realisation that success

is a journey not a destination and the realisation that “there is no failure only
feedback” in performance appraisal;

8
 • There is increase in scope of public management. There are new techniques
being employed. Contrastive analysis involves contrasting similarities and
differences between one situation and another to find “what difference makes
the difference” Benchmarking is the approach of continuously measuring
products, services and practices against standards set by competitors or
leaders in the field;

• There is attention to detail to maximise efficiency. Method study is involved

in performance measurement; and

6.2 RELATED IDEAS

Some of the significant ideas, which are related to performance appraisal, need to be
understood for better appreciation of it as a tool for achieving desired organisational
effectiveness. These are:

6.2.1. Performance Measurement

Performance measurement is based on the belief that performance can be measured

by objective indices. Stress is not so much on ‘behaviour’ and ‘activities’ as ‘ends’ of
behaviour and activities. Behaviour or activities are seen rather as ‘mean’ to the
important ‘end;’ results. Emphasis is on tangible value- added measured in terms of
tangible contribution to the organisation that can be expressed in numbers. This is
known as performance measurement. The chief factor in performance measurement
is development of objective measures for quantifying performance.

Performance measurement is necessary to enforce accountability to results. In

government, accountability means the responsibility of a civil servant or unit for
achieving a mission and the functions to support that mission. They have to be
accountable to the tax player for prudence in expenditure. In other words the civil
servants are to be responsible for their results, not just for their efforts.

Osborne and Gaebler (1992) have referred to the following as reasons for measuring
performance:

1. What gets measured gets done.

2. If you don’t measure results, you can’t tell success from failure

3. If you can’t see success, you can’t reward it

4. If you can’t reward success, you are probably rewarding failure

5. If you can’t see success, you can’t learn from it

6. If you can’t recognise failure, you can’t correct it

7. If you can demonstrate results, you can win public support.

9
Limitations of Performance Measurement

Stated below are some of the major problems in performance measurement:

• It may be difficult to measure phenomena as complex as performance.

Results could be unreliable;

• Today's organisations are rapidly changing. Results and measures

consequently get quickly obsolete;

• Translating human desires and interactions to measurements is impersonal

and even heavy handed (Mc Namara, 2005).

• There may be employee resistance on the ground that the

1. Job is either too creative to be measured; or

2. Too professional; or

3. Too diffused;

• As far as comparative performance evaluation of sections inside an

organisation is concerned, it should be remembered that inadequate
performance does not always indicate a problem on the part of the work unit.
Performance standards may be unrealistic or a section showing sub optimal
performance may have insufficient resources at its command or there may be
other constraints. Similarly, strategies of the organisation or its means may be
unrealistic or without the backing of sufficient resources (McNamara, 2005).

• Academics, today, do not avoid about using subjective and descriptive

measures in performance evaluation. The guideline seems to create
descriptive measures; do not stick to numbers; verifiability and reliability of
measures instead of quantification is more important. Instead of avoiding
subjective measures, innovative yardsticks could be employed. This is
especially relevant in case of service-oriented organisations (such as in
government bureaucracy) where measurement by numbers might seem far-
fetched. (ibid)

6.2.2 Performance Management

Performance management is a result oriented exercise. It brings into focus all

organisational and sectional results, links them, brings them into perspective, relates
them in terms of the larger picture, measures them, set up monitoring and feedback
mechanisms, and finally, institutes development plans to improve upon results
procured thus.

The result of the exercise depends on the focus of performance effort articulated
through the mission statement and communicated as ‘work- related objectives’ to
employees, the focus differing with the section involved and also with the differing
perception of the authority in charge of carrying it out. For example, an economist
would identify financial results, such as return on investment, profit rate, etc. as the

10
focus. An industrial psychologist might identify more human centric results, such as
employee productivity and implications for industrial relations, and the like (Mc
Namara, 2005)

Result measurement is not an end in itself. Setting up an on- going feedback

mechanism with stress on informal work relations and use of positive social capital in
performance management and periodic adjustments providing for flexibility of
processes are more important than result measurement in numbers. Continuous
review of performance, therefore, is understood as performance management.
Performance managements is an ongoing activity, more in the nature of a learning
exercise, whereas performance review or appraisal involve post-committal
assessment of an activity or of the performance at a given task as a whole.

Performance management works by the systemic perspective. Besides focusing on

performance of employees, it should also ideally cover:

1. The Organisation
2. Departments (computer support, administration, sales, etc.)
3. Processes (billing, budgeting, product development, financial management, etc.)
4. Programs (implementing new policies and procedures to ensure a safe workplace;
or, for a nonprofit, ongoing delivery of services to a community)
5. Products or services to internal or external customers
6. Projects (automating the billing process, moving to a new building, etc.)
7. Teams or groups organised to accomplish a result for internal or external Hence
systems paradigm is considered most suitable for performance management.
customers (McNamara, 2005).

(a) Basic Steps in Performance Management

Performance management activities proceed in a logical continuum. Observing

sequential steps may be critical for successful implementation of the process. The
focus of performance management function could be the entire organisation, a single
process, a sub-system or an employee. Subsystems could be a department, a program,
a team or a group organised to accomplish a particular task. Performance is a
complex whole which involves integrated effort of all units in a direction, that is, the
organisational purpose.

Performance management activities are somewhat similar to several other major

approaches in organisations, for example, strategic planning, management by
objectives, total quality management, training as mentioned earlier etc. Steps in
performance management are similar to those in a well-designed training
programme. Trainers today focus much more on results of performance. This has
given rise to a new genre of training consultants. Many trainers with this orientation
now call themselves performance consultants (Mc Namara, 2005). The steps in
performance management include:

1. “To set up the process successfully, steps should be followed as; articulate
results objectively in terms of discrete units of performance; as, quantity,
quality, cost or timeliness ( result itself is a measure);

11
2. The performance management process often includes translating
organisational goals in terms of results, which themselves are described in
terms of quantity, quality, timeliness or cost. Therefore, the results of all parts
of the organisation should be aligned with the overall preferred results of the
organisation;

4. Prioritise desired results; break down results into component units and
activities to the extent possible. Weighting results refers to prioritising, often
expressed in terms of a ranking (such as 1, 2, 3, etc.) percentage; time-spent,
etc;

4. Establish direct causal relationship between immediate ends leading to

broader organisational purpose variously understood as ‘end’ or ‘value’;

5. Conduct ongoing observation and measurement to track performance;

8. Exchange ongoing feedback on performance;” (McNamara, 2005)

(b) Key Benefits of Performance Management

Some of the key benefits of performance management are:

1 Performance measurement focuses on results rather than behaviors and

activities of employees. Value added to organisational performance is important.
Accountability is enforced through performance management.

2. Alignment of organisational activities and processes in furtherance of the goal

of the organisation imparts coherence to an organisation;

3. Cultivates a system-wide, long-term view of the organisation. These

measurements have a wide variety of applications. …in benchmarking, or
setting standards for comparison with best practices in other organisations

4. It is a basis for Organisation Change and Development. Performance

management provides a consistent basis for comparisons between temporal
situations during internal change conflicts;

5. It cultivates a systems perspective in that the focus is on the relationships and

exchanges between subsystems, e.g., departments, processes, teams and
employees. Accordingly, personnel focus on patterns and themes in the
organisation, rather than specific events;

6. It produces specificity in resource commitment and allocation;

7. It provides specificity for comparisons, direction and planning;

8. It improves coordination;

9. It encourages responsible behaviour on the part of employees and facilitates

decentralised functioning;

10. Delegation is resorted to more often; and

12
11 Ethics of participation and team- work are facilitated;

Performance Development Plan

A performance Development Plan is aimed at plugging the performance gap.

It indicates specifically the problems behind below par result accomplishment such
as, in what areas what correctives need to be administered, at what level; when
performance is to be reviewed again and in what manner, by what methodology and
such other relevant information.

(a) Key Features of Performance Development Plan

Performance development plan entails:

• Strategic alignment which communicates strategic direction, goals and

objectives;

• Learning oriented mechanism for reviewing and learning from the

information provided by the measures adopted;

• Action oriented mechanism that stimulates action from the results of the
‘measures’; and

• Environmental impact assessment, considering value impingement from the

environment; specifically government policy or directives emanating there-
from. (Mc Namara, 2005)

6.3 METHODS OF PERFORMANCE APPRAISAL

There are two methods of performance appraisal. They are classified broadly, as
traditional and modern methods.

6.3.1. Traditional Methods

This classification contains a number of techniques:

1. Graphic Scale

2. Ranking

3. Forced Distribution Method

4. Critical Incident Method

5. Forced Choice Rating Method

6. Group Appraisal

7. Nomination

13
 8. Work Sample Tests

9. Result-Oriented Performance Appraisal System

10. Confidential Reports.

Graphic Scale

It is the most widely used technique of performance appraisal. In this method,

articulated traits such as quality of work, quantity of work, dependability, attitudes
and so forth are laid down. The rater places a check-mark on a form next to the word
or phrase describing the degree of merit for each factor. Many scales designed by
different technicians are available which can be modified to suit different situations.
For example, J.B. Probst, former chief examiner of the St. Paul Civil Service Bureau
adopted a comprehensive list which has been used in a modified form by different
organisations. A major problem with graphic rating scales is that words like
“excellent”, “poor” and the like are general and do not convey the degree of merit
relating to each specific factor with respect to an employee. The following should be
kept in mind for selecting traits for merit rating regardless of the method that is
adopted:

1. Traits should be observable, that is, can the rater actually observe this trait in
action?

2. Universality of the trait under consideration is important, meaning, is it a

relevant characteristic in relation to the job under study?

3. The trait under question should clearly be distinguishable as something

different from another trait with a different name.

Advantages

(i) It is less subjective as it considers a number of different traits rather than a

subjective whole.

(ii) Traits are defined and uncertainty is minimised.

(iii) It also shows the degree to which each desired trait is present; is therefore
precise.

Disadvantages

It is difficult to:

(i) Decide on relative weights of different traits;

(ii) Validate the opinions arrived at; and

(iii) Ensure uniformity in trait articulation and consistency in rating, as

they are likely to differ with raters.

14
Ranking

Persons of similar cadre are ranked in the order of merit, for example, if there are
eight lecturers in a college, they could be ranked, 1, 2, 3… It entails simple ordering
which gets difficult when twenty or more cases are involved. One of the techniques of
ranking used is paired comparison. In this method, the rater compares each employee
with every other in the group. Final ranking is based on the number of times the
employee is judged better than the others. The rater must make n (n-1)/2 judgments
where n is the number of men to be ranked. The method is not suitable where the
group is large because number of judgments required, become unmanageable.

Forced Distribution Method

In this system, a five-point scale of job performance is used. On one end of the scale
are the best job performance and the other, poor job performance. Fixed percentage
of employees is allocated to the best, middle bracket and worst ends of the scale. The
supervisor is asked to allocate approximately ten percent of his men to the best end of
the scale, twenty percent to the next category, forty percent to the middle category,
twenty per cent to the bracket next to the low end and ten per cent to the low bracket.

The supervisor’s opinion is taken as the final word. Despite subjectivity the method
is relied upon for assessment of employee performance. This could be illustrated with
the help of a table.

Job Performance Scale

___________________________________________________________________
10 per cent 20 per cent 40 per cent 20 percent 10 percent

Poorest Poorer Average Better Best

Critical Incident Method

This method involves keeping a record of exceptionally good or bad incidents in the
employee’s work life with respect to the period under review. Such good or bad
incidents can be examined to rate the fortitude and practical skills of employees. Bad
incidents do not mean low ranking. It is how the particular employee rises up to the
challenge and works his way through difficulty that is considered.

Forced Choice Rating Method

The rater is asked to select one statement out of two or four which in his opinion is
most characteristic of the employee and another which is least, or both. In effect, the
forced choice system is an attempt to devise an objective method of arriving at the
same answers that the top management would reach after a protracted and
complicated process. To serve a practical example; the subordinate

15
A. Commands respect by his most characteristic

actions

B. Is cool headed

C. Is indifferent least characteristic (optional

rating?)

D. Is overbearing

Two of these are favourable and the other two, unfavourable. One of the two
favourable terms checked as most characteristic gives plus credit whereas the other
gives no or negative credit. However, articulation of these characteristics and the
determination of the scoring key (most, least) are crucial in a just rating by this
method.

Group Appraisal

The appraiser group consists of three to four persons including the immediate
supervisor who give their opinions collectively. Assistance from others also could be
taken to cover aspects of employee performance and personality which may not have
been noted by the immediate supervisors. For just assessment, members approached
for appraisal must be people who have some contact with the subject. These
members can be managers at high levels or colleagues or subordinates. It is
apprehended that colleagues, if associated can work as either rivals or personal
friends, which would create ‘biases’ in judgment. There can also be cliques of
informal groups based on mutual benefit ties! As far as subordinates are concerned,
they might not perceive the issue correctly and judge the person from their own
narrow standpoints. They might also avoid airing views against the supervisor for
fear of reprisals. Group appraisals therefore are advised to be used with caution. As
practical concern it is better to involve superiors rather than colleagues or
subordinates in group appraisals.

Nomination

By this method, appraisers are asked to identify exceptionally good and exceptionally
poor performers in the organisation. The latter group is singled out for correctives.
Both groups are studied for academic knowledge about ‘organisational climate’ and
specific ‘drivers’ of efficiency. Academic inquiry into poor performance is also
necessary.

16
Work Sample Tests

In this method, workers are administered work sample tests which form the basis of
their assessment which they are evaluated. It provides important practical inputs for
training and employee development programmes.

Result-Oriented Performance Appraisal System

This technique evaluates the extent of attainment of targets in the context of overall
objectives to ascertain the merit of personnel. Value addition on the part of an
individual employee is considered which is attempted to be quantified.

Annual Confidential Reports (ACR)

In most government departments and public enterprises in India, performance

appraisal is done through Annual Confidential Reports (ACRs). Format of these
reports differs from organisation to organisation and also with levels as per specific
requirement(s) articulated. Casual attitude is alleged on the part of superiors writing
remarks for subordinates. There is strong opinion in favour of confidential reports
incorporating modern techniques of rating.

Confidential report is written for a year and relates to performance, ability and
character of the person, for that specific period. The essential features of confidential
reports of officers under the administrative control of the government are as follows:

(i) Annual confidential remarks are recorded to judge the performance

and efficiency of officers in public services.

(ii) The objective of maintenance of character reports is to put an officer

on the desired path by pointing out defects.

(iii) Adverse entries should be communicated in time to enable him to

rectify the defect.

(iv) From December 4, 1946 until April 20, 1966, the practice of
communicating both remediable and irremediable defects was
followed. Since 1966, irremediable defects concerning integrity and
morality are not being communicated as per express governmental
directive to that effect.

(v) Confidential character roll recorded by reporting officers is to be

countersigned by the superior authority.

(vi) Countersigning authority may take a view different from that of the
reporting officer in which case the view of the former shall prevail.

(vii) Until the countersigning authority gives his remarks, the character roll
is not considered complete and is not to be acted on.

17
 (viii) Time schedules have been prescribed for recording remarks at
different levels and their submission to the government for
maintenance of confidential character roll.

(ix) Representations against adverse remarks are not ordinarily entertained

as the very purpose of such communication is to apprise the officer of
his failings in order that he rectifies them for his own benefit. Such
communication should not be regarded as a matter of argument or
controversy.

(x) In rare cases, however, where the remark is concerning specific acts or
is the result of an error on the part of the reporting officer,
representation lies (Ventat Rao vs. State of Orissa; 1974 Lab. IC
1192:1975 SLS 267(1974) 2 SLR 899 (Ori)).

Evaluation of Traditional Methods:

Perceived faults of traditional methods are as follows:

Performance is not evaluated in terms of its impact on organisational objectives,

goals and targets. It focuses attention on the personality of the subject rather than
organisational results or the purpose of his joining the organisation. Appraisal goals
are found to lack in reliability, verifiability, validity, and are most often, subjective.
Besides, raters also (allegedly) display biases. Both the appraiser and the subject
consider it an unpleasant exercise as no performance appraisal system can be claimed
to be perfectly free of biases or prejudices. Annual performance review “leaves
people bitter, dejected, depressed and in despair for months” (Deming)

Most administrators do not possess knowledge of the art and science of performance
appraisal which results in adoption of different criteria of assessment for one
employee by different administrators.

Appraisals are not always utilised to educate employees with regard to expected
behaviour. Counseling the employee to influence his behaviour in the desired way
should be the prime objective of performance appraisal.

Traditional performance appraisal techniques do not stress effective communication

between the appraiser and subject as a necessary and desirable condition or even as a
prerequisite. Information flow, top to bottom, is crucial as personnel are desired to
know the criteria by which their performance is being assessed.

V.R. Buzzotta (1989) raises the following other criticisms of performance appraisal:

(a) Appraisal process often gets confrontational as employees and

supervisors work as two opposing poles of organisational effort;
reconciliation may not always be possible. The appraisal process gets
emotional in case participants sense adverse entries or anticipate
confrontation. There may be outbursts of temper or even sarcasm
which leaves parties hurt and resentful.

18
 (b) Appraisal process is often judgmental. This causes conflict because
the manager is required to act in a dual capacity, as ‘judge’ and
‘counselor’ which he may not be trained or experienced to be just to.

(c) The appraisal process gets ambiguous as managers do not fully

appreciate their responsibility and also lack the psychological insight
and interactive skills needed to appraise successfully.

6.3.2. Modern Methods: Management by Objectives

Management by objectives (MBO) is a systematic and organised approach that

allows management to focus on achievable goals to attain best possible results from
available resources. It aims to increase organisational performance by aligning goals
and subordinate objectives throughout the organisation. (business e- coach, 2005)

According to Odiorne (1965), result-oriented appraisals or MBO is “a system

wherein the superior and the subordinate managers of an organisation jointly
determine their common goals, define each individual’s major areas of responsibility
in terms of results expected of him and use these measures as guides for operating the
unit and assessing the contribution of each of its members.”

Steps in the Process

The main steps in the process are as follows:

(a) Determination of Results

The first step is to identify key areas in which positive results are desired. The
general purpose of the organisation should be articulated in terms of meaningful
objectives for each unit within the organisation. Once identified, the objectives
should be delineated and should not normally be changed during the year. Objectives
should be specific and achievable as short- term manageable targets. They should
distinctly characterise the subject’s job; in other words be directly related to his job
description. These should be tasks for which the subject is held accountable. They
should be realistic and achievable, at the same time; challenging enough to make the
employee stretch his potential for the organisation’s good.

Job design helps in goal setting for each level. It enables setting out targets
quantitatively, for better performance measurement. The basic ideas behind written
requirements for each position is, specification of duties, responsibilities, reporting
relationships and qualifications (attributes or specifications) desired for
achievement.

Each subordinate is required to establish short-term performance goals or targets. It is

necessary that subordinates’ targets are discussed with superiors for better co-
ordination and avoiding of role conflict and ambiguity. According to O.A. Ohmann
(1957) this procedure gives subordinates an opportunity to make their own evaluation
of target accomplishments and assess further scope for improvement. While
discussing results, the subordinate actually appraises himself and gains further insight

19
for improved performance regarding his methods, attitudes and behaviour. MBO is
hence, first a diagnostic tool for self appraisal, then an action programme for change
and improvement, next, a tool for implementation.

The second step is to clearly lay down the requirements and expectations at every
level regarding expected volume of output, quality stipulations, time and money
investment required etc. The idea behind the exercise is that performance appraisal
system has its genesis in the broad purposes of the organisation.

Recording Observations

The appraiser records the performance of his staff members against norms articulated
in well-designed appraisal forms. There is a formal provision for self-appraisal by the
incumbent. Self-appraisal process enables self- assessment on the part of the
employee. He analyses his present performance and identifies his strengths,
weaknesses and potential for future growth, as well as craft plans for improvement.

Performance Progress Review Conference

Once performance appraisal is completed, the next step is performance progress

review conference for exchange of information between the appraiser and appraisee.
The subject matter is progress review as per specified parameters. Should parameters
be changed or retained in their original form? Does format of appraisal chart need
reviewing? What section should be added to orient it towards desired end such as
career planning or performance improvement or enhancing productivity etc.?

Individual Development Programme

Based upon performance-appraisal reports, a plan can be developed jointly by the

appraiser and appraise identifying specific performance targets for development
period under review and formulating a description of specific approaches under
consideration for improving the performance of the subordinate.

Post-development Programme Review Conference

Post-development review is designed to evaluate the results of the individual

development programme and to establish new or modified targets for the ensuing
review period.

MBO approach has limitations. The procedure may be impracticable in cases where
the top personnel are simply not interested in involving subordinates in decision
making. Besides, the approach stresses on tangible goals and not intangibles, like
honesty, commitment of employees which actually determines performance.

Feedback to Employees

One of the important aspects of performance appraisals is the provision of clear

performance based feedback to employees (Rearce and Portee, 1986). Raters tend to
inflate performance ratings when they know their reviews will be fed back to the
raters(Antononi, 1994). Inflated feedback gives distorted information. The question

20
arises; is performance appraisal feedback necessary? Many Korean organisations are
known to offer no performance appraisal feedback to raters. Performance appraisal is
viewed in Korean organisations as bureaucratic red tape which no body really cares
about. However, they do take performance appraisals into account for promotions.
The application of the concept is culture specific (Lee and Shin, 2000).

It is also to be kept in mind that benefits of appraisals are not primarily regarding
procedure. Benefits result only when procedure is supported by consistent and fair
judgment and managerial acumen. W.B. Oastetter has rightly said that although
“there is a considerable amount of knowledge and understanding required to plan,
organise, implement and operate a performance appraisal system, the application of
the process need not be complicated”. There is generally an inverse relationship
between the amount of paper work involved in the appraisal process and its
effectiveness. Consequently, the emphasis of the appraisal process should not be on
an elaborate system of forms, procedures and reports. The focus of this approach is
the self-development and ‘self actualisation’ of personnel. The basic focus is on
employee development. Performance evaluation therefore is something of an
executive art and science in itself.

6.4 PERFORMANCE APPRAISAL OF PUBLIC SERVICES IN

INDIA
The performance of the civil servants is commented upon by the controlling
authority, which normally is the head of the department. He rates the incumbents on
several parameters, such as competence, punctuality, efficiency, capability, ability to
work with the team, leadership qualities, etc. Often efficiency rating is a matter of
subjective assessment. Level of efficiency is rated; outstanding, very good, good or
fair. Promotions give special weight to a consistent ‘outstanding’ grade. Assessing
authority rates integrity as “totally beyond reproach”, “of unquestionable integrity”,
“beyond doubt”, or as, “nothing adverse has come to notice”.

Performance appraisal system followed in public services in India is based on the

limiting idea of efficiency. Unless ‘integrity’ is rated negative, this parameter does
not matter in the process of promotion. In the prevalent climate, it has to be
recognised that integrity is as much, if not more, relevant to public service efficiency.
If we consider probity and integrity in public service as national assets, an integrity
rating like “of unquestionable integrity” has to be given due weight for promotion.
By doing so, we would place equal emphasis on both efficiency and integrity.
(Reddy, 1990). Mere absence of negative rating does not imply ethical behaviour. In
the prevailing climate, integrity is as tangible a value added as ‘efficiency’ and
should be given due count. It need not be asserted that the present crisis in public
personnel administration is due to lack of integrity. Integrity is built into the idea of
effectiveness. Integrity needs to be studied academically; all its dimensions need to
be brought out and the same incorporated as a positive virtue in performance
appraisal charts. Responsibility and responsiveness may be tangible suggestions.
Hence, the first priority of public personnel administration is to improve ethical
standards with a view to rooting out corruption.

21
Weaknesses

Despite all the efforts to make performance appraisal objective and useful, loopholes
remain in the system as is practiced today. Some could be discussed as follows:

(a) There is high degree of subjectivity in performance appraisal reports

for employees at all levels. Performance appraisal is used more as an
instrument of ‘subservience’.

(b) Employees, especially if they are due for promotion have to “chase”
the concerned reporting, reviewing and accepting authorities to ensure
that their appraisal report is written on time.

(c) It is a common complaint that appraisal reports are never written on

time. Time lag means that reporting and reviewing authorities do not
remember all benchmarks of performance for the period under
assessment.

(d) For employees who are transferred frequently in a year, proper

assessment of performance is difficult. It becomes more an official
directive complied with, than an activity aimed at management
development.

(e) It is difficult for secretariat employees, especially assistant level

upwards to under-secretary, to write anything meaningful in their
annual confidential reports against targets and achievements. It is also
not possible to prescribe any targets for officials who are entrusted
with only deskwork. Even for others, specific targets are not fixed by
the superiors.

(f) Assessment of employee made in terms of ‘satisfactory’, ‘good’,

‘outstanding’, differs from officer to officer and also department to
department. Where output of work can be measured easily objectivity
is facilitated, but in government departments which deal mostly with
policy matters, quantification is difficult.

(g) Only adverse remarks are communicated to the employees. Even this
is not done on time in many departments.

(h) Number of ACRs being reported or reviewed should be limited to the

span of control lest it become a meaningless, routine activity.

(i) In most states, the formats are uniform for all the employees
regardless of the nature of functions. There are wide variations in the
grading of civil servants between states and the linking of
empanelment of civil servants to ACRs has led to politicisation of the
processs. Effort should be made to revise and update the ACR format
and incorporate more department-specific and objective feedback

22
Recommendations for Better Objectivity of Appraisal

The Karnataka Administrative Reforms Commission in its interim report in 2001

examined the problem of performance appraisal and made suggestions for
improvement. In order to improve performance appraisal, following changes have
been recommended to be adopted;

• All information about the annual confidential reports of the employees must
be computerised. The management should guard against missing reports or
‘level jumping’ in the process;

• There should be different formats for ACRs for secretariat, field, and public
sector employees;

• Apart from adverse comments a copy of each year’s completely written ACR
must be given to the employee. This will help the employee know how his or
her performance is being evaluated. He might make necessary improvements
for the next year. The ACR need not be ‘confidential’ in a liberal
environment;

• As is done for the armed forces and central police organisations, a grading
system on a 10 point or a 7-point scale to assess the individual traits and
attributes could be introduced as a necessary facet of the ACR exercise;

• All levels of officers who have to write ACRs must be given proper training
in writing ACRs objectively;

• Counseling may be introduced for employees who get repeated adverse

remarks; and

• Action should be taken against officers who delay writing ACRs whether they
are reporting, reviewing or accepting authorities.

• Time frame should be fixed for approval of ACRs by ministers. ACRs are
delayed at this stage for several months.

• The comments in the ACR should be utilised as inputs for training, job
assignments and career development planning.

Confidential reports have far-reaching influence on the career of an employee. These

should therefore be handled prudently. It need not be emphasised that the remarks
such as “good”, “very good”, “satisfactory”, “fair”, etc., are not made with precision.
Each one of these has different implications and leads to unintended consequences
for the employee’s career.

Suryanarayana and G. Prageetha Raju (1998) rightly state, that if training is provided
meticulously at regular intervals for both appraises and appraisers conceptual clarity
will improve and appraisal process would become more acceptable to the
organisation. Through training there is exchange of ideas and experiences.
Stimulated role plays ensure better interaction in the hierarchy.

23
In this context, the recommendations of the Fifth Pay Commission are worth noting:

• A ten point grading scale should be used instead of the broad categories of
good, very good, to consider finer and subtler distinctions among personnel.
Benchmarks should be prescribed for performance.

• Transparency should be ensured through partial opening of the process by

provision for communication of the final grading to the employees. In case of
low grading, such communication would afford the employee an opportunity
to represent against an assessment that may adversely affect his career
advancement.

• Assessment and appraisal of employees’ performance should be a continuous

process. Officers responsible for reporting on their subordinates should
maintain a weekly or monthly record of their impressions about the
performance and contribution of subordinates, including, important
achievements, shortcomings, adherence to schedules for completion of
specified tasks, etc.

• Assessment of an employee should be in the context of the team and

department as a whole since he does not operate in isolation but as member of
a group. Appropriate weight for group work should be assigned in grading.
Constraints should be clearly stated.

• The employee can opt to work under a different reporting officer in case of
inconsistency or unfairness in review.

• Five years review should be taken into account for career advancement
schemes.

• There should be quinquenial review of performance for Group A officers.

• Counseling of employees should form an integral part of performance

appraisal.

• Delays should be minimised by adhering scrupulously to schedule prescribed

and computerisation of data.

6.5 PROPOSED IMPROVEMENTS

Improvements can also be made without much difficulty to improve the consultative
nature of the ACR process and the feedback managers provide to staff. A
Performance Appraisal Model will be of great use in reforming Annual Confidential
reports.

Promotions should be merit based and the respective authorities have to benchmark
the best practices and evaluate the performance of the civil servants both qualitatively
and quantitatively along a variety of parameters. The performance appraisal of civil
servants has to be according to these benchmarks and the necessary placement
reward and punishments can be taken up by the authorities. (Misra, 1997)

24
The recent reform in Hong Kong Civil Services wherein it was mandated that the
civil servants would be recruited on a permanent basis but their continuation in the
job would be subject to verifying the performance indicators from time to time. This
model can be replicated in India also. There may be periodic performance reviews or
audits for civil servants, especially when they become 50 or complete a certain
number of years in service. (Satish, 2005)

The Indian system fails to measure technical competence and their capability to carry
out neutrally and impartially the policy directives of political decision-makers though
this should be the spirit which guides their functioning. It is said that each profession
should develop its own code of conduct and performance appraisal system. By this
reckoning, the civil service system in India should also respond to the need for
developing its own system of performance appraisal and code of conduct. No law can
offer an all-time solution in these regards. Most of the Indian acts in their present
form are adopted versions of their British editions. A perusal of such Acts clearly
reveals that they were never intended to prescribe a code of conduct or a performance
appraisal system. They only contained the powers and privileges, the service
benefits, and the accountability mechanism which had to be followed by the civil
servants (Morgan and Heady, 1997).

The Indian civil service allegedly lacks professionalism. As noted earlier, they act
more as generalists and much less as specialists. The induction training has been
designed in such a way that hardly any scope is left for giving a non-generalist
orientation. Once they join the service, they are shuffled for short trainings from one
to the other department, so much so that they hardly get an opportunity to develop an
understanding of technical aspects of a problem or acquire a technical expertise. The
inputs coming from civil servants can lead to a much higher value addition in certain
areas if they could have an understanding of practical aspects related to them. For
instance, professionalism of a high degree is required to handle complex tasks at the
Ministry of Finance, Petroleum, Commerce, Power, Transport, Food and Agriculture,
Irrigation, Communications, Atomic Energy, etc.

A study of the overall perception of the officers of the IAS by members of the Indian
Police Service, politicians, technocrats, and academicians points out that they project
themselves as experts on everything. Their concern for, and focus on their own career
is very high. They are self-opinionated, power-hungry, shrewd and manipulative,
procedure and rule-focused, arrogant, inaccessible, judgmental and critical, and
having concern for minor details. They have been rated very low on positive traits
such as commitment to organisation, trustworthiness, risk-taking, conscientiousness,
innovativeness, and creativity. Most of the studies have rated them lowest as
visionaries and transformational leaders. They are considered to be no-change agents.
The self-perception of these officers (officers of the IAS) is exactly opposite. The
thrust of the criticism of the Indian civil service system is on overstaffing,
wastefulness, cautiousness, unfairness, and non-responsiveness, the last one being the
most important of all, which could be seen from the fact that as per a recent decision
of the government, discussions are being conducted on effectiveness and
responsiveness of the Indian administration in the different parts of the country.

There is also an underlying Government concern about leadership skills in the Civil
Service and elsewhere in the public sector. Largely in response to this, the Civil
Service now has in place a six-pronged reform programme whose elements of

25
particular relevance to the Senior Civil Service include: (a) stronger leadership with
clear sense of purpose; (b) sharper performance management; (c) a dramatic
improvement in the diversity of staff; and (d) a service more open to people and
ideas.

There has to be a regular appraisal of performance of public service providers at

every level. As is done for the armed forces, a grading system on a ten-point scale to
assess the individual traits and attributes could be introduced as a part of the annual
confidential reports. Counseling may be introduced for those employees who
repeatedly get adverse remarks. A time-frame should be fixed for writing the annual
confidential reports as well as for their acceptance. It may be a good idea to provide a
copy of each years completely written annual confidential report to the employee
concerned, to enable him to know how his/her performance had been judged and
what improvements are required for better performance (Meenakshi Sundaram,
2005).

In the absence of standards, public service organisations get away with poor
performance. The absence of an effective Performance Monitoring and Evaluation
System makes it difficult to identify effective public service organisations from those
which are unable to provide services. It is, therefore, necessary to set standards of
public services and to ensure that the standards are adhered to by putting in place an
effective performance monitoring and evaluation systems. (Administrative Staff
College, 2005). However, with regard to specifying service quality standards, the
following issues need to be considered:

• How can one take into account the diversity of circumstances across
the country while developing service delivery standards;

• What should be the mechanism for enforcing standards of service ;

• Can financial allocations or payments be linked to service quality

standards? How can one ensure equity in this regard, given that
states start from different levels of competence and
infrastructure ?; and

• Is there a meaningful way of establishing objectively verifiable

service standards for achieving universal and quality primary
education, reduction in infant mortality rate, and effective
access to primary health care?

Since a large number of India’s citizens live in rural areas, posing inherent
difficulties in service delivery, special attention has to be paid to the improvement of
service delivery in rural areas. Some of the problems associated with rural areas are
the lack of credible institutions, poor resource base, and unwillingness on the part of
public service workers to serve in rural areas, lack of accountability due to distance
from the controlling unit, issues of local capture and information asymmetries.
Following are some issues related to improvement of service delivery in rural areas:

• How can existing service delivery mechanisms in rural areas be

reinvigorated to deliver services effectively;

26
 • Can non-public sector delivery mechanisms backed by voucher payments
offer an alternative to improving service delivery in rural areas;

• Can effective decentralisation lead to improvement in the delivery of

services in rural areas;

• How can the tools of e-government be effectively used to improve service

delivery in rural areas;

• Can performance evaluation systems based on citizen inputs help in

improving the delivery of services;

• What level of local government should be the unit of service in rural

areas, taking into consideration issues of economies of scale and
accountability ?; and

• Will local economic growth help in improving the quality of public

services in rural areas?

6.6 CONCLUSION
An effective performance appraisal system is a continuous activity beginning with
goal setting, progressing through periodic reviews and culminating in traditional year
end evaluation. It is designed to improve overall functioning of an organisation.
However, performance appraisal is still perceived as a fault-finding exercise which
encourages favouritism and timidity and servitude on the part of employees. The
final grading of an employee depends much more on personal loyalty than
performance. Final grading is made a personalised decision. Besides, appraisal is
arguably not taken seriously enough. Confidential reports are completed rather
lackadaisically barely a few minutes before final submission indicating that
supervisors take this actively casually.

Though meant to serve the three fold purpose of monitoring, evaluation, and control,
the appraisal system has been reduced just to a control mechanism to secure
submission and compliance of the employee rather than an instrument for improving
the capability of the organisation and individuals. The proclivity is suggested by the
term ‘annual confidential report’ or ‘confidential character role’ that is used to name
performance appraisal chart in government. The two obvious characteristics of
performance appraisal in government are secrecy and fairness. Whereas secrecy is
maintained by strict hierarchical structures of the government and its impersonal
character, the fairness of the system has also been called into question. Subjective
attitudes, personal biases and outdated value systems have been pointed out as the
faults plaguing the system. Finally, it is necessary to discuss how responsibility for
performance appraisal can be made more meaningful (Sharma, Harinder and Dey).

• The employee should be made aware of the organisation’s expectations

and norms used for evaluation

• The employee should have the right to raise his voice against unfair
practices in rating. Such provision for hearing should be built into the

27
 appraisal. Systemic evaluation and potential evaluation should be clearly
distinguished for the benefit of the employee.

• Performance appraisal should ultimately become a development-oriented

evaluation approach.

The focus of analysis in this Unit has been on appreciating all aspects of
Performance appraisal. In order to get thoroughly, sensitised to it, the
discussion has been on performance measurement, performance management,
etc., besides highlighting the performance appraisal in public systems.
6.7 KEY CONCEPTS

Indicators: Indicators are framed as per nature of a specific job. For

example, indicators for a teacher and a civil servant would
be different. Indicators enable progress (lack of) at a
specific level.

Measures: Measures provide specific information as to the extent of

accomplishment of targets. Measures are both subjective
and objective, as human performance cannot be judged by
objective standards alone. The only condition is that
measures should be amenable to a result- oriented
assessment. Examples of measures include, time spent on
specific activity, work hours, quantity of output etc.

Performance Gap: Perceived difference between actual and desired

performance is understood as performance gap. Human
Resource Development activities are undertaken as per
analysis or diagnosis of causes of performance gap.
Performance gap is human and only indicates the needs for
improvement and how the same should be affected for
desired performance at that level.

Performance Plan: Performance Plan integrates parts into the whole of

organisational effort, including articulation of performance
standards at each level, integration of performance and
total measurement. The idea behind a performance plan is
that each activity in an organisation is tied to the whole and
should not be assessed in isolation. Missing links, casing
sub optimal performance at a level should be discovered
and taken care of to rectify whatever is creating shortfall at
that level.

Results: Desired final or specific outputs in terms of quality,

quantity or money and time cost, and human resource
indicators as stipulated for effective work performance.
Due to cost constraint, measurement by results is needed to
derive maximum benefit with minimum cost. Human
Resource audit and performance management and

28
 development are based on results measurement, or the
extent to which desired performance has been
approximated or elicited.

6.8 REFERENCES AND FURTHER READING

Antononi, D, 1994, “The Effects of Feed Back Accountability on Upward Appraisal
Rating”, Journal of Personnel Psychology.

Bittner, Reign, Developing an Employee Merit Rating Procedure, Dooher and

Maraquis, (Eds)

Buzzotta, V.R, 1989, “Improve your Performance Appraisal”, Journal of Security

Management.

Chadha, Narendra K, 2000, Human Resource Management Issues, Case Studies and
Exercise, Shri Sai Printographers, Delhi.

Cunning, M.W, 1972, The Theory and Practice of Personnel Management, William
Heineman Ltd., London.

Desiber, Gary, Human Resource Management, Seventh Edition, Prentice Hall, New
Delhi.

Desing & Austin K.Naney, (Eds.), 1942, Updating The Performance Review:
Working Women.

Flippo, E. B, 1984, Principles of Personnel Management, McGraw-Hill College.

French, Wendell, 1997, Human Resource Management, Third Edition, Houghton

Mifflin Company, USA.

Ghosh, P, 1993, Personnel Administration in India, Sudha Publications, New Delhi.

Goel, S.L. and Shalini Rajneesh, 2002, Management Techniques: Principles and
Practices, Deep & Deep Publications, New Delhi.

Goel, S.L. and Shalini Rajneesh, 2003, Public Personnel Administration, Deep &
Deep Publications, New Delhi.

Heigel, C, 1973, The Encyclopedia of Management, Reinhold Publishing

Corporation, New York.

Koontz, H and O' Donnell, 1951, Principles of Managment: An Analysis of

Managerial Functions, McGraw-Hill Inc., New York.

Koontz, H, 1961, "The Management Theory Jungle", Journal of the Academy of

Management Review.

29
Lee, Mushlim & Wonjun Shin, 2000, “Is there any Positive Effect of Offering No
Performance Appraisal Feed back”? Journal of Human Value, Vol. 6, No. 1.

Malhotra, H.R, 2000, Managing Civil Service, Observations and Suggestions, The
Tribune.

McNamara, Carter, “Performance Management: Benefits and Concerns”, read online

at, http://www.managementhelp.org/topics

Meggionson, L.C, 1967, Personnel: A Behavioural Approach to Administration,

Homewood, Illinois, Richard D. Irwin, Inc.

Misra, R.K, “Configurations”, read online at

http://www.Indiana.edu/~csrc/misra5.html

Morgan, Phillip and Heady read online at, Mishra Homepage at,
http://www.indiana.edu/~csrc/misra5.html.

Odiorne, G, 1965, Mangement by Objectives, Pitman, New York.

Ohmann, O.A, 1957, “Executive Appraisal and Counselling”, Michigan Business

Review, Vol. 9, No. 6 Nov Issue.

Osborne & Gaebler, 1992, Reinventing Government, Addison Wesley Publishing

Company.

Ramaswamy, P.R, 2000, “Implementing TQM in Government” Journal of

Management in Government.

Rearce and L.W. Portee, 1986, “Employee Responses to Formal Performance

Appraisal Feedback” Journal of Applied Psychology.

Reddy, Rattan B, 1999, “Code of Conduct and Ethics for Civil Servants” Journal of
IJPA.

Rowland, V.K, 1970, Evaluating and Improving Managerial Performance, McGraw

Hill, New York.

Satish, M, read online at http://www.civilservantsquovadisfiles/fecol.css

Sharma, K.C, Harinder Singh and Bata K.Dey, B.C. Mathur, et al., (Eds)
Management in Government

Sundaram, Meenakshi, “Public Service”, read online at,

http://www.meenakshisundarampublic servicesreform.htm

Suryanarayana, A. and Prageetha Raju G,1998, “Assessment of Confidential

Report Method as a Performance Appraisal System : A Study of Managerial and
Non-Managerial Responses”, Journal of Ford School of Management, Vol. XVI,
Nos. 1 & 2, January-June Issue.

30
Swanson, Richard A, 1994, “Advances in Developing Human Resources”, Journal
of Performance Improvement Theory and Practice

Terry, Lead L. & Michael D. Crino, 1990, Personnel / Human Resource

Management, Macmillan, New York.

Tripathi, P.C, 2003, Human Resource Development, Sultan Chand and Sons, New
Delhi.

Tyagi, A.R, 1969, Civil Services in a Developing Society, Sterling, Delhi.

Venkatarao, S.S.S. vs. State of Orissa, 1974 Lab. IC 1192: 1975 SLS 267 (1974)SLR
899 (Ori) HC, quoted in, R.R. Ghaeye and N. Malhotra, 1981, Employment: Its
terms and Conditions, Eastern Book Company, Lucknow.

Verma, S.P. and Sharma S.K, 1980, Managing Personnel Systems: A Comparative
Perspective, IIPA, New Delhi,

6.9 ACTIVITIES
1. Discuss the concepts of performance measurement, management and
performance development plan. Can they be applied to improve civil service
recruitment?

2. What are the shortcomings in Annual Confidential Reports? How can they be
remedied?

3. What is Management by Objectives? Discuss the steps involved in MBO.

31
UNIT-7 REMUNERATION / SALARY SYSTEM
Structure
7.0 Learning Outcome
7.1 Introduction
7.2 Wages and Salary
7.3 Principles of Remuneration
7.4 Methods of Determining Salary Structure
7.5 Role of Central Pay Commissions
7.6 Conclusion
7.7 Key Concepts
7.8 References and Further Reading
7.9 Activities
7.0 LEARNING OUTCOME

On studying this Unit, you should be in a position to:

• Understand the principle of compensation administration;
• Understand the concept of minimum wage, fair wage and living wage; and
• Refer to principal recommendations of pay commissions in India.

7.1 INTRODUCTION
Compensation is a broad term referring to financial rewards received by persons through
employment relationship with an organisation. Compensation has two functions: the
‘equity’ function and the ‘motivational’ function. Individuals are likely to work
effectively if they visualise that the prevailing reward system provides equitable
remuneration for their efforts. Compensation functions as a motivator to future initiative
human behaviour being highly complex with numerous motivational determinants.
(Dwivedi, 1990) Specifically compensation is financial in nature because a monetary
outlay is required to administer it. The importance of pay compensation is of high order
for every employee. The standard of living and the social prestige of an employee depend
on the pay he draws. A man chooses his job on the basis of the pay he expects to receive
by it. (Leap and Crino, 1990)
From the point of view of the organisation, cost effectiveness is imperative. “Many
OECD countries are examining ways of making public sector pay systems more flexible.
For example, in the United States, Canada, Japan, Australia, New Zealand, France,
Norway and The Netherlands, Spain, Switzerland and the United Kingdom performance
based pay regimes have been operating. The premiums involved vary from less than 1 to
50 percent of the base salary.” (Yntema, 1993)

1
Quantification of HRM is being stressed as a desirable organizational practice. According
to Yntema, the following activities help to quantify HRM; planning an annual human
resources plan describing the staff not only in terms of size, ages, sexes, and races, but
also in terms of levels of education, experience, performances, work preferences and
potential. Such a plan can, for instance, help for effective replacement. Often the existing
internal work force is not fully utilised to find replacement in case of vacancies. A
similar systematic and detailed HRM databank on jobs or establishments in the
organisation can also help inform which jobs are becoming obsolete, redundant or
inappropriate.

Such monetary outlays may be ‘immediate’ (payable at specified time) or ‘deferred’ (in
case of incentive plans). Accordingly, weekly or monthly pay is the immediate payment
whereas a pension, profit sharing, or bonus plan, are examples of deferred payment.
Pay is related to motivation. Mason Haire (1969) remarks, "pay in one form or another, is
certainly one of the mainsprings of motivation in our society." The health and vitality of
services depend on the level of remuneration offered. Therefore, a salary system must be
so designed as to attract, retain and motivate the best among staff. Undertaking
challenging and arduous tasks gains momentum if the institution has the right number of
employees, with the right level of talent and skills and right incentives.

Organisations establish their image as model employers through the salary contract. A
model employer need not necessarily offer the highest rates of pay, but aim at creating
such work environment within the enterprise which induces employees not only to have
an economic stake with the unit but also abiding commitment which results from a sense
of fulfillment through involvement with it. The true test of a model employer, as
expressed in the Third Central Pay commission (CPC), should be, "whether the
government is attracting and retaining the personnel it needs and if personnel are
reasonably satisfied with pay and other conditions of service. The fulfillment of this test
is an essential prerequisite for proper functioning of the administrative machinery."

An adequate and sound salary structure together with healthy physical and social working
conditions is the 'sine qua non' for organisational efficiency and effectiveness. Inadequate
compensation has been "one of the major factors for strikes, inter-service tensions and
rivalries, indifferent attitude to work, poor performance, frustration and low morale of the
employees."

In other words, the aim of the organisation should be to create and maintain such
condition whereby an employee feels like giving his best to the organisation, derives
satisfaction out of his job and is suitably rewarded for his efforts. Under such conditions,
the money spent is never ‘cost’; rather, it is investment.

There is, however, no empirical evidence of direct proportionality between compensation

and quality of job performance. According to Leap and Crino (1990), high levels of job
satisfaction do not necessarily guarantee high levels of productivity. Conversely,
dissatisfied employees might on occasions, unexpectedly exhibit high levels of job

2
performance. There is no direct correlation therefore, between job satisfaction (of which
pay satisfaction is a major component) and performance. It is probably safe to say that
compensation specialists have tried many different combinations to compensate
employees better in order to motivate them to better standards of performance. In fact,
no two organisations have the same philosophy and methods of structuring compensation
packages in an attempt to draw extra effort from their employees. Deductions from
researches so far have shown that:
1. Pay will generally serve to motivate employees if it is believed that good
performance will lead to higher pay and if employees value pay as a
‘motivator’;
2. Organisations must articulate performance- pay relationship in organisational
strategy to optimise benefits and reduce costs; and
3. Negative consequences associated with good performance and higher pay
such as adverse peer pressure, negative social capital in informal organisation
must be minimised. (Leap & Crino, 1990)

7.2 WAGES AND SALARY

The wage frequently expressed as an hourly rate, forms a payment for an individual’s
services while the salary relates to such payment frequently expressed as monthly rate. A
wage or salary level relates to the average of the rates paid for the jobs in a given
population that is industry, enterprise, region nation, etc, whereas a wage structure means
a hierarchy of jobs where wage rates are embodied. (Dwivedi, 1990). While the
traditional approach is limited to determination of wage structures and wage levels, the
modern approach stresses the total compensation systems involving intrinsic and extrinsic
rewards referring to endogenous and exogenous need satisfaction. With respect to wage,
‘money wage’ and ‘real wage’ can be different. Real wage relates to an employee’s
standard of living. Hence if there is price rise, his purchasing power and standard of
living will fall if money income stays the same. Inflation has to be accounted for in
periodic wage increases.

Public Choice Implication

By public choice theory, free market is said to afford better rationality in choice to all
concerned parties, viz. producers, employees as well as consumers. In controlled
economies, there is simply a myth of consumer welfare, better provision of quality goods
and services and employee welfare through social legislation. Workers’ welfare can never
be secured through welfare measures by the public choice argument, rather, by affording
better choice to the workers regarding career decisions through the free market with
provision of proper/adequate information. This places real effective bargaining power,
through legislation, with the workers, who are then able to take their own welfare
decisions. Hence public choice theorists are unflinching advocates of privatisation and
the free market economy, which creates better ‘choices’ as per their argument, for all
involved.

3
 In free market economies, wages are determined by the free operation of demand and
supply of labour. During cyclic business downturns, workers have little bargaining
power; unemployment rises and wage levels reflect the iniquitous position. It is free
operation of demand and supply in the market, which results in good employment options
for workers, better labour policy for organisations and better quality goods and services
provision for consumers. Controlled demand and supply of labour unnecessarily adds to
production costs, confuses the workers regarding career choice and raises prices of goods
while lowering quality. It also adversely affects competition, reducing ‘choice’ for
consumers. New players cannot enter and exit the market freely, as per, economic
expediency. It is rather policy that controls economics. In controlled economies, wage
levels are fixed by legislation. The argument put forth by socialists is that because of
surplus value appropriation by the employers, workers are never fairly compensated for
the value addition to the organisation. They are compensated partially; surplus value
appropriation implies exploitation of the workers by managements.

There is the other side to the picture. Since money compensation to employees forms
‘cost’ for the employer, collective bargaining has to be resorted to by workers to maintain
wages at an equitable level. Argument of economic expediency is offered by managers in
favour of low wages. It is argued that wage increase causes inflation by augmenting
effective demand (purchasing power of workers) in the economy. In the long run, it leads
to unemployment by, Keynesian argument (excess demand over supply makes
management deliberately cut on supply which causes retrenchment of workers and
hampers further business expansion). However researches have shown that such impact
on unemployment is marginal or even negligible (Chapman, 2005). It is also to be
noted, that differential wages as an incentive system promote productivity, though only to
a limited extent (owing to criticisms of the carrot and stick approach). Besides, in
developing countries like India, inflation and unemployment may not be always due to
excess demand (purchasing power) over supply, but rather due to supply deficiency
owing to supply bottlenecks caused by corruption, unfair price rise due to operation of
cartels, infrastructure problems, etc. which lead to endemic underutilisation of capacity in
organisations which create disequilibrium conditions in the economy. It is reconciliation
of the two paradigms that is the challenge for developing mixed economies like India.
Recent stress is on creating the wage-productivity link. Productivity rise will negate
potential supply demand disequilibrium following rise in wages without consequent raise
in productivity. Such link, it is hoped, would counteract price rise and prevent real wages
of workers from falling. The stress on bonus and workers participation in management
and other intangibles like higher order need satisfaction, employee empowerment, etc.,
are being considered to motivate employees to contribute enthusiastically to
organisational productivity. While workers benefit from good wages, supply situation
improves, unit cost decreases, prices get manageable with better productivity and
utilisation of capacity of unit organisations and the whole economy is uplifted.
International trade is also set to benefit. Good human resource management stemming
from the initiative of the management is the imminent need. The Trade Union movement
needs a new orientation in that recalcitrant tactics have to be replaced with an adaptive
and accommodating attitude with respect to change policies and constructive schemes
pioneered by the management.

4
Levels of Wages
The course of collective bargaining was influenced in 1948 by the recommendations of
the Fair Wage Committee that reported that three levels of wages exist - minimum, fair,
and living. Minimum wage is fixed from the standpoint of employee health and well
being and the nature of his work. It ‘prevents sweating’ of the employee and ensures a
reasonable standard of living for him (Dwivedi, 1990).
The objective of the act of 1948 is to ensure employees, not only of physical
subsistence but also maintenance of health and decency as would be conducive to the
general health of the public. The fifteenth Indian Labour Conference, a tripartite body, in
its meeting in 1954 defined precisely what the needs-based minimum wage was and how
it could be quantified using a balanced diet chart. This gave greater boost to collective
bargaining; many organised sector trade unions were able to achieve reasonably
satisfactory indexation and a system of paying an annual bonus. It is now the law that a
thirteenth month of wage must be paid as a deferred wage to all those covered by the
Payment of Bonus Act. The minimum bonus payable is 8.33 percent and the maximum is
20 percent of the annual wage. Constant Relative Real Income Criterion has been
considered most apt out of the various approaches for calculation of minimum pay. As
per estimations of the National Productivity Council, the real per capita income grew by
about 28% during the period 1986-87 to 1995-96. The Fourth Pay commission had
adopted a norm of 20%. The Fifth pay commission has adopted this approach as against
other approaches discussed, and adopted a compensation factor of 30.9% as being the
increase in the per capita net national product during the period 1986-1995 (works out to
Rs 574.4) The salary figure works out to approximately Rs. 2440(adding 574 to basis of
750 and dearness allowance if Rs. 1110 as on 1.1.96. Notably, the consumption unit was
taken as three members as against 4 recommended by the NPC.
Living wage is defined and expressed by the formula, necessities plus (+) incentives.
There is considerable debate about what constitutes a fair wage. Point of contention
seems to be affordability on the part of management and justice for the worker which
may not always be reconcilable. ‘Capacity to pay’ applies only to fair wage, which can be
linked to productivity. (Dwivedi, 1990)
Minimum Wages Act 1948
The Minimum Wages Act, 1948 empowers the government to fix minimum wages for
employees working in specified employments. It provides for review and revision of
minimum wages at suitable intervals, not exceeding five years. The central government is
the appropriate agency in relation to any scheduled employment carried on by or under its
authority or in railway administration or in relation to mines, oilfields or major ports or
any corporation established under the central act. State governments are the appropriate
agencies in relation to other scheduled employment. Enforcement of minimum wages in
central sphere is secured through the Central Industrial Relations Machinery (CIRM).
Wages and Productivity
The vicious circle of poverty and unemployment and low productivity can be broken only
by a tremendous stress on the maximum possible contribution made by all the
participants in the processes of production. For the workers no real advance in their
standard of living is possible without a steady increase in productivity, because any
increase in wages generally, beyond certain narrow limits, would otherwise be nullified
by a rise in prices. Workers have, therefore, to insist on and not resist the progress of
rationalisations in their own interest and in the larger interest of the country.
5
 Industry is being called upon to meet, as rapidly as possible, the claims on behalf of the
workers for a living wage, better living and working conditions, the needed employment
opportunities and a fuller measure of social security. Productivity has many facets and it
suffers because of a one-sided and rigid approach which is frequently adopted by both the
employers and the workers. Rationalisation of effort in every direction is the true basis of
productivity. The term has often been wrongly associated with increase in workloads and
added strain on workers to swell the volume of private gains.
Large gains in productivity and an appreciable reduction in unit costs can be secured in
many cases without causing any ill effect on the health of the workers or incurring any
large outlays. Greater responsibility in this regard rests on the management which should
provide the most efficient equipment, correct conditions and methods of work, adequate
training and suitable psychological and material incentives for the workers. For several
purposes, it will be more helpful to take the working group as a unit of activity rather
than the individual worker, and the scheme of incentives should be aimed, at the group no
less than at the individual. The industry, trade unions and the government should together
ensure that every worker whether employed already or freshly recruited receives
adequate training to acquire the requisite skill and efficiency. By proper organisation, it
should be possible to supply the essential needs of the workers at reasonable cost without
unduly increasing the burden on industry. Management has to give the lead by bringing
about the maximum rationalisation in its own sphere and eliminating all unjustifiable
practices which at present act as disincentives in drawing the best out of the workers.
Greater attention has to be paid to the training of management at various levels in the
important aspects of employer-employee relations. Systematic studies need to be
conducted for determining the individual wage differentials and the manner in which
wages should be linked to productivity. Techniques for improving the managerial and
supervisory skills and training in the higher productivity techniques besides carrying out
field investigations like job evaluation and work load studies have helped in stimulating
the interest of both management and workers. Further development in this field can be of
considerable assistance in evolving rational wage policies.

Objectives of a Salary System

Human resource managers are primarily interested in the impact pay has on individual
performance and organisational effectiveness. Most compensation programmes are
designed to attract quality job applicants to the organisation and motivate employees
towards further improved performance. This succeeding part examines the issues of pay
equity and job satisfaction and the effects of compensation on job performance, employee
attendance and organisational effectiveness.

Determining wage and salary payments is one of the critical aspects of human resource
management because: (1) the organisation’s reward system affects recruitment, job
satisfaction, and motivation of employees; and (2) wages and salaries constitute cost to
the employer with implications for organisational efficiency. A carefully designed wage
and salary programme administered as part of sound organisational policy and
consistently applied rules is essential, if human capital is to be used effectively to achieve
organisational objectives.

6
Objectives of compensation can be listed as:

• To meet the needs of employees with emphasis on security and esteem needs;
• To motivate workers to achieve desired levels of performance;
• Cost-effectiveness based on affordability;
• To be competitive with other organisations in order to attract and retain
quality human resource;
• To comply with wage and salary provisions in the labour contract and with
federal and state laws and regulations; and
• To be fair and consistent throughout the organisation based on scientific
criteria.( Wendell French)

7.3 PRINCIPLES OF REMUNERATION

The factors which are taken into consideration for the determination of salary scales of
services are as follows:
I. Structure of Emoluments
Structure of emoluments should be so designed as to ensure recruitment of persons with
requisite qualifications and abilities at each level. Fairness and equity should be the two
prime considerations. Job evaluation is done for the purpose of addressing the aforesaid
requirements.
2. Scales of Pay
Scales of pay of the employees should be fairly comparable to the rates of remuneration
prevailing outside the industry. With liberalisation and economic reforms in the public
sector, the government may no longer be able to maintain tight control over
compensation packages of public sector employees who have now been allowed to
negotiate pay scales with their unions. Recent spurt in negotiated compensation packages
for employees in the private sector is a result of intense competition among the large
number of players that are in the picture. While the present boom in private sector
salaries may be a transitory phenomenon and may be limited by its own parameters, there
is need for a national wage policy to ensure uniformity and consistency in pay
administration. For example, in Singapore, salaries in government have been
benchmarked to salaries in the private sector. Salaries of permanent secretaries in the
United Kingdom are comparable with salaries of chief executives in the private sector. In
India, government employees enjoy perks which need to be quantified in rupee terms to
facilitate comparison with private sector remuneration.
3. Social Criteria
Minimum salary should not be determined only on economic considerations but should
also pass social tests. The subject of minimum wages ha evoked much criticism. The
following appear to be some of the approaches for the determination of minimum wages
(fifth central pay commission):
(i) The need-based approach;
(ii) Capacity to pay approach;
7
 (iii) Relative parities approach;
(iv) Job evaluation approach;
(v) Productivity approach; and
(vi) Living wage approach.
The decision of pay commission on minimum wages reveals a harmonisation attempt
between the need-based and the capacity to pay approaches. This has been essential
because minimum wage which was found to be 'socially desirable' was not necessarily
'economically feasible'. Job evaluation and measurement of productivity was not found to
be feasible as determining factors by the pay commissions.
Comparisons with the public and private sector were also not held desirable. Regarding
living wages, it has been observed by the Fifth Pay Commission that a living wage is
desirable and the state must endeavor to reach it as indicated by Article 43. The concept,
however, is inherently elusive for living wage is not a static concept since it rises or falls
with the differing prosperity level of the state. The fourth central pay commission was
content with the state being a "good" employer as against a "model" employer.
4. Equal Pay for Equal Work
'Equal pay for equal work' is an important factor in pay determination. It is an
endorsement of the fact that organisations should compensate the positions and not the
individual. It may be mentioned here that the Canadian Human Rights Act had further
amplified the concept to include "equal wages for equal value of work". Theoretically,
nothing can be held against it; in practice however it is extremely difficult to define what
equal work means because it’s the person who works that makes the difference.
5. ‘Variations’ in Compensation
'Variations' in compensation should take into consideration the extent of experience of an
employee, his background, skills, duties, responsibilities and hazards involved in work. If
the work is hazardous, pay scales would need to be higher to attract and retain good
employees.
6. Level of Consumer Prices
Prevailing consumer prices should be taken into consideration for fixing pay scales and
determining other conditions of service. Inflation should be counted in periodic wage
revisions.
7. Social Considerations
Social considerations deem that minimal disparities between the highest and lowest
salaries should be maintained to ensure an equitable and a just social order. In India, the
gap is rather wide.
8. Making Salaries Commensurate with Personnel Requirement
Making salaries commensurate with the kind of personnel the organisation requires helps
attract good personnel. Fair wage determination has assumed increased significance in
the ‘knowledge era’ where there is better bargaining power with the workers.
9. Employer's Capacity to Pay
Employer's capacity to pay employees is an important factor in the determination of
salaries or wages. The central pay commission observed that if the economy is in a mess,
the employees alone cannot have a good time. On the other hand, if there is a generally
8
upbeat mood in the country, government employees should also share in the general
prosperity. An examination of the salaries of central government employees over the
years has shown serious erosion on account of inflation, especially at the higher levels.
The extent of erosion at the secretary level is as high as 71 per cent. This is all right,
largely, but it has caused resentment among the civil servants of the union, state and local
governments and also among employees of different states. The central government
generally has the highest level of emoluments; the public sector undertakings are
somewhat ahead of them and provide even better opportunities. On the other hand, are
the local government, whose financial position is generally not good and their employees
have to rest content with rather low level of pay. Quite often the opinion has been
expressed that the government should seek to provide comparability in pay amongst the
employees of the union government, the state governments, the local governments and
quasi-government organisations.
10. Legislation
Apart from the factors mentioned above, legislation plays an important role in
determination of salary and wage rates e.g. minimum wage legislation. Political and
economic maxims do not always coincide. Challenge of policy formulation is a
reconciliation of political and economic theory. For example, state determination of wage
though answers social necessity, militates against economic equilibrium. As explained
earlier, a rise in minimum wage rates can potentially up prices and create inflation and
unemployment in the economy.
7.4 METHODS OF DETERMINING SALARY STRUCTURE
There is need to determine salary on the basis of inputs like education, training,
experience, etc., Management has to ensure a wage structure which ensures equilibrium
between the inputs and outputs pertaining to the individual and the organisation. This
requires 'job evaluation' which is a process of assessing the relative worth of various jobs
in an organisation so that differential pay may be administered for jobs of different worth.
In most new organisations salary structures are adopted from other organisations as job
evaluation is always a costly exercise and difficult to keep up to date. Many top
executives feel that job evaluation should be avoided as long as problems are not too
pressing. However, job evaluation is an accepted methodology for determining pay
structure. The focus of discussion in the subsequent text is on job evaluation for
determining salary or wages. The focus of discussion in the subsequent text is on job
evaluation for determining salary or wages.

Job Evaluation
“The purpose of job evaluation is the establishment of rates of pay for various jobs on an
equitable basis. It is intended to eliminate chance, favouritism and individual bargaining
in determining wage rates and for establishment of fair and equitable wages. The basis of
job evaluation programme is an occupational description, which indicates precisely the
duties or tasks of the person holding the job. It gives facts related to work content as the
hours of work, age, sex and educational requirements of the worker, value of material
handled and danger of spoilage, value of tools and equipment used and danger of
breakage, accident hazard to self and fellow workers possible damage to clothing,
working conditions as dirt heat moisture, lifting, standing, walking, judgment attention
adaptability, mental alertness, initiative and planning, required experience, necessary
9
quickness of expertness in coordination of sight and hearing with muscles of arms or
feet…”(Miller, 1987)

Methods of Job Evaluation

There are two methods for job evaluation:
I. Non-Analytical Methods:
Non-analytical methods establish grade hierarchy but are non-quantitative while
analytical methods are quantitative and can be expressed in some numerical form.
Small organisations prefer non-analytical methods as compared to analytical which is
used by large organisations. Non-analytical methods, that is, job ranking methods
and job classification methods are discussed as follows:

(a) Job Ranking Methods

Ranking is a direct method of comparing jobs together so that they are ranked in the order
of importance. Job ranking is one of the simplest methods to administer. Jobs are
compared to each other based on the worth of the job to the organisation. The 'worth' of a
job is usually based on judgments of skill, effort (physical and mental), responsibility
(supervisory and fiscal), and working conditions of the job. Jobs are then ordered as per
their relative importance. This technique simply lists the relative worth of the various
jobs under consideration. Jobs are not divided up factor-wise but are considered as a
whole. Such exercise may not be practicable in large organisations with multifarious
nature of jobs and diverse processes. The other drawback is that the appraiser may not
practice propriety in ordering jobs as he is not likely to be familiar with all the jobs in
sufficient measure. In such case, ordering is likely largely to be a matter of opinion.

Job ranking also may not indicate the degree of difference between jobs. In some cases it
might be too pronounced; in others, negligible, bringing the very rationality of the
exercise in question. For example 1 and 2 may be relatively closer than 2 and 3. Rank
does not bring out the measure of difference.

(b) Job Classification Method

Selection is made of one of two jobs from each level of the grading structure and standard
descriptions of duties, responsibilities and requirements of these jobs are prepared. These
jobs are known as benchmark or key jobs. Job descriptions are then examined for jobs
which are classified into appropriate grades or levels. Since classification depends on the
existing jobs for classification, it might become unrealistic since it cannot gauge into
changes in job contents. Job grading is done by establishing labour grades. Jobs are
matched against requirements of each grade. It is widely used in USA to grade various
clerical administrative and professional jobs.

II. Analytical Methods

Analytical methods comprise Factor Comparison and the Point Method.
10
(a) Factor Comparison
The process entails identifying key jobs which are assumed to be paid properly. Total pay
per hour is assigned and attributed to some key factors in these jobs. Some commonly
used factors are mental requirements, responsibility, working conditions, physical
requirements and skill requirements. Next step is to compare other jobs with key jobs.
Pay is fixed according to attributes required in the assessed job in relation to the key job;
for example, how much should be paid for physical requirements for job B if Rs.100 is
paid for it in key job A. Accuracy of the method depends upon correctness of pay
determination in key jobs and criteria adopted for judgment with regard to comparisons
of other jobs with key jobs.
(b)Point Method
It is an extension of factor comparison method. A set of compensable factors are
identified as determining the worth of jobs. Typically the compensable factors include the
major categories of:
1. Skill
2. Responsibilities
3. Effort
4. Working Conditions
These factors are further broken down into:
1. Skill
1. Experience
2. Education
3. Ability
2. Responsibilities
1. Fiscal
2. Supervisory
3. Effort
1. Mental
2. Physical
4. Working Conditions
1. Location
2. Hazards
3. Extremes in environment
Each factor is then divided into levels or degrees, which are then assigned points. Each
job is rated using the job evaluation technique. The points for each factor are summed up
to form a total point score for the job. Jobs are then grouped by total point scores and
assigned to wage or salary grades so that similarly rated jobs are placed in the same wage
or salary grade. Factors are agreed upon by industries in formal meetings and point
values assigned for each factor. For example, experience may be a factor. Development
of a factor, in this case, experience is traced as employee grows in experience and
11
compensation rises accordingly. For example, experience of three months or less, is
experience of first degree, three months to one year, second degree and so on. The
important condition is that there has to be an agreed definition of each factor to ensure
parity/similarity as between industries. Though uniformity is difficult to achieve, some
similarity has been possible through negotiations.
Point values justify a wage rate and helps attract employees. Employees are able to assess
themselves and also compare available jobs according to personal need. Provision of
choice in employment is welcomed by them. Job surveys can also be undertaken for
wage determination.
Civil services and posts under the Central Government are at present classified as per
‘rank classification’ in India under groups as follows (fifth pay commission report).
Classification is not based on job evaluation or position description. The words gazetted
and non- gazetted have been criticized as reflecting a feudal bias. Position description has
been called for, for at least group c and d positions. (Jain, 1976)
S. No. Description Group
1. A central civil post carrying a pay or a scale of pay A
with a maximum of not less than Rs. 4000

2. A central civil post carrying a pay or a scale of pay with a maximum B

of not less than Rs. 2900 but less than Rs. 4000
3. A central civil post carrying a pay or a scale of pay with a maximum C
over Rs. 1150 but less than Rs. 2900

4. A central civil post carrying a pay or a scale of pay the maximum of D

which is Rs. 1150 or less

7.5 ROLE OF CENTRAL PAY COMMISSIONS

So far, there have been five central pay commissions constituted by the government of
India. The third central pay commission emphasised three characteristics of a sound pay
structure--inclusiveness, comprehensibility and adequacy. 'Inclusiveness' implies that the
broad patterns of pay scales that have been adopted for the civil services will be
uniformly applied everywhere, especially in areas where some autonomy has been
provided. A pay scale should be 'comprehensive' to give a total picture of the emoluments
of a post, rather than fragmented into a number of allowances. The third requirement is
adequacy. Most government employees have a feeling that their emoluments are
inadequate with respect to their skills, educational qualifications, experience, duties and
responsibilities, and also compare unfavourably with peers outside the government
sector. Thus there is need for a scientific basis for fixing 'adequate' compensation to the
employees. The commission was not in favour of literal comparison between government
salaries and private sector salaries without examining the totality of prevailing
circumstances. The commission wanted co- ordination among all sectors of public
employment. The commission fixed the salaries on the basis of duties and
responsibilities, difficulty and complexity of the task, qualifications, etc. The main
contribution of the commission has been to rationalise the pay scales and to reduce the
prevalent 500 scales to a mere 80. The disparity between the lowest and highest scales
was reduced from 15.4 as on 1 January 1970 to 11.8.
The fourth pay commission recommended the following principles:
12
 (a) The rates of pay and other conditions of service in private sector need to be
considered, though disproportionate importance may not be attached to it;
(b) The principle of supply and demand is relevant but for unskilled labour, wages
may be linked with essential physiological need;
(c) The government should not only be a 'model employer' but also a 'good'
employer;
The main criterion stressed by the commission was, 'attracting' and 'retaining' the
required and, that, they were reasonably satisfied with the pay and other conditions of
service, taken as a whole. The fourth pay commission recommended thirty six scales of
pay.
The minimum-maximum ratio of 1:10.7 which had been fixed by the fourth central
pay commission has been retained. In its opinion, if this ratio cannot be increased, nor
should it be allowed to get reduced. That is the reason why 100% neutralisation of
cost of living at the higher levels has been recommended.

A number of scales have been merged because the existing scales were too close to each
other. Some scales have been altogether done away with;
The increment in the proposed revised scale ranges between 1.64% to 3.44% with
reference to the minimum of the scales and from 1.42% to 3.32% with reference to the
mean of the scales. The increment of Rs. 40 at the lowest point of Rs. 2440- 40-3200
works out to 1.64% of the minimum of the scale at Rs. 2440 and 1.42 of the mean of
the same scale at Rs. 2820. The increment of Rs. 275 in the scale of Rs. 8000-275-13500
works out to 3.44% of the minimum of the scale at Rs. 8000.
This can be done through performance related increment (PRI) scheme by the grant
of an extra increment in addition to the normal increment in recognition of exceptionally
meritorious performance.
Since it is proposed to introduce the performance related increment (PRI) scheme, it may
not be necessary to continue with the system of efficiency bar. Thus, CFPC had
recommended for its abolition.
If the economy is in a mess, the employees alone cannot have a good time. On the other
hand, if there is generally upbeat mood in the country government employees should
also share the general prosperity.
The examination of the salaries of central government employees over the years has
sown serious erosion on account of inflation, especially at the higher levels.
The extent of erosion at the secretary level is as high as 71 %. In case, the numbers can
be brought down, government can very well afford to pay its employees a decent salary.
Central fifth pay commission has done a good job by awarding good scales to employees
but still expectations remain unanswered. Therefore, it would be wrong to say that money
alone can bring the desired results. It is a combination of various factors such as work-
culture, working conditions, work-ethics, leadership and commitment, etc. which
determine collectively performance level of an organisation. Although individually
speaking, salary or compensation forms a very critical factor in determining the
commitment of an employee to his or her job.

13
The resources of the country being scarce and the development responsibilities huge, the
government's personnel policy has to effectively balance the two. Scales have to be
rationalised so that those who are retained are adequately compensated in lieu of high
productivity at the job. The security of job and prestige attached to government service
are some of the fringe benefits which are difficult to quantify and equate with the private
sector. Similarly, the performance linked and competitive pay structure in a liberalised
economy is bound to have its impact on public sector employment. Thus, a research and
analysis wing needs to update itself with changes in the external environment and
concurrently influence the pay policy and principles of remuneration, periodically.
A truly dynamic compensation system, which is flexible both laterally and vertically,
could alone bring in the desired changes in organisational efficiency and effectiveness. It
is also clear that no compensation plan can satisfy all the constituents. The true efficiency
of the administrative system can be promoted only through the dedication and loyalty of
the civil service to the national goals. Nehru rightly said, "The new India must be served
by earnest, efficient workers who have an ardent faith in the cause they serve and are bent
on achievement, and who work for the joy and glory of it, and not for the attraction of
high salaries. The money motives should be reduced to the minimum."

7.6 CONCLUSION

The analysis in the Unit has enabled us to mention that:

1. Terms of employment are important to attract talented persons to jobs.

2. Terms of employment should be reviewed after every five years.
3. Attractive terms of employment would promote efficiency.
4. Central payment commissions have done good job to rationalise terms of
employment.

7.7 KEY CONCEPTS

Pay Commission: Difference between a board and a commission is that in a

board, responsibility is diffused while in a commission, each
individual member has a separate charge with respect to a
subject. Pay Commissions are appointed in India to study the
structure of emoluments in government and make suitable
recommendations. Pay Commissions have been criticised for a
generalist approach to a technical issue and for lacking
expertise in concerned areas like ergonomics, method study,
work study and job analysis on which pay should be
determined.

Salary: Salary is standard payment made to an employee on a monthly

basis. Wages are usually used for remuneration at the shop

14
 floor, while the term salary is used for employment at senior
levels.

Wage: Wages is that which is received by a worker or paid by an

employer for time on the job; money received or paid usually
for work by the hour, day, or week, or month; a calculation or
statement of money earned for a period of time from one hour
(hourly wage) up to one year (annual wages).

7.8 REFERENCES AND FURTHER READING

Chadha, Narendra K, 2000, Human Resource Management Issues, Case Studies and
Exercise, Shri Sai Printographers, Delhi.
Chapman, Jeff, 2004, “Employment and Minimum Wage: Evidence from Recent Labour
Market Trends”, read online at, http://www.epinet.org/content.cfm/economist#chapman,
EPI Briefing Paper #150.
Desiber, Gary, Human Resource Management, Seventh Edition, Prentice Hall, New
Delhi.
Dwivedi, R.S, 1984, Manpower Management: An Integrated Approach to Personnel
Mnagement and Labour Relations, Eastern Economy Edition, Prentice Hall.
Dwivedi, R.S, 1990, Personnel Management, IBH and Oxford Publishing Company.
French, Wendell, 1997, Human Resource Management, Third Edition, Houghton
Mifflin Company, USA.
Ghosh, P, 1993, Personnel Administration in India, Sudha Publications, New Delhi,
Goel, S.L.and Shalini Rajneesh, 2002, Management Techniques: Principles and
Practices, Deep & Deep Publications, New Delhi.
GOI Report of the Third Central Pay Commission, Ministry of Finance, Vol. I, New
Delhi.
GOI Report of the Fourth Central Pay Commission, New Delhi.
GOI Report of the Fifth Central Pay Commission, 1999, Nabhi Publications, Reprint
Edition.
Government of India, 1969, “Report on Personnel Administration”, Administrative
Reforms Commission.
Haire, Mason, et.al, “Psychological Research on Pay: An Overview”, Personnel
Administration, New York.
HR Guide, read online at, http://www.at hr-guide.com/data/G411.htm
Jain, R.B, 1976, Contemporary Issues in Indian Administration, Vishal Publications.
Leap L. Terry & Michael D. Crino, 1990, Personnel/Human Resource Management,
Macmillan, New York.
Miller, Tahlman, 1987, Colliers Encyclopedia, Maximillan Educational Company.
15
NCUI, 1977, “Employer-Employees: A Relationship in the Cooperative Sector”, Report
of the National Workshop, Delhi.
Nehru, Jawahar Lal, 1955, An Autobiography, The Bodley Head, London.
Rigors, Paul and Charles A Myers, 1973, Personnel Administration, McGraw-Hill, New
Delhi.
Tripathi, P.C, 2003, Humana Resource Development, Sultan Chand and Sons, New
Delhi.
Tyagi, A.R, 1969, Civil Services in a Development Society, Sterling, Delhi.
Verma, S.P. and S.K. Sharma, 1980, Managing Personnel Administration: A
Comparative Perspective, IIPA, New Delhi.
Yntema, 1993, “Managing Human Resources in the Private Sector”, Kjell A.
Eliasson & Jan Kooiman (Eds), Managing Public Organisations: Lessons from
Contemporary European Experience, Second Edition, Sage Publications
7.9 ACTIVITIES

1. Is the free market better for wage fixation? Discuss the public choice
implication in the wage level determination.
2. Should wages be based on standard criteria on differential basis? Give
reasons in support of your contention.
3. Discuss job evaluation. Explain its objectives and the methods employed in
job evaluation.

16
UNIT-8 REWARDS AND INCENTIVES MANAGEMENT

Structure
8.0 Learning Outcome
8.1 Introduction
8.1.1 Motivation and Incentives
8.1.2 Justification of Incentives
8.2 Incentive Plans
8.3 Social Security
8.4 Shortcomings of Incentive Plans
8.5 Conclusion
8.6 Key Concepts
8.7 References and Further Reading
8.8 Activities
8.0 LEARNING OUTCOME

On studying this Unit, the learners will be in position to:

• Understand the significance of incentives in achievement of motivation and group
morale;
• Distinguish between material and non- material incentives and emphasise their
significance to organisation in general and management in particular; and
• Refer to types of incentive plans.

8.1 INTRODUCTION

The term ‘incentive’ is used to describe material and non-material benefits given to
employees in addition to their normal salaries to induce them to go that extra mile
towards promoting productivity and efficiency of the enterprise. It is generally felt that
performance of personnel, either as individuals or as members of a group is below par
when compared to their capabilities, skills and capacities. Finer, states that demonstrated
performance generally never exceeds more than fifty percent of an individual’s innate
ability. Most individuals tend to halt efforts around an estimation of costs expended (time
and energy) and relative benefits procured from work. This is where incentive
administration assumes significance. According to Wendell French (1997), the purpose of
incentive plans is to increase the morale and motivation of employees to contribute to
further the goals of the organisation.

1
Incentive systems are meant both to motivate an employee to earn more by working hard
and also reinforce positive behaviour on his part by rewarding good performance for
healthier organisational climate. Hence incentive is to be understood both in the tangible
and intangible senses, as aimed both at encouraging and sustaining better performance
from employees. Material incentives may take the form of wage payments related to
employees’ performance in addition to the normal salaries given for standard work
assigned, welfare related benefit programs, fringe benefits, rewards and recognition
certificates.

Incentive administration must have a "base line" standard so that performance over and
above the specified standard can be rewarded. These incentive plans are linked directly or
indirectly to the standards of productivity or the profitability of the organisation or to both
criteria. The study group of the National Commission on Labor, (1968) has recommended
that, "under our conditions, a wage incentive is concerned with effective utilisation of
manpower which is the cheapest quickest and surest means of increasing productivity.
The only practicable and self-sustaining means of improving manpower utilisation is to
introduce incentive schemes and stimulate human efforts to provide a positive motivation
to greater output."

Megginson (1967) defines incentive wages as the extra-compensation paid to an

individual for production over a specified magnitude which stems from exercise of more
than the normal skill, effort or concentration when accomplished in a pre-determined way
involving standard tools, facilities and' materials.
Currently, the emphasis in payment by results schemes is on team work more than
individual effort.

Schematic diagram below depicts the process of incentive, offering financial

inducements above and beyond basic wages and salaries.

Determination of Payment of salary

Job Evaluation basic pay and fringe for minimum
benefits standards
prescribed

Determination of Performance
Incentive Plan extra work done as
Compared to the
evaluation
base

2
8.1.1 Motivation and Incentives

Reiterating the importance of motivation, E.F.L. Brech states, “the problem of motivation
is the key to management action; and in its executive form it is among the chief tasks of
the General Manager. We may safely say that the working of an organisation is a
reflection of motivation from the top”.

On the basis of above definitions, it can be said that motivation is a tendency, which
keeps a person attentively and purposefully engaged in achieving goals. Motivation
arises from obvious and tacit factors that form employee psychology. It involves
interactions and relationships in employee personal and work life referring to his
existence as an individual, a member of society and a member of both the formal and the
informal group of the organisation he works for. From a management perspective,
motivation constitutes the base for management activities covering POSDCoRB
functions. One of the biggest challenges to modern organisations is how to sustain
productivity or efficiency standards while maintaining competitive advantage in the
market place with emphasis on cost competitiveness. There is a danger of workers losing
interest in work if they realise that extra interest or labour could not make any difference
to them. Paul Rigors (1973) has rightly posed this challenge when he states, "a continuing
challenge for management is how to share the gains from higher productivity in ways that
will stimulate the interest of employees in improving their performance on-the-job and
the productivity of the organisation as a whole.” One of the challenges of motivation
theory is investigation into pathological phenomenon.

Questions like, why some employees feel alienated in an organisation? Why some resist
their own skills and capabilities? Do they encounter emotional blockages? What can the
management do?; Is retrenchment the only solution? Or; is the best? Why is there inertia
in hierarchy?; Why employees of one organisation work more efficiently than others’?;
and what makes certain employees achievement oriented and disciplined arise?;

These and such other questions have to be inquired into, if we have to grasp fully the
meaning, nature and scope of motivation for both social and utilitarian purposes. It is
obvious that mere possession of knowledge, skill and ability do not ensure best results as
performance also depends on intangibles like human relations at work, motivation or will
to perform. Empirical investigation into behavioural phenomenon is required to answer
many of the questions addressed above to solve the perennial dilemma of motivation in
management theory and practice. The most important task of the personnel department is
to put across the point most emphatically and continually that personnel in an
organisation are most important and also the key to development.

3
8.1.2 Justification of Incentives
The economic theory of motivation is based upon the argument that people feel
motivated when rewarded with money. This gives a utilitarian orientation to incentive
management. There is an assumption of direct correlation between monetary reward and
performance. Dale Yoder, (1969) rightly remarks, “However, fascinating the individual's
job assignment in a public agency or private firm, the employee expects to be paid. His
wage may (and it is generally assumed that it does) affect the way he works how much
and how well." Guellerman (1963) too regards money as an important motivator when
.he states, "money may well turn out to be the costliest motivator of them all, but money
may also prove to be the most potent motivator of all, at least in certain circumstances,
and when used on a sufficient scale." Executives in organisations must look after material
welfare of employees because despite human relations and behavioural assumptions,
money is regarded as a potent motivator.

However to assume that financial rewards are the only sources of motivation would be an
exercise in oversimplification. A positive incentive can be either financial or non-
financial. Financial incentives satisfy primarily, employees' lower order needs viz.,
physiological, security, as per Abraham Maslow’s (1954) theory and wins his calculative
involvement, that is, the person feels committed only to the extent of doing a fair day’s
work for a fair day’s pay. On the other hand, non-financial incentives for example,
praise, competitions, participation, etc., provide higher order need satisfaction, catering
to social and psychological needs of a person, which make him more committed to
organisational goals. As a result, a person realises his full potential. To quote
Barnard,(1938) "material rewards are ineffective beyond the subsistence level excepting
to a very limited proportion of men; that most men neither work harder for material
things, nor can be induced thereby to devote more than a fraction of their possible
contribution to organised efforts. The opportunity for distinction, prestige, personal
power, and the attainment of dominating position are much more important than material
rewards in the development of organisations, including commercial organisations."

It has, therefore, been conceded that economic gain may not be sufficient incentive. In
this vein Allport (1943) observes, “Employees in an organisation are 'not economic men'
so much as they are 'ego- men'. What they want, above all else, is credit for work done,
interesting tasks, appreciation, approval and congenial relations with their employers and
fellow workers. These satisfactions they want even more than high wages or job security.
Non-material incentives take the form of recognition of good work through appreciation
letters, merit certificates, medals, more meaningful involvement in decision making,
opportunity for self growth(‘associational attractiveness’ and ‘ideal benefactions’ by
Barnard’s terminology). Such awards benefit employees indirectly that is, aiding
promotion or nomination to higher posts. However, this comparison is rather meaningless
because management needs both types of incentives. The real question, therefore, is not
what type of incentives is required, but rather how to integrate the two types of incentives
successfully. What is needed is a contingency approach that considers needs of workers,
type of jobs, and requirements in the organisational environment. Only then can an

4
optimum balance between financial and non-financial incentives be attained. (Tripathi,
2003)

R.K. Misra (1973) favours the judicious use of both monetary and non-monetary
incentives to achieve productivity. While budgetary restrictions and temporary
improvements in performance place a limit on the potency of financial incentives as
motivators, non- financial incentives demand only human ingenuity as investment and
also ensure relatively stable acceleration in output. Both are important and judicious mix
of the two enriches organisational practice. The Administrative Reforms Commission
(1968) has advocated the use of incentives to promote efficiency in organisation.
Recommendation number 64 states:
1. Incentives for timely completion of a specific project may be provided
through suitable awards such as a rolling cup or a shield. In individual
cases, commendatory certificates may be issued;
2. Cash awards or one or two advance increments may be given to those who
give valuable suggestions for simplifications of work leading to economy
in expenditure or otherwise increase efficiency; and
3. Any exemplary or special achievement may be recognised by grant of
medals as is practiced at present in the police department. It may now be
in order to discuss incentive plans separately.

8.2 INCENTIVE PLANS

The incentive plans are discussed under two types, that is, material incentives and non-
material incentives.

A. Material Incentives: Individual Incentive Plans

These plans award individuals or group of individuals, extra payment for the extra work
performed. In order to encourage employees, different incentive plans have been
designed. Same are recounted as; Taylor's Differential Piece Rate Plan, Gantt Bonus
Plan, Halsey Plan, Emerson Efficiency Plan, Rowan Plan, etc. In these schemes
minimum, daily or weekly rates of pay are guaranteed and personal effort and efficiency
are linked with rewards.

Modern innovation metrics such as Return on Innovation Investment (ROI) aid in

evaluating and rewarding new product teams and establishing a credible link between
new product performance and corporate incentives
According to Louden, "the purpose of individual incentive plans is to offer financial
incentive for a worker or group of workers to produce work of an acceptable quality over
and above a specified quantity." According to Wolfe, "their primary purpose is to aid in
obtaining minimum unit costs thereby contributing to enterprise profits." These

5
individual incentive plans can be categorised into piece rate plans and production bonus
plans. There are, however, problems in instituting individual incentive plans. The most
pressing is the criteria by which work performance standards are to be set. It has also to
be kept in mind that differential payment schemes might adversely affect social capital
and lower group morale. It can also potentially affect the quality of work. Differential
annual payout may be determined by a subjective evaluation of each person's
performance.
Advantage is that differential criteria is adopted to reward performance which is just to
more meritorious employees and individual performance is given recognition apart from
group. There may also be a significant one-time payout if an employee has an
extraordinary accomplishment for a year.
Disadvantages are that the payout may be subjective. It can be divisive and adversely
affect the working of the informal organisation. Suggestion proffered to get around the
problem is to encourage employees to make suggestions through a suggestion box for
promotion of productivity and reduction of costs. This would also encourage employee
participation in decision making in an organisation. Suggestions given by employees
would be effective as they are expected to understand the functioning of the organisation
better than supervisory personnel. However, care should be taken that suggestion plans
do not lead to unsavory interference or role dilution with respect to the management
function specifically policy making. Supervisory and professional employees are
excluded from such plans as this forms part of their job profile.

Merit Pay
The merit increase program is implemented when funds are designated for that purpose
by the institution's administration, dependent upon the availability of funds and other
constraints. Its major advantages are that it allows administration of differential pay to
high performers, allows estimation of individual and company performance separately
with a view to judge impact fairly, and allows compensation for outstanding
achievements. Main disadvantage is that assessment criteria employed may be subjective.
Robert and Masvin (1966) observe that there are several specific common-sense
considerations in establishing any such plan:
1. Ensure that effort and rewards are directly related. The incentive plan should
compensate employees in direct proportion to their increased productivity.
Employees must also perceive that they can actually do the tasks required.
Thus, the standards have to be attainable, and the employer has to provide the
necessary tools equipment and training;
2. Make the plan understandable and easily calculable by the employees.
Employee should be able to calculate easily the rewards they will receive for
various levels of efforts;
3. Set effective standards: This requires several things. The standards should be
viewed as fair by subordinates. They should be set high but reasonable and
there should be about a 50/50 chance of success. And the goal should be
specific – this is much more effective than telling someone to “do your best”;

6
 4. Guarantee standards: View the standards as a contract with your employees.
Once the plan is operational, great caution is to be used before decreasing the
size of the incentive in any way. Rate cuts have long been the nemesis of
incentive plan;
5. Guarantee an hourly base rate: Particularly for plant personnel, it is usually
advisable to guarantee employees base rate. Therefore, they will know that no
matter what happens they can at least earn a minimum guaranteed base rate;
and
6. Get support for the plan: Group restrictions can undermine the plan; get the
work group’s support for the plan before starting it.

Group Incentive Plans

Because of the pressure of unions, these incentive plans often become unpopular.
Group incentive plans are increasingly put into use, for example, bonus schemes, profit
sharing, etc. The purpose of group-incentive plans is the same as that of individual
incentive plans except that incentives are paid to a group rather than individuals engaged
in a particular plan or aspect of organisational work.

Profit-sharing Plans
Profit-sharing plans are the most widely used incentive-pay programs. The purpose of
profit-sharing is to distribute additional profit among employees as incentives in the form
of bonus, which may be paid in cash or transferred to their account. The company
contributes a portion of its pre-tax profits to a pool that is to be distributed among eligible
employees. The amount distributed to each employee may be weighted by the employee's
base salary so that employees with higher base salaries receive a slightly higher amount
of the shared pool of profits. This is done generally on an annual basis. The amount
credited to their account can be withdrawn only if the employees have worked for a
minimum period of time. Profit plans work best at more established firms with relatively
steady earnings. Large corporations widely employ profit sharing.
Advantages of a profit-sharing plan include, fostering team work, focus on profitability
and sustainability to the enterprise. For smaller companies with erratic earnings, profit-
sharing plans can frustrate and irritate employees by creating expectations that are not
fulfilled. Criteria adopted for administering profit plans differs from organisation to
organisation and need to be carefully defined in advance.
Wages received by employees are supplemented by payment of an annual lump sum
called bonus, which is a type of profit sharing. Over the years, the concept of bonus has
changed from one of profit sharing to one of deferred wages so that a minimum amount is
payable irrespective of the profits. Bonus is regulated in India by the Payment of Bonus
Act 1965, which is applicable to every factory and other establishments employing
twenty (20) or more persons on any day during an accounting year. Newly set up
establishments are not required to pay a bonus until they derive profits or for five
accounting years following the year when they start selling their products on a regular
basis, whichever is earlier.

7
 The Payment of Bonus Act specifies a detailed method for computation of the bonus.
Only employees drawing up to Rs 3,500 per month are entitled to a bonus under the
act, but the bonus is calculated on the maximum salary of Rs 2,500 per month for a
salary between Rs 2,500 and Rs 3,500. The amount payable varies from 8 percent
(minimum) to 20 percent (maximum) of annual salary. However, the normal practice is
to pay, ex gratia, some amount to employees drawing above Rs 3,500 per month also.
In addition to profit sharing and bonuses, some other incentive options are:
• Salary-at-risk plans; where employees receive their full base pay only if
performance meets minimum goals, but a larger payout is possible; and
• Gain sharing, popular at some manufacturing firms, provides for a portion of
increases in efficiency to be shared with employees. Gains are measured and
distributions are made through predetermined formula. For example difference
between actual and expected hours of work put in give hours gained. Since this
pay comes into act only when gains are achieved, gain sharing plans do not entail
extra cost burden.
• Stock Options entail the ‘right’ to purchase stock at a given price at some time in
the future. An option is created that specifies that the owner of the option may
'exercise' the 'right' to purchase a company’s stock at a certain price (the 'grant'
price) by a certain (expiration) date in the future. Usually, the price of the option
(the 'grant' price) is set to the market price of the stock at the time the option was
sold. If the underlying stock increases in value, the option becomes more
valuable. If the underlying stock decreases below the 'grant' price or stays the
same in value as the 'grant' price, then the option becomes worthless.
Stock options provide employees the right, but not the obligation, to purchase shares of
their employer's stock at a certain price for a certain period of time. Options are usually
granted at the current market price of the stock and last for up to 10 years. To encourage
employees to stick around and help the company grow, options typically carry a four to
five year vesting period, but each company sets its own parameters.
Stock Options are of two types:
1. Incentive stock options; (ISOs) in which the employee is able to defer taxation
until the shares bought with the option are sold. The company does not receive a
tax deduction for this type of option.
2. Nonqualified stock options; (NSOs) in which the employee must pay income tax
on the 'spread' between the value of the stock and the amount paid for the option.
The company may receive a tax deduction on the 'spread'.
The advantages of stock options are that they allow a company to share ownership with
employees. Employees consequently feel more involved in organisational functioning.
The disadvantage is that stocks are speculative with attendant risks, employee
interference increases in the name of participation and their attention diverts to pecuniary
matters rather than performance at work
Stock options are considered most suitable for small companies where future growth is
expected and for publicly owned companies that want to diversify ownership.

8
Besides aforementioned schemes, other forms of incentives could be recounted as (HR
Guide, 2005):
• Paid holidays
• Paid vacation
• Medical care
• Paid sick leave
• Life insurance
• Retirement plans
• Educational assistance
• Accident insurance
• Family benefits
• Paid personal leave
• Paid maternity leave
In addition to monthly salary or wages, various fringe benefits are also available to
employees. Fringe benefits contribute significantly to the cost of hiring an employee. In
general, it may be said that they represent approximately 50 percent of the monthly
salary. The compulsory fringe benefits are as follows.
1 Annual bonus
2 Monthly contribution to a provident fund
3 Terminal gratuity
4. Contribution toward the employees' state insurance scheme.
5. House rent allowance to workmen.

(B) Non-material Incentive Plans

Non material incentive plans may take the form of appreciation letters, award of medals,
certificates, etc. These incentive plans can be of great use in organisations where the
service aspect is stressed more than the business or commercial aspect. In organisations,
with welfare activities or law and order or defense functions, it may be difficult to
compensate the hard work of employees with money. Here, one can make use of non-
financial incentives, which sustain the morale of particularly hard-working employees.

8.3 SOCIAL SECURITY

According to P.C. Tripathi (2003), the connotation of the term ‘social security’ varies
from country to country along with changing political ideologies. In socialist countries,
the avowed goal is complete protection of every citizen from the cradle to the grave. In

9
other nations, with less controlled economies, a measure of protection is afforded to all
citizens with schemes evolved through the democratic process consistent with the
resources of the state. According to the social security (minimum standards) convention
number 102, adopted by the International Labour Organisation in 1952, following are the
nine identified components of social security:
(i) Medical care
(ii) Sickness benefit
(iii) Unemployment benefit
(iv) Old-age benefit
(v) Employment injury benefit
(vi) Family benefit
(vii) Maternity benefit
(viii) Invalidity benefit
(ix) Survivor’s benefit

8.4 SHORTCOMINGS OF INCENTIVE SCHEMES

Incentive schemes, if not properly implemented can create problems, for example, (i)
there is a tendency amongst employees to improve quantity at the cost of quality; (ii)
there is a danger that safety regulations might be disregarded by workers which result in
higher accident rates; and (iii) there is a danger that workers undermine their health under
strain of work; finally such schemes potentially generate misunderstandings and jealousy
among workers because of differential earnings. Therefore:

(1) Employees must be taken into confidence in design the rewards and incentive
plans so that they are aware of all parameters by which to avail of benefits.
(2) The plan should be simple and intelligible to all
(3) The plan should be equitable and flexible.
(4) The amount of rewards and incentives should be substantial so as to suit the
stature of the person concerned.
(5) A feedback of incentive audit must be obtained to assess the benefits of the
scheme.

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8.5 CONCLUSION
The crux of the discussion is;
1. Rewards and Incentives are important to motivate employees towards
excellence.
2. Rewards can be both material and non-material.
3. Non-material awards are easy to administer.
4. Awards and incentives must be based on well- defined principles.
5. Awards and incentives may be given only to deserving employees.

8.6 KEY CONCEPTS

Incentive: Incentives are offered to motivate employees towards better

work performance and improved commitment towards the
organisational purpose. Incentives are both material and non
material incentives. Examples of non material incentives
include meaningful participation in work, recognition, team
work and identification with the purpose of the organisation
etc.

Motivation: “Goal directed behavior” is motivated behaviour. Motivation

study analyses human needs, motives and drives which create
an achievement orientation in an employee. As part of
management strategy it implies positive reinforcement of
desired organisational behaviour. The Classical School of
administrative thought took a limited perspective to motivation
in that it understood and appreciated it, in monetary terms only.
The Human Relations and Behavioral Schools inquire into
cognitive processes of human beings with a view to studying
tangible and intangible motivators that determine employee
psychology and shape up to organisational behaviour.

8.7 REFERENCES AND FURTHER READING

Allport, 1943, “The Ego in Contemporary Psychology”, Journal of Psychological

Review, Volume 5.
Barnard, Chester I, 1938, The Functions of the Executive, Harvard University Press,
Cambridge.
Chadha, Narendra K, 2000, Human Resource Management Issues, Case Studies and
Exercise, Shri Sai Printographers, Delhi.

11
Desiber, Gary, Human Resource Management, Seventh Edition, Prentice-Hall, New
Delhi.
Dwivedi, R.S, 1984, Manpower Management: An Integrated Approach to Personnel
Management and Labour Relations, Prentice Hall.
Dwivedi, R.S, 1990, Personnel Management, Oxford and IBH.
French, Wendell, 1997, Human Resource Management, Third Edition, Houghton Mifflin
Company, USA.
Gellerman, Saul W, 1963, Motivation and Personality, American Management
Association, New York.
Ghosh, P, 1993, Personnel Administration in India, Sudha Publications, New Delhi.
Goel, S.L and Shalini Rajneesh, 2003, Public Personnel Administration, Deep &
Deep Publications, New Delhi.
Government of India, 1968, Report of the Study Group on Productivity and Incentives,
National Commission on Labour.
HR Guide, read online, at http://www.hrguide.com/compensation.htm
Leap, L. Terry & Michael D. Crino, 1990, Personnel/Human Resource
Management, Macmillan, New York.
Maslow, Abraham, 1954, Motivation and Personality, Harper, New York.
Megginson, 1967, A Behavioural Approach to Administration, Homewood, Illinois,
Richard D. Irwin, Inc.
Misra, R.K, 1973, “Incentives and Motivation,” G.K Suri (Ed), Wage Incentives: Theory
and Practice.
Opashf, Robert and Masvin Dunnette, 1966, “The Role of Financial Compensation in
Industrial Motivation,” Journal of Psychological Bulletin, Vol. 66.
Pigors, Paul and Charles A. Myers, 1973, Personnel Administration, McGraw Hill, New
Delhi.
Tripathi, P.C, 2003, Human Resource Development, Sultan Chand and Sons, New
Delhi.
Tyagi, A.R, 1969, Civil Services in a Development Society, Sterling, Delhi.
Verma, S.P. and S.K. Sharma, 1980, Managing Personnel Administration: A
Comparative Perspective, IIPA, New Delhi.
Yoder, Dale, 1969, Personnel Management and Industrial Relations, Fifth Edition,
Prentice Hall, New Delhi.

8.8 ACTIVITIES

1. Relate incentives with motivation. To what extent do material incentives

motivate workers?

12
2. Discuss material and non material incentives currently in use.
3. What are the limitations of modern incentive schemes? List out the
suggestions you would like to make for improvement.

13
UNIT 9: EMPLOYEE BENEFITS
Structure
9.0 Learning Outcome
9.1 Introduction
9.2 Meaning of Employee Benefits
9.2.1 Examples of Employee Benefits
9.2.2 Purposes of Employee Benefits
9.3 Types of Employee Benefits
9.3.1 Fringe Benefits
9.3.2 Retirement Benefits
9.4 Pension Scheme
9.4.1 Kinds of Pensions
9.4.2 Quantum of Pension
9.4.3 General/Contributory Fund
9.4.4 Gratuity
9.4.5 Medical Allowance
9.5 Voluntary Retirement
9.6 Conclusion
9.7 Key Concepts
9.8 References and Further Reading
9.9 Activities
9.0 LEARNING OUTCOME
On studying this Unit, the learner will be in a position to:
• Understand the significance of employee benefits in the context of employee
motivation;
• Understand various ways in which benefits are administered; and
• Discuss various types of benefits.

9.1 INTRODUCTION
Honest, professionally sound and contended employees are a critical element of any
programme. It is thus of utmost importance that the best brains in the country are
attracted to the public services. They should not only be motivated to enter the services
but also serve in a professional and dedicated manner. This necessitates careful handling
of all the major parameters of employee work –life, from induction to retention.
From top to the bottom, center to the periphery, it is employees that make the machinery
of administration work. Bacon, philosopher and administrator, has rightly said, “It is vain
for princes to take counsel concerning matter, if they take no counsel likewise concerning
persons, for all matters are as dead images; and the life of the execution of the affairs lies
in the good choice of persons.” Therefore, the first and foremost task is to pay attention to
the administration of personnel, if we expect good performance from organisations.

9.2 MEANING OF EMPLOYEE BENEFITS

The efficiency of employees depends substantially on the level of concentration of
individual employees at work. Desired state of mind can be attained only if the
employees are satisfied and relaxed. This requires beneficial measures both at the work
place as well as at home, which can keep them relaxed and tension free. As a contented
workforce, employees would develop physical, mental, social and spiritual health and
happiness, imminent for success. Therefore, management must give priority to providing
adequate measure of benefits to keep the employees contended and well balanced in
outlook. The benefits of welfare programmes are as follows:
1. Efficiency in administration.
2. Commitment among employees.
3. Promote the productivity.
4. Happy families.
5. Harmonious relationship at the work place.
The concept of benefits is a dynamic one. Scope is a matter of interpretation in the
context of forces which determine societal equilibrium form values. These forces,
nonetheless dynamic, may be grouped as, social, economic, cultural, religious and
political influence on ‘organisational climate’. The scope of employees’ benefits varies
from time to time, organisation to organisation and with different governments.
Terry L.Leap and Michael D. Crino (1990) observe that employee benefit programmes
have become an integral part of most compensation packages. Group life and health
insurance programs, retirement programs, and vacations and holidays, prepaid legal
plans, and dental and optical insurance coverage are among the types of employee
benefits commonly found in private and public sector organisations. Today, employee
benefits comprise approximately forty percent of the total compensation package.
A comprehensive array of employee benefits is generally believed to aid the organisation
in attracting high-quality employees as well as increasing the morale, job satisfaction and
motivation of current employees. As employees accumulate seniority in an organisation
the employee benefit program may reduce turnover because of favourable group
insurance rates and pension vesting arrangements that “time” quality workers to the firm.
Finally, employees usually discover that benefits such as group life and health insurance
are less expensive than they would be if purchased individually from local insurance
agents because of lower group insurance rates and employer subsidisation of
administrative costs and premium payments.
9.2.1 Examples of Employee Benefits
Employee benefits take the form of:
1. Legally Required payments
a. Old-age, survivors, disability, and health insurance (commonly known as social
Security)
b. Workers compensation
c. Unemployment compensation
2. Contingent and Deferred benefits
a. Pension plans
b. Group life insurance
c. Group health insurance
i. Medical expense (hospitalisation and surgical)
ii. Disability income (short and long term)
d. Guaranteed annual wage (GAW)
e. Prepaid legal plans
f. Military leave and pay.
g. Jury duty and bereavement paid leave.
h. Maternity leave
i. Child care leave
j. Sick leave
k. Dental benefits
l. Tuition-aid benefits
m. Suggestion awards
n. Service awards
o. Severance pay
3. Payments for Time Not Worked
a. Vacations
b. Holidays
c. Voting pay allowances
4. Other Benefits
a. Travel allowances
 b. Company cars and subsidies
c. Moving expenses
d. Uniform and tool expenses
e. Employee meal allowances
f. Discounts on employer’s goods and services
g. Child care facilities
9.2.2 Purposes of Employees Benefits
Let us mention the important purposes that can be served by encouraging staff benefits:
i. Identification and development of personal interest with the interest of the
organisation.
ii. Achieving integration in organisational functioning
iii. Creating will and determination among members of the services for work
improvement and innovation.
iii. Mobilising the available manpower for productive and useful activities in the
organisation.
iv. Keeping the members of the organisation informed of latest developments in the
sphere of employee benefits.
v. Organising informal clubs of youth, women, to serve as centers of discussion and
expression of innovative ideas.
vi. Providing an open forum for the employee to discuss problems and find
indigenous solutions which may be efficient and economical for the organisations.
(viii) Encourage the employee to adopt modern changes which can accelerate the
efficiency of the organisation.
(ix) Arranging extra curricular activities to generate social awareness through publicity.
9.3 TYPES OF BENEFITS
In addition to dearness allowance, house rent allowance, city compensator allowance; the
following benefits are also available. Let us discuss some of the important benefits in
detail:
9.3.1 Fringe Benefits
Fringe benefits refer to supplements to wages obtained by the employees at the cost of
the employers. Fringe benefits are also called wage extras, hidden payments, non wage
labour costs and supplementary wage practices. The list of fringe benefits covers
numerous items such as pension and other agreed upon payments (employers share only)
legally required payments(employer’s share only)paid rest periods, lunch periods, etc.
payments for time not worked and other items such as profit sharing payments festival or
other special bonuses service awards, suggestion awards, free meals, tuition funds etc.
Thus fringe benefits embrace both voluntary and involuntary programmes. These
programmes are intended to improve employer employee relations, minimise excessive
labour turnover costs and provide a sense of individual security. Fringe benefits can be
most effective if they are geared to the preferences of the employee as determined by
research programmes. (Dwivedi, 1990)

Fringe benefits have been described as welfare expenses, wage supplements, perquisites
other than wages, sub wages and social charges. Fringe benefits are also known as non
pecuniary incentives i.e. visualising beyond money wages.

Fringe benefits can be categorised as under ( HR Guide, 2005)

(a) Benefits without work Casual Leave, Earned leave

(b) Benefits protecting against Provident Fund, pension,

hazards Gratuity, etc.

(c) Facilitative programmes to Working hours, Medical

ease routines of life allowances, Leave travel
concession, etc.

(d) Recreational programmes Sports, Dramas, etc.

Definition of Workman
Generally, government staff covered by the definition of “ Worker” as defined under
section 2(1) of the Factories Act, 1948 and “ Workman as defined under section 2(s) of
the Industrial Disputes Act , 1947, are classified as industrial staff and who do not fall
within these definitions are classified as non industrial staff. Industrial employees are
governed by labour laws. These give them substantial rights to form trade unions and to
raise industrial disputes. The non industrial employees are governed by the rules
applicable to Central Government servants in general.
Industrial Disputes Act 1947
The Industrial Disputes Act 1947 was amended with effect from August 21, 1984
empowering the government to keep their industrial establishments outside the purview
of the act, which implies that the industrial workers will have recourse to only to such of
those rules as are applicable to other government employees for settlement of their
grievances. The notification issued initially for the establishment of the Central
Administrative tribunal had excluded the employees covered by the Industrial Disputes
Act from the scope and jurisdiction of the Tribunal. However, by a subsequent
amendment of the Administrative Tribunals At, 1985(no. 13 of 1985) in 1986 the
relevant clause was deleted, thereby bringing the employees governed by the Industrial
Disputes Act also within the jurisdiction of the Administrative Tribunal.
Demands for Parity
Industrial employees of the Central Government have always been demanding parity in
matters of leave entitlement, holidays, leave encashment and working hours with their
counterparts classified as non-industrial employees. The leave entitlements of industrial
workers were also examined by the earlier pay commissions. While the first three did not
favour any increase in the leave entitlement of industrial workers in government, the
fourth CPC recommended parity in leave entitlement and its encashment between the
industrial employees in the Railways and those in other sectors of the central government.
While the entitlements of industrial employees in the Railways to leave and its
encashment are on par with those of non-industrial workers in the central government.
their hours of work are substantially more than those of other industrial workers. The
government did not accept the recommendation of the Commission. The matter was
therefore referred to the Board of Arbitration in 1989. In terms of the award of the
Board(April, 1991) the prerequisite of 240 days service for grant any leave with wages
and the restriction on carry forward of leave only up to 30 days were removed. The
maximum limit up to which leave could be accumulated was also increased to 120 days.
Recent Position
There is now complete parity between the industrial and non-industrial employees in
matter of entitlement to and accumulation of leave on half pay, extraordinary leave casual
leave and certain special kinds of leave (maternity leave and hospital leave). However,
the entitlement of industrial employees to earned/annual leave is determined with
reference to their length of service and ranges between 17 and 27 days in year, as against
30 days in a calendar year to which all non-industrial employees are entitled. Further
industrial employees can avail of earned leave only on six occasions in a year, whereas
there is no such restriction in respect of non industrial employees. On the other hand,
unlike non industrial employees holidays intervening during spells of leave of industrial
employees are not counted towards leave.
Difference between the two Categories
The nature and scope of the duties and responsibilities of the two categories of employees
are totally different, as are their wage structure and terms and conditions of service as
well as the nature of service s provided by them. These two categories are subjected to
different types of stresses, strains and hazards in the performance of their duties.
Industrial employees are entitled to certain other benefits like overtime allowance at
twice the rates applicable to their counterparts in the non industrial sectors, exclusion of
Sundays and holidays intervening during spells of leave, a higher age of superannuation
etc. In the circumstances it may not be appropriate to consider in isolation, disparities in`
the matter of leave alone. The Board of Arbitration has refused in the past to concede
absolute parity in holidays and leave entitlement between industrial and non-industrial
employees of the central government. All the earlier central pay commissions, (CPCs)
barring the fourth had also negated such demands. Besides, the changing economic
climate of the country also has to be taken into account while evaluating this demand.
With the onset of liberalisation, all government sectors, including the industrial sector,
has to compete with the private sector directly. Even at present, productivity and
efficiency in the government sector cannot be considered to be of desired level. In this
milieu, any increase in the leave entitlement of industrial workers may lead to loss in
production, thus placing the industrial sector of the government at a further disadvantage
in relation to the private sector.
Reduction of Work Hours
The hours of work prescribed for staff employed in industrial units are longer than those
in the administrative offices. However such a measure is necessitated on account of
differences in the service conditions of the two categories of workers. Workshop staff is
governed by the provisions of the Factories Act, which permits up to 48 hours of work in
a week. The industrial staffs working in the central government are not worse off than
their counterparts either in the state owned public enterprises or in the private sector. The
public enterprises as well as the industrial units in the private sector follow the provisions
of the factories act in regard to their industrial employees. An analysis of the weekly
hours of work in other countries would show that even in these countries the hours of
work prescribed for different categories of workers are not uniform. Industrial workers in
Thailand work for as many as 13 hours more per week than non industrial staff. Similar
differences are also discernible in other countries like Belgium, Canada, Israel, Japan,
Malaysia, the Netherlands, Portugal, United States of America etc.
The question of ensuring uniformity in the working hours in all Government
Establishments had been considered by the Second, Third and Fourth Pay Commissions.
They did not recommend any uniformity as it was opined that work hours had evolved
overtime in individual organisatiosn as per requirements and convention. It would not be
advisable to tamper with any organisations’ schedule. The Fifth pay commission adopted
two policy guidelines in this respect:
• Complete parity may not be justified
• Some revision could be suggested incorporating the best features of both the
systems
• Changes may be so designed as to reduce absenteeism and improve productivity
The following was recommended.
(a) Entitlement to Earned Leave
Indicated revisions have been recommended to be carried out:

Length of Service Present Leave Entitlement Revised Leave Entitlement

One to Ten Years 17 days 20 days

Eleven to Twenty Years 22 days 25 days

More than Twenty Years 27 days 30 days

This would represent an increase of three days over the present entitlements.
Simultaneously, Sundays and other holidays intervening during spells of leave should be
counted as leave availed of by the employee and debited to the leave account. These two
measures would cancel each other out and not have any net impact on the whole leave
entitlement.
(b) Accumulation of Earned Leave
Industrial employees may be permitted to accumulate up to 300 days of earned leave on
par with non-industrial employees and to encash, out of the leave so accumulated, leave
of up to 60 days earned by them during their entire service, while availing of leave travel
concession for travel anywhere in the country.
Leave that can be taken on any one occasion should be reduced in the case of non
industrial employees from 180 days to 60 days as such leave is often abused by workers
in the vent of undesired transfer and also for the simple reason that such along spell of
leave on one occasion is not required.
In the same vein, the maximum number of occasions on which earned leave can be
availed of in calendar year by non-industrial employees should also be reduced to six as
in the case of industrial employees.
The above steps are expected to achieve the twin objectives of rough parity and also
enhance productivity of industrial employees as the proposed increase in the quantum of
earned leave that can be accumulated combined with the introduction of the facility of in
service encashment of leave in addition to encashment on superannuation is likely to
reduce absenteeism and improve overall productivity.
9.3.2 Retirement Benefits
Most of the employees join government service at a young age and retire at the age
decided by the government. The fifth central pay commission has fixed 60 years for
retirement of central government employees and 62 years for university teachers. Most of
them serve the government for thirty to forty years till retirement. It becomes incumbent
on government to look after their retired employees when they are not in a position to
work. They need be compensated during this period decently, so that they securely
discharge their duties during active job span.
In fixing of the retirement age of employees, some of the important factors, which are
taken into account, are life expectancy, health and morbidity, labour market conditions,
stage of economic development, financial implications, social dimensions, etc. The age at
which the productivity, efficiency and health of an employee begins to decline can be
considered as the appropriate age for retirement.
There are three forms of retirement benefits: (a) non- contributory wherein the
government is responsible for the retirement benefit; (b) partly contributory wherein the
government and employee share the cost of retirement; wholly contributory wherein the
employees contribute. In India, there are two main schemes for retirement benefits for
employees, namely, the Pension Scheme and the Contributory provident Fund.

9.4 PENSION SCHEME

The pension scheme involves cash disbursement to the retired employees in fixed
monthly amounts. It provides them a safe source of living as long as they survive. There
is provision for extraordinary pension like injury pension or family pension. The injury
pension is paid to the employee in case of injury received in the course of duty while
family pension is payable to the widow or minor children or in some cases to the parents
of an employee if he is killed in the course of the discharge of his duties.
Central government employees on retirement are entitled to superannuation or retiring
pension, retirement gratuity, encashment of earned leave and the facility to commute up
to 1/3rd of their pension. The significant features of retiring or superannuation pension are
that it is non-contributory and is subject to future good conduct of the pensioner. Pension
can also be withheld under certain circumstances.
Pension is computed on the basis of length of qualifying service, reckonable emoluments
and the pension formula. There are also orders prescribing minimum and maximum
pension. The rules and regulations governing the above aspects are contained in the
central civil services (pension) rules, 1972 (hereafter referred to as pension rules which
have been modified from time to time with a view to bringing about improvements in the
pension benefits of the employees).
As per article 366(17) of the constitution of India, pension means a pension, whether
contributory or not, or any kind whatsoever payable to or in respect of any person, and
includes retired pay so payable, a gratuity so payable and any sum or sums so payable by
way of the return, with or without interest thereon or any other addition thereto, of
subscriptions to a provident fund.
The Supreme Court of India has, in the landmark judgment of D.S. Nakara and others vs.
Union of India (AIR 1983, SC 130) clarified all the issues relating to pension. While
examining the goals that a pension scheme should seek to achieve the Apex Court held
that; a pension scheme consistent with available resources must provide that the
pensioner lives:
(i) free from want, with decency, independence and self-respect; and
(ii) at a standard equivalent at the pre-retirement level.
The Court felt that since determining the minimum amount required for living decently
was difficult, selecting the percentage representing the proper ratio between earning and
the retirement income was harder. We owe it to the pensioners that they live and not
merely exist. The Court also held that pension is neither a bounty nor a matter of grace
depending upon the sweet will of the employer. It is not an ex-gratia payment, but a
payment for past services rendered. It is a social welfare measure, rendering socio-
economic justice to those, who is in the heyday of their life, ceaselessly toiled for the
employer, on an assurance that in their old-age, they would not be left in the lurch.
The Central fifth pay commission honored the observations of the Honourable Court in
the Nakara case. It needs to be averred emphatically that pension is not in the nature of
alms being doled out to beggars. The senior citizens need to be treated with dignity and
courtesy befitting their age. Pension is their statutory, inalienable, legally enforceable
right and it has been earned by the sweat of their brow. As such it should be fixed,
revised, modified and changed in ways not entirely dissimilar to the salaries granted to
serving employees.
Central fifth pay commission started to build these bridges when for the first time in the
history of the services, it was suggested in their report submitted in October, 1994 that an
interim relief be granted to pensioners. When no action was taken on the same, it was
followed up in their report presented in May, 1995 and suggested another installment of
interim relief to pensioners. Fortunately, this time the government relented and granted
both the installments of interim relief to pensioners. This established a principle and the
grant of a third installment to pensioners consequent upon their report of August, 1996
evoked no surprise. It is hoped and trusted that this parity between the serving employees
and pensioners with regard to grant of interim relief is now firmly established and will
continue.
9.4.1 Kinds of Pension
As per 1972 Central Civil Services Rules, the following are the different types of
Pensions
(1) Superannuation Pension: It is pension granted to a person who retires on attaining
the age of superannuation or compulsory retirement (rule 35)
(2) Retiring Pension: It is pension granted to a public servant who retires voluntarily
or is retired in advance of the age of compulsory retirement by giving the
prescribed notice, and who on being declared surplus, opts for voluntary
retirement (rule 36)
(3) Invalid Pension: It is pension granted to a public servant who retires from service
because of any bodily or mental infirmity, which permanently incapacitates him
for the service, if so certified by the appropriate medical authority (rule 38)
(4) Compensation Pension: It is pension granted to a government servant who is
discharged owing to the abolition of his permanent post, while a suitable post of
equal rank cannot be found for him or when such post is offered to him but not
accepted by him. (rule 39)
(5) Compulsory Retirement Pension: It is pension granted to a government servant
when he is compulsorily retired as a penalty (rule 40)
(6) Compassionate Allowance: When a government servant is dismissed or removed
from service, he may if he so deserves, be given compassionate allowance on a
special consideration, as he forfeits on dismissal or removal, his pension and
gratuity (rule 41)
(7) Extraordinary Pension: The central civil service extraordinary pension rules
provide for:
ƒ Disability Pension: When he is permanently incapacitated on account of injury or
disease attributable to government service.
ƒ Family Pension: To the widow and allowance to children if the death of the
government servant is accepted due to government service.
Reduction of pension for unsatisfactory service: Rule 6 provides for such reduction by
the appointing authority after giving opportunity to the employee to make his
representation against the proposed reduction (Hidaytullah, 1986)
Proceedings can be instituted under Article 226 of the Indian Constitution in case of non
compliance with the rules on the part of government.
9.4.2 Quantum of Pension
Quantum of Pension is based on the qualifying service of the government servant and his
or her average emoluments for six months immediately preceding the date of retirement.
Pension under government is payable to those who have rendered a minimum of ten years
qualifying service.
With regard to the quantum of pension, there is no universally acceptable formula.
Different countries give pensions ranging between 50 and 100% of last pay drawn. Some
consultants have suggested that 67% of last pay drawn should suffice. The fifth pay
commission felt that it would not be possible for government to fund this sudden increase
in the quantum of pension from 50% to 67%. It was therefore suggested that while
retaining the government's contribution of 50% the balance should be funded by
employee's contributions. There would be some relief to pensioners by the reduction of
the period over which emoluments are averaged towards the end of the career from ten to
six months. Pensioners who have served the government for more than thirty -three years
would also benefit if 0.5% additional pension is granted for every six months of
additional service, over and above thirty three years.
With regard to family pensions, fifth pay commission has retained the quantum of 30% of
reckonable emoluments as at present but this has been made uniform for all categories of
employees. The ceiling has also been removed.
Fifth pay commission have attempted a major policy thrust, by suggesting a complete
parity between past and present pensioners, while recommending a modified parity
between pre-1996 and post-1996 pensioners. The formula will ensure total equity
between persons who retired before 1996 and those who retired later. It also gives all
pensioners at least the minimum pension appurtenant to the post-1996 revised scale of
pay of the post they held at retirement.
9.4.3 General / Contributory Fund
Under this scheme there is a provision for employees to contribute to the provident fund
to which government contributes an equal share. The employee gets the money at the
time of retirement and has also the facility to draw loans out of it from time to time.
9.4.4 Gratuity
According to the definition in rule 3(1) of the 1972 central civil service rules, the term
‘pension’ includes gratuity except when the term pension is used in contradistinction to
gratuity. Payment of Gratuity Act, 1972 provides for the payment of gratuity to
employees with five years continuous service working in factories, mines, oilfields,
plantations, and other establishments including piece-rate and seasonal workers where
there are ten or more employees.
For the purposes calculating the period of employment, periods of maternity leave are
included provided that the total period of such maternity leave does not exceed twelve
weeks. The Payment of Gratuity Act, 1972 is applicable to factories, mines, oil fields,
plantations, ports, railways, motor transport undertakings, companies, and to shops and
other establishments employing ten or more workmen. The act provides for payment of
gratuity at the rate of fifteen days wages for each completed year of service subject to a
maximum of rupees two lakh. In the case of seasonal establishment, gratuity is payable at
the rate of seven days wages for each season. The act does not affect the right of an
employee to receive better terms of gratuity under any award or agreement or contract
with the employer.
Gratuity has also been unnecessarily subjected to three kinds of ceilings. First is the rate
of gratuity which is half-a-month's emoluments for every year of service put in. This is
subject to a second ceiling of 16.5 months, irrespective of number of years of service.
There is also a cash ceiling on top of the other two. The Fifth Pay Commission has tried
to bring about greater equity in the system, between past and present retirees by making
two suggestions; 1) removal of the cash ceiling and 2) computation of gratuity on pay
plus the Dearness Allowance on the date of retirement.
The Fifth Pay Commission found considerable ad hocism in the treatment of employees
dying while in service, with different departments treating their employees through
varying formulae. The pay commission has tried to bring some uniformity in the ex-
gratia rewards according to the nature of death in five different sets of circumstances,
with the amount reaching up to Rs. 7.5 lakhs.
9.4.5 Medical Allowance
For pensioners not covered by the Central Government Health Scheme (CGHS), the Fifth
Pay Commission suggested a medical allowance of Rs. 100 per month. It has also
recommended a comprehensive medical scheme, providing complete health insurance
both to employees and pensioners in non-CGHS areas.
9.5 VOLUNTARY RETIREMENT
Currently we have a procedure for voluntary retirement. In the context of economic
liberalisation and the need for right-sizing the government machinery, the question of
liberalising the provisions of the present Voluntary Retirement Scheme (VRS) arose.
After considerable thought and discussion the commission has evolved a two-pronged
strategy on voluntary retirement as under:
(a) Retain the existing VRS as it is, on a regular year round basis to take care of those
who want to leave government service of their own volition. Here, the assumption is that
they have weighed the pros and cons of their decision and have already lined up a job in
all probability. For them, the normal provisions would be adequate.
(b) Evolve a new special short-term Golden Handshake Scheme only for those who are
identified by the government as surplus. Here it is the government, which is taking the
painful decision of sending such employees home, although there may be no fault of
theirs. The posts so vacated by the incumbents shall be abolished. The persons identified
as surplus would be entitled to the following benefits:
1. Full commutation of pension by surrender of the right to receive monthly pension with
an option to avail, instead of commutation up to the limit prescribed for employees
retiring on superannuation and to receive monthly pension.
2. Ex-gratia amount of 1.5 months emoluments (Pay + DA) for each completed year of
service or the remaining years of service left before the normal date of retirement,
whichever is lower. The weight age allowed in qualifying service shall not count for the
purpose of computation of ex-gratia amount. The employee shall be given an option to
receive the amount of ex- gratia and retirement gratuity either in lump sum or in the
shape of a monthly protection allowance, equivalent to the ex-gratia, gratuity and interest
thereon at the rate applicable to GPF accumulations, spread over 60 months. This
allowance could help the employee to pull on during the period of transition, by
providing him with a substantial monthly income sufficient to cater to his basic needs at
least.
3. Computation of pension and retirement gratuity by allowing a weight age of five years
to the qualifying service on the date of relief.
4. Encashment of earned leave accumulated on the date of relief.
5. Payment of accumulations in the general provident fund.
6. Exemption of pension benefits including ex-gratia amount from Income Tax and
Wealth Tax.
The purpose of providing pension and other retirement benefits to the employees by the
government is to ensure that during their service, they work without the fear or
apprehension about meeting their old-age requirements. A suitable compensation
structure takes care of these material aspects of life, both while in the job and later on.
Most people in government service are oblivious of their personal finances, since there is
a structured pattern of savings, investments and accruals. The successive Central Pay
Commissions have given adequate attention to the interests of pensioners, both
employees and their families. In addition, the landmark judgment of the Supreme Court
in Nakara's case has firmly established the rights of pensioners to a decent pension in
keeping with the changes in the price index etc. Although pensioners are not a vocal and
organised lobby unlike their serving colleagues, it is the paramount duty of the State as
the employer to give them their due in a dignified manner.
The union and state governments have provided many facilities to promote social,
cultural and psychological inputs in the lives of employees to keep them active, alert and
enthusiastic. However, in practice, we find that only a fraction of employees take
advantage of the programs initiated by the government at the union and state levels. We
have to make the employees aware of these schemes so that they develop positive
attitudes and feelings towards their work. In modern times, most of the employees are
stress prone and are inflected by drudgery of life leading to evils like smoking, liquor
consumption, etc. the purpose is to divert their interest to extra curricular activities both
within the working places and at home.
9.6 CONCLUSION

We can conclude by summarising the benefits of employee benefits scheme as follows:

1. Employees Benefits are an integral part of the salary system.

2. Employees’ benefits take care of the employees of their present as well as future
needs.

3. Employees’ benefits raise productivity of employees.

4. Employees’ benefits keep employees motivated as they feel relaxed and secure.

9.7 KEY CONCEPTS

Employee Benefits: Salary and perquisites may not be enough to elicit desired
behaviour from employees. Fringe Benefits are added benefits, like
travel concession, leave, commutation of leave, provision of
crèches for female employees etc., which are given for a worker’s
facility to enable him to perform comfortably and with
convenience.

Retirement: An employee retires after reaching the age of superannuation. The

age of superannuation is fixed in each country by legislation. The
demographic profile of the country and, life expectancy, climate,
work culture and general health levels are some of the factors
determining the retirement age in a country.

9.8 REFERENCES AND FURTHER READING

Bureau of Labour Statistics Survey, 1992, Report on Employee Benefits for Small Private
Businesses.
Dwivedi, R.S, 1984, Manpower Management: An Integrated Approach to Personnel
Management and Labour Relations, Eastern Economy Edition, Prentice Hall
Dwivedi, R.S, 1990, Personnel Management, Oxford and IBH.
Fifth Pay Commission Report, 1993, Vol. 3, Nabhi Publications, Reprint Edition.
French, Wendell, 1997, Human Resource Management, Third Edition, Houghton Mifflin
Company, USA.
Ghosh, P, 1993, Personnel Administration in India, Sudha Publications, New Delhi.
Goel, S.L. and Shalini Rajneesh, 2003, Public Personnel Administration, Deep & Deep,
New Delhi.
Hidaytullah, M, 1986, Constitutional Law of India, Bar Council Trust.
Leap, L. Terry & Michael D. Crino, 1990, Personnel/Human Resource Management,
MacMillian, New York.
Tripathi, P.C, 2003, Human Resource Development, Sultan Chand and Sons, New Delhi.
Tyagi, A.R, 1969, Civil Service in a Development Society, Sterling, Delhi.
Verma, S.P. and S.K. Sharma, 1980, Managing Personnel Administration: A
Comparative Perspective”, IIPA, New Delhi.
9.9 ACTIVITIES
1. What are the purposes of employee benefits?
2. Discuss types of employee benefits.
3. Discuss different kinds of Pensions.
UNIT-10 TRAINING AND DEVELOPMENT

Structure

10.0 Learning Outcome

10.1 Introduction
10.2 Meaning of Training
10.3 Training, Development and Education
10.4 Importance of Training
10.5 Assessment of Training Needs
10.6 Learning & Teaching
10.7 Steps in Training Programme
10.8 Training Methods
10.9 Causes for Failure of Training
10.10 Evaluation of Training
10.11 Conclusion
10.12 Key Concepts
10.13 References and Further Reading
10.14 Activities

10.0 LEARNING OUTCOME

After reading this Unit, the learner will come to know:

• The meaning and importance of Training and Development;

• The significance of assessment of Training needs;
• The relevance of Training Methods; and
• The causes of failure of Training.

10.1 INTRODUCTION

Every organisation needs to have well trained and experienced people to perform the activities
required to be undertaken. It is necessary to raise the skill levels and increase the versatilities and
adaptability of employees to the requirements of an organisation in the changing world. Inadequate
job performance results in a decline in productivity of changes. Job redesigning or a technological
break-through require some type of training and development effort. In a rapidly changing society,

1
training and development is not only an activity that is desirable but also an activity that an
organisation must commit resources for maintaining a viable and knowledgeable workforce.

All types of jobs require some sort of training for efficient performance. Therefore, all the
employees, new and old, should be trained or retained. Every new employee regardless of his
previous training and experience needs to be introduced to the work-environment of his new Job and
taught how to perform specific tasks. Moreover, specific occasions for retraining arise when an
employee is transferred or promoted or when jobs change. Training is valuable to the new comer in
terms of better job security and greater opportunity for advancement. A skill thus, acquired by the
new entrant through training is an asset to the organisation.

10.2 MEANING OF TRAINING

Training is the process through which employees are made capable of doing the jobs prescribed to
them. According to Flippo, “Training is the act of increasing the knowledge and skills of an
employer for doing a particular job”.

According to Dale Yoder, “Training is the process by which man-power is filled for the particular
jobs it is to perform”. Beach says, “Training is the organised procedure by which people learn
knowledge and skills for a definite purpose”.

The trainee will acquire new manipulative skills, technical knowledge, problem-solving ability and
or attitudes, etc. Training is not one-step process but it is a continuous or never-ending process.
Training makes newly recruited workers fully productive in the minimum of time. Even for old
workers training is necessary to refresh them and to be conversant with required techniques. In
short, training is the act of improving or updating the knowledge and skills of an employee for
performing a particular job.

10.3 TRAINING, DEVELOPMENT AND EDUCATION

“Training”, “education”, and “development” are the three terms frequently used. On the face of it,
there might not be much difference between them, but when a deep thought is given, there appear
some differences between them. In all “training” there is some “education” and in all “education”
there is some “training”. And the two processes cannot be separated from “development”. Precise
definition is not possible and can be misleading but different persons have used these activities in
different ways.

Training: It is a process of training, a sequence of programmed behaviour. It is application of

knowledge. It gives people an awareness of the rules and procedures to guide their behaviour. It
attempts to improve their performance on the current job or prepare them for an intended job.

Development: It is a related process. It covers not only those activities which improve job
performance but also those that bring about growth of the personality, help individuals in the

2
progress towards maturity and actualisation of their potential capacities so that they become not only
good employees but better men or women.

In organisational terms, it is intended to equip persons to earn promotions and hold greater
responsibility. Training a person for a higher job is development. It may well not only include
imparting specific skills and knowledge but also inculcating certain personality and mental attitudes.
In this sense, development is not much different from “education”.

Education: It is the understanding and interpretation of knowledge. It does not provide definite
answers, but rather, it develops a logical and rational mind that can determine relationships among
pertinent variables and thereby understand phenomena. Education must impart qualities of mind and
character, understanding of basic principles, synthesis and objectivity. Usually, education involves a
range of skills and expertise, which can be provided only by educational institutions. An organisation
can and does make use of such institutions in order to support and supplement its internal training
and development efforts.

Distinction between Training and Development

Training
It is a short-term process utilising a systematic and organised procedure by which non-managerial
personnel have technical knowledge and skills for a definite purpose.

Development
It is a long-term educational process utilising a systematic and organised procedure by which
managerial personnel learn conceptual and the theoretical knowledge for general purpose.

Training refers only to instruction in technical and mechanical operations while development refers
to philosophical and theoretical educational concepts. It designed for non-managers, while
development involves managerial personnel. Campbell has observed that training courses are
typically designed for a short-term, while development involves a broader education for long-term
purposes.

Training and development differ on account of “what”, “who”, “why”, and “when”.

Learning Training Development

Dimensions
Who? Non-Managerial Personnel Managerial Personnel
What ? Technical and mechanical operations Theoretical Concepts or ideas
Why? Specific job-related purpose General Knowledge
When? Short-term Long-term

3
Training and Development
Employee training is distinct from management development or executive development. While the
former refers to training given to employees in the areas of operations, technical and allied, the latter
refers to developing an employee in the areas of principles and techniques of management,
administration, organisation and allied areas. It could be more appropriately understood through the
following:

- Training is meant for all individuals, that meant for operators or non-managers is often
called learning: Training and all other developmental activities meant for executive are
considered as executive development activities;
- The aim of training is to develop specific abilities in an individual. The aim of
development is to enhance the total personality of the individual;
- Training is a specific activity or one-shot affair aimed to imparting specific job-related
information and skills. Development is a continuous process;
- Training is mostly a preparation to meet an individual’s present needs. It can thus, be
seen as a reactive process. Development is a preparation to meet his future process
having long-run objectives; and
- the initiative for training largely comes from management, the initiative for
development comes from the individual himself, and it is a result of internal motivation.
Various activities, planned and unplanned, formal and informal, initiated and carried
out by individual and the organisation, come under development.

10.4 IMPORTANCE OF TRAINING

Training enables the employees to get acquainted with jobs and increase their aptitudes, skills and
knowledge. It helps the newly recruited to be productive in minimum amount of time. Even for the
experienced workers, it is necessary to refresh them an enable them to keep up with new methods,
techniques, new machines and equipments for doing the work. According to Dale S. Beach
“Training is vital and necessary to activity in all organisational and of plays a large part in
determining the effectiveness and efficiency of the establishment”. Training is advantageous not
only to the organisation but also the employees.

Advantages to the Organisation

The major advantages of training to organisation could be referred to as:

1) Follow up of selection procedure: Training is a follow up of selection procedure. It

helps in choosing the most appropriate individuals for different jobs. Training can be
used in spotting out promising persons and in removing defects in selection process;
2) Better Performance: Training is about improvement of the quality of output by
increasing the skill of the employee. This makes the fresh and old employee acquire
more skills and thus, be accurate in performance of their work;
3) Reduction in Cost Production: Training personnel is to make better and economical
use of materials and equipments besides decreasing wastage. In addition, the rate of
accidents and damage to machinery and equipment is at the minimum by the well
trained employees amounting to lesser cost of production per unit,
4
 4) Reduced Supervision: If the employees are given proper training, the need of
supervision gets lessened. A well trained employee is self-reliant in his work as he
comes to know what is to be and how. Under such situations, close supervision is not
much required. Leaving the scope for the management focus its attention on other basic
and important functions;
5) Increased morale: The morale of the employee gets boosted, if they are given proper
training. As a common objective of the organisation, training programme moulds its
employees’ attitude to achieve support for organisational activities and obtain better
cooperation and greater loyalty. With the help of tiny dissatisfaction, complaints,
absenteeism and turnover can also be reduced among the executives. Thus, training
helps in building an efficient and cooperative work force; and
6) Organisational Stability and Flexibility: Training increases the stability and flexibility
of the organisation. Creation of a reservoir of trained replacements increases the
stability of the organisation that is; the organisation is able to sustain its effectiveness
despite the loss of key personnel.

Advantages to the Executive

The incumbents on executive position have advantages to their credit through training. It could be
reflected as follows:

1) Increase in wage earning capacity: Training helps the executive in acquiring new
knowledge and job skills. In this way, it increases their market value and wage earning
power leading to increase in their pay and status.
2) Job Security: Training can help an executive to develop his ability to earn make the
official adaptive to new work methods, besides learning to use new kinds of equipment
and adjusting to major changes in job contents as well a work relationship; and
3) Chances of Promotion: Training also qualifies the executives for promotion to more
responsible jobs.

Limitations of Training

Every coin has two sides. The other side of training, that is, its limitations are as such:

1. Training is a costly affair and expensive process making organisations to spend

substantive amount, taken out of other organisational commitments.
2. Training may result in dislocation of work and loss of output because regular office work
is likely to be interrupted or delayed because of the time of trainees spent in training;
3. Sometimes, it is difficult to obtain good training instructors and leaders; and
4. Self-reliance and capacity for new ideas might be stiffed.

10.5 ASSESSMENT OF TRAINING NEEDS

5
Training needs are identified on the basis of organisational analysis, job analysis and man-power
analysis. Training programmes, training methods and course contents have to be planned in keeping
with the training needs. Training needs are those aspects necessary to perform the job in an
organisation in which executive is lacking attitude/aptitude of knowledge and skills.

The following methods are used to assess the training needs:

1) Organisational requirements and weaknesses;

2) Departmental requirements/weaknesses;
3) Job specifications and employee specifications;
4) Identifying specific problems;
5) Anticipating future problems;
6) Management’s request;
7) Observation;
8) Interviews;
9) Group conferences;
10) Questionnaire Surveys;
11) Tests or examinations;
12) Check lists; and
13) Performance appraisal

10.6 LEARNING AND TEACHING

The training programme will not be effective if the trainer is not properly equipped with the technical
aspects of the content or if he lacks aptitude for teaching and teaching skills. Training comprises of
mainly learning and teaching. Training principles can be studied through the principles of learning
and teaching.

Some of the significant principles and assumptions of learning include:

1) All human beings can learn

2) An individual must be motivated to learn
3) Learning is active and not passive
4) Learners may acquire knowledge more rapidly with guidance. Feedback ensures
improvement in speed and accuracy of learning
5) Appropriate material (like case studies, tools, problems, readings, etc) should be provided
6) Time must be provided to practice learning
7) Learning methods should be varied. Variety of methods should be introduced to off-set
fatigue and boredom

6
 8) Learners need reinforcement of correct behaviour
9) Standards of performance should be set for the learner
10) Different levels of learning exists
11) Learning is an adjustment on the part of an individual
12) Individual differences play a large part in effectiveness of the learning process
13) Learning is a cumulative process
14) Ego factor is widely regarded as a major factor in learning
15) The rate of learning decreases when complex skills are involved.
16) Learning is closely related to attention and concentration
17) Learning involves long-run retention and immediate acquisition of knowledge
18) Accuracy deserves generally more emphasis than speed.
19) Learning should be relatively based
20) Learning should be a goal-oriented

Learning Patterns

Trainees need some understanding of the patterns in which new skills are adopted. The
executive is likely to find himself unusually clumsy during the early stages of learning. This can
be called discouraging stage. After the executive adjusts himself to the environment, he learns at
a faster rate. A “fatigue” develops after the lapse of more training time due to loss of motivation
and lack of break in training schedule. The trainee reaches the next stage when he is motivated
by the trainer and the training process restarts after some break. The trainee at this stage learns at
a fast rate. Special repetition of the course leads the trainee to reach the stage of over-learning.

Learning Curve
-Learners Job Proficiency
-Discouraging first stage
-Increasing Returns
-Fast fatigue
-Peak Proficiency
-Over-learning period

Thus, it is clear that learning partly takes place at a constant rate. It varies according to the
difficulty of the task, ability of the individual and physical factors. However, the rate of learning
varies from one individual to another.

Characteristics of Learning Process

Learning Process has the following characteristics

7
1) Learning is a continuous process
2) People learn through their actual personal experience, simulated experience and from others’
experience
3) People learn step by step, from known to unknown and simple to complex
4) There is a need for repetition in teaching to inculcate skill and to learn perfectly
5) Practice makes man perfect. Hence, opportunity should be erected to use and transfer skills,
knowledge and abilities acquired through learning. It gives satisfaction to the learner
6) Conflict in learning arises when the trainer knows or has developed some habits which are
incorrect in terms of the method being learned.

Learning Problems
The trainer has to be familiar with the subject and its applied area. He should have the knowledge of the
possible learning problems like:

1) Lack of knowledge, skill and favourable attitude

2) Knowledge and skill not being applied
3) Existence of anti-learning factors: Most operational situations contain a number of
elements which will restrict the development of elements regardless the methods
employed of learning
4) Psychological problems like fear end shyness
5) Durability to transfer of learning to operational situation
6) Heavy dependence on repetition, demonstration and practice
7) Unwilling to change
8) Lack of interest about the knowledge of results
9) Absence of self-motivation

Teaching Principles
In addition to learning principles, teaching principles should also be taken care for effective training.

1) The executive must be taught to practice only the correct method of work
2) Job analysis and motion study techniques should be used
3) Job training under actual working conditions should be preferred to class room training
4) Emphasis should be given more on accuracy than speed
5) Teaching should be at different time intervals
6) It should be recognised that it is easier to train young workers than old workers due to
their decreasing adaptability with the increase in age.

Principles of Training
A sound training programme should be based on the following principles

8
 1) Designed to achieve pre-determined objectives
2) Less-expensive
3) Developed for all
4) Pre-planned and well organised
5) According to size, nature and financial position of the concern
6) Flexible
7) Conducted by an experienced supervisor
8) Coverage of theoretical as well as practical aspects
9) Interests of executives and employees
10) More than one method
11) Training followed by reward
12) Sufficient time for practice

Area of Training
Organisations provide training to their personnel in the following areas:
- Company policies and procedures
- Specific skills
- Human relations
- Problem solving
- Managerial and supervisory skills and
- Apprentice training

10.7 STEPS IN TRAINING PROGRAMME

Training programmes are costly affair, and time consuming process. Therefore, they need to be
drafted very carefully. Usually, in the organisation of training programmes, the following steps are
considered necessary:

1) Discovering (or) Identifying the training needs

2) Getting ready for the job
3) Preparation of the learner
4) Presentation of operation and knowledge
5) Performance try-out
6) Follow-up and evaluation of the programme

9
10.8 TRAINING METHODS

There are a number of methods through which the trainees are trained. The methods normally used
for training of operative and supervisory personnel are classified into “on the job” and “off-the-job”
training methods.

A. On the Job Training Methods

The worker by these methods learns to master the operations involved, on the actual job situation,
under the supervision of his immediate boss who undertakes the responsibility of conducting
training. On-the-job training has the advantage of giving first hand knowledge and experience under
the actual working conditions. The emphasis is placed on rendering services in the most effective
manner rather than learning how to perform the job.

1) On Specific Job: The most common or formal on-the-job training programme is training for
a specific job. Current practice in job training was first designed to improve the job
performance through job instruction. On-the-job training is conducted through:

a) Experience: This is the oldest method of on-the-job training. But as an exclusive

approach, it is wasteful, time consuming and inefficient. It has been observed that
it should be followed by other training methods to make it more effective. On-
the-job problem-solving and colleague interactions were prompted as most
important for professional growth.

b) Coaching: On-the-job coaching by a superior is an important and potentially

effective approach, if superior is properly trained and oriented. The supervisor
provides feed-back to the trainee on his performance and offers him some
suggestions for improvement. Often the trainee shares his thoughts, views and
apprehensions about the duties and responsibilities with the boss and thus gets
relief and relieves him of his burden. A limitation of this method of training is
that the trainee may not have the freedom of opportunity to express his own ideas
because the trainer happens to be his immediate boss.

c) Understudy: The understudy method is considered a somewhat different approach

from those described above, that a certain person is specifically designated as the
heir-apparent. The understudy method makes the trainee an assistant to the
current job holder. The trainee learns by experience, observation and imitation of
the style of the person he asked to work with. The trainee is informed about the
policies, methods, techniques etc. The advantage of this method is that training is
conducted in a practical and realistic situation.

2) Position Rotation: The major objective of job rotation is the broadening of the background
of trainee in the organisations. This type of training involves the movement of the trainee
from one job to another. The trainee receives the job knowledge and gains experience from
10
 his supervisor or trainer in each of the different job assignments. This method gives an
opportunity to the trainee to understand the operational dynamics of a variety of jobs. There
are certain disadvantages of this method. The productive work can suffer because of the
obvious disruption caused by such changes. Rotations become less useful as specialisation
proceeds, for few people have the breadth of technical knowledge and skills to move from
one functional area to another.

3) Special Projects: This is a very flexible training device. Such special project assignments
grow ordinarily out of an individual analysis of weaknesses. The trainee may be asked to
perform special assignment; thereby he learns the work procedure. Trainees not only acquire
knowledge about the assignment activities, but also learn how to work with others.

4) Selective Readings: Individuals in the organisation can gather and advance their knowledge
and background through selective reading. The readings may include professional journals
and books. Various business organisations maintain libraries for their staff. Many executives
become members of professional associations and they exchange their ideas with others. This
is a good method of assimilating knowledge. However, some executives claim that it is very
difficult to find time to do much reading other than absolutely required in the performance of
their jobs.

5) Apprenticeship: Apprentice training can be traced back to medieval times when those
intended of learning trade skill bound themselves to a master craftsman to learn by doing the
work under his guidance. In earlier periods, apprenticeship was not restricted to ascertains,
but was used in training for the professions including medicine, law, dentistry, teaching, etc.
Today’s industrial organisations require large number of skilled craftsmen who can be trained
by this system. Such training is either provided by the organisation or it is imparted by
governmental agencies. Most states now have apprenticeship laws with supervised plans.
Such training arrangements usually provide a mixed programme of classroom and job
experience.

6) Vestibule Schools: Large organisations are frequently provided with what is described as
vestibule schools, a preliminary to actual shop experience. As far as possible, shop
conditions are duplicated, under the close watch of the instructors. Vestibule schools are
widely used in training for clerical and office jobs as well as for factory production jobs.
Such training is through shorter and less complex but is relatively expensive. However, the
costs are justified if the volume of training is large and high-standard results are achieved.

B. Off-the-job Training Methods

In these methods, trainees have to leave their work-place and devote their entire time to the
development objective. In these methods development of trainees is primarily and any usable work
produced during training is secondary. Since the trainee is not instructed by job requirements, he can
place his entire concentration on learning the job rather than spending his time in performing it.
There is an opportunity for freedom of expression for the trainees. Off-the-job training methods are
as follows:

11
 1) Special Course and Lectures: Lecturing is the most traditional form of formal training
method. Special courses and lecturers can be organised by organisations in numerous
ways as part of their development programmes. First, there are courses which the
organisations themselves establish to be taught by members of the organisations. Some
organisations have regular instructors assigned to their training and development
departments. A second approach to special courses and lecturers is for organisations to
work with universities or institutes in establishing a course or series of courses to be
taught by instructors of these institutions. A third approach is for the organisations to
send personnel to programmes organised by the universities, institutes and other bodies.
Such courses are organised for a short period ranging from 2-3 days to a few weeks.

2) Conferences: This is an old but still a favourite training method. In order to escape the
limitations of straight lecturing many organisations have adopted guided-discussion type
of conferences in their training programmes. In this method, the participants pool their
ideas and experiences in attempting to arrive at improved methods of dealing with the
problems, which are common subject of discussion. Conferences may include buzz
sessions that divide conferences into small groups of four or five for intensive discussion.
These small groups then report back to the whole conference with their conclusions or
questions.
3) Case Studies: This technique, which has been developed and popularised by the Harvard
Business School, USA is one of the most common forms of training. A case is written
account of trained reporter or analyst seeking to describe an actual situation. Cases are
widely used in a variety of programmes. This method increases the trainee’s power of
observation, helping him to ask better questions and to look for a broader range of
problems. A well chosen case may promote objective discussion, but the lack of
emotional involvement may make it difficult to effect any basic change in the behaviour
and attitude of trainees.
4) Brainstorming: This is the method of stimulating trainees to creative thinking: this
approach developed by Alex Osborn seeks to reduce inhibiting forces by providing for a
maximum of group participation and a minimum of criticism. A problem is posed and
ideas are sought. Quantity rather than quality is the primary objective. Ideas are
encouraged and criticism of any idea is discouraged. Chain reaction from idea to idea is
often developed. Later, these ideas are critically examined. There is no trainer in
brainstorming. Brainstorming frankly favours divergence, and this fact may be sufficient
to explain why brainstorming is so little used yet in developing countries where new
solutions ought to carry the highest premium. It is virtually untried even though its
immediate use is limited to new ideas only, not change in behaviour.
5) Laboratory Training: Laboratory training adds to conventional training by providing
situations, which the trainees themselves experience through their own interaction. In this
way, they more or less experiment the conditions on themselves. Laboratory training is
more concerned about changing individual behaviour and attitude. It is generally more
successful in changing job performance than conventional training methods. There are
two methods of laboratory training namely simulation and sensitivity training as
explained under:

a) Simulation: An increasingly popular technique of management development is

simulation of performance. In this method, instead of taking participants into the field
there can be simulated in the training session itself. Simulation is the presentation of
real situation of organisations in the training session. It covers situations of varying
complexities and roles for the participants. It creates a whole field organisation,
12
 relates participants through key roles in it, and asks them deal with specific situations
of a kind they encounter in real life. There are two common simulation methods of
training: role-playing is one and business game is the other.

i) Role-playing: Role-playing is a laboratory method, which can be used rather

easily as a supplement to conventional training methods. Its purpose is to increase
the trainees’ skill in dealing with other people. One of its greatest uses is in
connection with human relations training but it is also used in sales training as
well. It is spontaneous acting of realistic situation involving two or more persons
under classroom situations. Dialogue spontaneously grows out of the situation, as
it is developed by the trainees as singed to it. Other trainees in the group serve as
observers or critics. Since people take role everyday, they are somewhat
experienced in the art, and with a certain amount of imagination, they can project
themselves into roles other than their own. By this method, a trainee can broaden
his experience by trying different approaches. Role-playing also has weaknesses
which partly offset its values. It is time consuming and expensive. It requires
experienced trainers because it can easily turn sour without effective direction.
Nevertheless, these weaknesses do not undermine the strengths of this method.

ii) Gaming: Gaming has been devised to simulate the problems of running a
company or even a particular department. It has been used for a variety of
training objectives, from investment strategy, collective bargaining techniques, to
the morale of clerical personnel. It has been used at all levels from the top
executives to the production supervisors. Gaming is a laboratory method in which
role-playing exists but its difference is that it forces attention on administrative
problems, while role-playing tends to emphasise mostly on interaction. Gaming
involves several teams each of which is given a firm to operate for a specified
period. Usually, the period is a short one, say one year or so. In each period, each
team makes decisions on various matters such as fixation of price, level of
production, inventory level, and so forth. Since each team is competing with
others, each firm’s decisions will affect the results of all others. All the firm
decisions are fed into a computer, which is programmed to behave somewhat like
a real market. The computer provides the results and the winner is the team which
has accumulated largest profit. In the light of such results, strengths and
weaknesses of decisions are analysed.

b) Sensitivity Training: It is the most controversial laboratory training method. Many

of its advocates have an almost religious zeal in their enhancement with the training
group experience. Some of its critics match this fervour in their attacks on the
technique. As a result of criticism and experience, a somewhat revised approach,
often described as “team development” training, has appeared. It was first used by
National Training Laboratories at Bethal, USA. The training groups are called T-
Group. Sensitivity training is a small-group interaction under stress in an
unstructured encounter group which requires people to become sensitive to one
another’s feeling in order to develop reasonable group activity. T-Group has several
characteristic features: (i) T-group is generally, small, from ten to twenty members;
(ii) the group begins its activity with no formal agenda; (iii) the role of trainer is
primarily to call attention from time to time to the on-going process within the group;
and (iv) the procedure tends to develop introspection and self-examination, with
emotional levels of involvement. The objectives of such training are concern for

13
 others, increased tolerance for individual differences, less ethnic prejudice,
understanding of a group process, enhanced listening skills, increased trust and
support.

10.9 CAUSES FOR FAILURE OF TRAINING

Training effort in most cases in many organisations becomes a failure due to weaknesses in policies,
procedures, practices concerning training activities. Some such important causes for the failure of
training, in general, are:

1) Top management does not have complete faith basically in HRD philosophy and has little
confidence in training as an important method for ensuring development of human
resources.
2) The training objectives or not clear, specific and not understood by all.
3) Training policy is not clear, lacks comprehensiveness and does not have proper linkage
with other HRD policies.
4) Organisational arrangements, budgetary allocations, staff resources, aids, etc. are not
adequate and properly placed
5) Training staff lacks coordination with other staff and personnel
6) In various aspects relating to training, such as identification of needs, selection of
trainees, sponsoring candidates for training, using trainees on the job etc., there is not
adequate seriousness to ensure effectiveness of training. It is felt that procedures are
adopted as a mere formality
7) In conducting training activity, absence seriousness to involve the trainees in learning
affects the training outcome. Besides, lack of expertise in using the methods, aids,
resources, etc. hampers the expected results.
8) Lack of efforts to make better utilisation of the trainees and unfavourable environment to
the trainees in applying their enhanced abilities and in rewarding their improved
performance.
9) Lack of evaluation of training at various stages. The outcomes of training programmes
are not monitored.

Efforts to overcome the weaknesses mentioned may help the organisation in improving the
effectiveness of training.

10.10 EVALUATION OF TRAINING

A desirable characteristic of all training programmes is built-in-provision for its evaluation to find
out whether the objectives of training activity or programmes are achieved or not.

14
Notable dimensions of training evaluation are:

1) Evaluation of Contextual factors: Training effectiveness depends on not only what

happens during the training, but also on what happens before the actual training and
what happens after the training has formally ended. Thus, there is need for both pre-
training and post-training evaluation of contextual factors.
2) Evaluation of training inputs: This involves the evaluation of training curriculum,
its sequencing, trainers abilities, facilities, aids and resources used.
3) Evaluation of training process: The climate of training organisation, the relationship
and interaction between participants and trainees, attitudes and approaches of the
trainers, training methods used, and involvement of the trainers in learning are some of
the important elements of the training process, which need to be evaluated.
4) Evolution of training outcomes: It involves measuring the results of the training in
terms of what has been achieved on account of training programme. Pay-offs from
training is intangible, slow and not clearly identifiable with the specific activity.

In evaluation of outcomes, four categories of outcomes can be measured:

i) Reaction: Evaluation of trainee’s reaction to the programme

ii) Learning: Evaluation of what trainees have learnt
iii) Behaviour: Evaluation of change in the behaviour of trainee due to training
iv) Results: Evaluation of results achieved due to training in various areas such as production,
human resource utilisation, performance tests, general job and organisation environment and
cost-value relationship.

Principles of Training Evaluation

If evaluation in any form is to be effective, it must be done in accordance with some of the following
principles:

1) Evaluation must be planned, which is to be evaluated, when, why, by what means and by
whom must be determined in advance
2) Evaluation must be objective. It should not be a mere formality or eyewash or for name-
sake
3) Evaluation must be verifiable. Results can be compared by the same or different means
4) Evaluation must be cooperative. It must involve all those part of or affected by the
training programme. It is not a contest between the evaluator and the subject of
evaluation.
5) Evaluation must be continuous to ensure effectiveness at every step.
6) Evaluation must be specific. It should specify the strengths and weaknesses for further
improvement but should not make out vague statements or generalisations
7) Evaluation must be quantitative. All measurements should aim at quantifying the
changes in different performance variables.
15
 8) Evaluation must be feasible. It must be administratively manageable
9) Evaluation must be cost effective. The results must be commensurate with the costs
incurred.

10.11 CONCLUSION

Every organisation needs to have well-trained and experienced people to perform the activities that
have to be done. Training is the process through which employees are made capable of doing the job
prescribed to them. In a rapidly changing society, employee training and development is a desirable
activity. All types of jobs require some type of training for their efficient performance and therefore
all employees new and old should be trained or retrained.

The basic needs and objective of training programme for a particular level differ from that of other
level. Thus, a particular training programme would be more suitable to a particular group of people.
Moreover, within a particular group, an individual may use a particular training while others may
need some other programme. The determining factor would then be the level of individual in
organisation and his personality characteristics.

10.12 KEY CONCEPTS

Education: Knowledge attainment which develops or progresses, both as an inadvertent virtue

and as part of deliberate policy is understood as education. Education is more than
information sharing and imparting. It implies approximation to truth in the specific
area of learning.

Learning: Learning is the process of knowledge attainment or the tool with which knowledge is
attained. Learning and development proceed in tandem and as complementary
processes as each refurbishes the other. Learning leads to development of cognitive
processes.

Peak Proficiency: Proficiency is understood as the ability, talent, aptitude, adeptness, or expertise in
a given subject area. Peak proficiency implies operating at optimum capacity.
Maximum capacity may not be possible due to physical and cognitive limitations to
human capacity.

10.13 REFERENCES AND FURTHER READING

Flippo, Edwin B, 1984, Principles of Personnel Management, McGraw-Hill, New York.

Luthans, Fred, 1985, Organisational Behaviour, McGraw-Hill, New York.
Memoria, C.B, 1999, Personnel Management, Himalaya Publishing Hosue, Bombay.
Verma, M.M. and R.K.Agarwal, 2000, Personnel Management and Industrial Relations, King’s
Books.
Yoder, Dale, 1969, Personnel Management and Industrial Relations, Prentice Hall.
16
10.14 ACTIVITIES

1. Explain the meaning and importance of Training with suitable illustrations.

2. Write an essay on Methods of Training.
3. List out the shortcomings and the limitations of Training.

17
UNIT 11 REDEPLOYMENT AND RESKILLING

Structure
11.0 Learning Outcome
11.1 Introduction
11.2 Understanding Redeployment
11.3 Redeployment: Guiding Principles
11.4 Redeployment: Key Issues
11.5 Redeployment Policy Framework
11.6 Redeployment in India with special reference to VRS and NRF
11.7 Reskilling: Meaning and Importance
11.8 Reskilling Process
11.9 Reskilling through Distance Mode
11.10 Conclusion
11.11 Key Concepts
11.12 References and Further Reading
11.13 Activities

11.0 LEARNING OUTCOME

After reading this Unit, you shall be able to:

• Understand the importance of personnel as an asset;
• Explain the concept, meaning and process of redeployment;
• Understand the key issues involved in redeployment;
• Know about redeployment in India with special reference to VRS and NRF;
• Explain the meaning and importance of reskilling; and
• Understand the process of reskilling.

11.1 INTRODUCTION

Organisations are formed collectively of individuals. The success or failure of any

organisation, by and large, is attributed to the commitment, zeal, enthusiasm or laziness,
lethargy and demotivation of the personnel. It becomes imperative for any result-oriented
organisation, public or private, to enhance the productivity and performance of its human
resource besides focusing on reducing duplication and fragmentation. Goal oriented
organisations work towards enhancing their ability to attract and retain talent, which could be
diverse as well as capable. To this effect, reengineering has been defined as “the
1
fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in critical, contemporary measures of performance, such as cost, quality,
service and speed” (Hammer and Champy, 1993). Thus, one finds that the move for being in
terms with required contemporary measures for better performance, the human resource is of
crucial importance. Along with reengineering, restructuring of organisation also contributes
to making an organisation effective. Restructuring measures are undertaken in a broad policy
framework in respect of loss-making manufacturing organisations. It is done for introducing
measures, which could lead to better performance and to do away with redundant existing
operations and their modalities. Through business process reengineering, many organisations
come up with substantive performance improvement, especially in productivity, quality,
profitability and above all customer satisfaction. James P. Ware in his paper “The Process
Redesign Imperative” has highlighted the following positive lessons which have emerged
from experiences with this radical approach: dramatic redesign can produce dramatic
outcomes, dramatic performance improvement requires dramatic leadership; it is central to
process redesign; process redesign efforts change the nature of work; the nature of
management itself also changes”. By and large, the Principles for restructuring process in
public organisations aim at

• Protecting and creating quality employment within the public service

• Supporting the key objectives of transformation of the State
• Improving delivery of services to the community, enhancing productivity and
performance of public service to meet the national objectives
• Supporting all stakeholders’ rights to have information to assess the impact of
transformation
• Promoting good governance values amongst public servants and in this way building
the morale of public personnel
• Improving the skill base of the public service (Public Service Job Summit, 2001)
As referred to above, for making an organisation to have best performance, employees at
all levels play a crucial role. In fact, to say that they are the greatest asset of any
successful organisation will not be out of place. It is through their efforts that rather
extraordinary achievements could be on cards and it is equally true that lack of employees
commitment can drag an organisation and keep its performance down.

11.2 UNDERSTANDING REDEPLOYMENT

An opportunity to be innovative is being provided through redeployment. It enables for

complete use of the skills, knowledge and expertise of the employees at various levels and
enables them to cope up with the challenges coming their way. An organisation going for
redeployment needs to aim at achieving the best use of skilled personnel, while offering
learning opportunities to all. “Redeployment is the process at securing alternative
employment for staff displaced as a result of organisational change, service modernisation,
capability or ill health. The process by which staff accesses different forms of redeployment
may vary and individual staff entitlements within this may differ”. (Redeployment Guideline,
2005).

2
11.3 REDEPLOYMENT: GUIDING PRINCIPLES

An employee declared ‘surplus’ maybe redeployed to a position within the department (or
another department) where there is a similar match of skills between the employee and the
skill requirements of the position.

An overriding principle that is applied to redeployment is that the earlier contribution in the
organisation is of value and working towards retaining such experiences would provide
opportunity for capability and capacity building. Taking example from Public Service
Reform in New Zealand, in the present era of challenges and need for efficient functioning,
redeployment options certainly march towards improving change management process and
helping the organisations to:

• Retain people who are familiar with organisational networks, culture and behavioural
and ethical standards
• Retain institutional knowledge and specialised competencies
• Promote the organisation as an employer of choice
• Reinforce work ethos and commitment to the spirit of service
• Provide both a symbolic and a tangible gesture that the organisation offers employees
unique opportunities, such as multiple career pathways and opportunities for
development
Regarding guiding principles of Enhanced Redeployment Process, the above quoted
document, has referred to the following as additional principles for redeployment.
• The employee is to be consulted on any proposed appointment
• Chief executives and where applicable the union, undertake to encourage surplus
employees to seek voluntary redeployment within the wider public service when
placement is not available in the employing department
• Individual employee’s entitlement to privacy must be respected throughout the
process and information about them can only be released with their agreement.
• Any redeployment process must fit easily within the overall restructuring programme
and be easy to understand and administer within a reasonable time”.

Some of the major reasons for redeployment include internal reorganisation and restructuring
adhering to an employees request for redeployment to another post, the post occupied by the
incumbent becomes redundant, incapacity of an employee for performing assigned duties, an
employee being declared as incapable to perform the assigned role, etc.

11.4 REDEPLOYMENT: KEY ISSUES

In a learning organisation the focus is also on redeployment for the purpose of retaining and
developing experienced staff having required skills. Redeployment facilitates the process of
organisational development and modernisation besides adjusting to service changes by
safeguarding the skills, experience and motivation of personnel. In any given redeployment
3
situation, the following have been identified as the key issues (Redeployment Guideline,
2005)

i) Pre- Redeployment situation

a) Total cooperation of all parties and stakeholders
b) Local Redeployment policy in place
c) Appointment on temporary basis, if required, until regular and substantive
posts are available
d) Appointment of Redeployment Coordinator (It is the responsibility of the
Redeployment coordinator to check: the post or elements of the post are
close in nature to that previously held by the employee in the organisation;
agreed and required training has been imparted, and any other factors
considered relevant by the superior, employee, or Trade union
representatives).

ii) During Redeployment

a) Redeployment opportunities sought in Partnership with Trade Union
b) Displaced staff given preferential consideration for post
c) Redeployment coordinator co-opted into the area partnership forum
d) Opportunities for training or retraining accessed
e) Managers required to provide written reasons for not appointing displaced
staff
f) Redeployment coordinator will liaise between employees
g) Monitoring arrangements

iii) Post- Redeployment

a) Relocation costs, where appropriate, paid by redeploying organisation
b) Protection costs, where appropriate, paid by redeploying organisation
c) Individual Redeployment assessment
d) Focus groups

11.5 REDEPLOYMENT POLICY FRAMEWORK

It goes without saying that any forward-looking organisation is always committed to attract
and retain excellent, sincere staff. It has care for the knowledge, experience and skills of the
employees.
The exchange of ideas, skills and knowledge, and its promotion through staffing policies and
procedures is integral to the organisational work. It leads to the movement of staff between
different sub-units of the organisation and benefits the individual and the Unit as a whole.

The changing needs of the organisation and the pro-active management of change mean that
staff may need to be considered for redeployment from time to time, either on an individual
4
or a group basis. In these circumstances, it is recognised that the staff concerned have a body
of experience and expertise which shall enable them to continue to contribute to the success
of the organisation, given suitable opportunities to do so.
There is a need for an organisation to develop Redeployment Policy suiting its needs,
circumstances, resources, challenges and constraints. It calls for an organisation to put on use
all reasonable efforts for its staff to work effectively in a redeployment situation whereby
both the staff and the organisation stand benefited.
The effective operation of this Policy shall be dependent on the full co-operation of staff and
managers in the process and the provision of all necessary and relevant information to
support assessment and decision making. For redeployment to be successfully achieved, staff
is expected to undertake appropriate training and to exercise flexibility in considering
available opportunities.
For a Redeployment Policy to be effective there is need for un-stinted support and
cooperation of all concerned. Detailed information about the staff, organisational objectives,
past performance record of personnel, future vision of organisation, etc., is a must to carve
out a Redeployment plan. It is also necessary to make enough space fro training and
reorientation of the staff to be redeployed so that the purpose of the policy, including the
following, is achieved.
• To follow a consistent and unbiased mechanism in administration of Redeployment
• Proper skills to be inculcated and knowledge to be imparted to the Redeployed staff in
the interest of work efficiency
• To make sure that the redeployed staff owe allegiance to the organisation
• To motivate the redeployed staff and recognise their contribution.
The Redeployment Policy needs to be designed in such a way, wherein the personnel in the
organisation are provided with the opportunity to have alternative employment within the
organisation. The Head of the sub-unit in the organisation shall have the onus to find avenue
for a person within the same sub-unit so that the earlier acquired skills and experience could
be made use of. In case, the opportunity for after native employment is not available, efforts
are to be made for Redeployment of the staff in other sub-units, of course, in keeping with the
nature of work, quantum of work, and specialisation of the member to be redeployed. The
organisational management should ensure that the person being redeployed is in the same
grade or a grade below so that the person redeployed is not demoralised and demotivated.

In the interest of fair and considerate ethics, it shall be responsibility of all concerned that the
policy is implemented without being unfair and biased towards such employees who are
otherwise considered eligible to be redeployed. Further more it shall be the responsibility of
all concerned to work towards successful implementation of the Policy. (For more details,
Redeployment Policy of the University of Sheffield may be consulted at www.shef.ac.uk).

11.6 REDEPLOYMENT IN INDIA WITH SPECIAL REFERENCE TO

VRS AND NRF

In India, industrial restructuring as an essential component of economic reforms was

introduced in July 1991 in the name of New Economic Policy. Structural adjustment as a
global phenomenon relied heavily on manpower rationalisation for its success. Shedding
surplus workers under the programmes of structural reforms was initiated in many countries.
5
It is in this context the voluntary severance, in various forms and contents, has emerged as the
most commonly accepted policy option for tackling labour redundancy all over the world.
The experiences of different countries though varied in its content and effect, the impact was
very severe as millions of workers, employees have lost their jobs with certain wage
compensation and without any thing to offer to the retrenched employees, where the
IMF/World Bank aided programmes were implemented in Pakistan and Bangladesh. In
China also the experiment of labour redundancy took place in a different manner, where in
China emphasised on absorption of surplus labour through expansion and diversification of
various industries (Guha, 1996). The World Bank in its Golden Shake Hand programme
conceived that the Voluntary Retirement Scheme (VRS) is based on with a planning to offer
attractive package and counselling assistance for redeployment both inside and outside the
bank.
In the wake of New Economic Policy, it is widely apprehended that the drastic measures of
reforms are bound to lead to serious problems of mass retrenchments and displacement of
labour. The Government through NEP repeatedly assured the country that the structural
adjustment will be made with a human face and only with consultations (Both bi-partite and
tri-partite) and co-operation. The Government reiterated its commitment to protect the
interest of labour, enhance their welfare and equip them in all respect to face the
technological change.

Exit Policy
The logical corollary of the economic reforms is a liberal exit policy. It deals with the
closure of the loss making units and retrenchment of labour. It is felt that an effective exit
policy is necessary, for the speedy implementation of structural reforms. “Golden Hand
Shake” is a management term for exit. It is also known as “retrenchment without tears” by
managers and “forced retirement by labour”. Voluntary Retirement Scheme (VRS) has
become the basic component of labour adjustment strategies adopted by management in both
public and private sectors.

Exit policy means freedom for the employers to close down the sick and loss making units
and retrenches the surplus labour. Among other things the objective of exit policy is to
increase the potential for further growth of job opportunities.
The exit policy intends to provide a “right to shrink” in various ways such as: reducing the
operations, retraining and redeploying surplus labour force, expanding the operations through
diversification or even the closure of the industry as a final alternative.
With the establishment of National Renewal Fund (NRF) exit policy has become more
pronounced. NRF is designed to be the safety mechanism, to provide training of workers
who are adversely affected by structural adjustment programme (SAP). The trade unions
have not reconciled with the idea of exit policy and vehemently opposed to the use of NRF
for retrenchment benefit to the workers.
The New Industrial Policy affected all the vulnerable section of the society either directly or
indirectly. Workers have to accept wage restraint, redeployment and retrenchment.
Some expert and the supporters of the SAP believed that in the long - term there will be an
overall improvement in employment and in the medium – term employment will grow in the
organised sector, and short-term employment growth would be very less.

Whatever may be, the exit policy played havoc with the employment generation and social
commitment of the planning, through diversion effect and displacement effect. The policy
6
created insecurity and uneasiness in the Indian Labour World. Therefore, the Government
has a special responsibility to save the workers.
The economic reforms threatened to create substantial additional unemployment since a
sizable quantity of surplus labour had been carried over from pre-reform days.
Unemployment due to restructuring is expected to arise from the closure of some of the
economically non-viable enterprises, downsizing of the workforce in other weak units and
adjustments in labour force necessitated by technological innovations.

Estimates of Labour Redundancy

The labour redundancy arising from two sources:
(i) Closure of the non-profitable, terminally sick units; and
(ii) Workforce rationalisation for securing long-term viability of currently loss-
making units.
According to one estimate that two – thirds of the employment in all sick enterprises is taken
to be redundant. 17-18 per cent of workers in the 58 public sector units “chronically loss
making” is also redundant, which will be about 3.3 million and altogether about 27.8 per cent
of the total employment in the Central PSUs is found redundant which is estimated 0.614
million in 1988-89. Employment in the 81 enterprises of the employment, the sick subset,
was 0.53 million or 64.6 per cent of the employment in all non-profitable enterprises.
According to another estimate one – third (33 per cent) of the sick Central PSUs will be
wound up. Half of the sick private enterprises will be closed down and they will shed down
25 per cent of their workforce and 35 per cent in the central PSUs.
The following table will show the extent of labour redundancy during 1990-91 in millions for
various reasons:

Central PSUs Private organised Sector

Total redundancy 0.381 0.992

Per cent of Total employment 17.9 12.9

Redundancy in other sectors is estimated as under:

Central Government : 0.610 millions
State Governments : 1.273 millions
Local bodies : 0.414 millions
Quasi-Governmental Organisations : 1.114 millions
Public Sector : 3.411 millions
Private Sector : 0.992 millions
These estimates suggest that 75.6 per cent of redundant labour is found in the service sector.
Indeed, public services account for more than 66 per cent of all potentially redundant labour,
much of this surplus labour exists at the level of state and local Governments.
Voluntary Retirement Scheme
The new industrial policy decided to reduce a sizeable redundant labour without causing
much dissatisfaction to the outgoing labour. Therefore, instead of painful retrenchment, a
better option, which will be more acceptable to the workers, was thought to be introducing

7
the Voluntary Retirement Scheme (VRS). VRS offered attractive package of benefits,
therefore, it enabled a firm to rationalise labour strength, attain cost effectiveness.
Throughout the world, various countries like USA, Canada, UK, Japan, and Scandinavian
countries, China, Pakistan, and Bangladesh etc introduced some kind of voluntary retirement
or voluntary severance schemes. The developed countries provided adequate social security
measures like the unemployment insurance. In these countries, before the introduction of
VRS, there were free and transparent discussions between the workers and their trade unions.
In India, the management tried to tackle the problems of business recession, industrial
sickness, technology induced labour redundancy by adopting voluntary retirement strategy as
a means to reduce the labour cost.
Guidelines for Voluntary Retirement
Guidelines for voluntary retirement for the employees of public sector enterprises were issued
on 5th October 1988, by the Bureau of Public Enterprises. Following are the main conditions
for opting for VRS:
i. 10 years of service or 40 years of age.
ii. The terminal payments available to employee seeking VRS are:
a. The balance in the Provident Fund
b. Cash equivalent of accumulated earned leave as per the rules
c. Gratuity as per the gratuity Act.
d. Ex-gratia payment equivalent to 1 ½ months pay + DA for each completed
years of service left before normal date of retirement which ever is less.
Later on, the scheme was made much more flexible to benefit the workers.
In November 1995, the planning and Economic Affairs (BPE) Department issued a circular
recommending guidelines for introduction of VRS in the state public sector undertakings as
in the Central Government Public Sector undertakings.
The conditions for VRS are:
1. The posts which are allowed to avail the VRS should be abolished.
2. The expenditure should be met by the Public Sector undertakings themselves.
3. The other conditions, which are applicable to Central Public Sector
undertakings.
The Causes for Taking VRS in the Industries
The reason for taking VR were many but the main reasons were classified under eight major
heads (Guha, 1996)
1. Apprehension of closure of unit (30%)
2. Poor health of workers (24%)
3. Debt clearance (11%)
4. Marriage and Education of Children (10%)
5. Setting up of children in Business (4%)
6. Anticipation of good career/business (3%)
7. Return to native place (2.3%)
8. Constructing house or purchase of land (2%)

8
 9. Other reasons (15%) (The figures in brackets are percentages of VR workers
according to reason)
VRS in the Government of India
Based on recommendations of the Expenditure Reforms Commissions (ERC), a Liberal
Voluntary Retirement Scheme was introduced in the Government of India in February 2002
to downsizing, rightsizing or restructuring for optimising the Government Staff strength.
Detailed guidelines to this effect were issued to all the Ministries/Departments by the
Ministry of Personnel, Public Grievances and Pensions and Training.
The Features of Special VRS
1. All permanent employees rendered surplus irrespective of age and service can opt for
VRS.
2. Ex-gratia payment to VRS employee, equal to basic pay plus DA on the basis of
length of service at the rate of 35 days for each completed year and 25 day for each
remaining year.
3. Ex-gratia will be to a minimum of Rs. 25,000/- or 250 days of emoluments.
4. The Ex-gratia will be paid in lump-sum
5. The Ex-gratia amount up to Rs. 5.00 lakhs will be exempted from Income Tax.
6. The post held by the retiring incumbents should be abolished.
7. The VRS will be made applicable as per the order of Government issued in April
1989, “steps for identification of surplus staff”.
Thus, the Government of India announced to reduce their staff by 10 per cent in four years,
and effect economy in Government expenditure. It has decided to retire 25 per cent to 50 per
cent of the officers at the age of 52 to 55 as it is done in the army.
Many other drastic measures were taken ruthlessly to reduce the expenditure. The All-India
State Government Employees Federation, Central Government Employees Confederation and
All India Defence Employees Federation and other organisation vehemently opposed the
Governments move against the welfare of the employees.
No opposition could stop the reduction measure taken by the Central/State PSUs, Private
Industry/Central Government and Banking sectors. In fact, the initial opposition based on
certain apprehensions could not be sustained due to lucrative benefits and the lump-sum
amounts offered through the VRS. There are no proper statistics but millions of employees
took to VRS on a competitive basis, which led to closure of the units completely, and
thousands of crores of rupees were paid to VR workers through National Renewal fund.
Many things unwanted happened due to the defective VRS and faulty estimates of NRF.

The Impact of VRS on VR Workers

An in-depth analysis of the impact may not be possible. For not many studies are made on
this aspect. However, certain findings can be noted:
1. The expected benefits of rehabilitation were not available to a large number of
employees who took VRS.
2. 10% of VR workers did not show any interest in any kind of rehabilitation. They
were mentally upset.
3. 20% were not eligible for any kind of rehabilitation facilities as they were 55 years of
age and above.

9
 4. 5% of the VR workers had some confidence in the Government Programmes for
Training and Redeployment.
5. The Success and failure of the VR workers depended on the interest of the workers as
well as on the attitude of the PSEs and the Government in providing retraining and
deployment.

Redeployment in Central Government

A scheme of redeployment of surplus staff has been in operation in Government of India
since 1966. The work relating to redeployment and readjustment of surplus officials
belonging to group A, B and C is handled by the Central (Surplus Staff) cell located in the
Department of Personnel and Training, while that relating to group D staff is handled by the
Director General of Employment and Training (DGET) of the Ministry of Labour. Till 1989,
there was a provision for compulsory retirement of all those surplus officials who neither
opted for voluntary retirement nor could be redeployed with in six months of being declared
as surplus. This provision was discontinued in 1989. So far, of the 9214 group A, B and C
officials accepted in the Central Cell, 8662 are reported to have been redeployed, 72
retrenched or resigned, 235 retired voluntarily or on superannuation, while 245 are awaiting
redeployment of the 6211 group D personnel declared surplus, 5559 were placed / nominated
in alternate jobs, the rest are still awaiting deployment at the end of June 2000.
Now, the personnel declared surplus would be transferred to the surplus cell, now called
division for Retraining and Deployment for Retraining and Redeployment.
National Renewal Fund (NRF)
The new Industrial Policy announced by the Government of India on July 24, 1991 that “the
government will fully protect the interest of labour, enhance their welfare and equip them in
all aspects to deal with the inevitability of technological change. Government believes that no
small section of society can corner the gains of growth, leaving workers to bear its pain.
Labour will be made an equal partner in progress and prosperity. Workers’ participation in
management will be encouraged to participate in the packages designed to turn around sick
companies. Intensive training, skill development and up gradation programmes will be
launched”.
The concept paper on National Renewal Fund (NRF) prepared by the Department of
Industrial Development (January 1992) assured that labour will be retrained, their technical
skill upgraded and surplus labour will be suitably redeployed. During discussions on the
paper it was agreed that the labour will not be thrown out of employment in the name of
modernisation.
Thus, the NRF was constituted on February 3, 1992 but became operational only in early
1993. On May 5, 2000 the NRF in its original form was abolished accordingly. At present,
the budgetary support for implementation of VRS in Central Public Sector undertakings has
been made available directly to the concerned administrative Ministries by Ministry of
finance from the financial year 2001-2002 and funds required for retraining / rehabilitation of
employees availing VRS has been placed with Department of Public Enterprises from 2001-
2002.
Objectives of NRF
NRF has three objectives:-
1. “to provide assistance to cover the costs of retraining and redeployment arising as a
result of modernisation, technology up gradation and industrial restructuring”.

10
 2. “to provide funds, where necessary, for compensation of affected by restructuring or
closure of industrial units, both in the Public and Private Sectors”.
3. “to provide funds for employment generation schemes both in the organised and
unorganised sectors in order to provide a social safety net for labour”.
The NRF was envisaged in two parts:
1. The National Renewal Grant Fund (NRGF)
2. The Employment Generation Fund (EGF)
I. National Renewal Grant Fund
The funds are expected to be disbursed in the form of grants for assisting employees affected
by technology up gradation, modernisation, restructuring and revival of industrial
undertakings specifically for approved schemes relating to:
i. Counselling, retraining and redeployment of displaced workers,
ii. Workforce reduction through retrenchment and voluntary separation and
iii. Soft loans for labour restructuring by weak industrial units.
II. Employment Generation Fund
It provides funds for approved employment generation schemes for both the organised and
the unorganised sectors such as:
i. Special programmes designed to regenerate employment opportunities in areas
affected by industrial restructuring.
ii. Employment generation schemes for the unorganised sector in defined areas.
The NRF assistance was extended to workers rendered jobless after July 1991 through the
following institutional structures:
i. Employee Resource Centre (ERC)
ii. Employee Assistance Centre (EAC)
Employee Resource Centre
ERC screens the rationalised workers providing identity cards indicating their skills,
experience profile and preference for the future. The ERC is located in the industrial unit
itself where from the employees outflow takes place. It is the first agency which comes into
contact with displaced workers. Therefore, its role is very important in the final rehabilitation
of rationalised workers. The ERC provides a range of services/counselling involving
guidance about retraining facilities.
The ERC rebuilds morale by psychological counselling. A self-help guide along with the
details of opportunities of jobs available in the labour market are provided to help the
workers to resettle without much worry and make productive use of their time and the money
they got through VRS.
At the end of 1996, there were 47 Central Public Sector units, out of 61 receiving NRF
assistance were having ERC units, managed by the funds and the staff of the industrial units.
They extended counselling facilities only to about 15 thousand workers out of about one lakh
workers who took VRS. The statistics indicated that only a few ERCs functioned well and
only 10 per cent workers were counselled.
Employee Assistance Centre (EAC)
A network of EACs in the cities of sufficient worker outflows aimed at equipping the
workers with input for wage-employment or self-employment. EACs surveyed displaced

11
rationalised workers, possible job avenues, skills in demand and training infrastructure
available and counselling / retraining redeploying the affected workers. Retraining is
imparted in capsule form for skill up gradation or skill formation. Workers are provided
entrepreneurship training. They are guided in getting finances and raw materials and
supported in running the business in the areas of marketing, taxation, environmental
conditions etc,.

Pilot Project
The Department of Industrial Development of Government of India set up five pilot projects.
These pilot projects were entrusted to five nodal agencies in Ahmedabad, Kanpur, Mumbai,
Kolkata and Indore.
The Nodal Agencies were asked to set up Employee Assistance Centres to assist Employee
Resource Centres set up in the enterprises needing rehabilitation services. The EACs have to
conduct systematic survey of workers targeted for assistance, identify their training needs,
and locate suitable centres to provide retraining in vocational skills as are in demand in the
local area. As most of the VRS workers possessed low levels of education and advanced age,
the training courses that are given to these need to be designed to impart practical skills. In
practice, they have taken the form of part-time courses spread over three to five months.
Workers who are not interested in vocational skills were to be provided training
entrepreneurship development to enable them to start business of their own.
The nodal agencies prepared action plans in early 1994 and they were provided funds in
September 1994 to undertake counselling, retraining activities and provide escort services to
needy workers to obtain funds from banks for their self – employment.
All the Employee Assistance Centres formulated Annual Action Plans on the basis of
surveys. Groundwork for retraining by Employee Resource Centres has benefited about
10,000 employees.
Besides, the nodal agencies, EACs, ERCs the Directorate General of Employment and
Training of Ministry of Labour Government of India has also offered vocational courses,
through six advanced Training Institutes (ATIs) and 15 Industrial Training Institutes (ITIs) all
over India.
Employees Assistance Centres were in operation in about 50 centres. To an estimate by the
end of 1997, the centres surveyed (60,416) workers (60,416), counseled (29,220), retrained
(19,334) and redeployed (4,488). The response from the displaced workers for these short
term training was poor, as only 10-15 per cent workers showed some interest.

Assessment of NRF
Though the economic reforms were initiated in June 1991, the NRF was set up 1992 but it
came into operation in 1993. It was delayed in the beginning. The NRF package was
designed with unemployment insurance scheme was yet to be finalised, special employment
programmes are yet to be designed, area regeneration activities are yet to be taken up and
retraining facilities were not fully organised. The initial delay caused adverse impact on
employment.
The NRF covered mainly the permanent workers who have opted for voluntary retirement
under VRS, belonging to:
a. The Central Government Departments and CPSUs
b. State PSUs and

12
 c. Large private industrial enterprises.
It was observed that the NRF package is not comprehensive enough to take care of the
interest of workers. The components of the safety net of the package are limited and
inadequate as it left out the unorganised sector.
The quantitative dimensions of the NRF are also far from adequate in terms of coverage of
PSU workers and insignificant in terms of training, retraining and redeployment. NRF
emerged as a haphazard cosmetic measure, which failed to give human face to the reforms.
The NRF also could not promote restructuring of units and could not facilitate their closure.
The retraining and reskilling measures undertaken under NRF were not effective as they are
not planned in the light of the needs of the labour market. Thus, the meaningful counseling,
retraining and redeployment activities remained a distant dream.
On the other hand, NRF almost came to a halt due to the cost increase as the increasing
numbers of managerial staff opted for “Golden Shake Hand” from the Central PSUs only to
take better paid jobs in the private sector. This was not the objective of NRF to allow the
flight of managerial talent for lucrative personal gain.
Thus the general picture is the NRF made some progress in involving VRS. Even this only
scratched the surface of the problem it was expected to solve. The NRF programmes could
not be fully successful for want of past experience and it is designed on inappropriate
assumptions in assessing the stock of surplus labour and the amount of cost involvement for
VRS. The NRF must have taken care to prevent the flight of talent to reduce the cost
increased and to retain the talent.

11.7 RESKILLING: MEANING AND IMPORTANCE

It is almost imperative for any organisation, which endeavours to achieve targets effectively,
to find, retain, develop, deploy, redeploy and reskill its workforce. To keep pace with the
newer challenges and to overcome existing constraints, it becomes essential that matching
skills are inculcated amongst the organisational personnel. The employees, which are an
asset, need to reorient leading to appropriate management of the intellectual capital for
competitive advantage. Thomas A. Stewart in his book, Intellectual Capital, has defined
intellectual capital as “intellectual material-knowledge, information, intellectual property,
experience-that can be put to use to create wealth”. In other words, the intellectual capital
can help in not only achieving the fixed targets on time but also developing and executing
such plans whereby the organisation could do not only the best but also to the satisfaction of
all concerned.
Ellen H, Julian and Christopher Boone (2001) have stated that it is rather an expensive way to
have skilled employees. It is a fact that integrated recruiting and training approach has been a
success but it also quite challenging because any error in recruitment or proper training could
make an organisation to pay a dear price because an improper selection or lack of required
training / orientation could make an employee rather than an asset, a liability, which could
stand in the way of accomplishing pre-fixed goals and objectives. “Reskilling internal
resources have emerged as an exceptional method of both maintaining productivity and
developing talent. However, utilising a learning management system will be critical to
understand the training and individual involvement to make reskilling appropriate. Reskilling
continually develop employees’ skills can be a complete process. Reskilling enhances job
satisfaction, reduces employee turnover, and lessens the needs to outsource or hire contract
labour” (Julian and Boone, 2001). It is also worth mentioning here that reskilling provides an
opportunity to the employees to proceed towards a new career path with the same employer.
It enables both the employees and employers to be in an advantageous position as both get in
13
position to have more trust and commitment. It further provides a chance to the personnel to
make use of their already acquired skills in conjunction with the newer opportunities and
challenges faced by the organisation.
It is often said that organisations must attempt to retain the talent having been invested in and
developed over the years. But it has to be understood with the assumption that employees
who have not been working properly could either be fired or retrained/reskilled. Certainly,
the later option is more beneficial. The point has been stressed by Zia Askari (2002) in the
write-up ‘Reskill to Retain’ as ‘polish your most critical assets, your people with utmost care.
Be quick to train them when they need it, in areas most profitable to you. It’s time to brush
away the dust……”. The write-up has come out with the following six-point agenda of
reskill to retain.
• Reskilling employees should be an ongoing process
• Reskilling keeps top performers cognizant of new tools available in the market
• Let high performers focus on what they do best for the firm
• Conduct quarterly follow-ups with employees to accelerate skill development
• One-to-one monitoring accelerates total personality development, especially with
team leaders
• Training should avoid unrealistic expectations like creating superheroes or replicas of
the boss.

11.8 RESKILLING PROCESS

Each successful organisation reviews the performance of its employees in a meaningful

manner not with a negative end to punish the defaulters but with a positive goal to improve
those who are not up to the mark and further strengthen the ones who are best performers.
Moreover, the competitive environment calls upon organisations to continually up-bringing
their employees, who in turn contribute in developing required infrastructure. Inculcating
skills to the new recruits is as much important as it is to impart and inculcate new skills
among the employees. If one looks at the reskilling process in totality, probably the take-off
stage is to conduct an effective employee audit. The staff audit helps in: updating the
employees records; identifying and initiating steps to do away with such employees who are
on the payroll but actually are only shadow employees; chalking out plans for better accuracy
of subsequent workforce analysis; and reviewing job positions and assigned duties. It thus
brings to light that staff audit provides not only information on personnel but also gets
information on strength of employees on different positions in different sub-units; employees
performance record; employees skills, etc. It paves the way for a through assessment of
employees skills primarily with focus on elements like current skill levels assessment;
highlighting and forecasting future skill requirements; identifying gaps between current and
likely required skills for surfacing areas of skill surplus and skill shortage (Labor Tool Kit,
2002).
The managers and other superiors in the organisation normally are aware of the skill level of
the subordinate and also the required level of skills in order to meet with the targets. It is for
the operational managers to update the top management about the existing gaps and also to
suggest ways for abridging the hiatus. In every organisation, there are Key Performance
Areas or Key Result Areas which need to be given more attention as lack of required
performance on count of KRAs can be dangerous for the efficacy of the organisation.
Therefore, it becomes essential to list out the critical skills and efforts need to be put in to
14
reskill the workforce in those areas to avoid disappointment and failures at a later stage. The
Plan of Action for reskilling needs to pay attention to certain points, viz. proper listing of
required skills and its prioritisation; effective identification of the personnel to be reskilled in
specific areas. Framing of such training / orientation programme which matches with
immediate job requirements; tailor-made reskilling exercises for future needs of the
organisation; proper identification of trainers; periodic monitoring of the effectiveness of the
training imparted for reskilling purpose; identification of gaps between retraining and actual
job performance; through evaluation of reskilled activities; and updating the reskilling
framework process.

11.9 RESKILLING THROUGH DISTANCE MODE

Especially, in civil services the number of employees engaged in different organisations at

various levels has increased substantively. It has become almost impossible for any cluster of
organisations to periodically retrain and reskill the employees in a face-to-face mode. Thus,
over the period of time, the idea of retraining / reorienting / reskilling employees in public,
private, and non-governmental organisations through distance mode is gaining currency.
Rather fast and innovative developments in telecommunication and satellite technology have
provided significant support to the idea of constantly retraining the workforce. There is
sufficient interest being shown by the government, business and industry to make use of
audio/video conferencing, electronic performance systems, and online web-based programme
for the purpose. To be effective in reskilling employees through distance mode, the role,
responsibility and performance of the Training Institutions become much important. It
requires to have through analysis of the job/business needs, identification of strategic training
programmes, conceiving a training programme having conceptual knowledge and practical
components, demonstrating how to performance a given task in assigned time, focussing on
delivery tools by developing organisational technology plan and suggesting ways for its
implementation, designing mechanism for ensuring required implementation support,
encouraging trainees at the receiving end to raise their concerns and queries and responding
to the same in a satisfactory manner, asking for online feedback on implementation, advising
superiors to periodically review the effectiveness of the skills imparted and seeking their
suggestions for further improvement in content and delivery of retraining / reskilling
exercises. The underlying assumption of reskillng through distance mode is to enable a large
number of employees in different organisations to develop cognitive strategies for self-
learning and independent critical thinking. All said and done, the purpose is also to remove
the mental blocks and bring attitudinal changes in the employees besides increasing their
motivation and boosting their morals (Schreiber and Berge, 1998).

11.10 CONCLUSION
Employees are the greatest asset of any organisation. At times, it is due to structural
adjustment programme and the consequent economic reforms, number of them loose their
jobs besides sizable number become inappropriate to keep pace with the newer challenges
faced by the organisations and thus being laid off. It is very much essential to estimate labour
redundancy properly. The Voluntary Retirement Scheme, the Exit Policy and the Golden
Shake Hand in India, not only allowed the surplus labour to go but also permitted the flight of
managerial talent from Public Sector to the Private Sector. The Voluntary Retirement
Scheme and the National Renewal Fund were not properly designed. Many managerial staff
enjoyed the fruits of VRS and NRF, and only the poor, aged, uneducated were the ones who
suffered for want of effective retraining and redeployment facilities. There was no proper

15
planning in estimates of the out go and the cost involved to pay them as VR compensation.
Thus, the NRF could not be imaginative and effective in solving the problem. An attempt has
been made in this Unit to highlight the positive side of redeployment and reskilling whereby
both the employers and the employees benefit.

11.11 KEY CONCEPTS

Reorganisation: By reorganisation is meant to take up steps for bringing new initiatives in

the organisation. It is an act of organising the structure and work differently in comparison to
the on-going practices and modalities. It calls for extensive and innovative changes in the
organisational working and culture.
Reorientation: Organisations in the contemporary market-driven global economy often
encounter reduced revenues, market compulsions, growing competition, financial crunch,
mass layoffs, customers’/clients’ expectations,etc. The management attempts to find out ways
for coping with the emerging challenges and regain solid footing by realigning and
refocusing employees for positive and forward-looking performance. It can be achieved by
revisiting, solidifying, and communicating a forward-looking vision, equipping leaders and
managers to connect individual employees with the organisational vision and shared goals,
framing and executing open communication plan, etc.(Reviving up the Word “P”
Productivity).
Restructuring: It has become quite important in the contemporary period, mainly due to
technological advancements, globalisation, knowledge society, replacement of industrial
society with information society, changes in demography, substantial growth in Foreign
Direct Investment, etc.
Skills: Almost performance of any duty requires skills. Thus, skills help the employees to
solve problems, achieve goals and accomplish targets timely. Skills may be innate or
acquired. Normally, the skills of an employee are improved with practice
Staff Redundancy: Redundancy is defined as a dismissal of an employee either because of
the employer’s decision that the job done by an employee is not required to be performed or
because of employee’s lack of capacity to perform the job. Often, when the job is declared
redundant, it is obligatory on the part of the employer to comply with severance allowances
and other related separation benefits, which are over and above all other dismissal
requirements.

11.12 REFERENCES AND FURTHER READING

“Labor Tool Kit: Assessing the Size and Scope of Labor Restructuring”, read online at
http://www.ppjab.org
“Reviving up the Word “P” Productivity,” read on line at http://www.inc.com
Bhatty, I.Z, 1993, “Protective Net for Workers in an Exit Policy: A Proposal”, National
Council of Applied Economic Research, Working Paper No. 2, New Delhi.
Dutt, Ruddar, Jan-March 1993, “New Economic Policy and its Impact on Industrial
Relations and Employment in India”, the Indian Journal of Labour Economics.
Guha, B.P, 1995, New Economic Policy Changes: Impact on the Economy Including
Labour, AIM DISA, Hyderabad.

16
 Guha, B.P, 1996, Voluntary Retirement: Problems and Prospects of Rehabilitation, Shri
Ram Centre for Industrial Relations and Human Resources, New Delhi.
Hammer, M. and J. Champy, 1993, Reengineering the Corporation: A Manifesto for
Business Revolution, Harper, New York.
ILO, SAAT, New Delhi, “Industrial Restructuring Labour Redundancy and the National
Renewal Fund”, read online at http://www.ilo.org/public/english/region
/asro/newdelhi/papers/ 1996/=ssl/ch4.htm.
Information about the Department of Heavy Industry administered 48 Public Sector
Enterprises, where in 35,000 Employees Opted for VRS involving an Expenditure of Rs.
600 crores during 1992 to 1998, read online at http://dhi/nic.in/role.html.
Julian, Ellen and Christopher Boone, “Blended Learning Solutions: Improving the Way
Companies Manage Intellectual Capital,” read on line at http://www.sun.com
Mundale, S, 1994, “Structural Adjustment, Employment and Redundancy in Organised
Sector in India,” R. Islam (Ed), Social Dimensions of Economic Reforms in Asia, ILO –
ARTEP, New Delhi.
Patel, B.B, March 1995, Approach to Managing Redundancy in the Context of
Enterprises’ Restructuring in India.
Recommendations of the Fifth Pay Commission, 1999, Nabhi Publications, Vol 1
Reprint Edition.
Redeployment Guideline, read online at, http://www.scotland.gov.uk
“Redeployment of Staff within the Public Service, New Zealand”, read online at,
http://www.unplan.un.org).
Schreiber, Deborah and Zane L. Berge, 1998, “Distance Training: How Innovative
Organisations are Using Technology to Maximise Learning and Meeting Business
Objectives”.
Special Voluntary Retirement Scheme for Surplus Central Government Employees,
2002.
Stewart, Thomas A, 1997, Intellectual Capital.
Sukomai, Sen, 2001, Central Government Proceeds to Kill Public Services People’s
Democracy, Vol. XXV, No. 14, 2001.
The Public Service Job Summit: 29-31 January 2001, The University of the North –
Petersburg read online at http://www.dpsa.gov.za.

11.13 ACTIVITIES
1. Discuss the importance of redeployment by quoting references from such
organisation in your area, which has used it.
2. Do you think reskilling can prove to be beneficial to both the organisation and the
employees, if yes, substantiate with suitable examples.

17
UNIT -12 LEARNING AND DEVELOPMENT
___________________________________________________________________

Structure

12.0 Learning Outcome

12.1 Introduction
12.2 Meaning of Learning and Development
12.3 Need for Learning and Development
12.4 The Nature of the Learner
12.5 The Outcomes of Learning
12.6 Theories of the Process of Learning
12.7 Elements in the Process of Learning
12.8 The Concept of Development
12.9 Conclusion
12.10 Key Concepts
12.11 References and Further Reading
12.12 Activities

___________________________________________________________________
12.0 LEARNING OUTCOME
________________________________________________________________________

After reading this unit, you should be able to:

• Know the concept of the Learning and Development;
• Understand the need for Learning and Development in an organisation;
• Find the nature of Learner; and
• Note the relationship between Learning and Development.
12.1 INTRODUCTION

Learning is a continuous process and invariably, those involved in different activities in

various organisations need to get themselves engaged in learning and development
processes for the purpose of reorienting and revisiting the knowledge gained and
expertise acquired in the past. It is understood that a large number of organisations, in
the contemporary period, have started providing unstinted support and importance to the
learning and development of their employees. In order to get maximum benefits out of

1
learning and development, it becomes imperative to have a proper understanding of the
concepts of ‘learning’ and ‘development’.
12.2 THE MEANING OF LEARNING AND DEVELOPMENT

Learning is a process through which an individual goes through qualitative changes in

comparison to what has been conceived by him or her earlier in life (Burgoyne and
Hodgson, 1983).
Learning is a process within the organism which results in the capacity for adjustment in
changed periods which can be related to experience rather than maturation”. (Ribeaux
and Poppleton, 1978)
Binsted (1980) has referred to learning process as not just a cognitive process, which
involves the assimilation of information in symbolic form, but also as an effective and
physical process. In keeping with this view, it could be stated that an individual’s
emotions, nerves and muscles are involved in this process, which can be effectively
undertaken and which brings forth changes for the learner. Certainly, with conscious
attention, learning can be much more effective.
Development is mesmerising and soothing concept. Everybody wants it, many chase it,
but only a few get it. Those who get it are the ones who make conscious efforts towards
it and do the needful to regulate the changes. It is worth mentioning here that change is
imminent; whether one likes it or not, it is bound to happen. Of course, change can be
towards the development of an individual, if properly regulated. It will not be wrong to
mention that development, by virtue of learning and maturation, has emerged as a process
of increasingly complex nature, quantitatively elaborate and sufficiently differentiated.
Differentiation and increasing complexity in organisations paves the way for newer
potentialities actively responding to the organisational micro and macro environment. It
brings forth and furthers opportunities to learn and the process continues. Thus, learning
could be stated as the pathway to development. Of course, it is not its synonym but
without learning, it becomes difficult to develop.
Primarily, it is the thinking pattern of the individual, which is, based on the results of
his/her learning and development. Individuals’ retrospection of self-concept and self-
esteem, besides their responsive capabilities make them to work for learning and
development. It has been stated by Daloz (1986) that “learning and development is a
journey that starts from the familiar world and moves through ‘confusion, adventure,
great highs and lows, struggle, and uncertainty………… towards the new world’ in
which nothing is different yet all is transformed, and its meaning has profoundly
changed”.
On going through the viewpoints of scholars and practitioners on learning and
development and distinguishing between learning and development, it becomes amply
clear that learning and development are significant for both individuals as well as
organisations. (Refer Unit 10 for more details on the concepts of Learning and
Development).

12.3 NEED FOR LEARNING AND DEVELOPMENT

Organisations crave for excellence, therefore, the use of concepts of learning and
development for properly equipping their personnel are gaining currency. It is an
2
established fact that such moves of the organisations make personnel more effective and
pro-active. They are able to cope with the existing challenges and plan for future strategy
implementations appropriately.
To keep pace with change, organisations are emphasising quality along with regular
improvement, coupled with flexibility and adaptability in order to enable the personnel to
be conversant with the new work requirements and work relationships instead of focusing
on erstwhile training and inculcating required skills among the work force. The focus
now is on developing employees towards work-oriented thinking and standards. It calls
on them to learn how to think, what to think, when to think, why to think, and under
which circumstances to think for forwarding the organisation on the path of development
with the help, cooperation and support of the management to make the organisation a
truly, ‘learning organisation’. For an organisation to be committed to learning and
development, the concepts of quality and flexibility occupy the place of prime
significance.
A. Quality
Public or Private organisations have quality of service to be provided to their clients on
the top of their agenda. It becomes very much difficult to ensure quality in work and
service without meeting the expectations of the clients and by ignoring the prevailing
circumstances and competition without gearing to a much called for focus on continuous
improvement in the structure, processes, products and services (Hodgson, 1987). Quality
cannot be in place unless there is consistent effort made by all concerned in the
organisation in the right direction. It thus ensures that employees make quality as the
core-part of the work assigned and responsibility assumed by them. Total Quality
Management (TQM) is on cards in almost every organisation so that it could ensure
clients’ satisfaction, stress on required initiatives in the process and product, personnel
involvement and participation needed, free-flow of communication, teamwork, updated
management information system, periodic review of personnel performance, reorientation
of employees and reskilling of the workforce, etc. To be on the podium of quality, there
is the much required need for thorough and timely learning and development in
organisations. In the present market-driven global economy, it is rather difficult for
organisations to shine by emphasising on training and retrieving or reorientation of
employees for quality operations to be in place (Unit No. 15 of this course deals with
TQM at length).
B. Flexibility
Organisations, for the purpose of fulfillment of their mission and timely accomplishment
of targets, cannot afford to adopt a rigid posture. They have to be flexible in their
approach. Crofts (1990), has stated that one of the pre-requisites for on organisation to
be flexible is a body of highly skilled officials, which stake a human resource direction
for the enterprise. To be on the advantageous end in the prevailing competitive settings,
it becomes necessary for the organisations to make ample use of the human resource,
which need to be multi-skilled for efficient and effective performance to be on cards. It
is a fact that organisations adhere to set norms and established practices. Along with it,
there is the important need for organisations to leave enough space for the participants in
its workforce to get involved in thinking process. This is expected to enable them to coin
out new ways of dealing with the work at hand besides contributing to the development
of organisation for future challenges and growth. Gone are the days when workers were
given responsibilities based on ‘daily defined tasks’. The workers are to be treated as
assets which requires their participation and meaningful involvement in organisational
decisions, which is probably not possible through a rigid approach and by making the
3
functioning rules, regulations oriented, and strictly as per pre set processes set earlier.
Thus, flexibility is much in place in comparison to rigidity because through it the
commitment of the personnel can be ensured. However, it does not mean than rules,
regulations, processes, etc., formulated in the past should not be regarded but it means
constant revisiting of the established norms and practices for achieving greater success.

12.4 THE NATURE OF THE LEARNER

Learning is not only a continuous process but is also natural. Since learning affects the
individuals, it is not just a cognitive activity and all of us remain engaged in it, almost all
through the life.
Learning and Development throughout Life
Individuals right since birth keep on learning and a majority of them craves for more and
more learning for excelling in walks of life. We learn and develop in the environment
around us, may it be family, community, school, college, work place, religious
organisation, etc. Various agencies of socialisation, as referred to above, facilitate the
learning endeavors of the individuals, who use the knowledge gained and skills
inculcated, for the advantage of the organisation, formal or informal, public or private,
big or small, etc. The process of learning never ends and the more we learn, the more is
the quest for acquisition of better knowledge and constructs. At times, people do not get
the required encouragement from the outside environmental forces, yet it does not kill
their instinct for learning. However, it could be affected by discouragement but will
reappear when the circumstances favourably improve. Irrespective of the setting; office
or home, people tend to learn and accordingly grow.
It is an admitted proposition that individuals, who are endowed with thinking potentials
by the nature, have to their credit a lifetime experience of being learners, though some of
them may not have been satisfied and happy with the situations around. It is also in place
that not all of them may be able to possess required competence or confidence. From the
analysis made above, it becomes clear that life long learning means regular and
continuous adaptation. It is through the increased knowledge and improved skills that the
individuals are capacitated for adapting to the existing environment and for making
changes in the environment, wherever required. It is through learning that far reaching
changes are generated in the individual and thus the development through learning is
promoted. The process of learning and development is not always smoothly conducted,
as at times there are barriers to learning and development. The subsequent table refers to
such barriers.

4
Barriers to Learning and Development
With middle and top-level managers in focus, Mumford (1988) has identified the
following significant blocks to learning:
Blocks to Learning
Perceptual Not seeing that there is a problem.
Cultural The way things are here.
Emotional Fear or insecurity.
Motivational Unwillingness to take risks.
Cognitive Previous learning experience.
Intellectual Limited learning styles.
Poor learning skills.
Expressive Poor communication skills.
Situational Lack of opportunities.
Physical Place, time.
Specific environment Boss/colleagues unsupportive

Since each coin has two sides, there are positive results of learning and development, and
there also exist a number of barriers to the same, which have been referred to above.
However, in order to be more conversant with different types of learners in varying age
groups, it shall be worthwhile to analyse each group of learners, as explained in the
succeeding text.
A. Adult learners
Primarily, it is understood that it is the young minds that need to be imparted instructions
and knowledge for doing the things rightly. Other than the young people, there are the
adults, which have different needs and experiences. With regard to adult learners,
Knowles (1984) has suggested that:
• “The adult learner is self-directing;
• Adult learners have experience on which to draw and learning events need to
consider this. They may have developed poor learning habits, and may be
defensive about their habitual ways of thinking. However, their former
experience is a source of self-identity and so must be approached sensitively
and with respect;
• Adults are ready to learn when they become aware that they need to know or
do something so that they can be more effective: they ‘do not learn for the
sake of learning’. Learning experiences, therefore, have to be as per needs
and situation;
• What motivates people most are their needs for ‘self-esteem, recognition;
better quality of life, greater self-confidence, and self-actualisation”.
B. Older Workers

5
It is said that old habits die hard and the work practices, one gets used to, become
difficult to be changed or discarded overnight. Thus, there is a need for older workers to
be properly imparted knowledge, skills and instructions for development. Further more,
the older workers at times attempt to seek re-employment. Thus, to be in consonance
with the job requirements, it becomes imperative that the stereotyped thinking process of
the older workers gets overhauled. In this category, there could be some workers, who
demonstrate their desire and ability to learn continuously throughout their lives. It
becomes possible only with the support of the employers and other fellow colleagues.
C. Other Classes of Workers
It is being felt that employees from women, differently abled people, cultural and ethnic
minorities etc., are socialised and educated in a manner, which at times does not go alone
with the requirements of the organisations. By virtue of the treatment given to them,
some of them are at low expectations and aspirations. It has been argued that women
look at their world as ‘a web of relationships’ in comparison to men who look at their
world as ‘a hierarchy of power’ (Gilligan, 1977).
It is, therefore, required that all employees, men or women, strong or weak, belonging to
minorities or majorities, etc., are to be put on path of learning so that they can contribute
towards organisational growth and development.

12.5 THE OUTCOMES OF LEARNING

Learning is an exercise and a process that never goes wrong. It always results in positive
benefits to the individuals and organisations. The following outcomes of learning are of
much concern to Human Resource Managers, who have the responsibility to develop the
workforce for accomplishing organisational goals and targets.
A. Skill
Skill is required for performance of almost any work. It amounts to not only efficient but
also effective performance of the assigned task. It is, thus, required for old skills to be
refurbished and new skills to be inculcated. Skills are required at not only the shop floor
level but also at the middle and top management levels. It is through skills that
competence of the individual gets sharpened and renewed. Different steps are initiated
by different organisations for inculcation of skills among employees. Thus, there is need
to appreciate the variety and different levels of skills. Learning can take place through
various levels of thinking skills, viz., knowledge, comprehension, application, analysis,
synthesis, evaluation etc.

12.6 APPROACHES OF THE LEARNING PROCESSS

As explained above, learning, which is a continuous activity, is a process. Two major

approaches of the learning process are as follows:
6
A. Behaviourist Approach
Learning evokes specific and particular response. The Behaviourist Approach postulates
that learning stimulates and leads to experiences, desirable or undesirable.
It can amount to two kinds of conditioning:
(a) Classical conditioning (it occurs when a stimulus amounts automatically to a
response, for example, an individual having liking for a particular food, gets attracted
with its flavour); and;
(b) Operant Conditioning (such conditioning follows a desired response, which gets
revitalised and increases the chance of the similar response being repeated on recurrence
of the stimulus).
B. Information Processing Approach
Learning has been referred to as an information processing system by this approach. It is
enunciated by this approach that a signal on information is transmitted to the receivers.
Of course, its receipt is subject to the communication barriers like noise and disturbance,
etc. It is necessary for the sender to encode the information and for the receiver to
decode it before making use of the same. The emphasis in the approach is that in
learning the signal containing data or information is filtered through the senses, which are
recognised by the receiver, decoded accordingly through the interpretive process of
perception and put in action by selecting required responses. Much success of the
learning effectiveness depends on the amount of attention attributed to the relevant
component of stimuli, efficient choice of adequate response, and providing periodic
feedback on data about its positive or otherwise effect on the system. There is possibility
of system breakdown at any of these phases.

12.7 ELEMENTS IN THE PROCESS OF LEARNING

After having discussed the need of learning, outcomes of learning and approaches of
learning, it is required to understand other significant elements of the learning process,
which plays an important role in formulating, imparting or facilitating learning. These
are as follows:
A. Feedback
It has been pointed out that any high achiever has four characteristics, that is, moderate
risk taking, perceived occupational level, satisfaction with accomplishment, and, need for
immediate feedback. No learner can be regarded to be on the path of effective learning
unless he is informed of what has been learned, what has not been acquired, what are the
advantages of the learning imparted or which other steps need to be in place for better
performance, etc. A learner can get internal as well as external feedback. Based on the
knowledge imparted and skills inculcated, a learner gets the response from within
regarding whether the job is performed in the way it should be performed. Learners also
get external feedback from the fellow workers, bosses, clients being served, etc., as to
whether they are performing as being told or taught or trained for. The feedback received
by the learners has to be taken up by them in the proper stride and they should not
consider the same as their criticism. It is equally important for the boss to be positive in
his approach while giving feedback to the performer and not being unnecessarily negative
or for being so for the sake of it.
B. The Choice of Whole or Part Learning
7
We often wish that whole knowledge were imparted in a single shot. It is not possible in
all circumstances that the entire process of learning takes place in one go. In fact, it
depends on the circumstances, level of participants, comprehension of participants,
maturity and art of trainers, etc., which could determine whether the whole or a part of
learning is to be accomplished. In cases, where the complexities involved are rather high,
it becomes difficult to go in for whole learning. Of course, if the temporal dimensions do
not permit and exigencies have to be met immediately, the choice of part learning is not
worthy of consideration.
C. Role of Memory in Learning
Learning is imparted to the living beings. The human beings, who have the potential of
becoming, are, though keen to learn, yet at times have their attention on other issues,
which stand in the way of acquiring through the process. The individual, who is
bestowed by nature to think and rethink, often stores such information, which is
considered important, in one’s memory. It has been on record that memory involves
three kinds of information storage. The sensory memory receives and stores the data
sensed or event seen just for a couple of seconds and unless it is transferred to the short-
term memory or primary memory, the data sensed gets lost. The primary memory stores
the information received for about thirty seconds unless specific and required attention is
paid to the information received. In comparison to the limited capacity of the short-term
memory, the long-term memory has unlimited capacity and can hold data or information
for years together. It is, therefore, essential for those engaged in making others learn to
adopt such mechanism and strategies whereby the learners not only understand what is
being told but also are also able to retain it in the long-term memory. Since the human
mind gets involved in social, economic, personal aspects, etc., and not exclusively in the
organisational functioning, it, at times, becomes difficult for properly understanding,
comprehending and retaining whatever is imparted. Depending on the context, at times,
it becomes difficult to record and retain the aspects and techniques as being seen or told.
Furthermore, the individual’s mind filters the concepts told and draws own inferences for
elaborating further on them in his own way.

12.8 THE CONCEPT OF DEVELOPMENT

Development is holistic in nature and is an on-going process. Unless dissuaded by
certain prevailing circumstances, the individuals crave for development. Development is
significant for both the employees and employers. It is irreversible and adds on to
people’s comprehension and change adjustment through life. A planned approach to
development facilitates the participants to acquire such possessions, which could
contribute to the betterment of their life and functional styles. There is no end to the
process of development and like learning; it goes on all through the life of an individual.
The advantage of being developed is reflected through the methods used and techniques
adopted for performing the job assigned. It spreads through all levels in the organisation
and so to feel that it is only the lower level or middle level of management, which has to
be developed, is wrong. In fact, more developed top or middle management, can develop
the potential of the middle or lower level management in a profound way. Thus, one
does not talk only of lower echelons to be developed, as one does not say that it is for the
developing or under-developed nations to be on the path of development, and not that of
the developed countries. In fact, those who stand developed today could get redundant if
they do not attempt continuous and periodic development. It is necessary to keep the
pace of development going on for accomplishing the pre-fixed targets and for drawing
8
agenda for the time to come. Lack of such efforts will stand in the way of organisations
to compete with others in the contemporary global economy. Through development of
human resources, the organisations look for development of infrastructure, processes,
goal fixation, job designing, organisation change and development, etc. It also certainly
leads to more confident, capable and responsible workforce in place in an organisation.
It is understood that individuals develop all through their lifespan. It leads to achieving
greater degree of confidence and transformation. There is need for development
achieved to be sustained also for all times to come or at least until newer and better
initiatives are put in place. For sustaining developed human resource, it is required for
organisations to focus on motivation, communication, promotion, feedback, participation,
control, and so on.
12.9 CONCLUSION

It is possible to have learning process in a continuous manner. It makes the

organisational personnel to gain required knowledge and skills, as per the needs of the
work. Learning helps the staff members to develop in their overall interest and in the
interest of the organisation.

12.10 KEY CONCEPTS:

Learning Styles: Choice of right learning style is also a matter of administrative

decision. It may not be proper to arrive at an a priori choice
regarding the learning style preferred with respect to a particular
programme. The appropriate learning style may be
Life Span Development: Life Span Development is an important component of
employee capacity building strategies. Looking after the
health and strength of workers is part of corporate social
responsibility. The extent to which such intervention would be
successful depends on a number of factors some of which may be
outside the ambit of organisational coverage. Researches have
shown that life span development strategies, dealing with
employee health and safety measures have been successful in
ameliorating the state of organisational health.
Nature of Learners: Good listening capability is a prerequisite for success of a learning
process or exercise. By means of attitude surveys, employees’
could be categorised as per aptitude or proclivity shown towards
learning. Desired behavior changes could then be induced or
encouraged by means of positive reinforcement to aid development
of proper and required aptitude for learning a specific programme.
on- the- job learning with regard to a specific case and likewise.
Process of Learning: Cooption of knowledge imparted is understood as the process of
learning. This process is both an inadvertent and a conscious
deliberate process through which proceeds the process of
knowledge attainment. Right learning process in a given set of

9
 circumstances or for a particular subject is a policy decision which
might determine the success or otherwise of a learning process.
_______________________________________________________________________
12.11 REFERENCES AND FURTHER READING
________________________________________________________________________
Atkinson, R.L, R.C. Atkinson, E.E. Smith and D.J. Bem, 1993, Introduction to
Psychology, 11th Edition, Harcourt- Jovanovich, New York.
Beardwell, Ian and Len Holden, 1995, Human Resource Management, A Contemporary
Perspective, Longman Group UK Ltd.
Binsted, D, 1980, “Design for Learning in Management Training and Development”,
J.E.I.T. Monograph.
Binsted, D, 1980, “Design for Learning in Management Trainer’s Development: A
View”, European Industrial Training.
Boot, R. and V. Hodgson, 1987, Beyond Distance Teaching: Towards Open Learning,
Oxford University Press, London.
Borger, R. and A.E.M. Sea Borne, 1966, The Psychology of Learning, Harmonds Worth,
Penguin.
Burgoyne and Hodgson, 1983, “Simulating Entrepreneurial Learning: Encouraging
Deeper Learning”, Natural Learning and Managerial Action.
Crofts, A.R, 1990, Circular Dichroism of Cartenoids in Bacterial Light Harvesting
Complexes, Experiment Biophys.
Daloz, Laurent A, 1986, Effective Teaching and Mentoring, Jessy- Bass, San Francisco
Gilligan, C, 1977, “In a Different Voice: Women's Conceptualisations of Self and
Morality,” Harvard Educational Review.
Knowles, M.S, (Ed), 1984, Andragogy in Action, Jessy- Bass, San Francisco
Knowles, S, 1999 "Designing Your Future," Journal, Queensland Guidance and
Counselling Association, Issue 16, No.2.
Kolodner, K. and L.Wills, 1993, “Case-based Creative Design”, AAAI Spring Symposium
on AI and Creativity, Stanford, CA.
Mumford, A, 1988, Developing Top Managers, Gower, Aldershot
Pedler, M, (Ed), 1983, Action Learning in Practice, Gower.
Ribbeaux and Poppleton, 1978, “Nutritional Aspects of Respiratory Diseases”, Journal of
Psychology and Work Introduction, McMillan, London.
Sheard, Paul, 1992, “Corporate Organisation and Industrial Adjustment in the Japanese
Aluminum Industry,” P. Sheard, (Ed.), International Adjustment and the Japanese Firm,
Allen &Unwyn.
Sheard, A, 1992, “Learning to Improve Performance”, Personnel Management.
Taylor, S, 1992, “Managing a Learning Environment”, Personnel Management.
Wills, G, 1993, (Ed.) Your Enterprise School of Management, MCB Press, London.
________________________________________________________________________
12.12 ACTIVITIES
10
________________________________________________________________________
1. Explain the need for Learning and its advantages towards better work
performance.
2. What are the outcomes of Learning and how these help organisations’
functioning?
3. Critically examine the concept of Development.

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UNIT 13 MANAGEMENT DEVELOPMENT
Structure
13.0 Learning Outcome
13.1 Introduction
13.2 Meaning and Definition of Management Development
13.3 H.R.M. and Management Development
13.4 Approaches to Management Development
13.4.1 Piecemeal Approach

13.4.2 Open System Approach

13.4.3 Unified Approach

13.5 Considerations for Effective Management Development

13.5.1 The Context of Management Development

13.5.2 Organising and Implementing Management Development Programmes

13.6 Management Education and Training

13.6.1 The Management Learning Process

13.6.2 Coaching and Mentoring

13.7 Issues and Controversies in Management Development

13.7.1 The Ethics of Management Development

13.7.2 The Future of Management Development

13.8 Evaluating Management Development

13.9 Conclusion
13.10 Key Concepts
13.11 References and Further Reading
13.12 Activities

13.0 LEARNING OUTCOME

After reading this unit, you will come to know:
• The meaning and nature of management development;
• The significance of management development;

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• Various approaches to management development; and
• Contemporary issues in management development.

13.1 INTRODUCTION
Before exploring the concept of management development, we need to be clear about the word
‘management’. Management is described as ‘making organisations perform’. (Smith et al.
1980)Management is concerned with:
• Individuals to manage work;
• Activities for achieving goals;
• A body of knowledge represented by theories and frameworks about people and
organisations;
The general assumption is that management education and training themselves constitute
management development, but they do not. When we educate managers we seek to introduce
extend or improve their learning and understanding about the managerial world they occupy.
Management training is primarily concerned with teaching managers the skills to perform their
jobs more effectively.

13.2 MEANING AND DEFINITION OF MANAGEMENT

DEVELOPMENT
Management development is defined as
• A conscious and systematic process to control the development of managerial resources in
the organisation for the achievement of goals and strategies. (Molander, 1986)
• An attempt to improve managerial effectiveness through a planned and deliberate learning
process. (Mumford, 1987)
That function which from deep understanding of business goals and organisational requirements,
undertake (a) to forecast need, skill mixes and profiles for many positions and levels (b) to design
and recommend the professional, career and personal development programmes necessary to
ensure competence (c) to move from the concept of ‘management’ to the concept of
‘managing’.(Beckhard,1989)
Although such definitions represent useful starting points, they tend to constrain the notion of
development to processes that are seen as formalised, planned and deliberate. It is true that
many aspects of development are like that, but development is also a continuous, dynamic process
where managers often learn through informal, unplanned experiences.
To achieve a more comprehensive view of development, there is need to incorporate additional
aspects such as:
• Framework for setting, linking and balancing individual and organisational objectives;
• Systems for identifying and selecting managers;

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• Structures to support, motivate and reward;
• Plans to enable career progression;
• Mechanisms to measure and evaluate performance.
This wider, more holistic perspective on management development will be the theme running
throughout the rest of the unit.

13.3 HRM AND MANAGEMENT DEVELOPMENT

Human resource management is about the effective management of people in organisations. It
involves the integration of people with organisational goals and strategies. It views people as
assets to be developed and utilised in a productive way rather than costs to be minimised or
eliminated. People influence effectiveness and success is seen as significant for the organisation.
What is therefore is the way people are managed, and the way people are managed within a
given organisational context is the outcome of two important and interacting sets of variables:
• The philosophies, ideologies, values and beliefs of management that operate and dominate
within the organisation.
• The practices, policies and management style that managers employ in their managerial role.
A ‘harder’ approach to human resource management emphasises a rational economic perspective
where people, although acknowledged as important to an organisation’s success, are viewed as
a resource to be used alongside and in conjunction with capital and plant. They are deployed in
a seemingly calculative, instrumental way for economic gain, people are a means to an economic
end.
The role of management is therefore seen as maximising the efficient use of labour to meet the
economic goals of the organisation. This implies a ‘scientific management’ approach where
managers tightly control employees with minimum scope for decision-making. Tasks and jobs
are highly specialised and bounded by rigid rules and procedures. Performance in the job is
carefully monitored. Motivation is based largely upon reward and punishment (‘carrot and stick’
approach).
In the ‘softer’ form of human resource management, a more humanistic perspective is adopted
where organisational goals are achieved with and through people. People are seen as valued
resource to be nurtured and developed. The emphasis for managers changes, and they become
more concerned with measures to improve cooperation, communication, consultation,
participation, job satisfaction and the quality of working life. The manager’s role shifts to one of
gaining commitment, facilitating and encouraging participation, training and developing people to
their full potential, motivating through techniques such as appraisal and job enrichment.
Some Implications for Management Development
A number of implications for managers and their development are:
• Managerial values and attitudes: If strategic HRM is to operate effectively, managers must
possess a set of attitudes and values that are congruent with the notion that people are
central to the organisation’s success.
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• Other significant development is the improvement of links between the providers of
management education and employers. There is also evidence of greater flexibility amongst
employers, business schools and consultants to meeting the needs of practising managers.
• Managerial roles and relationships with employees: One of the most profound implications
for management development contained in HRM philosophy is the need to persuade managers
to accept and adapt to new managerial roles and forge new relationships with their employees.
Devising a management development policy
Developing effective managers begins with the formulation of a detailed management development
policy. ‘Management development will fail if there is no clear policy’ (Margerison, 1991).
Guidelines for preparing a management development policy:
1. Link development plans and activities to business strategies, human resource planning and
employment policies.
2. Determine responsibilities for developing managers.
3. Decide the characteristics for an effective manager within the organisation context.
4. Identify the managerial competences required to implement strategy.
5. ‘Map out’ the organisation’s cultural philosophy with regard to management.
6. Communicate the organisation’s strategic goals and objectives to managers and those involved
in manager development.
7. Ensure development links to the reality of what managers do, not what the organisation
thinks they do.
8. Develop a flexible approach to management development that can accommodate both
organisational and individual needs.
Policy statements are useful because they express an organisation’s commitment to development
and clearly set out a framework within which it can take place. What is some times less clear is
the extent to which they are prepared to implement them and how effective they are. Like other
areas of management development, this is difficult to evaluate.

13.4 APPROACHES TO MANAGEMENT DEVELOPMENT

Having determined its policy guidelines, the next step for the organisations to consider how it
should approach the development of its managers. Management development can be approached
in different ways. Mumford (1987) describes three types of approaches, which are broadly
representative of management development at the present time. They are:
Type 1: ‘Informal managerial’—Accidental Processes
Characteristics:
• Occurs within manager’s activities

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• Explicit intention is task performance
• No clear development objectives
• Unstructured in development terms
• Not planned in advance
• Owned by managers.
Type 2: ‘Integrated managerial’—Opportunistic Processes
Characteristics:
• Occurs within managerial activities
• Explicit intention is both task performance and development
• Clear development objectives
• Structured for development by boss and subordinate
• Planned beforehand and/or reviewed subsequently as learning experiences
• Owned by managers.
Type 3: ‘Formalised development’—Planned Process
Characteristics:
• Often away from normal managerial activities
• Explicit intention is development
• Clear development objectives
• Structured for development by developers
• Planned beforehand or reviewed subsequently as learning experiences
• Owned more by developers than managers.

13.4.1 Piecemeal Approach

Programmes that have characteristics similar to Type 1and Type 3 development tend to lead to
piecemeal approaches, which in turn lead to inefficient and ineffective development. There are a
number of reasons why organisations might choose or be forced to adopt these approaches.
Some of them are:
• Resource constraints
• A lack of awareness about linking management development to organisational strategy on
the part of those responsible for initiating or delivering development;
• Groups who seek to exert control over development

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Characteristics of this approach:
• No management development infrastructure. Development is not linked to business strategy.
• Development often focuses on the needs of the organisation and fails to meet the learning
needs and aspirations of individuals and groups.
• There is tacit support for management education and training because it is seen as a ‘good
thing to be doing’ irrespective of organisational needs
• There is lack of common vision among those responsible for management development.
• It is difficult to evaluate the effectiveness of a piecemeal approach that lacks clear direction
and established objectives.

13.4.2 Open System Approach

If organisations can be persuaded to adopt an open systems perspective of management
development they are likely to overcome many of the problems created by the piecemeal approach.
Instead of looking at management development in isolation, it becomes an integral part of a wider
organisational system, and more importantly, is linked to the ‘reality’ of management work. Viewing
management development in open systems terms recognises and focuses attention on the following:
• It is composed of identifiable parts or components, which act together in an organised way.
A range of inputs is transformed in the management development process to produce a
range of outputs.
• The management development process interacts, influences and is influenced by variables
from other environmental and organisational subsystems (social, technological, cultural).
Benefits of open systems approach:
• The notion that if you develop the manager, you develop the organisation and vice versa,
become apparent. An open systems view identifies the way management development
contributes to overall organisational effectiveness.
• Viewing management development in open system terms reveals the full extent of its influence
on the organisation and is likely to lead to more detailed and objective assessment of
performance and overall effectiveness.

13.4.3 Unified Approach

In a unified programme, management development is located at the very heart of the organisation’s
philosophy, mission, business goals and human resource strategy. The process is integrated and
coherent across all functions and hierarchies. Manager performance is measured and development
activity can be linked clearly to the organisational values and the achievement of strategic goals.

13.5 CONSIDERATIONS FOR EFFECTIVE

MANAGEMENT DEVELOPMENT
It was stressed that unified approach based on open systems model overcome many of the

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problems associated with a fragmented, piecemeal approach. But there are a number of important
considerations, they are:
• Management development programmes are presented as rational and mechanistic in
orientation. They utilise universal blueprints and frameworks to guide the ‘production’ of
effective managers. There is a systematic and logical process with clearly identifiable stages.
Managers are selected for training and development using ‘pseudo-scientific’ techniques.
Developing managers in this way offers a number of benefits, but there are limitations and
drawbacks. There is often failure to take account of and deal with the irrational side of
human behaviour, i.e. the conflict between personal and organisational goals .A more rational,
mechanistic approach may also neglect or fail to come to terms with the complex, contextual
and multi-faceted nature of a manager’s job.
• Attitudes and awareness: Different attitudes and degrees of awareness with regard to
management development will exist at different levels within the organisation and influence
the approach that is adopted.
• Differing goals and objectives: Different organisational groups and individuals will influence
and shape management development approaches. Each will have its own set of aims and
objectives.

13.5.1 The Context of Management Development

Context can be thought of as a complex network of variables with which managers interact, and
out of which they are able to construct a social reality with sense and meaning. It is context,
which shapes and influences the way development is formulated and enacted. Some of the
important contextual variables are:
• The individual
• The management team
• Environmental factors
• The organisation
The complex and ambiguous nature of management development
Research has revealed the complex nature of management development. Some
Issues that have created difficulties are:
• Clarifying what is management development
• Defining business needs and requirements
• What do managers want from developers
• Evolving and changing individual development needs
• The need for different managerial styles
• Selecting the most appropriate method of development
• Measuring and evaluating the benefits
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13.5.2 Organising and Implementing Management Development
Programmes
With a clear set of policies, objectives and approaches established, the organisations now in a
position to consider the best way to organise and implement the development programme.
To organise an effective management development programme, even a modest one, requires
considerable effort. This may partially explain why programmes have a tendency to become
piecemeal and fragmented, why line managers often leave it to personnel and training specialists
to organise. Certain decisions have to be made within the context of the organisation’s strategic
plans and environmental influences.
If a development programme is to be successfully planned and implemented, there has to be
clear and unambiguous allocation of responsibility and a willingness to accept that responsibility.
Traditionally, responsibility for development has rested with the personnel function with some
input from the manager’s boss. The individual manager was essentially passive in the process:
they were only required to ‘turn up and be developed’. More recently, organisations are adopting
and promoting a tripartite view where responsibility is shared between the personnel specialist,
the boss and the individual.
The effective development of managers requires the full involvement and participation of all three
parties.
An active process of discussion and negotiation usually results in all parties accepting and owning
a share of responsibility for development objectives, planning and implementation.

13.6 MANAGEMENT EDUCATION AND TRAINING

Management education and training forms the core component of the management development
programmes. Many of those involved in management education and training appear to have
broadly welcomed the moves to a competence approach which is practical and work-based and
encourage employers to increase investment in management education and training. Management
education and training comes in a variety of forms. A great deal of it is formalised, planned and
structured. It can take place ‘on-the-job’ or ‘off-the-job’.
Within these and other programmes, we find a diverse range of formalised learning methods.
These methods have tended to evolve through a pragmatic process of trial and error. Research
by Burgoyne and Stuart (1991) reveals the following methods to be used as learning methods.
• Lectures
• Games and simulations
• Projects
• Case studies
• Experiential (analysis of experience)
• Guided reading

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• Role playing
• Seminars
• Programmed instruction
Weaknesses that have been identified in formalised management education and training are:
• A clash between academic culture/expectations and managerial culture/expectations
(Cunnington, 1985)
• Difficulty in transferring and applying knowledge to the ‘reality’ of the workplace (Newstrom,
1986)
• The relevance of course material to the needs and wants of individual managers and
organisations.

13.6.1 The Management Learning Process

Attention is now focusing on linking education and training to learning processes. In the case of
managers, Burgoyne and Hodgson (1983) suggest that managerial action is influenced by a
gradual build-up of experience created out of specific learning incidents. This experience is
internalised and managers use it, both consciously and unconsciously, to guide future decision-
making and action. There are three levels of learning process identified:
• Level 1 learning occurs when a manager simply takes in some factual information or data,
which was immediately relevant but did not change their views of the world.
• Level 2 learning occurs at an unconscious or ‘tacit’ level. Managers gradually build up a
body of personal ‘case law’ which enables them to deal with future events.
• Level 3 learning involves managers consciously reflecting on their conception of the world,
how it was formed and how they might change it.

13.6.2 Coaching and Mentoring

Coaching
Coaching and mentoring represents the most tangible, practical and, if done effectively, most
useful forms of on-the-job development. Coaching is defined by Torrington (1989) as ‘improving
the performance of somebody who is already competent rather than establishing competence in
the first place’. Coaching usually begins with period of instruction and ‘shadowing’ to grasp the
essential aspects of the task. There is then a transfer of responsibility for the task to the individual.
Through out the process there is a dialogue with regular feedback on performance in the form of
constructive criticism and comments. The effectiveness of this feedback is dependent upon a
sound working relationship. In most organisations coaching is done on an informal basis and is
dependent on the boss having the inclination, time and motivation to do it, as well as possessing
the necessary expertise and judgment for it to succeed.
Mentoring
It differs from coaching in two ways.

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• The relationship is not usually between the individual and their immediate boss. An older
manager unconnected with the workplace is normally selected to act as mentor.
• Mentoring is about relationships rather than activities.
Mentoring represents a powerful form of management development for both the parties involved.
For the individual, it allows them to discuss confusing, perplexing or ambiguous situations, and
their innermost feelings and emotions, with somebody they can trust and respect. They gain the
benefit of accumulated wisdom and experience from somebody who is knowledgeable and ‘street-
wise’ in the ways of the organisation, especially its political workings. For older managers looking
for new challenges and stimulation in their managerial role, mentoring represents an ideal
development opportunity. It gives them an opportunity to achieve satisfaction and personal reward
by sharing in the growth and maturity of another individual.

13.7 ISSUES AND CONTROVERSIES IN MANAGEMENT

DEVELOPMENT
Organisational power and politics:
Managers are employed by organisations to‘get things done through people’ or to ‘make things
happen’. However, getting things done and making things happen within an organisation is rarely
a simple or straightforward task. Managers are confronted by ‘political’ factors. They have to
contend with ‘obstacles’ such as:
• Competition for scarce resources
• Conflicting viewpoints and priorities
• Confrontation with coalitions of vested interests
• Managing ambitious and self-interested individuals
To cope, and more importantly to survive, in an organisation, there is a growing view that managers
have to become’ politically competent’ to achieve political competence, managers must first
understand power in organisations (the ability to make things happen) .They must be aware of
how power manifests itself, its sources and how it is used.
There is now a growing realisation that managers require some measure of political competence
and awareness. The absence of politics in development programmes may tend to be politically
neutral, generate frustration and confusion in managers who find difficulty in relating or applying
what they learn to the ‘reality’ of managing back in the workplace. A politically competent
manager can contribute to organisational effectiveness. Equally, a politically incompetent manager
can hamper and ‘damage’ organisations as well as themselves.

13.7.1 The Ethics of Management Development

Like power and politics, the ethical conduct of management, and the ethical frameworks used by
developers, has received little attention beyond academic journals and books. More recently,
ethical conduct has become an important consideration, especially for human resource
management, because of its influence on managerial behaviour. For example, there is increasing

248
publicity in the media about organisations who are being accused of abusing employee rights and
exploitation. Managerial work is so complex, ambiguous and at times confusing, it is not possible
to legislate or create an all embracing framework of moral competences point to the dilemmas
facing managers who subordinate their moral values to the notion of ‘corporate good’ and that in
such instances, simplistic ethical rules and codes of practice may not be helpful to managers and
serve only to create ‘managerial cynicism’. Managers and developers should ‘catch’ and confront
each other’s conduct as it occurs and discuss its legitimacy. But such a course is likely to be
uncomfortable and will rely upon a close relationship between developer and manager.

13.7.2 The Future of Management Development

Management Development is future-oriented in that those responsible for development will have
to form views about the way management as a profession will progress and the skills and knowledge
that will be required in the future. The following are trends, which seem likely to develop in future:
• Organisations will continue to decentralise and seek greater flexibility from their workforce.
• Managerial control will change as a better educated workforce, the growth of professionals
in the workforce and new technology will lead employees to demand greater autonomy
over their jobs and working lives.
• There is an increasing awareness that people represent a real source of competitive advantage.
The competitive gap is narrowing as technology becomes cheaper and more widely available,
barriers to competition are removed and markets are ‘globalised’.
• The growth of Information Technology (IT) has led to information being more available and
more accurate than ever before. Instead of ‘tiered ranks’ of middle managers manually
collecting, sifting and analysing information for decision-making and control purpose,
technology has enabled strategic decision makers at senior manager level to obtain an
immediate and detailed view on how their organisation is performing.
• Managers will be expected to adapt and respond to environmental and organisational changes.
• Managers of the future will possess skills and attributes that are markedly different from
those that have gone before. The emphasis will shift more to managing people and developing
flexibility, adaptability and coping skills in the face of complexity and relentless and unremitting
change.
• The notion of established career paths and career ladders would have to change.

13.8 EVALUATING MANAGEMENT DEVELOPMENT

In most organisations evaluation is carried out at three stages. The evaluation of management,
education and training tends to concentrate on the input process stages and less on the effects of
the activity. Where evaluation does take place at the output stage, it is usually immediate in time
scale and narrow in both scope and content, i.e. questionnaire issued at the end of a training
course.
To conduct evaluation effectively data must be gathered. A range of methods can be employed:
• In-course and post-course interviews and questionnaires
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• Attitude surveys and psychological tests
• Observation by trainers, managers and others
• Self-reports by managers

13.9 CONCLUSION
The future of organisations based on management development. In this unit we discussed the
objectives of management development, relation between HRM and Management Development,
and various approaches to management development, future of management development and
management education and training.
Evaluating the success or otherwise of a systems-wide management development programme is
extremely difficult and in most cases it has to rely on an intuitive, ideological belief that development
will improve organisational effectiveness.

13.10 KEY CONCEPTS

Informal Management : Informal interface between management and workers is
suited to the knowledge era when workers resent task-
oriented, directive leadership and feel encouraged by a
participatory culture. Participatory management is
facilitated by personalising organisational culture,
deemphasising hierarchy and promoting informal interface
between management and workers. ‘Management by
wandering around’ is currently in vogue, which effectively
deemphasises hierarchy and promotes informal
communication in the organisation.
Management Development : It means developing managerial capacity through training
sessions geared towards information sharing and devising
means of improving upon employer employee interface with
a vie to making it more meaningful and value adding.
Leadership is an emerging area of professional expertise.
As per situational paradigm of leadership, leadership skills
may be acquired by learning. Research and development
activity in the field has made it possible.
Organisational Power : Organisational effectiveness transforms to organisational
power, understood as the potential of an organisation to
maintain internal balance and impact the environment in a
positive way. Organisational power emerges from sound
economic and ethical functioning. Resource constraint is
major consideration in determination of organisational
efficiency. Ethical functioning is imminent for organisational
effectiveness.

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13.11 REFERENCES AND FURTHER READING
Buckley, J. and N. Kemp, 1989, “The Strategic Role of Management Development”, Journal
of Management Education and Development, Vol. 20, No. 1.
Burgoyne, J. and R. Stuart, 1991, “Teaching and Learning Methods in Management
Development”, Journal of Personnel Review, Vol. 20, No.3.
Davis, T, 1990, “Whose Job is Management Development, Comparing the Choices”, Journal
of Management Development, Vol. 9, No.1.
Hitt, W, 1987, “A Unified Manager Development Programme”, Journal of Management
Development, Vol. 6, No. 1.
Limerick, D. and B. Cunnington, 1987, “Management Development: The Fourth Blueprint”,
Journal of Management Development, Vol.6, No. 6.
Mumford, A, 1989, “Management Development: Strategies for Action”, Personnel
Management, London Institute.
Newstrom, J, 1986, “Leveraging Management Development through the Management of
Transfer”, Journal of Management Development. Vol. 5, No. 5.
Ryan, M, 1989, “Political Behaviour and Management Development”, Journal of Management
Education and Development, Vol. 20.
Snell, R, 1986, “Questioning the Ethics of Management Development, A Critical Review”, Journal
of Management Education and Development, Vol. 17.
Temporal, P, 1990, “Linking Management Development to the Corporate Future, The Role of
the Professional”, Journal of Management Development, Vol. 9, No. 5.

13.12 ACTIVITES
1. Explain the meaning and importance of Management Development.
2. Discuss the main approaches to Management Development.
3. Examine the issues and controversies involved in Management Development.

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UNIT-14 EMPLOYEE CAPACITY BUILDING STRATEGIES
Structure

14.0 Learning Outcome

14.1 Introduction

14.2 Objectives of Capacity Building

14.3 Significance of Capacity Building

14.4 Process of Capacity Building

14.5 Strategies of Capacity Building

14.6 Conclusion

14.7 Key Concepts

14.8 References and Further Reading

14.9 Activities

14.0 LEARNING OUTCOME

After reading this unit, you should be able to understand:

• The importance of employee-capacity building strategies

• Objectives of capacity building; and

• Key areas in capacity building;

14.1 INTRODUCTION
New facets continue to emerge in governance such as sustainable development, eco- friendly
technologies, information technology, etc, which need to be incorporated in organisational
functioning. To institute the same, capacity building initiatives are needed. Capacity Building is
the development of an organisation’s core skills and capabilities such as leadership,
management, finance and fund raising in order to build the organisation’s effectiveness and
sustainability.

Capacity building has two components, organisational and human. Organisational capacity
building involves both technical updating of the organisation through periodic reviews and the
development of human capital through education and training. Human capacity building is the
process of assisting an individual or a group to identify key areas of development and gain
necessary insights for fuller exploitation of capacity. Knowledge and experience are needed to
solve incident and apprehended problems and implement necessary changes to augment
organisational capacity to preempt change as also withstand attendant pressure. To that end,
capacity building involves building on the available knowledge base both in technical and human

1
relations fields. For better exploitation of available resources, continuous review and
development needs to be instituted through research and development initiatives (R&D),
emphasising the most vital, human resource.

Human Strategies for Human Rights (HSHR) provides capacity building services centering on
development of effective, efficient and sustainable physical working conditions for the
promotion and protection of human rights. It focuses on two areas of development, the
employees of the institution and the organisations’ thematic area of work. The objective is to
provide training and guidance that facilitates the development of a profession, and ensures
transparency and accountability of internal operations and processes with respect to the
environment and internal equilibrium of the organisation. There is need to continually update the
knowledge and skills of the employees as part of the process of learning and adapting to a
changing society.

To realise this objective, the Human Strategies for Human Rights (HSHR) works closely with
individuals responsible for the management, fund raising, public relations, accounting, and
human resource on operating activities of the organisation.

An organisational capacity building work plan is developed after an HSHR consultant completes
an assessment of the organisation’s working environment. Training takes place over time and on
time as per need, taking cognizance of the realities of the employees’ work life in a ‘class- room’
setting. It is essentially an educative exercise with technical overtones. There is a suggestion of
education and training which inform human resource development practices in organisations.

Need for External Stimulus

The Beijing Initiative on APEC Human Capacity Building, held during May 15-6,2001 placed
particular stress on the importance of human capacity building (HCB) to ensure that all people
benefit from goals set out and through partnership across the widest spectrum of stakeholders to
develop the necessary policies and programmes to respond to the HCB challenge.

The role of stakeholders is particularly important in stimulating and also corroborating proposed
change. Opinion proffered is a chief determining factor with respect to what is finally accepted
and what is not. Specific challenges include stakeholders questioning the traditional mode of
working in an organisation, stressing on technological change, change in work processes,
specifically, organisation and methods (O&M), decision making practices, strategy formulation,
employment practices, education, training and market behaviour. Their significance lies in
stimulating positive change through pressure group tactics.

Stakeholders with respect to government administration will include people (clients, customers),
social service organisations (civil society), particularly, environmentalists, human rights workers;
political parties, farmers and businesses (interest and pressure groups) which impact upon and
are in turn impacted by public policy. The ‘people’ group can be further broken down into the
‘articulate’ and inarticulate ‘publics’ in a society. ‘Publicness’ of public administration demands
need articulation with respect to the passive segments of society and incorporation of the same in
policy craft. For more democratic policy, public interest articulation through more meaningful
participation of civil society would be desirable. Public Interest is understood as substantive
public interest and procedural public interest. While substantive public interest is ensured
through better articulation of needs at the formulation stage, procedural public interest is ensured
by the process of consultation that precedes policy making. More inclusive the process of
consultation, more democratic is the polity. Organisation, which are collectivity of individuals,
in order to be effective, efficient and representative need to have constant interaction with all
2
stake-holders for the purpose of sharing required information, issues of interest to all, especially
relating to socio-economic and polity co-administrative policies.

With regard to Civil Services Organisations to be more proactive, it becomes essential that the
Organisations have enough financial resources, an innovative civil accounting definition which
corresponds to pragmatic financial conditions, adequate and appropriate transparency, especially
in organisations engaged in delivering public service, ensuring protection of workers’ dignity
and their rights to participate in constant interaction amongst themselves as well as with the
Management, developing such a vision which is owned by all concerned in the Organisation.

Venkataratnam and Shzuie Tomoda (2005), in their work have referred to the concept of Social
Dialogue in Public Service Reform for making Civil Services more proactive. The concept of
social dialogue is one of the four strategic objectives of International Labour Organisation for
promoting decent work for all (the primary goal of the ILO is to promote opportunities for
women and men to obtain decent and productive working conditions of freedom, equity, security
and human dignity). This is being achieved through four strategic objectives, namely, by
promoting (i) International Labour standards and the fundamental principles and right at work;
(ii) Decent Employment and Income opportunities; (iii) Social protection for all; and (iv)
Strengthening tri-partism and social dialogue (ILO, 1999).

It goes without saying that through social dialogue, there could be profound success in policy
making, citizen requirements in public services etc. The success of social dialogue very much
depends on the nature in which social dialogue are formulated. All said and done, every effort
must be taken up to see that there are not impositions from the above but are put in place through
exchange of ideas and information and by focusing on participatory approach with emphasis on
consultation, negotiation and consensus broadly social dialogue, more so in Civil Service include
information sharing, public hearings, direct consultation and collective bargaining. Firm and
uninstintive cooperation of the Government is very much required for effective social dialogue in
Civil Services. Like any other management technique, the process of social dialogue cannot be
accomplished unless and until it has favourable and committed stand-point of the Government on
its sight for putting it into execution not for the benefit of the organisation, but to that of the civil
society organisations, private sectors, non-governmental organisations, interest groups and
voluntary associations. Though the process of social dialogue, not only the organisations will be
able to achieve its global but would also be in a position to have committed work force by virtue
of its participation, and satisfactory citizenry through effective governmental functioning.

With regard to Civil Service Organisations to be more proactive, it becomes essential that the
Organisations have enough financial resources, an innovative civil accounting definition which
corresponds to pragmatic financial conditions, adequate and appropriate transparency, especially
in organisations engaged in delivering public service, ensuring protection of workers’ dignity
and their rights to participate in constant interaction amongst themselves as well as with the
Management, developing such a vision which is owned by all concerned

Peoples’ participation in governance is the informing and distinguishing virtue of organisations.

Specific strategies for employee capacity building in government organisations include;

Decentralisation: Decentralisation is more democratic in that decision making is facilitated at the

grass roots which involves more people. Services rendered are also more people friendly and
more in tune with requirements at the local level and employees are empowered with more
authority and better ‘choice’ in decision making. ‘Choice’ is widened also for the government by
way of cost benefit comparisons in ‘choosing’ between centralised and decentralised options for

3
a facility, also involving cost comparisons regarding structure, manpower, inventory etc. Wider
participation in policy formation and implementation and thereby, better choice with respect to
policy inputs. By creating more ‘choice’ for all partners involved, that is government, employees
and the clientele, decentralisation maximises benefits and minimises cost both in the purely
utilitarian and welfare senses.

Delegation: Better resort to delegation makes processes dynamic and improves communications
in an organisation considerably. Work is speeded up and top management is relieved of routine
functions. Delegation contributes to employee empowerment. For delegation to succeed there
has to be increased emphasis on:

(a) Ethics in governance from the point of view of responsibility and responsiveness; and

(b) Training to acquire necessary skills to carry out delegated tasks properly. Employee
capacity improvement is a natural corollary to delegation.

Quality and Innovation: For better ‘effectiveness’ at the level of individual organisations,
stakeholders need to adopt a new concept of development that stresses on quality and
innovativeness to step up capacity building practices. Application of exogenous pressure in the
form of interest articulation and lobbying for the same is, therefore, important, especially, in
government administration for employee capacity building.

Technical Capacity Building: Technical capacity building in organisations is facilitated through

the provision of technical support activities, including coaching, training, specific technical
assistance and resource networking. In the present context of the information communication
revolution human capacity building involves bridging the digital divide, and in turn, converting
“digital divide” into “digital opportunities” so as to benefit all segments of the economy. In the
context of e-governance, it is the extent to which the same is pressed for in government
administration that will determine procedural efficiency of government administration in the
coming years.

Promoting openness and networking of government organisations promotes capacity building. In

the U.K, the Citizens Charter contains specific provisions for promoting increased openness
about the reasons for decisions taken by the government. In1988 certain changes were effected in
the official secrets act, 1911 to narrow the scope of official information falling within the ambit
of the Act. Besides a white paper guaranteeing a statutory right of access to personal records held
by the government has also been implemented in April 1994.Canada has an access to
information act which gives all Canadian citizens as well as people and corporations present in
Canada the right to have access to federal government records that are not of a personal nature.
Government of Malaysia has also taken steps to provide for an inclusive policy formation
mechanism. Specific measures include publication of reports on public complaints, progress of
administrative efforts undertaken by the government etc.

In accordance with the general trend worldwide, towards a more open and transparent
government, the right to information act has recently been passed by the legislature in India.
Such measures would curtail the growing arena of administrative discretion which has been a
point of debate and concern in academic circles and also with practitioners.

Transparency is both external (responsiveness) and internal, with respect to personnel processes.
The Fifth Pay Commission has called for clearly defined criteria for all matters concerning
promotions transfers, appointments etc of government employees. “Openness shall also extend to
resolution of disputes among government servants. Instead of following the official channel of
4
reporting the grievance, the senor officer should counsel both parties involved in the dispute to
arrive at a mutually acceptable settlement. If settlement has not been possible, the two people
involved should be ‘disassociated’ to avoid further interpersonal problems. Lastly, positive
relations should be cultivated with the media. Publicity seeking bureaucrats should be punished
as per conduct rule in this regard.

As observed in the Fifth Pay Commission report, “We have a centralised system of government
that is premised on distrust. Whether it is the, ministry of finance or the ministry of law or the
Department of Personnel, the tendency is to centralise decision making. Individual ministries
have to refer everything to these nodal ministries. Most important decisions of any consequence
are taken either by the cabinet or cabinet committee or the minister or the committee of
secretaries.” The commission has called for delegation of powers to individual ministries to cut
down levels involved and the time taken for arriving at a decision.

Management Information System

The Management Information System is an integrated approach to the design and use of a
computer based information system that provides summary information and highlights
exceptions for corrective decision making. Readily available and up to date information is a vital
requirement for facilitating correct policy making and monitoring and control over various
programmes. MIS also enables the management to take concurrent corrective action in ongoing
projects

Canada and Malaysia have taken major steps forwarding this direction. In Canada an office of
information management systems and technology headed by the chief information officer was
created for policy devolution, implementation and administrative reengineering of the existing
information systems. In 1994 the Malaysian governments introduced a civil service link (CSL) as
an on-line information database system to enable the general public to access information on
government services with facility. This was preceded by massive computerisation and
strengthened technology base in the management of public services. The ambit of administrative
reforms in the United Kingdom included establishment of information systems in the principal
areas of government establishment, like personnel records, finance, physical resources and
procurement. Integrated approach to MIS was followed so as to share the available information
between different government departments. Efficiency units were set up to determine
departmental needs and recommended most suitable MIS for different governmental agencies. A
body called the Government center for Information Systems was created for promoting
effectiveness and efficiency in government through the use of information systems.

Comparatively, Information processing in India has not been systematic. Information technology
in government departments is mainly used for document processing, not for decision making or
planning for improved organisational effectiveness. Information sharing between departments is
not systematic.

Total organisational capacity building involves diversification and expansion of organisations,

which evolves out of effective capacity building of the existing resource base and its consequent
development. Effective capacity building strategies at micro levels add up at the macro level
which results in the development of the economy. Businesses of all sizes from international
corporations to micro-enterprises, and family businesses need to enhance their capabilities to
participate in and take full advantage of the global economy.

5
According to Ratnam and Timoda (2005):

For quality public services, the following conditions must be met

a) adequate funding;

b) new public accounting definitions that correspond to the realities of financing and

managing modern public services;

c) the right to information and transparency in the public, private and voluntary sectors

involved in delivering public services;

d) respect for workers’ rights to enable workers to participate in social dialogue;

corruption-free values and norms;

investment in organisation and the development of staff;

e) effective auditing by appropriate legislative bodies and the public as customers

and citizens to allow full accountability and feedback for policy formulation;

f) robust procedures for the disclosure, review and management of conflicts of

interest;

g) a shared vision and coherent framework that links policy and execution, and

h) a civil service that is more professional, innovative and proactive in its approach.

Steps in Capacity Building

Significant steps in capacity building are studied as follows.

(a) Promoting Overall Human Capacity Building:

Employee capacity building will not be possible unless the overall human capacity is promoted.
It is necessary to emphasise the following activity areas:

1) Human capacity building within overall social and economic development strategy,
recognising the critical importance of human capital by developing more integrated
approaches to capacity building.

2) Develop relevant programmes to enhance entrepreneurial and management skills,

particularly among small and medium enterprises to meet the new demands from
globalisation and the new economy.

3) Develop policies to provide needed incentives for the business sector to participate in
the development of human capacity building, such as providing facilities and
infrastructure ensuring that access is maintained for the development of e-commerce
etc.

6
4) Facilitate mutual recognition of professional qualifications in respective countries,
which should be based on the standard of achievement and outcomes that are
mutually agreed on between economies.

5) Enhance industry-academic partnership between businesses as end users of the

workforce as well as providers of financial resources, and universities, educational
institutions, and vocational training institutions, as suppliers of the workforce, so that
they produce an information technology (IT) workforce that is readily available to
high-tech businesses.

6) Establish mutual linkage between sectoral networks including business, education,

training sectors and government to draw out synergy effect to the human capacity –
building;

7) Encourage trade union to develop and implement relevant training programmes, and
motivate and mobilise workers to undertake life long learning.

(8) Setting up a life-long education and learning society

(b) To build employee capacity on a continued basis, it is felt necessary to set up a life long
education and learning society to:

1) Establish accessible, wide and multi-dimensional learning networks to empower the

whole community.

2) Endeavor to convert education and training systems that are more supplier-centric
into consumer- oriented systems that are in tune with demands.

3) Establish a life-long learning system to ensure pre-employment education continual

training and upgrading of knowledge and skills for workers.

4) Enhance the skills and responsiveness of government employees to better equip

governments to design appropriate policy infrastructure and process in a changing
environment, and

5) Encourage the opening of education and training facilities, including facilities which
transcend national boundaries. (Beijing Initiative; HCB 2001)

Strengthening the Managerial and Employee Training:

Managerial and Employee training need to be strengthened for:

1) Developing a package of liberalisation measures to ensure continued open access

including various elements of commerce and to;

2) Retraining of both employees and employers in developing economies to help them

catch up with the requirements of new economy for sustainable growth and equitable
development.

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14.2 OBJECTIVES OF CAPACITY BUILDING
National AHEC Leadership Conference on “Capacity Building Needs and Strategies, held on
August 20, 2003 at Portland, had the following agenda:

1. Assessing organisation capacity;

2. Developing capacity building plan;

3. Developing keyboard and management capacities;

4. Building effective collaborations; and;

5. Assessing change management strategies;

The following objectives were articulated by the National AHEC Leadership Conference:

1. Prioritising the areas for improvement;

2. Developing specific outcomes to achieve along with strategies and tactics;

3. Identifying resources required to achieve identified outcomes;

4. Implementing;

5. Evaluating, what worked, what did not and what was learnt in the process;

6. Beginning again including suitable modifications

14.3 SIGNIFICANCE OF CAPACITY BUILDING

Through effective capacity building the following merits are gained:

1) Optimum utilisation of resources through consistent application of R&D

2) Preparation of the organisation to face the future through assessment of prevailing

logistics and the wherewithal of augmenting the same.

3) Helping the organisation acquire competitive advantage in identified fields.

4) Facilitating long-term decisions in the organisation.

5) Providing training and guidance to facilitate development of individual careers.

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6) Developing a database to measure and evaluate the current working capacity of the
organisation

14.4 PROCESS OF CAPACITY BUILDING

The process of capacity building involves the following activities:

1) Preparing information material to promote the organisation’s work;

2) Developing and implementing job descriptions;

3) Developing a formal organisational chart;

4) Preparing and maintaining a core operating budget;

5) Developing a routine for strategic planning and work plan management;

6) Developing fund raising strategies and building a donor database; and;

7) Developing a database to measure, trend and evaluate working activities;

14.5 STRATEGIES OF CAPACITY BUILDING

The UNDP Capacity 21 Trust Fund works with countries to build national capacities for the
implementation of Agenda 21. The agenda includes working with governments, civil society and
the private sector. Capacity 21 programmes support the development of integrated, participatory
and decentralised strategies for sustainable development. Capacity 21 programmes are country-
owned, country-driven processes that support and influence national and local decision-making
to build long-term capacities at all levels of the society. Capacity 21 is operational in each of
UNDP’s 5 regions: Africa, the Arab States, Europe and the Commonwealth of Independent
States, and Latin America and the Caribbean. Since 1993, Capacity 21 has worked with over 75
developing countries and countries in transition to adopt innovative capacity-building approaches
to address environmental degradation, social inequity and economic decline.

The following principles lie at the heart of Agenda 21 process and are the main building blocks
for capacity 21 programme.

• Participation of all stakeholders in programme development, implementation,

monitoring and learning.

• Integration of economic, social and environmental priorities within national and local
policies, plans and programmes.

• Information about sustainable development to help people make better decisions.

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14.6 CONCLUSION
During the last decade due to changes in the economy all over the world, need has been felt to
enhance the capacity of employees in all respects of sustainable development and organisational
effectiveness. Its vitality is not only realised by every country in the world and the UNDP has
taken up this issue of capacity building of workforce to make them fit the new realities. It leads
ultimately the human capacity building activity from the school level to the industry and
institutional level. The traditional capabilities are now outdated. Personnel need to be trained to
acquire new capacities for the new economies.

14.7 KEY CONCEPTS

Equitable Development: The idea of equitable development implies ‘balance’ in policies with
respect to potential impact of measure on any section or aspect of work
with a view to achieving ‘strategic fit’ with regard to policies in an
organisation. Planning is imminent for achieving desired balance in
growth strategies as all aspects or ramifications of the issue at hand have
to be appreciated and understood to craft a balanced policy in that
particular respect. A measure should not be lopsided.
Life Long Education: Employee capacity building is an ongoing and continuous process, which
involves learning and development on the part of both the employees of an
organisation and the management. Life long education clarifies the
implication of employee capacity building in an organisation. Life long
education is carried trough by means of training and development
programmes in organisations and on the job training which is imparted
both formally and informally.
Participation: Participation is a means of utilising positive social capital inherent in
communities or workers in an organisation. Participation makes policies or
decisions taken in an organisation more ‘real’ than academic in that felt
needs are articulated and policy content becomes meaningful and
strategically right.
Sustainable Growth: Growth has to be long- term and continuous. To that end, extreme impacts
which may make the measure unviable would have to be avoided.
Sustenance of growth over a ‘long term period’ is the chief consideration
in sustainable growth.

14.8 REFERENCES AND FURTHER READING

Beijing Initiative on APEC Human Capacity Building, 2001, May 15-16.

Deb, Furry, 2003, “Capacity Building Needs and Strategies”, National AHECL Leadership
Conference, Portland, or [email protected]

Definition of Capacity Building, read online at

http.//www.undp.org/capacity21/mandate/index/html

ILO, 1999, “Globalisation and Change: Social Dialogue and Labour Market Adjustment in the
Crisis-affected Countries of East Asia”, ILO ROAP, Bangkok.

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ILO Guidelines on Social Dialogue in Public Emergency Services in a Changing Environment,
adopted by the Joint Meeting on Public Emergency Services, Geneva, 27-31 January 2003, ILO:
IFP/DIALOGUE, read online at “Social Dialogue” at
www.ilo.org/public/english/dialogue/ifpdial/sd/index.htm accessed on 07.10.2004.

“NGO Capacity Building”, read online at, http.//www.hshr.org/ngo capacity building.html.

Ratnam, Venkata and Shizue Tomoda, “Practical Guide for Strengthening Social Dialogue in
Public Service Reform”, read online at http://www.ilo.org

14.9 ACTIVITIES

1. Discuss the significance and objectives of Employee-capacity Building Strategies.

2. What are the current strategies of capacity building?

3. Explain the significant steps in capacity building.

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UNIT-15 TOTAL QUALITY MANAGEMENT
Structure
15.0 Learning Outcome
15.1 Introduction
15.2 Concept of TQM
15.3 Concept of Quality
15.4 Advantages/Benefits of TQM
15.5 Differences between TQM and Traditional Management
15.6 Awareness of TQM
15.7 Framework of Implementing TQM
15.8 Roadblocks in Implementing TQM
15.9 TQM in India
15.10 Conclusion
15.11 Key Concepts
15.12 References and Further Reading
15.13 Activities

15.0 LEARNING OUTCOME

After reading this Unit, you should be able to:

• Understand the concept of Total Quality Management (TQM);
• Define Quality;
• Understand the difference between TQM and traditional management; and
• Explain TQM in the Indian context.

15.1 INTRODUCTION

Efficient human resource management was behind the economic revolution achieved by countries
ruined after the Second World War. Cases in point are Germany and Japan, who achieved
revolutionary success within a short span of time. They not only succeeded in reviving their
economies but sent their surplus produce to other nations, spreading prosperity the world over. They
famously accomplished the task by adopting the total quality management (TQM) approach with
focus on optimum development and management of the precious human resource.

Total Quality Management is related to work organisation and management. TQM marks a shift
away from the traditional productivity centred approach to a quality centric, systemic approach to
management. Components of TQM are; the company’s mission, objectives, employee participation,

1
values and strategies, and an integrative approach towards maximum quality, efficient marketing,
good people management making for all round development of an enterprise.

15.2 CONCEPT OF TQM

Total Quality Management (TQM) is an enhancement of the traditional way of managing

organisations. TQM is a proven technique to guarantee survival in international competition. Only
by changing the function of management can the culture and actions of the entire organisation can be
transformed. TQM is for the most part, common sense. Analysing the three words, we have;

Total: Made up of the whole

Quality: Degree of excellence, a product or service provides
Management: Act, art, or the manner of handling, controlling, directing etc.

Therefore, TQM is the technique of managing the whole, to achieve all round excellence.

Although the concept of quality is old, quality management is the major preoccupation of
organisations today. Many organisations around the globe are conducting Organisations
Development (OD) programmes to enhance quality awareness and change the attitudes of their
employees. The efforts towards understanding, adopting and promoting TQM are primarily inspired
by the changes taking place in the global economy, changing market conditions and customers’
expectations and increasing competitive pressures which require organisational excellence on a
continued basis. Sustained effort towards improving quality is total quality management. Many large
organisations have recognised the important contributions that TQM can make in dealing with these
challenges.

TQM is not a technique but a collection of approaches designed to optimise the performance of an
enterprise. It is better suited to a more sophisticated production and service economy (Paris, 1994)

In the 1950s, Dr. Edwards Demmings and J.M Muran introduced the Japanese to the concept of total
quality management. The Japanese adopted his ideas, and over time, developed them further. They
extended the application of process improvement from manufacturing to administrative functions
and service industries, so that the quality concept impacted the entire system favourably. Japanese
industry succeeded in achieving overwhelming success because they were able to drive down their
costs while at the same time, improve the quality of their products
During the eighties, a number of North American manufacturers emulated Japanese success and
extended the application of the total quality concepts to the areas of employee motivation,
measurement and rewards. This blend of quality management techniques and organisational behavior
philosophies is described under the rubric of Total Quality Management.
According to Mike Hick (2005), the core concepts in total quality management are:
• continuous process improvement
• customer focus
• defect prevention

2
 • universal responsibility

Continuous improvement is a top down process. It is initiated and directed from the top, but
implemented from the bottom. The selection of improvement projects is specific and focused. The
problem areas must be identified, prioritised, critical processes selected for improvement, and
improvement goals set for the project team. This is a bottom up process, which requires the
involvement and commitment of the staff. (Hick, 2005)
Employee Involvement and Empowerment
The success of the quality management approach is dependent on a well- trained and motivated staff
that is involved and empowered.
Involvement means that management actively encourages employee involvement in running the
operation and improving the processes. Empowerment implies something more than involvement. It
means that the management recognises, that, when the staff are given training and provided with the
right information, they are in the best position to control their own work processes. This being the
case, they should be empowered for the same.
There are various techniques to ensure employee involvement and empowerment. Suggestion
schemes, delegation and improvements in job design are used to effect continuous improvement in
work.
Problem solving
Quality management depends on people having good problem solving skills. It is through the
continuous process of identifying problems, and solving and implementing solutions that the
business is improved. Problem solving consists of identifying the root causes of a problem and
implementing actions to correct the situation. Measuring quality costs is important. There is an old
adage that if something can’t be measured, it can’t be managed. Measures of quality costs provide
the information needed to analyse where excess costs are occurring. Improvement projects can then
be targeted to reduce them. A computerised data base is needed to store information to monitor
quality.
Procedural Improvement
TQM involves minute improvements. The system failure analysis is a sophisticated approach to
finding the root cause of minutest failures in complex systems. Attempt is made to rectify errors for
total process improvement.
Quality Teams
TQM emphasises specialist, coordinated team work. Teams have a number of advantages over
individuals. Different facets of the problem can be tackled by subject matter specialists. Constitution
of the team is significant here. A properly constituted team has a much richer mix of skills to bring to
bear on a problem. The aim is to secure value improvement. Value improvement differs from cost
reduction. Cost reduction usually results in cheapening the product. Value improvement is aimed at
cutting costs while at the same time continuing to improve the product in terms of quality and
satisfaction of customers. The cost structure of the product is analysed, related to the customer
requirements, and attempt made to eliminate or reduce those costs that are unnecessary.

15.3. CONCEPT OF QUALITY

Quality is thus, both a user-oriented and production-oriented expression. From the user’s point of
view, quality is an expression of the product or services usefulness in meeting the needs and
expectations and its reliability, safety, durability. From the production point of view, the quality of a
3
product is measured by the quality of conformance. Quality of design is concerned with the
stringency of the specification for manufacturing the product. The quality of conformance is
concerned with how well the manufactured product conforms to the original requirements.
Form the view point of TQM, quality is everything that an organisation does, in the eyes of its
customers, which will encourage them to regard that organisation as one of the best in its particular
field of operation.
This definition encompasses all the activities of the business and is not related to any product. It also
considers the importance of meeting the needs and expectations of the customers at a cost that
represents the best value, to enhance the image of the organisation in the eyes of the customer and
build a loyal customer base.
When the expression “quality” is used, we usually think in terms of excellent product or service that
fulfils or exceeds our expectations. These expectations are based on the intended use and the selling
price. When a product surpasses our expectations, we consider the quality. Thus, it is somewhat of
an intangible based on perception. Quality can be quantified as follows:

P
Q = _____
E

Where, Q – Quality

P = Performance

E = Expectations

If Q is greater than 1.0 then the customer has a good feeling about the product or service. Of
course, the determination of P and E will most likely be based on perception with the
organisation determining performance and the customer determining expectations.

15.4 ADVANTAGES / BENEFITS OF TQM

The advantages of adopting TQM compared to conventional quality systems are numerous and some
of them are outlined below:

1) TQM helps to focus clearly on the needs of the market

The traditional approach to quality control focuses on the technical details of a product so as to
satisfy the customer. However, the customer longs for better satisfaction, which is generally
overlooked in the traditional approach. The needs change from person to person and also from place
to place. As TQM focuses on the concept of universality, it tries to abstract the satisfaction
perceptions of market and thus helps the organisation to identify and meet the requirements of the
market in a better way.
2) TQM facilitates to aspire for a top quality performer in every sphere of activity
It is a well accepted fact that the negative attitudes of employees and non participative culture of the
organisation pose the greatest hurdle to organisation’s success, growth and prosperity. TQM
4
emphasises on bringing about attitudinal and cultural change through promotion of participative
work culture and effective team-work. This serves to satisfy the higher team-work and the higher
human needs of recognition and self-development and enhances employee interest in the job. The
employee’s performance, thus, is not restricted to the product or service areas but reflects in other
spheres as well.
3) It channelises the procedures necessary to achieve quality performance
Quality in its true sense can not be achieved instantly. It requires a systematic a long-term planning
and strategic approach by focusing on defining the quality policies, goals and objectives, and
communicating these properly to one and all in the organisation adopting Statistical Quality Control
(SQC), and Statistical Process Control (SPC) techniques and developing and using a system of
evaluation, the organisations can channelise their efforts to achieve the desired and objective quality
performance.
4) It helps examine critically and continuously all processes to remove non-productive activities
and waste:
The organisation always aims at improving productivity as it leads to reduction in cost resulting in
increase in profitability. The efforts in this direction are contributed because of the formation of
quality improvement teams which meet regularly and through a systematic approach which tries to
remove non-productive activity. A continuous effort to identify the problems and resolve them helps
to reduce the waste. The culture of well being thus improves house keeping, cost effectiveness and
safety.
5) It gears organisations to fully understand the competition and develop an effective combat
strategy.
The dynamic changes in the global market and the open market policies adopted by a large number
of organisations has resulted in increased competition and for many organisations, survival has
become the key issue. It is essential for organisations today to understand the competition and
develop and adopt suitable strategies to meet the challenge. As TQM helps to understand the pulse
of the customer and thus the market it gives an edge to the organisation to meet the competition.
6) It helps to develop good procedure for communication and acknowledging good work
Improper procedures and inadequate communication is yet another base of many organisations,
which result in misunderstanding confusion, low productivity, duplication of efforts, poor quality,
low morale and so on. TQM brings together members of different levels of management thereby
providing an effective communication and interaction.

7) It helps to receive the process need to develop the strategy of never ending improvement. Quality
improvement efforts cannot be restricted to any time period. They need to be continuous to meet the
dynamic challenges. TQM emphasises on continuous and periodic review so as to make the required
challenges.
The benefits derived by the organisations, therefore, are many and multi-faceted. Many of these can
be measured in quantitative terms. However, the intangible benefits which include enrichment of the
quality of the work life and many more are not quantifiable. At the same time, it has to be
established whether they do occur or not in order to prove or disprove the efficacy of the concept.
This can be assessed by a well-planned research project or by carrying out an opinion survey
periodically.

5
The tangible and intangible benefits of TQM are as presented below:

Tangible gains Intangible gains

- Better product quality - Effective team work

- Productivity improvement - Enhancement of job interest
- Reduced quality cost - Improvement in human relations and work area
morale
- Increased market - Participative culture
- Increased profitability - Customer satisfaction
- Reduced employee grievances - Improved communication
- Enhanced problem solving capacity
- Improved corporate health and character of the
company
- Better company image

15.5 DIFFERENCES BETWEEN TQM AND TRADITIONAL

MANAGEMENT

Following are some of the basic and fundamental differences:

1. TQM stresses focus essentially on customers. Customers are viewed as dominant resource.
2. TQM takes the view that profits follow quality, not the other way round
3. TQM views that the quality is composed of multi-dimensional attributes. According Garvin
(1984), there are eight customer orient quality dimensions: performance, features, reliability,
aesthetics, conformance, durability, service ability and perceived quality. Traditional
management neglects these customer oriented dimensions.
4. In traditional management, economy-of-scale is seen as a desirable objective characterised
by long production runs, to incur low cost and achieve high efficiency. In TQM, economy-
of-time and economy-of-scope are pursued: Just-in-time production, shorter lead-times, low
inventories, quick customer response and the smallest possible sizes are the goals, to serve
customers better and quickly.
5. In traditional management, high volumes, long runs and maximum products are perceived as
desirable.
6. TQM creates goal-directed connections between customers, managers and workers.
Everyone is motivated to contribute. TQM empowers each and every employee, regardless
of level, to find better ways to work. Drawing on the concepts of participative management,
employees are given a significant role under TQM. In contrast, in traditional management,
the workers must work and mangers should manage. The manager of quality control is
responsible for quality.

6
7. Traditional management is characterised by strong divisions of labour, and by a separation of
manual work from the mental work. TQM emphasises on flexible multi-skilled workforce
that can move easily form one job to another.
8. TQM is a process oriented approach thus assuring focus on process over a long term
improvement to attain long range goals. The process-oriented view, which is the TQM way,
is a long-term, incremental approach to improving process quality. Since TQM empowers
people to improve the way they work, people are at the root of all improvement efforts.
Barriers to communication are removed and redundant activities eliminated. Working
environments are improved so that people are comfortable and do not feel strained at the
work place. Result oriented approach is based on the process of setting objectives, collecting
feedback and providing incentives to attain objectives.
9. Traditional management proposes hierarchical, vertically structured organisations. TQM, on
the other hand, seeks to create a culture of networking across and among functions, so that
teams form different disciplines come together to seek a permanent solution to each problem,
as it is identified.
10. The traditional management favours many layers of authority, with sort spans of control.
TQM advocates a flatter organisation structure with large spans of control, where authority is
pushed as far down as possible and flexibility actively encouraged.

The pertinent differentiating characteristics between TQM and traditional management are briefly
listed in Table-I.

Table-I

Comparison between TQM and traditional management approach

Sr. DIMENSION/ATTRIBUTES/ TOTAL QUALTIY TRADITIONAL

MANAGEMENT APPROACH
No. CHARACTERISTICS
APPROACH
/CATEGORIES

1. Management understanding Considers quality No compensation for

attitude management as essential quality. Tend to blame
part of company system quality department for
quality problems

2. Quality organisation status Quality is through the Considers quality is

leader. Quality managers hidden in manufacturing.
on Board of Directors Quality is not considered
as integral part of
organisation

3. Problem handling Emphasis on prevention Problems are fought as

of problems. A structure they occur fighting fire
approach to identify and approach
solving the problem

7
 4. Quality improvement action Quality improvement is a No organisational activity
continuous activity

5. Priority Quality is top most The first priority is to

priority profit

6. Focus Focus on customer Focus on management’s

satisfaction requirements

7. Organisation Networking across and Hierarchical-Vertically

among the functions

8. Span of control Large span of control Short span of control and

with authority almost many layers of authority
pushed down to the
lowest level

9. Production Schedule Economy to time, just-in- Long production runs for

time production, quick low cost and high
customer efficiency

10. Communication Conveyed with action Conveyed by slogan

11 Responsibility for quality With top management Delegated to subordinates

12. Perception of quality Quality is considered Quality is defined in

multidimensional and the terms of single
dimensions are customer dimensions, that is
oriented conformance to
specifications

13. Employee Employees are motivated Emphasises on

and are given significant monolithic work pattern.
role regardless of level to Opportunities for
better ways to work participation does not
exist

14. Work force Multi-skilled work force Emphasis on division of

with job rotation labour

8
 15. Quality-productivity Consider high correlation Contribution of quality in
relationship between the two forces improving productivity
not recognised

16 Ways of improving Changing corporate Improvement in

culture, increasing inspection and gauging
employee education, use
of process control

17 Keys to firm success Customer satisfaction and Growth in sales, profits

Production of high and return on
quality goods and investments.
services

15.6. AWARENESS OF TQM

An organisation will not begin to transform to TQM until it recognises that the quality of the product
or service needs to be improved. Awareness comes when an organisation loses market share or
realises that quality and productivity go hand-in-hand. It also occurs if TQM is mandated by the
customer or if the management realises that TQM is a better way to run a business and compete in
domestic and world markets.
Automation and other productivity enhancements might not help a corporation if it is unable to
market its product or service because of poor quality. As stated earlier, The Japanese learned this
from practical experience. Prior to World War II, they could sell their products only at ridiculously
low prices, and even then it was difficult to secure repeat sales. Until recently, corporations have not
recognised the importance of quality. However, a new attitude has emerged, quality first among
equals in costs and services. Precisely customer wants value.
Quality and productivity are not mutually exclusive developments in total quality management.
Many quality improvement projects are achieved with the same work force, same overhead, and no
investment in new equipment.
Recent evidence suggests that more and more corporations are recognising the importance and
necessity of quality improvement to survive domestic and international competition. Quality
improvement is not limited to the conformance of the product to specifications. It also involves built-
in quality in the design of the system. Prevention of product and process problems is a more
desirable objective than taking corrective action after the product is manufactured or a service
rendered.
TQM does not occur overnight, there are no quick remedies. It takes a long time to build the
appropriate emphasis and techniques into the culture. Over emphasis on short term results and
profits must be set aside so long-term planning and constancy of purpose will prevail.

Extension of TQM
Today, many institutions world wide are adopting quality management in different forms including
educational institutions. Many awards like the European Foundation for Quality Management
(EFQM) have been instituted in honour of quality management It is predicted that the 21st Century
will the century of quality. In India, quality consciousness of the 90s was started with ISO 9000
certification which was an endorsement total quality management. Now, there are more than 600
ISO 9000 certified organisations and the list is growing, implying that TQM is taking roots in India.
The University Grants Commission (UGC) and the All India Council for Technical Education
9
(AICTE) have also started emphasising on quality education and have instituted the NAAC National
Assessment and Accreditation Council and the NBA (National Board of Accreditation) for
measuring the quality of educational institutions and education.

15.7 FRAME WORK OF IMPLEMENTING TQM

1. Identify the degree of commitment, key

interests and list down the long-term
changes required

2. Define the objectives of TQM

3. Identify resources available and

develop understanding of organisational
system with quality system

4. Specify top management

commitment through quality
policies, procedures and processes

5. Create company-wide awareness

and participative work environment
by emphasising customer-oriented
values, encourage quality
commitment

6. Design plans, develop specifics

about future

7. Identify key issues and constraints

10 of implementation, develop strategies
for implementation
 8. Identify and allocate resources, Executive
Plans, Build momentum for change

9. Implement and monitor

10. Measure benefits in terms of

increased customer satisfaction

11. Review and reward.

15.8 ROADS BLOCKS IN IMPLEMENTATION OF TQM

A brief outline of problems in implementing TQM is given below:

• Lack of formal strategy
• Failure to provide incentive by recognition
• Lack of effective communication
• Narrowly based training
• Lack of faith in and support of TQM, activities among management personnel
• Lack of interest and incompetent leadership
• Misunderstanding the concept of TQM
• Delay or non-implementation of quality improvement team recommendations
• Irregularity of team meetings
• Non-application of proper techniques
• Inadequate visibility of top management support
The following issues are pertinent in TQM analysis.
• The activities involved in the process
• Identification of major problems

11
 • Inquiring into the causes
• Reviewing past experiences
• Discovering the cause effect relationships
• Current status of the activity as revealed through data.

15.9 TQM IN INDIA

TQM has been widely accepted approach for achieving highest standards of quality in all spheres of
business, but surprisingly it has been observed that Indian organisations have done little to utilise this
approach or even understand it.
It is necessary to take into consideration the human resources of the organisation which play a
revolutionary role in improvising collective performance of organisations, work groups, and
individuals for future sustainable survival and development in the competitive world. The
techniques of total quality management (TQM) along with the concept of sustainable development
have been applied to socio-economic policy. It is applied primarily to the typical business concern.
Sustainable development can be defined as “the management of losses and gains resulting from the
degradation of environmental factors that affect the ability of life, any life, to survive, now or in the
future.
Government of India has liberalised imports and exports and has taken various steps to protect Indian
industries. Such measures are temporary in nature. Indian industries will have to take steps to
evolve systems, process, procedures in a manner that product and services produced by them are not
only comparable to quality and cost internationally but also perhaps better in quality and cheaper in
cost.
Indian organisations are badly strangulated in traditional culture and are hesitant to adopt progressive
ways of management on a scientific basis. The sooner India adopts modern techniques of production
and implement total quality management (TQM) in all systems and subsystems, better it will for
Indian organisations. This must be considered on a long-term and permanent basis.
The pioneering work of Deming, Juran and Cross in total quality management produced amazing
results in cost saving in Japanese and American industries, but unfortunately, Indian industries did
not take notice of this phenomenon. The euphoria in US was such that the federal government even
constituted “Beldridge Wards” which is described as a beacon and a ‘blue print’ for driving any
organisation to its highest level of optimal achievement. These attributes are strategic in nature and
their implementation in Indian environment has to be studied for adoption in all spheres. For
achieving optimum TQM, lower level plans must deliver real value through formulation and
implementation in a long term perspective. Continuous review of the plan is necessary to keep pace
with industrial, social, and cultural change.
In a highly competitive world, it is time for Indian industries to introduce total quality management
concept, perceive TQM as a “mega” factor, identify various factors or areas, formulate simple
systems for each area and introduce TQM concepts by empowering people who have the vision,
ability to plan and identify key result areas so that desired organisational culture is developed and
employee growth achieved, along with organisational growth. Leadership of a high order and an
attitude of commitment at all levels will go a long way in achieving total quality management in any
organisation, with an eye on market competitiveness.

12
15.10 CONCLUSION
TQM is an enhancement to the traditional war of conducting business. It is a proven technique to
guarantee survival in world-class competition. TQM is for the most past common sense. It is the art
of managing the whole to achieve excellence. TQM integrates fundamental management techniques,
the existing management improvement efforts, and technical tools under a disciplined approach.

15.11 KEY CONCEPTS

Organisational Development (OD): A planned change process which is a continuous learning
exercise. Change is structural, functional and behavioural, pertaining to
organisational culture. OD consultants are employed by organisations to
lend expertise to the process.
Statistical Process Control (SPC): Procedure is monitored and improvements effected by means of
statistical techniques. Implementation is by standard procedure.
Statistical Quality Control (SQC): Output measurement cannot be done piece by piece. Variance
from the standard measure is tracked applying statistical and
engineering techniques.
Sustainable Development: Benefits should exceed costs of development. The concepts is
generically applied for environment protection efforts.
Systems Approach: Understanding processes as interlinked and integral to Organisational mission
is the systems approach. All round improvement is needed for better
quality.
15.12 REFERENCES AND FURTHER READING
Besterfield, Dale H, Carol Besterfield, Michna Besterfield, H. Glen and Mary Sacre Besterfrfield,
2001, Total Quality Management, Pearson Education Asia, New Delhi.
Dexter, Hansen A, Total Quality Management (TQM), Tutorial/Help Page, read online at,
http://www.smartdraw.com/hansen.htm
Mike, Hick, read online at, http://: www.eagle.ca/~mikehick
Paris, George, D, “Total Quality Management”, 1994, William R. Tracey, (Ed), Handbook of
Human Resource Management and Development Vol. 11, AMACOM.
Rao, Subba P, 1999, Essentials of HRM and Industrial Relations, Himalaya Publishing House.
Tripathi, P.C, 2002, Human Resource Development, Sultan Chand and Sons, New Delhi.
15.13 ACTIVITIES

1. How is TQM different from traditional approach to management? Give examples.

2. What are the processes involved in TQM? .Illustrate your answers with suitable
examples.
3. What are the possible areas in which TQM is applicable in India? Give reasons why TQM
must be adopted by developing countries.

13
UNIT-16 EMPLOYEE HEALTH AND SAFETY

Structure
16.0. Learning Outcome
16.1 Introduction
16.2 Health
16.2.1 Job Stress and Burnout
16.2.2 Computer Related Health Problems
16.2.3 Noise Control
16.2.4 Acquired Immune Deficiency Syndrome (AIDS)
16.2.5 Alcoholism and Drug Abuse
16.2.6 Violence in Workplace
16.2.7 Health Promotion
16.3 Safety
16.3.1 What Causes Unsafe Acts
16.3.2 Management Commitment and Safety
16.3.3 Safety Policies and Discipline
16.4 Responsibilities
16.4.1 Awareness
16.5 Conclusion
16.6 Key Concepts
16.7 References and Further Reading
16.8 Activities

16.0 LEARNING OUTCOME

After reading this unit, you should be able to:

• Know the importance of employee health and safety;
• Define Health and Safety;
• Analyse the remedial measures for occupational diseases; and
• Bring out the remedial measures for Industrial Accidents.

16.1 INTRODUCTION

Today employees expect their employers to provide work environments that are safe
and healthy. However, many employers once viewed accidents and occupational
diseases as unfavorable byproducts of work. This idea may still be prevalent in many
industrial settings in underdeveloped countries like India, the idea must be replaced
with the concept of using prevention and control to minimise or eliminate risks in

1
workplace. Employers in variety of industries have found that placing emphasis on
health and safety pays off in a number of ways.
Good companies maintain safe working environments by making health and safety a
top priority throughout the organisation. Health and safety are important aspects of an
organisation’s smooth and effective function. Good health and safety performance
ensures an accident - free industrial environment.
Companies seek to create common health and safety philosophies, strategies and
processes. To ensure health and safety consistency and promote an overall health and
safety culture, leading benchmark companies coordinate key strategies and activities
through a centralised oversight department, such as corporate health and safety.
Awareness of Occupational Health and Safety (OH & S) has improved in India
considerably. Organisations have started attaching the same importance to achieve
high (OH & S) performance as they do to other key aspects of their business
activities. This demands adoption of a structured approach for the identification of
hazards, their evaluation and control of risks.
Government of India believes that without safe and healthy working conditions, social
justice cannot be achieved and the attainment of safety and health at work is
fundamental to economic growth.
Under the constitution of India the Directive Principles of the State policy provides,
1. For securing the health and strength of workers, men and women and
providing
2. Just and humane conditions of work and maternity relief (Article 42)
On the basis of these Directive Principles, the Government of India declares its
policy, priorities and strategies, purposes through the exercise of its power. The
formulation of policy, priorities and strategies in occupational safety, health and
environment at work places is not undertaken by national authorities alone but in
some form of consultation with the social partners i.e. employees organisations,
autonomous & voluntary organisations public etc for agreement and involvement for
ensuring set goals and objectives.
The changing job patterns and working relationships, the rise in self employment
greater sub-contracting, out sourcing of work and the increasing number of employees
working away from their establishment and home work pose the problem of
management of occupational safety and health risks. New safety hazards and health
risks will be appearing along with the transfer and adoption of new technologies. In
addition, many of the well known conventional hazards will continue to be present at
the workplace many years ahead till the risks arising from exposure to these hazards
are brought under adequate control.

16.2 HEALTH

Health refers to general state of physical, mental and emotional well-being. A healthy
person is free of illness and injury. Health management practices in organisations
strive to maintain the overall well-being of individuals.
Employees’ health problems are varied and inevitable. They can range from minor
illnesses such as colds to serious illnesses related to the jobs performed. Some
employees have emotional health problems; others have alcohol or drug problems.
Some problems are chronic; others are transitory, but all may affect organisational
operations and individual employee productivity.
2
The well-being of the employee in an industrial establishment is affected by accidents
and by ill-health; physical as well as mental. Ill health of employees results in reduced
productivity, higher unsafe acts, and increased absenteeism. A healthy worker, on the
other hand, produces results opposite to these. In other words, healthy employees are
more productive, more safety conscious, and are more regular to work. The worker
who is healthy is always cheerful, confident looking, and is an invaluable asset to the
organisation.
A realisation of the advantage, which flow from a healthy workforce, has impelled
much management to provide health services to their employees, which vary from the
simple provision of first-aid equipment to complete medical care. Many progressive
organisations maintain well-equipped dispensaries with full-time or part-time doctors
and full-time compounder/nurses. Unlike his/her counterpart of yester-years, who
would take every precaution to protect his horses against diseases but felt that the
health of the human worker was his own business. The manager of today is fully
aware of the advantages of having a healthy workforce.
The protection of the health of the workers is a legal requirement too. Sections 11 to
20 of the Factories Act, 1948 deal with the health of workers.
Provisions of the Act:
• Factory to be kept clean and free from effluviant and dirt (S.11).
• Arrangements to be made for disposal of wastes and effluents (S.12).
• Adequate ventilation and temperature to be provided (S.13).
• Measures to be taken for prevention of inhilation or accumulation of dust and
fumes (S.14).
• Standards for artificial humidification to be fixed (S.15).
• Overcrowding related injuries to health of workers to be avoided. 9.9/14.2
cubic metres of space must be provided for each worker (S.16).
• Sufficient and suitable lighting must be provided in every part of the factory
(S.17).
• Glazed windows to be kept clean. Measures need to be taken for prevention
of glare and formation of shadows (S.17).
• Suitable points for wholesome drinking water must be provided. Drinking
points to be legibly marked and located away from urinals. Water needs to be
cooled if the number of workers is 250 or more (S.18).
• Latrines and urinals to be separately provided for male and female workers.
They should be well lighted and ventilated (S.19).
• Sufficient number of spittoons must be provided. Whoever spits outside the
spittoons shall be punishable (S.20).

16.2.1 Job Stress and Burnout

Problems such as alcoholism and drug abuse sometimes result from stress, especially
job stress. Here job-related factors such as overwork, relocation, and processing with
customers eventually put the person under such stress that a pathological reaction
such as drug abuse occurs.

3
A variety of external environmental factors can lead to job stress. These include work
schedule, pace of work, job security, route to and from work, and the number and
nature of customers or clients. Even noise including people talking and telephones
ringing, contribute to stress.
However, no two people react to the job in the same way, because personal factors
also influence stress. For example type a personalities – people who are workaholics
and who feel driven to always be on time and met deadlines – normally place
themselves under greater stress than do others. Job stress has serious consequences
for both employer and employee. The human consequences include anxiety,
depression, anger and various physical consequences, such as cardiovascular disease,
headaches, and accidents. For the organisation, consequences include reductions in
the quantity and quality of job performance, increased absenteeism and increased
grievances and health care costs.
Reducing Job Stress:
There are number of ways to alleviate stress. In his book “Stress and the Manager”
Karl Albrecht suggests the following ways to reduce job stress:
1. Build rewarding, pleasant, cooperative relationships with colleagues and
employees
2. Don’t bite off more than you can chew
3. Build an especially effective and supportive relationship with your boss
4. Negotiate with your boss for realistic deadlines on important projects.
5. Learn as mush as you can about upcoming events and get as much lead
time as you can to prepare for them.
6. Find time everyday for detachment and relaxation.
7. Take a walk around the office to keep your body refreshed and alert.
8. Find ways to reduce unnecessary noise.
9. Reduce the amount of trivia in your job; delegate routine work whenever
possible.
10. Limit interruptions.
11. Don’t put off dealing with distasteful problems.
12. Make a constructive “worry list” that includes solutions for each problem.
The employer and its human resource specialist and supervisors can also play a role in
identifying and reducing job stress. Supportive supervisors and fair treatment are two
obvious steps. Other steps include:
i. Reduce personal conflicts on the job.
ii. Have open communication between management and employees.
iii. Support employees’ efforts for instance, by regularly asking how they are
doing.
iv. Ensure effective job-person fit, since a mistake can trigger stress.
v. Give employees more control over their jobs.
vi. Provide employee assistance programmes including professional
counseling.

4
 vii. Reassess your goals in terms of their intrinsic worth. Are the goals you
have set for your self attainable? Are they really worth the sacrifices
you’ll have make?
viii. Think about your work. Could you do as good as a job without being so
intense or by also pursing outside interests?

16.2.2 Computer Related Health Problems

The fact that many workers today must spend hours each day working with computers
is creating health problems at work. Short – term eye problem like burning, itching,
and tearing as well as eyestrain and eye soreness are common complaints among
video display users.
Backaches, and neck aches are widespread among display users. These often occur
because employees try to compensate for awkward body positions. Researchers also
found that employees who used video displays and had heavy workloads were prone
to psychological distress like anxiety, irritability and fatigue.

The following measures have been further recommended:

1. Give employees rest breaks. The institute recommends a 15 minute
rest break after two hours of continuous work for operators under
moderate work loads and 15 minute breaks every hour for those with
heavy work loads.
2. Design maximum flexibility into the work station so it can be adapted
to the individual operator. For example, use adjustable chairs with mid
back supports and a video display in which screen height and position
are independently adjustable.
3. Reduce glare with devise such as shades over windows, terminal
screen hoods properly positioned, and recessed or indirect lighting.
4. Give workers a complete pre-placement vision exam to ensure
properly corrected vision for reduced visual strain.
5. Place the keyboard in front of the employee, titled away with the rear
portion lower than the front.
6. Place the computer mouse and mouse pad as close to the user as
possible and ensure there are no obstructions on the desk that impede
mouse movement.
7. Allow the user to position his or her wrists at the same level as the
elbow.
8. Put the monitor at or just below eye level at a distance of 18 to 30
inches from the eyes.
9. Let the wrist rest lightly on the pad for support.
10. Put the feel flat on the floor, or on the footrest.

Workplace Smoking
Smoking is a serious problem for both employees and employers. Studies even
shown that for some reason, smokers have a significantly greater risk of occupational
accidents than do non smokers, as well as much higher absenteeism rates. In general,
“sometimes employee are less healthy than non-smokers, are absent more, make more
5
and more expensive claims for health and disability benefits and endangers co-
workers who breathe smoking air.

16.2.3 Noise Control

An age-old problem, and not effectively tackled till now, is the noise in industrial
establishments. Noise made its appearance in organisations when human started
working on metal. As civilisation advanced, human discovered more and more ways
of having machines to do his/her work, and each new machine added to the problem.
For quite a number of years, noise was endured by all. But, in the recent past, the
increasing use of machines of great speed is telling upon the health of the workers.
Long exposure to excessive noise impairs the hearing of employees. The level and
duration of noise and the exposure that is likely to cause deafness varies from person
to person. It is agreed that long exposure to noise in excess of the prescribed limits
makes one deaf.
Hearing loss is not only effect of noise. Constant exposure to high noise levels can
cause hormonal imbalances, changes in blood circulation, dizziness, increase in
respiratory rate, heartburn, sleep disturbances and fatigue.
Noise Control Methods
It is impossible to eliminate noise from industrial establishments, as long as
machinery is used in manufacturing operations. However, noise control can help
minimise harmful effects on employees. Noise control can be achieved (i) at the
source (ii) through enclosure, (iii) by absorption, or (iv) by ear protection.
Controlling noise at its origin is the best method of reducing its harmful effects.
Noise can be controlled at its source by questioning the noise-producing elements by
repairing or redesigning the machines: mounting machines to reduce vibration; or
substituting noise – producing elements with quieter ones.
Considerable reduction in the level of noise may be achieved by providing enclosures
for machines with specially made covers or housing them in separate rooms. But a
small opening is enough to produce heavy leakage of noise. Care should, therefore be
taken to make the enclosure as full proof as possible. Where machines cannot be
enclosed, places which need quieter surroundings may themselves be enclosed, for
example a works office. Similarly, a machine transmitting vibration on a large scale
may be isolated from the rest of the operations.
The harmful effects of noise may be reduced by absorbing it. Ceilings and walls may
be constructed with acoustic materials to absorb sound. Empty space around the high
noise-producing machine may be provided to absorb the noise. High ceilings
dissipate noise considerably.
Where nose is excessive and other methods of noise control are likely to be
ineffective, employees working close to the source of noise may be given ear
protection to prevent any impairment of their hearing capacity. They may be
provided with muffs, helmets, cotton and soft rubber, to be worn by them while on
work. They should be educated to wear the protection equipment, because the
tendency with most workers is to ignore.
16.2.4 Acquired Immune Deficiency Syndrome (AIDS)
AIDS is likely to cause considerable confusion and disruption in the workforce.
When employees realise that they are working with an infected worker, they demand
that the hapless employee should be dismissed. If the management discharges the
employee, the law is violated, particularly in the US where individuals who have
AIDS are protected by federal, state and local laws. This protection generally comes
6
in the form of protection against discrimination and is based on the fact the virus
cannot be spread by casual contact.
Organisations are hard hit by additional costs – direct and indirect – when their
employees contact the disease. Direct costs are in the form of increased medical
burden. Indirect costs result from loss of productivity when employees refuse to work
with an AIDS-infected worker. It is responsibility of the government, and business
and non-governmental organisations to create better awareness about the disease in
the minds of the people.
Credit should go to central government undertakings, particularly HMT and BHEL,
for initiating measure to prevent AIDS. Teams of doctors from in-house
Occupational Health Services visit plants and give lectures to employees on AIDS
prevention. Lecturers are held once or twice every year.
What is needed most for the employers is to educate workers about AIDS. The
following guidelines need to be followed to make the educational programme
effective:
1. Employees must be made to understand how AIDS is contacted.
Understanding about the ways to contacting AIDS will ensure that the
activities do not occur at the workplace.
2. Presentations to employees must be handled by professionals, preferably from
experts. This is necessary as the message presented is going to include sexual
references which, if not handled properly, are likely to have a negative impact
on employees.
3. All employees must attend the sessions.

16.2.5 Alcoholism and Drug Abuse

Alcoholism is a serious and widespread disease. It does not strike any particular
group – alcoholism can strike employees from the junior to the general manager.
The effects of alcoholism on the worker and on the work are serious. Both the quality
and quantity of work decline sharply. A form of “on-the-job absenteeism” occurs as
efficiency declines. An alcoholic worker is more unlikely to observe safety
precautions while on the job or off the job. Morale of the other workers is likely to
suffer as they are required to do the work of their alcoholic peer.
Organisations employ three techniques to tackle alcoholism in workplaces. First is
disciplining alcoholics. Where disciplining fails, the alcoholic is discharged. Second
is in-house counseling by the HR department, the company doctor or by immediate
supervisor. Finally, companies use outside agencies, psychiatrists and clinics to deal
with the problem of alcoholism.
Drug abuse is a recent phenomenon and is a serious one. Drug abuse is more evident
among young employees and is found across all job levels. Employees who are drug
addicts are often much more difficult to detect than alcoholics-liquor is easy to smell
but not drugs. Drug abuse affects job performance. The problem of a drug addict
indicates his or her on-the-job behaviour.
As a result of the increased use of drugs in the workplace, more and more companies
have begun to use some form of drug testing for both job applicants and existing
employees.
Drug testing is risky. An employer can be exposed to substantial liability for
defamation for making a false accusation of drug use. The following guidelines can
help avoid the risk:
7
 1. Testing only applicants or employees whose jobs are considered safety
specific or critical.
2. Using only valid measures of drug use.
3. Obtaining valid consent of the applicant or employee and then provide the
examinee with the results of the tests.
4. Maintaining strict confidentiality of test results.
Organisations can use the same techniques (recommended to cure alcoholism) to be
problem of drug abuse.

16.2.6 Violence in the Work Place

Violence in the work place, once an exception to daily work life, has become common
these days. Those who are at high risk are taxi drivers, police officers, retail workers,
cashiers at petrol bunks, and people who work alone or at night. Violent incidents
include fist fights, shooting, stabbing and sexual assault.
Violence disrupts productivity; causes untold damage to those exposed, and costs
employers millions of rupees. Obviously, organisations should initiate measures to
protect employees and physical resources. It is important that companies concentrate
on avoiding violence rather than simply dealing with it after it occurs.
The following will help companies avoid falling victims of violence:
1. Hiring with caution. Pre-hire drug testing, detailed questions about previous
employment, and criminal record checks can go a long way towards violence-
prone individuals.
2. Develop a plan for preventing violence and for dealing with it when it occurs.
Reporting requirements for both violence and threats of violence should be an
integral part of the plan. The plan should also be drawn by employee
participation and professionals who are experts in areas of violence
assessment, counseling and law enforcement.
3. Establish a crisis-management team with the authority to decide and act
quickly. This group will evaluate problems, select intervention techniques,
and co-ordinate follow-up activities.
4. Train supervisors and managers in how to recognise aggressive behaviour,
identity the warning signs of violence, and resolve conflicts. Orient all
employees towards assuring a violence free work environment.

16.2.7 Health Promotion

Employers concerned about maintaining a healthy workforce must move beyond
simply providing healthy working conditions and begin promoting employee health
and wellness in other ways. Health promotion is a supportive approach to facilitate
and encourage employees to enhance healthy actions and life styles. Health
promotion efforts can range from providing information and enhancing employee
awareness of health issues to creating an organisational culture supportive of
employee health enhancements. Going beyond just compliance with workplace safety
and health regulations. Organisations engage in health promotion by encouraging
employees to make physiological, mental, and social choice that improve their health.

8
Health Promotion Levels

Level 1 Level 2 Level 3

Information & Awareness Lifestyle Wellness Organisational Health

• Brochures & materials • Wellness education • Benefits integrated
programme with programmes.
• Health risk screenings
• Regular health • Dedicated resources
• Health tests and
classes. and facilities.
measurements
• Employee assistance • Continuous health
• Special events and
programmes. promotion.
classes.
• Support groups • Health education
curriculum.
• Health incentives.

The first level is useful and may have some impact on individuals, but much is left to
individual initiatives to follow behaviors. Employers provide information on such
topics as weight control; stress management indicator that many employers have
limited their efforts to the first level is that 93% of promotion program and 72% of
them offer health education and training programs. However, only 27% of the firms
conducted health risk screenings and appraisals. Even through such efforts may be
beneficial for some employees. Employers who wish to impact employees’ health
must offer second level efforts through more comprehensive programmes and efforts
that focus on the life style “wellness” of employees.
Wellness Programmes
Employers desire to improve productivity, decrease absenteeism. Wellness
programmes are designed to maintain or improve employee lifestyle changes. Early
wellness programmes were aimed primarily at reducing the cost and risk of disease.
Newer programmes emphasise healthy lifestyles and environment, including reducing
cholesterol and heart disease risks and individualised exercise programmes and
follow-up. Employer sponsored support groups have been established for individuals
dealing with health issues such as weight loss, nutrition, or smoking cessations.
Employee Assistance Programmes (EAP)
Organisations use as a broad based response to health issues. It provides counseling
and other help to employees having emotional, physical or other personal problems.
In such a programme employer contracts with a counseling agency contact the
agency, either voluntarily or by employer referral, for assistance with a broad range of
problems.
EAPs help employees with variety of problems. One survey of EAP counselors found
that the most common employee issues dealt with were: (1) Depression and anxiety
(2) Marital and relationship problems (3) Legal Difficulties and (4) Family and
children concerns other areas.
Commonly addressed as part of an EAP include substance abuse, financial counseling
and career advice. Critical to employee usage of an EAP is preserving confidentiality.
For that reason, employers outsource EAPs to trained professionals, who usually
report only the number of employees and services provided, rather than details on
individuals using an EAP.
Organisational Health and Culture
Employers both large and small may recognise that an organisational culture that
emphasises and supports health efforts is beneficial. Common to these employers is
9
an integrative, broad-based effort supported both financially and managerially.
Development of policies and procedures supporting health efforts, establishing on-site
exercise facilities, and consistently promoting health programmes all contribute to
creating a health promotion environment throughout the organisation.

16.3 SAFETY

An accident-free plant enjoys certain benefits. Major ones are substantial savings in
cost, increased productivity, and moral and legal grounds. Safety refers to protecting
the physical well-being of people. The main purpose of effective safety programmes
is to prevent work-related injuries and accidents.
Types of Accidents

Accidents

Internal External

Major Minor

Fatal Disability

Temporary Permanent

Partial Total Partial Total

Causes of Accidents
There are three basic causes of workplace accidents: (a) chance occurrences, (b)
unsafe conditions, and (c) unsafe acts on the part of employees. Change occurrences
contribute to accidents but are more or less beyond management’s control (such as
walking past a plate-glass window just as some one hits a ball through it). We will
therefore focus on unsafe conditions and unsafe acts.

Unsafe Conditions and other Work Related Factors

Unsafe conditions are one main cause of accidents. The mechanical and physical
conditions that cause accidents. They include such as:
• Improperly guarded equipment.
• Defective equipment
• Hazardous procedures in, on or around machines or equipment.

10
 • Unsafe storage: congestion, overloading.
• Improper illumination: Glare, insufficient light.
• Improper ventilation: Insufficient air change impure air source.
In addition to unsafe conditions three other work related factors contribute to
accidents: the job itself, the work schedule, and the psychological climate of the
workplace.
Certain jobs are inherently more dangerous. For example, the job of crane operator
results in about three times more accident related hospital visits than does the job of
supervisors. Similarly some departments’ work is inherently safer. A book keeping
department usually has fewer accidents than a shipping department.
Work schedule and fatigue also affect accident rates. Accident rates usually don’t
increase too noticeably during the first five or six hours of the work day. But after
that, the accident rates increases faster than the increase in the number of hours
worked. This is due partly to fatigue and partly to the fact that accidents occur more
often during night shifts.
Unfortunately some of the most important working conditions – related causes of
accidents are not as obvious because they involve workplace psychology. A strong
pressure within the organisation to complete the work as quickly as possible,
employees who are under a great deal of stress and a poor safety climate. Accidents
occur more frequently in plants with a high seasonal layoff rate and where there is
hostility among employees many garnished wages and blighted living conditions.
Temporary stress factors like high work place temperature, poor illumination and a
congested workplace also correlate with accident rates.
How to Prevent Accidents?
In practice, accident prevention boils down to two basic activities:
1. Reducing unsafe conditions.
2. Reducing unsafe acts.
Reducing unsafe conditions is always an employer’s first issue of defense. Safety
engineers should design jobs to remove or reduce physical hazards. In addition
supervisors and managers play a role in reducing unsafe conditions. A checklist or
the self – inspection check can help identify and remove potential hazards.
Sometimes the solution for eliminating an unsafe condition is obvious, and sometimes
it is more subtle. For example, slips and falls at work are often the result of debris or
slippery floor. Relatively obvious remedies for problems like these include slip-
reducing floor coatings floor more off spills. But perhaps less obviously, special
safety gear can also reduce the problems associated with otherwise unsafe conditions.
For example, slip-resistant foot wear with grooved roles can reduce slips and falls.
Cut resistant gloves reduce the hazards of working with sharp objects.
Getting employees to wear personal protective equipment can be a famously difficult
chore. Including the employees in planning the program, reinforcing appropriate
behaviors, and addressing comfort issues can smooth the way for more widespread
use of protective equipment. Wearability is important in addition to providing
reliable barrier protection and durability protective clothing should fit properly; be
easy to care for maintain, and repair; be flexible and light weight; provide comfort
and reduce heat stress; have rugged constructed; be relatively easy to put on and take
off and be easy to clean dispose of and recycle.
Again, reducing unsafe conditions – by designing the job properly and having
managers watch for hazards – should always be the first choice. Then come
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administrative controls, such as job rotation to reduce long – term exposure to the
hazard. Only then turn to personal protective equipment.
Reducing unsafe acts – through screening training or incentive programs, for
example, is the second basic way to reduce accidents. Let’s look at how to do this.

16.3.1 Causes of Unsafe Acts

Most safety experts and managers know it is impossible to eliminate accidents just by
reducing unsafe conditions. People cause accidents with unsafe acts such as throwing
materials using unsafe producers in loading, placing or mixing by lifting improperly.
While safe acts can undo even the best attempts to minimise unsafe conditions. For
years psychologists assumed that some employees were simply more accident prone
than others, and the accident prone people generally caused more accidents.
Therefore, while some believe that most accident-prone people are impulsive, most
experts today doubt that accident proneness is universal that some people will have
more accidents no matter what the situation. Instead, the consensus is that the person
who is accident prone on one job may not be so on a different job.
Various human traits do relate to accident proneness in specific situations. For
example, accident prone drivers performed worse in a test of motor skills than did
drivers with fewer accidents and older adults with impaired vision were at a higher
risk for falls and motor vehicle crashes. People who were more fatalistic, negative
and cynical were more likely to exhibit violent behaviour in the job.

Reducing Unsafe Acts by Emphasising Safety:

It is the responsibility to set the tone so subordinates want to work safely. It is
necessary to show by both word and deed that safety is crucial. For example,
supervisors should:
1. Praise employees when they choose safe behaviors.
2. Listen when employees after suggestions, concerns or complaints.
3. Be a good example, for instance by following every safety rule procedure.
4. Visit plant areas regularly.
5. Maintain open safety communications – for instance, by telling employees as
much as possible about safety activities such as testing alarms and changing
safety equipment or procedures.
6. Link manager’s bonuses to safety improvement.

Reducing Unsafe Acts through Selection and Placement:

Screening is another way to reduce unsafe acts. Here, the aim is to isolate the trait
(such as visual skill) that might predict accidents on the job in question, and then
screen the conditions for this trait. Tests have distinguished between those who do
and do not have more car accidents, falls, and violent out busts studies suggests that a
test like Employee Reliability Inventory (ERI) can help employers reduce unsafe acts
at work. The ERI purportedly measures reliability dimensions such as emotional
maturity, conscientiousness, safe job performance and courteous job performance.
While the findings of one study were not definitive, using the ERI in the selection
process did seem to be associated with reductions in work related accidents.

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Reducing Unsafe Acts through Training
Safety training is another way to reduce unsafe acts. This is especially appropriate for
new employees. They should be instructed safe practices and procedures, warn them
of potential hazards, and work on developing safety – conscious attitude.
Reducing Unsafe Acts through Motivation Posters, Incentive Programs and Positive
Reinforcement:
Safety posters also help reduce unsafe acts. However, posters are not substitute for
comprehensive safety programme; instead employers should combine them with other
techniques (like screening and training) to reduce unsafe conditions and acts and also
change them often.
Others use positive reinforcement programs to improve safety at work. Researchers
introduced one program in a whole sale bakery that takes wraps, and transports pastry
products to retail outsets nation wide.
At the conclusion of training phase the employees were motivated to consider
increasing their performance to the new safety goal. For the following reasons: for
their own protection, to decrease costs of the company and to help the plant get out of
last place in the safety ranking of the parent company.
16.3.2 Management Committee and Safety
Telling supervisors to watch for spills and telling employees to work safely is futile if
everyone in the firm believes management isn’t serious about safety. Safety starts
with top management commitment.
Everyone should see convincing evidence of top management commitment. This
includes top management being personally involved in safety activities; giving safety
matters high priority in meetings and production scheduling; giving the company
safety officer high rank and status; and including safety training in new workers
training ideally “safety is an integral part of the system, woven into each management
competency and a part of everyone’s day to day responsibilities” In addition:
i. Institutionalise management’s commitment with a safety policy and
publicise it. This should emphasise that the firm will do everything
practical to eliminate or reduce accidents and injuries. Emphasise that
accidents and injury prevention are not just important but of the utmost
importance.
ii. Analyse the number of accidents and safety incidents and then set specific
achievable safety goals.

Safety Committees
Employees frequently participate in safety planning through safety committees, often
composed of workers from a variety of levels and departments. A safety committee
generally meets at regularly scheduled times has specific responsibilities for
conducting safety reviews, and makes recommendations for changes necessary to
avoid future accidents. Usually at least one member of the committee comes from the
HR departments.

16.3.3 Safety Policies and Discipline

Designing safety policies and rules and disciplining violators are important
components of safety efforts. Frequently reinforcing the need for safe behaviour and
13
supplying feedback on positive safety practices also are effective in improving worker
safety. Such efforts must involve employees, supervisors, managers, safety
specialists, and HR staff members.

Safety Training and Communications

One may to encourage employee safety is to involve all employees at various times in
safety training. Safety training can be done in various ways. Regular sessions with
supervisors managers, and employees often are coordinated by HR staff members.
Showing videos, television broadcasts, and internet based resources all are means
used to conduct safety training.
To reinforce safety training continuous communication to develop safety
consciousness is necessary. Merely sending safety memos is not enough. Producing
newsletters, changing safety posters, continually updating bulletin boards, and posting
safety information in visible areas also are recommended.

Employees Safety Motivation and Incentive

To encourage employees to work safety many organisations have used safety contests
work behaviour. Jewelry, clocks, watches, and even vocation trips have been given as
rewards for good safety records. Unfortunately some evidence indicates that
incentives tend to reinforce under reporting and “Creative” classifying of accidents.
This concern about safety incentives, raised by OSHA, is that employees and
managers do not report accidents and injuries so that they may collect the incentive
rewards.

Inspection, Accident Investigation and Evaluation

It is not necessary to wait for an OSHA inspectors to inspect the work area for safety
hazards. Inspections may be done by a safety committee or by a safety coordinator.
They should be done on a regular basis, because OSHA may inspect organisations
with about – average lost workday rates more frequently.
When accidents occur they should be investigated by the employer’s safety committee
or safety coordinator. The phases of accident investigation are four as follows:
1. Review the scene
2. Interview Employees / others
3. Prepare report
4. Identifying Recommendations
Closely related to accident investigation is research to determine ways of preventing
accidents. Employing safety engineers are having outside experts evaluate the safety
of working conditions is useful. In many similar accidents seem to occur in an
organisational unit, a safety education training program may be necessary to
emphasise safe working practices. As an example, a publishing company reported a
greater – than – average number of back injuries among employees who lifted heavy
boxes. Safety training on the proper way to lift heavy objects was initiated to reduce
the number of back injuries.
Organisations should monitor and evaluate their safety efforts. Just as organisational
accounting records are audited, a firm’s safety efforts should be audited periodically
as well. Accidents and injury statistics should be compared with previous accident

14
patterns to identify any significant changes. This analysis should be designed to
measures progress in safety management.

16.4 RESPONSIBILITIES

The general goal of providing a safe and healthy workplace is reached by operating
managers and HR staff members working together. The primary health and safety
responsibilities in an oraganisation usually fall on supervisors and managers. An HR
manager or safety specialist can help coordinate health safety programmes,
investigate accidents, produce safety program materials, and conduct formal safety
training. However, department supervisors and managers play key roles in
maintaining safe working conditions and a healthy workforce. For example, a
supervisor in a warehouse has several health and safety responsibilities: reminding
employers to wear safety hats; checking on the cleanliness of the work area;
observing employees for any alcohol drug, or emotional problems that may effect,
their work behaviour; and recommending equipment changes (such as screens, railing,
or other safety devices) to engineering specialists in the organisation.
A position becoming more common in many companies is that of
safety/environmental officer. This combination may make sense in situations where
danger remits from chemical (or) other sources of pollution that may be hazardous to
both employers and the public or the environment. Because both safety and
environmental responsibility require working with the government agencies, putting
someone in the job with the skills to deal with governmental agencies and ensure
compliance with a wide range of regulatory issues is a good choice.

16.4.1 Awareness
Awareness can be created among the workforce by following methods:
• By providing forums for consultations with employers’ representatives
workers representatives and community on matters of National concern
relating to safety, health and environment at work place with the overall
objective in creating awareness and enhancing National productivity.
• By encouraging joint – Labour Management efforts to preserve, protect and
promote National assets and to reduce injuries and disease arising out of
employment.
• By maximising gains from the substantial investment in awareness campaigns
by sharing experience and learning.
• By including occupational safety and health at workplace in schools higher
technical medical, professional and vocational courses.
• By securing good Liaison arrangements with the International organisations.
• By providing medical criteria which will assure in so far as practicable that no
employee will suffer diminished health, functional capacity, or life expectancy
as a result of his work experience and that in the event of such occupational
diseases having been contracted, suitably compensated.
• By providing for appropriate reporting procedures with respect to occupational
safety and health to help achieve the objectives and to accurately describe the
nature of the occupational safety and health problem with a view to carry out

15
 national project study, surveys to identify problem areas and pragmatic
strategies.

There are many side affects, if we use even new computers like headaches, sniffles
etc., some experts say it is all because of poor ventilation, dust and fumes. It is found
recently that new computers emit chemical fumes (which however, diminish after
running constantly for a week). And “Safe” office work is actually susceptible to
many other health and safety problems including repetitive trauma injuries related to
computer use, respiratory illness stemming from indoor air quality and high levels of
stress, which are associated with a variety of factors, including task design.
But even facts like these don’t tell the whole story. They don’t reflect the human
suffering incurred by the injured workers and their families or the economic costs
incurred by employers.
In USA the Congress passed the “Occupational Safety and Health Act” in 1970 to
assure so far as possible every working man and woman in the nation safe and
healthful working conditions and to preserve our human resources.
The Act created the “Occupational Safety and Health Administration” (OSHA)
within the Department of Labour. OSHA’s basic purpose is to administer the Act and
to set and enforce the safety and health standards that apply to almost all workers in
USA.
An occupational illness is any abnormal condition or disorder caused by exposure to
environmental factors associated with employment. This includes acute and chronic
illness caused by inhalation, absorption, ingestion or direct contract with toxic
substances or harmful agents.

16.5 CONCLUSION

One has to develop special programmers for hazardous occupations and specific
sectors; set up training mechanisms; create nation-wide awareness; arrange for the
mobilisation of available resources and expertise.
Through dedicated and concerted efforts India will certainly and steadily march
towards economic prosperity consistent with the requirements of safety, health and
environment at workplace thereby improvising the standard of living of the people.
Particular attention needs to be paid to the hazardous occupations and of workers in
precarious conditions such as migrant workers and various vulnerable groups of
workers. Work related hazards and occupational diseases in small scale industries
and agriculture are likely to increase as the occupational safety and health services are
out of reach in these
Thousands of employees die every year in factories due to accidents. An accident-free
plant can save on cost, increase productivity, discharge moral commitment towards
workers and comply with legal provisions.
Companies have to develop common health and safety philosophies, strategies and
processes. To ensure health and safety consistency and promote an overall health and
safety culture, leading benchmark companies have to coordinate key strategies and
activities through a centralised oversight department, such as corporate health and
safety.

16
16.6 KEY CONCEPTS

Employee Assistance Programmes (EAP): Employee assistance programmes are a

welfare measure designed to augment ‘productivity’ of workers in an
organisation. The concept of welfare has not been specifically defined
or a definition not been agreed upon unanimously. Employee
assistance programmes or such other welfare measures are looked at
from the utilitarian perspective, more than ethical that the idea is
deriving maximum possible output from employees.
Occupational Safety and Health Administration (OSHA): Occupational safety and
health administration is an aspect of organisational health. Physical
conditions of work need to be regulated. Significantly, the scientific
management school of thought is a pertinent paradigm to
understanding organisational functioning even in the post modern era
of welfare and humanism in that the ‘one best way’ of doing a job may
also be the safest and most value adding.
Organisational Health: Discipline, chiefly lack of untoward incidents with respect to
legal wrangles or disputes is the prime consideration in organisational
health. For maintenance of organisational health, physical and social
condition of employment should take workers’ safety into account. To
that end, managements need to invest in safety measures. Use of the
word ‘invest’ is significant in that the expenditure does not account for
‘cost’ but leads to tangible ‘value’ added to organisational output in the
long run, which makes it an ‘investment’.

16.7 REFERENCES AND FURTHER READING

Albrecht, Karl, “Stress and the Manager”, read online at, http://www.best-in-
class.com/rr555.htm.
Information on occupational health and safety, read online at,
http://www.bis.org.in/forms/ohms.htm
http://www.dgfasli.nic.in
http://www.nationalpolicy.htm
Aswathappa, K, 2002, Human Resource and Personnel Management, Tata Mc Graw-
Hill Publishing Company Limited, New Delhi.
Desler, Gary, 2003, Human Resource Management, 9th Edition, Pearson Education.
Mathis, Robert L. and John.H.Jackson, 2003, Human Resource Management,
Thomson South, Western Edition, Singapore.

16.8 ACTIVITIES

1. Analyse the need of introducing healthy and safety-working environment in

industries.
17
2. Explain health and safety conditions and its remedial measures in industries.
3. Write a note on Management Commitment and Safety.

18
UNIT-17 HUMAN RESOURCE MANAGEMENT AND
EMPLOYEE INVOLVEMENT
Structure

17.0 Learning Outcome

17.1 Introduction

17.2 Workers’ Participation in Management (WPM)

17.2.1 Historical Background

17.2.2 Objectives of Worker’s Participation in Management

17.2.3 Forms of Participation

17.2.4 Institutional Arrangements for WPM in India

17.3 Collective Bargaining

17.4 Trade Union Theories

17.4.1 Trade Union Movement in Selected Countries

17.4.1.1 United Kingdom

17.4.1.2 United States of America

17.4.1.3 India

17.5 Quality Circle (QC)

17.5.1 Definition of QC

17.5.2 Structure of QC

17.5.3 Objectives of Quality Circle

17.5.4 Quality Circle Process

17.6 Conclusion

17.7 Key Concepts

17.8 References and Further Reading

17.9 Activities

17.0 LEARNING OUTCOME

After carefully reading this Unit, you should be able to:

ƒ Define Workers’ Participation in Management;

1
 ƒ Explain various forms of participation and their working;

ƒ Describe Collective Bargaining and its process; and

ƒ Discuss Quality Circle and its process.

17.1 INTRODUCTION
It is a prime responsibility of the management in organisations to bring employees and
organisation on the same platform for continued effectiveness of the organisation.
Workers’ participation in management is the best way of increasing employees’
involvement in the decision making process of the organisation. Collective bargaining is
bipartite in nature in which workers bargain on issues where their interests are involved.
Quality circle is the process in which grass-root level employees of the organisation take
part in solving their problems.

Human's productive capacity depends upon the ability to acquire knowledge and put it to
economic use. Human resource philosophies are the basis on which policies and practices
guiding an organisation’s behaviour can be developed and implemented.

These are as follows:

(a) Accumulation- Translate policies into practices designed to

attract good candidates over time, carefully and consistently.

(b) Utilisation- Individuals are generally selected with attention

to technical skills, although personal characteristics are still
considered important, and

(c) Facilitation- Individuals must have technical skills and they should be able to
work together in close reciprocal interaction. Employee
development and enhancement are valued, but the organisation
will facilitate the acquisition of new knowledge and abilities
because in the current scenario, growth of organisation is directly
related to the knowledge base of its employees.

In a nut shell, it can be stated that facilitation is based on new knowledge and creation of
knowledge, whereas utilisation is based on commitment and high control, and
accumulation is based on maximum involvement and creativity. From the above
discussion, it is clear that the wide scope of human resource management covers union-
management relations, workers participation in management, collective bargaining,
disciplinary procedures, settlement of disputes and grievance, apart from other personnel
and welfare aspects. In this unit, attention will be focused on the below mentioned three
approaches.

i. Workers Participation in Management;

ii. Collective Bargaining, and;

iii. Quality Circles

2
17.2 WORKERS' PARTICIPATION IN MANAGEMENT (WPM)
The word 'participation' means, to take part in or to involve in any activity or event.
Participation brings attitudinal change and increases the motivation level of human
beings towards achievement in activities or events they participate in. The concept of
workers' participation in management is considered an instrument, whereby, workers
share their views in the decision making processes of the organisation. It has great
psychological value and also promotes better employer-employee relations in an
organisation, which is a pre-requisite for rapid industrialisation and economic growth.
This concept increases the involvement of employees at the work place and they, in turn,
feel committed to their job as well as to the organisation they serve.

Participation means identification with and involvement in the day-to-day functioning of

the organisation for the achievement of the goals of the organisation, taking into account
the reality of the situation which enables workers to undertake responsibilities. The
International Institute of Labour Studies (bulletin, 5) states, that, “participation results
from practices which increase the scope for employees share of influence in decision-
making at different tiers of organisational hierarchy with concomitant assumption of
responsibility”. Thus, participation should not be limited only to management functions
but should cover all activities in an organisation.

As per views expressed by social thinkers, Comte and Owen, workers' participation in
management should be encouraged for achieving the ideal of social justice. From the
point of view of social scientists, it is the best technique for utilisation of human resource.
Experiments of Blake, Mayo, Lewin and Likert bring out that if workers are given
opportunities to participate in the decision making process of the management, there
could be possibility of positive gains to the organisation's effectiveness and morale of the
workers. Fig 1 (Walker, 1973) shows the basic concept of participation

3
 Figure-1

Basic concept of Workers Participation in Management:-

Management Planning Managerial Employee Area of Union

Functions Organising Hierarchy Directors Collective Hierarchy
Motivating Bargaining
Controlling Work
Councils
Area of participative supervision
and job enlargement
Suggestions
Schemes
Workers
Function Doing Workers

It is illustrated in the figure that both workers and management are involved in the
process and their functions are also mentioned. On further analysis of the above figure, it
is observed that various forms of workers' participation in management are possible, such
as, collective bargaining, employee directors, work councils and suggestion schemes.

The idea of workers’ participation has been around for some time but has gained currency
in the present era of competitive advantage, innovative forms of organisations, fluid
flexible matrix structuring of organisation design and horizontal mode of functioning,
instead of the traditional linear vertical, where workers are rightly perceived, more as ‘co-
contributors’ rather than subordinates in the hierarchy and lateral entries and contract
based work are the new modes of functioning. The function of management is desirably
more ‘collaborative’ than ‘directive’ today. The question today is the extent to which
industrial democracy through workers participation in management would be practicable.

There are four ways in which participation is generally secured. These denote increasing
extent of workers’ participation along a linearly progressing continuum. (Dwivedi, 1989).

First there is;

• Profit sharing;

• Consultation; moving to;

• Joint management; and progressing to,

• Self-management on the part of workers.

The same is necessary because there is better command over the knowledge resource and
bargaining power today with the workers, which places them favourably Vis a Vis

4
management. Democracy has had a significant impact on the definition of rights and
duties of people within an organisation. Workers are more aware of their fundamental
rights and press for the same in an articulate and organised fashion.

In a developing economy, planning processes are designed to accelerate productive

processes. Productivity has always been considered an attitude of mind. There is research
based evidence to believe that participation of workers in decisions influencing them is a
prerequisite to effective decision making and overall productivity of the organisation.
(Ghosh, 1969). Industrial sociologists also argue that if there is greater identification of
participating workmen with socio-economic objectives of the enterprise, the chances of
higher productivity get much more real.

Labour management collaboration has been expressed in India’s policy and the following
objectives have been articulated in the second five year plan:

• Establishment of cordial relations between management and workers and building

up understanding and trust between them;

• Substantial increase in productivity in the interest of management, workers and

the nation;

• Securing better welfare facilities etc. for workers; and

• Training and education of workers to understand and share the responsibilities of

management

17.2.1 Historical Background

The origin of the concept can be traced back to the writing of Fabians socialists headed
by Sydney Webb. This concept gave impetus to the origin of political democracy in
many parts of the world. For achieving political democracy, the establishment of
economic and industrial democracy was considered a must. This concept found its first
practical application during the First World War, when organisations were facing two
major problems, that is, maintaining industrial peace and improving productivity. The
governments of Germany, France and Great Britain convinced the managements to
establish joint committees for resolving these problems through consultation.

In the United Kingdom, on the recommendations of the Whitley Committee, a well-knit

three tier consultative system was set up. The idea got a set back in the years 1918 and
1921 due to the cessation of hostilities and economic depression respectively. During
the Second World War, interest in joint consultation was revived because many
countries, such as, Federal Republic of Germany, Yugoslavia, France, Belgium and
Bulgaria passed laws to establish consultative bodies for reconstruction of war ravaged
economies. In India, this concept can also be related to the Gandhian approach. Gandhi
looked upon workers and employers as dependent on one another. He wanted them to
act like trustees for the society. Gandhi's concept of trusteeship is based on the theme
of collaboration between employers and employees rather than conflict between them.
The International Labour Organisation (ILO) has made efforts for creating interest in
this concept and its recommendations were adopted in 1952, 1960 and 1976.

Idea of workers participation in management has been suggested by various committees

and commissions, but so far, no concrete legislation has been enacted in pursuance of it.
5
Voluntary schemes of participative management have not proven very effective. In
pursuance of the above-stated objectives, a model agreement was drawn up on the
constitution and administration of the Joint Management Councils in 1957, following
the report of a tripartite study team sent to European countries and its unanimous
endorsement at the fifteenth (15th) session of the Indian labour conference. The scheme
was in the form of a government resolution and did not have any statutory sanction

Two guiding principles of the scheme were identified as: 1) providing management with
work related advice and 2) giving employees the opportunity of participation in
managerial decisions affecting them.

The idea was both to increase productivity and further the cause of socialist democracy
via industrial working. Private sector was also sought to be brought within the purview of
the scheme.

A scheme for works councils was introduced in 1975 for workers' participation at the
shop floor and plant levels, in enterprises, employing five hundred (500) or more
workers.

The issue of workers participation in management has also been deliberated upon in
various sessions of the Indian Labour Conference (ILC). In the 15th session, there was a
general agreement that participation should be ensured through legislation, or by mutual
agreement between the employees and the employers of selected Industrial
establishments. The issue was also discussed in the 28th, 29th, 32nd and 33rd sessions of
Indian Labour Conference.

17.2.2 Objectives of WPM

In 1975, the Constitution of India was amended and section 43-A was inserted in the
Directive Principles of State Policy. The article provided that;

“The state shall take steps by suitable legislation or in any other way, to secure the
participation of workers in management of the undertakings, establishments or other
organisations engaged in any industry.”

In accordance with this amendment, the scheme of workers participation in management

in manufacturing and mining industries was notified in 1975. The scheme provided for
formation of Joint Councils at plant level and shop councils at shop level and covered
only those manufacturing and mining units both public and private sectors as well as in
departmental run units employing 500 or more workers. In 1977, the government
extended the scheme to the commercial and service organisations of the public sector.
The basic objective was to devise a system which would generate mutual trust and
confidence between workers and management, so as to promote active involvement of
workers at the work place.

The government of India, on 30th December 1983, introduced a new scheme for
employees’ participation in management. This scheme was applicable to all public sector
undertakings, except those, which are given specific exemption from the operation of the
scheme by the administrative ministry or department concerned, in consultation with the
Ministry of Labour, taking into account the nature of the undertaking, the products it
manufactures, etc.

6
It envisaged constitution of bipartite forums at shop and plant levels. In undertakings
considered suitable, it was also to be implemented at the board level. The scheme
provides equal representation of workers and management in the forums. The mode of
representation of workers’ representatives was to be determined in consultation with the
concerned unions.

The objectives of proposed arrangements are discussed below:

(i) Economic: To increase workers' productivity. This is possible through cooperation

between workers and management. It motivates workers to work hard. Management and
workers mutually agree to some form of sharing the gains.

(ii) Social: To develop a sense of fulfillment not only as regards work but also in regard
to the social environment. Participation provides respectable status to workers in society.

(iii) Political: To make the workers conscious of their rights at the work place and to
establish industrial democracy. Political democracy gives the workers the right to
participate in the governance of the country.

(iv) Moral: To develop workers’ personality. They feel satisfied when decisions are
made with their participation in matters affecting them directly or indirectly; and

(v) Psychological: To bring attitudinal change among workers so that they feel part and
parcel of the organisation.

17.2.3 Forms of Participation

'Participation' is a soothing concept and it is welcomed at all levels. It has a tonic like
effect on the psychology of an employee. The following five levels of participations have
been identified.

(i) Informative participation- Information is shared with workers regarding

production figures, balance sheet, economic conditions and future expansion
plans, etc. Workers have no right to scrutinise the information provided by the
management.

(ii) Consultative participation- Workers' representatives are consulted on matters

relating to welfare facilities. The joint council acts in an advisory capacity
though the final decision rests with the management.

(iii) Associative participation- The management accepts the suggestions of the

council and implements the unanimous decisions taken by it.

(iv) Administrative participation- A decision is taken and the council is given the
right to choose the method of implementing it. This allows workers more
autonomy in exercising administrative and supervisory powers in respect of
welfare measures, safety, and operation of vocational training and preparation
of work schedules.

(v) Decisive participation- This is the highest form of participation where all
matters, economic, financial and administrative, are brought under the
scrutiny of the councils, and decisions taken jointly.

7
The form of participation also depends on the ideology and systems adopted by a
particular society. Socialist ideologies advocate direct participation at every level of
management, while capitalist societies have left it unstructured. Participation not only
protects the interests of both the parties but also acts as a system of checks and balances
on both groups.

Participation involves the following steps:

1. Ascertain the objectives, functions and scope of the committee set up for
participation;

2. Fix the number of member participants from each side;

3. Decide the quorum and frequency of meetings;

4. Specify the agency framework and the agenda for meetings;

5. Establish the procedure for giving notice of meetings;

6. Decide the agency that records the minutes of meeting circulate them, and
monitor follow up action;

7. Decisions implemented or otherwise should be discussed in meetings and

corrective actions taken accordingly;

8. The decision of the committee must be binding on concerned parties.

In order to streamline the mechanism, it is necessary to draw up standard practice. To

ensure that the committee is not merely giving lip service, it is necessary to incorporate
review and analyse systems. In this system, the top management assesses the number of
recommendations implemented by the committee, scrutinises reasons for non
implementation and suggests ways and means for overcoming difficulties.

Effective Participation

For effective and successful participation as a manager, one has to develop strategies
according to the structure, form and type of participation which is practiced in an
organisation. Some important strategies are:

1. Create compatible employer employee relations in the organisation

2. Avoid unfair labour practices

3. Eliminate possibilities of communication gap

4. Educate and train both parties in the ethos and mechanism of participation

5. Strengthen trade unions to avoid political pressure.

6. Adopt collective bargaining for amicable settlement of disputes

7. Develop mutual trust and confidence among management and workers

8. Ensure reasonable wages, salaries and other allowances

8
 9. Develop a sense of job security and freedom from reprisals resulting from their
participation

10. Develop a real sense of 'say' in organisational decisions. This helps find the root
causes of the problem.

17.2.4 Institutional Arrangements for WPM

Works Committee: Under the Industrial Disputes Act, an industrial establishment

employing hundred (100) or more workers was required by the government to constitute
a works committee, comprising an equal number of representatives of management and
workers. Normally, such committees are found in large industrial establishments.

1. Section 3 of the Industrial Disputes Act, 1947, provides for the setting up of
bipartite works committees in an industrial establishment, in which hundred or
more workers are employed in the preceding twelve months, in the prescribed
manner, consisting of representatives of employer and employees, working in
the establishment. The Bombay Industrial Relations Act, 1942, also provides for
these bodies, but under the provision of this act, they can be set up only in units
which have a recognised union and are called, joint committees. The following
are the objectives of the works committees:

a. To promote and establish harmonious relations in the work place; and;

b. To sort out differences of opinion between employers and employees in respect

of matters of common interest.

Structure of Works Committees

The number of members constituting a works committee is flexible, but in general, the
total strength should not exceed twenty. The number of representatives of employees
should not be less than that of the employer. In fact, equal number from both sides is
desirable. The tenure of these committees is two years and these meet as often as
necessary, as but not less than once in three months. As office bearers, a president, a vice-
president, a secretary and a joint secretary are nominated. The president of the works
committee is nominated by the employer while the vice-president is elected by the
employees’ member.

The main function of the works committee is to promote measures for securing and
preserving amity and cordial relations between the employer and employees. The
committee constituted by the Indian Labour Conference in 1959 suggested certain other
functions for these work committees to deal with:

(i) Physical working conditions such as ventilation, lighting and sanitation

(ii) Amenities such as drinking water canteens and health services

(iii) Safety and accident prevention

(iv) Adjustment of holidays

9
(v) Administration of welfare funds

(vi) Educational and recreational facilities

(vii) Encouragement of thrift and savings

(viii) Implementation and review of decisions

The National Commission on Labour (1969) suggested the following measures for the
successful functioning of works committees:-

(a) More responsive attitude on the part of management

(b) Adequate support from unions

(c) Proper appreciation of the scope and functions of the works committees

(d) Whole-hearted implementation of the recommendations of works committees

(e) Proper coordination of the functions of the multiple bipartite institutions at the
plant level now in vogue

These committees are functioning well in some organisations like the Tata Iron and Steel
Company and the Indian Aluminium Works. In general, despite a statutory requirement
for setting up works committees in all undertakings, some units have not established them
where established, have failed to work well. Works committees have not been very
successful in resolving differences at the negotiation stage. The main reasons for lack of
success of works committees have been: (Dwivedi, 1989)

• Indifference on the part of the employers to the very idea of discussing important
issues with workers or their representatives and the opposition of the trade unions
to the works committees, which they apprehend, would reduce their importance or
encroach their functions;

• Inter union rivalry, rendering joint operation difficult;

• Lack of demarcation between the functions of works committees and trade

unions;

• Illiteracy among workers, who cannot follow proceedings of works committee;

• Disregarding decisions arrived at in works committee deliberations;

• Absence of legal sanction behind such decisions;

• Entrusting matters of a minor or trifling nature

• Lack of interest meetings in meetings, holding meetings irregularly, considering

them a formality, reducing meetings to a ritual

Joint Management Councils (JMCs)

The Industrial Policy Resolution (1956) suggested the need for joint consultative
10
machinery between the employer and the employees to promote industrial peace. In the
year 1957, the government of India sent a study group to study the schemes of workers'
participation in management in countries like the United Kingdom, France, Belgium and
Yugoslavia. The report of this study group was considered by Indian Labour Conference
in its 15th session in 1957 and certain recommendations were made:

(i) Scheme should be set up on a voluntary basis in selected undertakings;

(ii) A sub committee consisting of representatives of employers, workers and ;

government should be set up for considering the details of worker' participation in
management schemes, and;

(iii) The above sub committee should select the undertakings where the schemes
would be introduced in the first stage on an experimental basis.

In 1958, Joint Management Councils were introduced. The JMCs are entrusted with the
administrative responsibilities for various matters relating to welfare, safety, vocational
training, preparation of schedule of working hours and holidays. They are to be
consulted in matters concerning changes in work operation, general administration and
alteration in standing orders, rationalisation, closure etc. Objectives of JMCs are
enumerated as follows:

(i) To determine the means of promoting better understanding between workers and
management;

(ii) To improve the efficiency of workers;

(iii) To suggest measures of reduction in wastage and increasing profits;

(iv) To educate workers so that they are well prepared to participate in these schemes;

(v) To promote a more stable work force and workers safety, and;

(vi) To satisfy the psychological needs of workers.

Joint Management Councils have been set up, so far, in twenty- three units. The first joint
management council was established in the public sector in the Hindustan Machine Tools
ltd., Bangalore, in 1958. The council has the right to obtain information regarding the
working of the undertaking and has direct administrative responsibility for matters
concerning workers' welfare, training and allied matters. Its main function is to bring
about mutual consultation between employers and workers over many important issues
which affect industrial relations

Structure of JMCs

It was decided that JMCs should consist of an equal number of representatives of the
management and employees but in any case these total number should not be more than
twelve. Representation of a workman to the JMC would be based on nominations by
recognised trade unions. A tripartite sub-committee was set up as per the
recommendations of the Indian Labour Conference, which laid down certain criteria for
selections of industrial units were the JMCs could be introduced. It includes the
following:

11
 (i) The unit must have five hundred or more employees;

(ii) The unit must have a good record of industrial relations;

(iii) The unit should have a well-established trade union;

(iv) The trade unions should be affiliated to some central federations;

(v) The management and the workers should agree to establish JCMs;

(vi) The private sector employers should be members of the leading employers'
organisations.

Further, it was also observed by the sub-committee that if the workers and employers
mutually agree, they can set up JMCs even if these conditions are not met. These councils
are required to work at the policy level besides works committees.

Functions of JMCs

The following are the essential functions of JMCs:-

(i) They are to be consulted by the management regarding administration of standing

orders, retrenchment, introduction of new methods of production and
closure, reduction of operations;

(ii) To receive information, discuss and give suggestions on the general economic
situation of the unit; and

(iii) To share administrative responsibilities on matters of welfare, safety, and training;

schemes, working hours, breaks, holidays, and payment of rewards.

Issues relating to wages, bonus and individual grievances are excluded from the purview
of the JMCs.

Working of JMCs

JMCs too did not receive much support from the unions or the management. It was felt
that a multiplicity of bipartite consultative bodies served no purpose. Where the
membership of unions was disputed, composition of the council became a contentious
issue. The Hindustan Machine Tools Ltd., Bangalore, was the first unit to set up a JMC in
1958, but it survived less than a year. The scheme also failed in Post and Telegraphs,
Railways, Fertilizer and Chemical Corporation, Indian Airlines, Air India, and Hindustan
Insecticides. In TISCO, the success of JMCs was because of the presence of one strong
union. Bharat Heavy Electricals Limited have provided an appropriate forum for effective
communication and management furnished all facts and information sought for. Despite
the useful purpose the JMCs could be a success be in some cases but by and large, they
have been found to ineffective and their functioning unsatisfactory. The main reason
behind it is the scheme is voluntary. The National Commission on Labour observed that,
"mental reservations which operated against JMCs are the same both in the ranks of the
management and among the workers". Besides, other causes responsible for the lack of
success of JMCs are:

(i) The managements felt that the workers were not competent enough to participate
12
 in JMCs;

(ii) Workers representatives were not very clear with their role as decision-makers;

(iii) Trade union leaders were not cooperating with the management to solve workers’
problems;

(iv) Management was not ready to give enough information to the workers; and;

(v) In the presence of works committees, JMCs proved superfluous.

Workman Directors

This represents apex level participation of workers in an undertaking. The participation of

representatives of workers on the Board of Directors of undertakings, is with the
following objectives (Administrative Reforms Commission (1970) :

(i) To improve two way communication link;

(ii) To enhance the status of workers; and,

(iii) To involve the workers in the formulation of policies in which workers are
interested.

Initially, this scheme was started in the Hindustan Antibiotics Ltd., the Hindustan
Organic Chemical Ltd. and later extended to the National Coal Mines Development
Corporation, the Bharat Heavy Electrical Limited and the National Textile Mills. The
Workers’ Director was elected by all the workers of the organisations by secret ballot.

The government of India advised all nationalised banks to appoint two workers’ directors
on the board of management, one representing officers’ and the other, the workers’ side.
The qualification for the director was that he should have been in continuous service of
one or more nationalised banks for a period of five years and should not have reached
superannuation during his term of office as Director as the tenure of workers’ director, is
three years. The workers’ director was selected by the central government out of a panel
of three employees to be proposed by the representative union of the bank. The National
Labour Institute indicated that the measure failed in promoting cordial relations between
the workers and the management. Later on, the Ministry of Finance removed the directors
from the boards of all nationalised banks.

Workers’ Participation Scheme

During the period of emergency, on the 30th of October 1975, the government of India
announced a new scheme of workers' participation in management. This scheme, called
the workers’ participation scheme, was also voluntary. It was for manufacturing and
mining industries whether in public, private, cooperative sector and departmentally run
enterprises employing five hundred or more workers. The scheme provided for shop
councils at the shop/departmental levels and joint councils at the enterprise/plant level.

Shop Councils

Shop councils consist of an equal number of representatives of employers and workers.

The workers’ representatives are required to be working in the concerned shop or
13
department. As per the scheme, the Chairman of the council is to be nominated by
management while the vice-chairman is to be elected by workers representatives among
themselves. The total number of members of council may not generally exceed twelve.
The council functions for a period of two years and is required to meet as frequently as is
necessary but at least once in a month. The decisions of the council are to be taken on the
basis of consensus and not by a process of voting, and implemented by the concerned
parties within a period of one month. The functions of the shop council are summarised
as under:

(i) To discuss matters relating to safety and security

(ii) To assist management in achieving monthly/yearly production targets

(iii)To help in improving production productivity and efficiency

(iv)To identify the area of low productivity and suggest measures for improvement

(v) To study problem of absenteeism and recommends steps to reduce them

(vi)To assist in maintaining general discipline of shop/department

(vii) To look after working conditions of shop/department

(viii)To ensure two way communication between management and workers; and;

(ix) To help in maintaining welfare and health conditions of the shop/department.

Joint Councils

The Joint Councils are required to be set up for whole unit and the employees who are
actually working in the unit shall be members of the council. The Chief Executive of the
unit was to be the Chairman and the Vice-Chairman is to be nominated by the
representatives of workers. The Secretary is to be appointed by the joint council who is to
be responsible for discharging its functions. The tenure of the council is two years and is
required to meet, once in a quarter. The decisions of the council are also by the process
of consensus and are to be implemented within one month. The functions of the council
are:

(i) To fix productivity norms for men and machines for the unit;

(ii) To discuss the matters which are unresolved by shop council;

(iii)To see that raw materials are used optimally;

(iv) To prepare the schedule of working hours and holidays;

(v) To develop adequate facilities for skills development of workers of the unit;

(vi) To look after general health, safety and welfare of workers of the unit as a whole;
and;

(vii) To develop a system for awards to workers for creative suggestions.

14
Later on, this scheme was extended in 1977, to other units of service and commercial
organisations which employ hundred or more workers, such as hospitals, railways, post
and telegraph, road, transport and electricity boards, etc. According to this scheme, the
unit councils were to function at the unit level while joint councils at divisional, regional
or zonal level. But the success of the scheme has not been encouraging.

The New Scheme

The government of India introduced a new scheme of workers participation after

reviewing the progress of various schemes in the industry in 1984. The main features of
the scheme are as follows:

(i) It is applicable to all central public sector enterprises;

(ii) This scheme is to operate at the shop floor and plant levels but there is a provision
for participation at the board level too;

(iii) Different categories of workers, such as unskilled, semi-skilled, technical and non
technical, supervisory and non supervisory are to represent, at both the shop floor
and the plant levels;

(iv) The mode of representation of workers’ representatives is to be determined

through consultations with the concerned unions;

(v) The number of representatives depends on the total number of work force;

(vi) The scheme has universal applicability irrespective of the number of workers
employed; and

(vii) A wide range of work related issues such as personnel, welfare, operations and
financial were brought within the ambit of the councils.

The Ministry of Labour constituted a tripartite committee to review the working of the
scheme and suggest corrective measures.

The net result of workers participation in management has not been encouraging, because
it has failed to achieve the objectives of labour management cooperation and
coordination. Some of basic reasons for failure of the above schemes could be briefly
stated as follows:

1. The negative attitudes of the management towards the scheme;

2. Lack of proper understanding of these schemes on the part of employees and trade
union;

3. Inadequate training systems;

4. Lack of follow up actions basically on the part of government especially with

reference to the works committee; and;

5. Overlapping of various functions on the schemes.

To ensure better degree of employees’ involvement, the following suggestions may be

15
worth considering:

1. The government should propose a scheme on a 'statutory basis;'

2. It should cover the private sector units also;

3. The employees’ involvement must be ensured from shop floor level to the
boardroom level;

4. Proper training should be compulsory before implementing the scheme;

5. The scheme has to be looked after the workers interest on one side; and;
efficiency, productivity, quality and profitability on the other side;

6. The management should adopt participative commitment rather than authorisation

to the scheme.
Worker's Participation in Management Bill, 1990

All these schemes of workers' participation in management have not provided a

meaningful framework of participation of workers in management at all levels in the
industry. To overcome from the above situation, the Government of India introduced a
bill in Rajya Sabha on 25 May, 1990. The important features of this Bill are as follows:
(1) The term ‘worker includes no-managerial and managerial employees.
(2) Setting up of Shop Floor Councils at the shop floor level and establishment council at
the establishment level in accordance with provisions of the scheme.
(3) Equal number of representatives to represent employer and workmen will present in
both councils
(4) Employer representatives shall be nominated by employer in a prescribed manner as
specified in the scheme.
(5) Employee representatives shall be nominated by the registered Trade Union or
elected by secret ballot in accordance with the scheme.
(6) The Chairperson of both the Councils shall be chosen by and from amongst the
representatives of the Council.
(7) The tenure of each council shall be 3 years and shall meet as and when necessary but
not less than 4 times within a span of one year.
(8) The functions of both the councils have to cover a wide range of activities of the
enterprise.
(9) This bill provide a rule for setting up a monitoring committee which include an equal
number of members representing - the appropriate government, the employers, and the
workers. The main function of monitoring committee is to review and advice in the

16
matters which arising out of the scheme.
(10) The bill omits Section 3 of the Industrial Disputes Act, 197 relating to the setting up
of works committees.
The working result of workers participation in management is not encouraging till date
because it has failed to achieve the objectives of labour management cooperation and
coordination. Some of basic reasons for the failure of above schemes are as follows:
1. The negative attitudes of the management towards the scheme;
2. Lack of proper understanding of these schemes on the part of employees and trade
union;
3. No adequate training systems;
4. Lack of follow up actions basically on the part of government especially with
reference to the works committee;
5. Overlapping of various functions on the schemes.
The following suggestions may improve the degree of involvement of employees:-
1. The Government should propose a scheme on 'Statutory Basis'
2. It should cover the private sector units also.
3. The employees’ involvement must be ensured from shop floor level to the
boardroom level
4. Proper training should be compulsory before implementing the scheme.
5. The scheme has to be looked after the workers interest on one side and efficiency,
productivity, quality and profitability on the other side.
6. The management should adopt participative commitment rather than authorisation
views towards scheme.

17.3 COLLECTIVE BARGAINING

Collective bargaining is explained as a process or method of determining the terms and
conditions of employment by negotiations between management representatives and
union representatives. The signed agreement, usually known as a trade agreement or
contract, establishes the terms and conditions of employment which are to prevail usually
for a stipulated period of time. Collective bargaining may be viewed as an alternative to
individual bargaining or to governmental regulation (Miller, 1987 ).

The essentials of collective bargaining are as follows:

• It presupposes some kind of organisation among workers;

17
 • Recognition of a labour organisation by the employer and acceptance of its
representative as authorised spokesman for all or a portion of his employees are
also essential conditions for the establishment of the process;

• Implies willingness on the part of both labour and employees to meet and confer
with respect to the issues involved;

• Will to agree is imperative from both sides and should be articulated thus;

• Ability to exert economic pressure in support of his position. The employer must
have the right to suspend operations and labour must have the right to strike;

• Only possible substitute to both labour and management to have the right to refer
unsettled issues to arbitration with compulsory acceptance of the award of the
arbitrator.

Incorporation of results of negotiations in a written, signed agreement is an essential part

of the process of collective bargaining (Miller, 1987). Collective Bargaining is another
form of involving employees in decision making in organisations. In this process, the
terms and conditions of employment are determined by mutual agreement between the
employer and the employees. It is bipartite in nature because only the employers and the
employees are involved in the bargaining process. The idea is that the employer and
employee should not make decisions unilaterally or with the intervention of any third
party. The International Labour Office Workers Manual (1973) defines collective
bargaining as “negotiation about working conditions and terms of employment between
an employer, a group of employers or one or more employers' organisations, on the one
hand, and one or more representative workers' organisations on the other with a view to
arrive at an agreement.”

It is called 'collective' because both employer and employees participate in groups rather
than as individuals and 'bargaining' refers to arriving at a stage of agreement using
methods like discussions, exchange of ideas and facts, and negotiations rather than
confrontation. Both parties realise the importance of peaceful co-existence for mutual
benefits and continued progress.

Objectives of Collective Bargaining

The following are the main objectives of collective bargaining

(i) To increase mutual confidence;

(ii) To regulate terms and conditions of employment without intervention of a third

party;

(iii) To create cordial environment in the establishment;

(iv) To protect the interest of the employees; and;

(v) To raise the socio-economic attributes of the employees.

Types of Bargaining

There are four types of bargaining activities:

18
(i) Distributive Bargaining: In this type of bargaining, one party gains and the other
loses. They try to settle economic issues like wages, and bonus, etc. Self-interest is given
precedence over organisational interest.

(ii) Integrative Bargaining: In this type of bargaining, both parties may gain, which
implies a win-win type of bargaining. Productivity aspects are considered and it is
believed that by a mutual problem solving approach, the sum total of the gains can be
increased. When the question of survival arises in front of both parties, then this type of
bargaining will give fruitful results.

(iii) Attitudinal Structuring Bargaining: This process of bargaining helps in shaping the
attitudes of both parties and brings about attitudinal change in them. It also helps in
developing an environment of mutual trust and confidence with respect to each other.

(iv) Intra-organisational Bargaining: In this type of bargaining, both parties discuss

general strategies and arrive at a consensus decision which is expected to improve
the overall performance of the organisation.

Structure of Collective Bargaining

It is generally structured and conducted at three levels, namely:

(i) The Plant Level: Bargaining is done between the management and employees of the
plant or unit. Local issues, such as work rules, safety, security, shift timings and working
hours, etc. are considered.

(ii) Industry Level: Negotiation is between the apex level of management and the unions.
The agreements are some what broader in scope, generally concerning revision of wages
pensions and insurance plans which have wide implications.

(iii) National Level: The scope of such type of negotiation is much wider. Such type of
agreements is not common in our country.

Bargaining Issues

The bargaining issues can be divided into the following three categories;

(1) Mandatory: Issues concerning wages hours and other terms and conditions of
employment. These demand immediate solution, which left unresolved would lead to the
charge of unfair labour practice, because they have direct effect on job performance of
employees;

(ii) Voluntary: Those issues which may be raised, but both the parties show least interest
in resolving them. For example, health benefits for retired employees;

(iii) Prohibited: Those that are outlawed, such as concerning closed units, and demands
that the employer use only union-produced goods etc.

Collective Bargaining Process

The following main steps are involved.

1. Negotiation Team
19
2. Preparation of Demands

3. Negotiating Procedure

4. Bargaining Strategy

5. Preparation of Agreement

6. Administration of Agreement

All six steps are explained as follows:

1. Negotiating Team: Two teams, one from management side and other from
workers side should be present for bargaining the issues because the interest of both sides
is involved. On the workers side, the team consists of the office bearers of the unions
while from management side, the team may consist of personnel, production and finance
managers, etc. The chief executive of the organisation is one of the team. It is not
necessary that the number of representatives from both sides should be equal.

2. Preparation of Demands: The next step is preparation of demands. Generally, the

charter of demands presented to the management by the unions, is prepared by the
members of negotiating team in consultation with other employees of the organisation. If
necessary, the involvement of an outside expert is permitted.

3. Negotiating Procedure: After preparation, comes the stage of process of

negotiation. Generally two types of processes may be adopted by the team (a) piecemeal
negotiation, in which the issues are taken up one by one, (b) total approach, in which all
issues are negotiated, considering total effect. The process and authority during
negotiations should be clearly spelt out by the management.

4. Bargaining Strategy: There is no specific strategy for negotiating the issues. It depends
on the situation, time, strength and other market conditions. But the main point is to give
attention to the entire package and its ultimate results rather than on immediate gains or
losses.

5. Preparation of Agreement: The outcome of collective bargaining process is the

preparation of agreement. The bargaining issues are solved and then, put on paper. Legal
terminology should be avoided as much as possible in the letter of such agreements. The
agreement should be signed by both the parties and communicated to all concerned. In
our country it is called a 'settlement' within the meaning of Section 2(p) of the Industrial
Disputes Act.

6. Administration of Agreement- The administration of agreement is left to both

management and workers because under section 29 of the Industrial Disputes Act, any
person who commits a breach of any term of the settlement, is punishable with
imprisonment for a term which may extend to six months, imposition of a fine, or both.

An important and relevant point which deserves attention in collective bargaining is that
it is a temporary accommodation because the unions may always demand the renewal of
such agreements before their expiry and the management may reject this demand which
may again lead to negotiations. Therefore, we can say that the collective bargaining is a
continuous process.

20
 Figure-2
Collective Bargaining Process

Negotiating Preparation Negotiating Bargaining

Team of Demand Procedure Strategy

Negotiating Workers Piecemeal Total

Team Side Approach

Administration of Preparation of
Agreement Agreement

Recommendations for effective collective bargaining:

For collective bargaining to be thoroughly effective, the following conditions are

imperative.

1. Favourable organisational climate is a prerequisite for effective settlement;

2. Interference of outside political leadership would be harmful;

3. Trade unions must be strengthened by recognition;

4. Government should made legislation for compulsory collective bargaining

preceding adjudication;

5. There is no scope of unfair labour practices in this process; therefore, both the
parties should develop positive attitudes towards each others;

6. A 'win-win situation' should be adopted by both the parties;

Recommendations of the National Commission on Labour

In 1969, National Commission on Labour made the following recommendations for

effective implementation:-

1. Compulsory adjudication should be used only as a last resort;

2. Trade Unions should be strengthened, both organisationally and financially, by

amending the Trade Union Act, 1926, to make registration of unions compulsory,
enhancing the union membership fee, reducing the source of outsiders in the
union executive and among the office bearers, and increasing the minimum
number of members of union applying for registration of the union;

3. Legal provisions may be made either by a separate legislation or by amending an

existing enactment for;

21
 (a) Compulsory recognition of trade unions, and certification of unions
bargaining agents;

(b) Promotions and Rehabilitation of unfair labour practices;

(c) Bargaining in good faith by both employers and unions;

(d) Conferring legal validity and legitimacy on collective agreements.

4. Intensification of workers’ education for building up internal union leadership and

making workers more knowledgeable ad conscious about their rights and
obligations;

5. The idea of one union for one plant or one industry should be popularised and
encouraged;

6. The government should declare its policy to allow and encourage the parties to
settle their conflicts by bipartite consultation and negotiation consistent with
public safety and interest of the society in general.

The recommendation regarding prohibition and penalisation of unfair labour practices has
been implemented by amending the Industrial Distorts Act, 1947, in the year 1982.

17.4 TRADE UNION THEORIES

Trade Unions are viewed by the historical school, as a ‘continuous association of wage
earners for the purpose of maintaining and improving their working lives. As per the
views of the neo-classicals, involvement of trade unions in economic decisions is mooted
by this school. The purpose of organised activity on the part of workers is betterment of
worker life through involvement in economic decisions involving them. Revolutionary
unionism has advocated participative management and equation of the power balance
between management and workers. Left wing theorists advocate socialist transformation
of the bourgeois society through organised activity on the part of the working class.
Anarcho syndicalism advocates use of violence for achievement of socialist objectives.

17.4.1 Trade Union Movement in Selected Countries

Discussed below is a brief account of development of trade union movement in select

countries from where most developing nations drew inspiration for such
institutionalisation of voluntary effort.

17.4.1.1 United Kingdom

The beginning of Industrial Relations in United Kingdom is traced to ‘mercantilism’

where journey men apprentices employed in craft guilds organised to prevent exploitation
at the hands of employers. Workers’ associations were developed during the industrial
revolution with the advent of the factory. The spread of the socialist doctrine of
anarchism, under Robert Owen, gave ideological endorsement to the movement. The
socialist doctrine was developed and popularised by Marx and Engels. Anarchism was a
strand in the broad ideology. Attempt was made to consolidate trade clubs into a grand
national consolidated trade union, which did not meet with success. After the Trade
Union Act was passed in 1871, trade union activity was legitimised and trade unions

22
forayed into politics to voice their opinions and concerns more forcefully. The process
culminated in all representative committees of individual organisations coalescing into
the Labour Party in 1923-24. Thereafter, worker associations got a boost. Joint shop
councils and works committees were set up in industries and union representatives were
appointed in management boards in public corporations.

17.4.1.2 United States of America

Trade union activity had similar beginnings under merchant capitalists in the United
States, except that here such activity was ruthlessly suppressed by the state and by
adverse law court decisions. In the famous Cordwain Conspiracy Cases, trade unions
were declared “conspirational coercive and injurious bodies”. Trade union activity was an
underground secret activity. In 1884, the Noble Order of Knights came into being
bringing together separate associations. Ferdinand Lassalle advocated capture of power.
Marxists, anarcho- syndicalist followers of Bakunin and Proudhon were ruthlessly
suppressed following the infamous Haymarket Riots. Up to the First World War,
internecine rivalry between the old order of knights and the new American Federation of
Labour eroded the movement. However, it revived in the interwar years. Law courts
attacked it and the government sought to counter it by enacting schemes for workers
participation in management which is popularly known as ‘welfare capitalism.’

Besides, bargaining power of workers in United States fluctuated with depression and
boom cycles in the economy (United States being a free market economy). During
depression (of 1812, 1873), workers could not bargain for fair wages and there was
widespread unemployment. During boom periods, their position was relatively
advantageous for a short period of time. Successive depressions dealt a death blow to
trade union activity. By 1889, the noble order of knights of labour had considerably lost
impact. The second technological revolution reduced the importance of skilled workers.

17.4.1.3 India

In India, workers’ associations were more in the nature of social service organisations
patronised by labour philanthropists in Calcutta and Bombay. The high water mark was
the establishment of the All India Trade Union Congress in 1920 registered under the
companies act. The trade union movement was influenced by the ideologically charged
movement of France and Italy. For better understanding, it could be studied in two parts:

The history of labour legislation in India is to be studied in the context of colonialism. It

is opined that it was difficult for the British to get enough regular Indian workers to run
British establishments and hence laws for indenturing workers became necessary. Labour
legislation was accordingly designed to protect the interests of British employers. The
government enacted the Trade Union Act, 1926 and the Trade Disputes Act of 1929 to
better the system of settlement of industrial disputes. Nevertheless, the major draw back
of this act was that it did not provide for any standing machinery for the settlement of
disputes. In the year 1936, the government to halt the exploitation of workers by the
management enacted the Payment of Wages Act. Even though the IDA was primarily
meant for industry in the organised sector, its present application has now extended well
into the unorganised sector, through judge-made law. Its pro-worker protection clauses
and safeguards against arbitrary job losses have evolved over a period of time, both
through the process of sustained legislative amendments and through the process of
judicial activism spread over more than five decades. Another important development
has been the setting up of the Indian Labour Conference, a tripartite body, to look into the
23
industrial relations problems. The major objective of this conference is to provide a
cooperation and coordination mechanism between the government, the employers and the
trade unions. In the year 1958, the Code of Discipline was introduced but had
limited success because it was more a moral guideline than a legal enactment. The
National Commission of Labour was appointed by the government in the year 1966, to
study and report on labour problems and make suitable recommendations. In 1966,
the Ministry appointed the First National Labour Commission (NLC) to review the
changes in the conditions of labour since independence and also to review and assess the
working of the existing legal provisions. The NLC submitted its report in 1969. The
important recommendations of NLC have been implemented through amendments of
various labour laws. In the areas of wage policy, minimum wages, employment service,
vocational training, and worker’s education, the recommendations made by the NLC
have been largely taken into account in modifying policies, processes, and programmes
of the government. During the emergency, (1975-77) there was considerable stress on
discipline in industrial as well as general undertakings. But after emergency and
consequent change of political leadership, the Janata government set up a number of
committees to review the industrial relations situation. In the late 1970s and early 1980s,
industrial relations in our country were characterised by violence, therefore, on 26th
July 1981, the government issued an ordinance to ban strikes. The law, called the
Essential Service Maintenance Act (ESMA) 1981. This act empowers the government to
ban strikes, Layoffs and lockouts in what it deems to be "essential services". Indian
industrial relations are shifting from bipartite to tripartite. Government is concerned for
economic development of employees. The principle of natural justice is playing a vital
role in the shaping of employers-employees relations and policies of organisation: Labour
laws are also playing a prominent role in maintaining industrial relations as well as
providing social security to the employees. In order to ensure consistency between
labour laws and changes in economic policy, and to provide greater welfare for the
working class, the Second NLC was constituted in 1999.Today, India is a signatory to
thirty nine (39) International Labour Organisation (ILO) conventions of which thirty
seven are in force. Of the ILO’s eight fundamental conventions, India has ratified four -
Forced Labour 1930, Abolition of Forced Labour 1957, Equal Remuneration 1951, and
Discrimination (employment and occupation) 1958.

Problems of Trade Unions in India

The problems of trade unions in India have been summarised as follows by R.S. Dwivedi
(1990):

• Structure of organisations as well as the process of functioning are important for

success of trade union activity;

• There is a multiplicity of trade unions. Need is consequently felt for developing a

coherent structure;

• There is need for committed membership, in that many trade unions choose to
remain outside the arena of joint negotiations. Proportional representation of trade
unions in the general body could be considered;

• There is need for constructive orientation, less stress on productivity and a

mechanistic approach;

24
 • Ideological proclivity of trade unions is the most important feature. The same
should be articulated effectively;

• There is need for structural reform by way of regular elections, audit etc.;

• Verification of membership is an important issue. Their status should be assessed

in the context of purpose;

• Trade Unions should enjoy certain rights such as office accommodation,

administrative obligations regarding office procedure; in short they need to be
‘institutionalised.’

17.5 QUALITY CIRCLE

Quality circle is a people building philosophy based on the premise that an employee
doing a particular job is the biggest expert of that field and thus, is in a better position to
identify, analyse and resolve work related problems through innovative and unique ideas.
In fact, it is a practical application of McGregor's Theory ‘Y,’ that given the right
environment and decision making power, people will enjoy and take pride in their work
thus leading to enrichment of their work life.

17.5.1 Definition of Quality Circle

It is a voluntary group of employees, engaged in the same or similar type of job, meet on
a regular basis to identify, analyse and solve their work related problems which leads to
improvement in their work performance and enrichment of their work life. The number
of circle members could vary from five (5) to fifteen (15), but the ideal size of a circle is
seven (7) or eight (8) members. The number of members should be such that the circle is
effective. The size should not be so high that every member can not have sufficient time
and opportunity to participate and contribute meaningfully. Preferably, Quality Circle
members must be from the same work area so that the problems they identify are familiar
to all the members for effective participation.

Philosophy of a Quality Circle

The philosophy of quality circle activities emphasises the following ideas:

1. Contribution to the development and improvement of the organisation;

2. Respecting humanity and building a happy bright work shop which is meaningful
to people not treated as a part of machinery, but as human beings engaged in
meaningful jobs and exhibiting their full potential;

3. Employees use their wisdom and creativity at work;

4. Employees develop their ability through opportunities to apply themselves to

analytical problems;

5. Employees are not isolated from each other and act as groups based strong social
ties;

6. Employees educate themselves by sharing experiences;

25
7. Employees are given due recognition for contributions.

8. Display human capabilities fully and consider possibilities;

9. Promotion of job involvement and participation; and

10. Stress on character development philosophy.

17.5.2 Structure of Quality Circle

One of the important factors for the success of any organisation is its structure and good
functional ties among constituting elements. For the successful operation of the quality
circle, a well structured approach is necessary. The important thing to remember is that
the quality circle does not alter the existing hierarchical setup or chain of commands in
any organisation.

Recommended quality circle structure has following six elements.

1. Non-members

2. Members

3. Leader

4. Facilitator

5. Steering committee

6. Top management

Non-Members

Employees who do not take part in selecting, analysing and solving the work related
problems are called non-members. They are, however, part of the structure of the quality
circle.

Members

The basic elements of a quality circle are the members themselves. Membership is strictly
voluntary and any one who wishes to join is encouraged. A voluntary member should be
from the same work area, engaged in similar work because they would be familiar with
the problems and could make significant contribution in analysing and solving them.

Leader

The quality circle leader is chosen from with in the group by the circle members. The
first line supervisor is also designated to perform the leadership role in this structure. The
position of the leader in a circle is like a thread which binds the individual members into
a circle. Therefore, leader provides strength to the circle.

26
Facilitator

The word facilitator is self-explanatory. It is an important link in the structure,

responsible for coordinating and conducting quality circle activities in a particular area.
He is usually an officer nominated by the management who is in charge of a section or a
department. The qualities of a facilitator are multidimensional. He works as a guide, a
coach, co-coordinator, promotor, teacher, communicator, statistician and a catalyst. He
must also possess working knowledge of the operation of the company, product and
services, vendor relation, manufacturing process, quality control, behavioral sciences
and above all, the policies of the organisation.

Steering Committee

The steering committee occupies an important place in the structure of a quality circle.
It sets goals and objectives of the quality circle activities. This committee should be
formed immediately after taking a decision to implement quality circle activities. It
consists of the departmental heads from every major function like, Production, Finance,
Materials, Engineering, Quality Marketing, etc. This committee is required to meet
regularly once in two months for smooth and effective functioning of quality circle
activities.

Top Management

This is an apex body at the highest level which overseas and monitors the functioning of
the quality circle and acts as an advisory body. Without the faith and commitment,
support and encouragement from the top management, the activities of the quality circle
can not be successful in the organisation. Therefore, top management support is quite
essential for the successful operation of the programme. One of the ways that the top
management could demonstrate its support is by incorporating promotion of the
quality circle concept in the company's broad objectives. For increasing the motivation
level among the circle members and leaders, it is essential that the top management meet
the quality circle's members and leaders periodically.

Co-ordinating Agency

It is a very essential and important element in the structure of quality circle, although this
agency does not envisage a separate department for its activities. Any department such as
quality assurance, personnel or engineering etc. could be motivated to function as a c-
coordinating agency depending upon the convenience of the organisation. The main
function of the co-ordinating agency is to prepare the plan and getting the sanction for the
budget to meet the expenses of quality circle activities.

17.5.3 Objectives of Quality Circle

The main objectives of a quality circle are:

1. To enhance the quality of goods and service produced, productivity, safety and
cost effectiveness;

2. To enrich quality of work life of employee;

3. To respect humanity and build a happy bright workshop, meaningful to work in;
27
 4. To give opportunity to employee to use their wisdom and creativity;

5. To promote self and mutual development;

6. To encourage team sprit, cohesive culture, great harmonious human relation etc.

17.5.4 Quality Circle Process

The most important activity of quality circle is to solve work related problems. The
problems are solved by using simple but powerful problems solving techniques. These
techniques are used to identify the problems, collect and analyse data, examine causes
and finally, suggest solutions. The problems solving process adopted by the quality circle
members are depicted below in Fig.3.

Figure-3

Quality Circle Process

Identification of problem

Selection of problem

Analysis of problem

Solution of problem

Pilot study of problem

Presentation to the Management

28
 Decision implementation

Selection of a new problem

Selection of a Problem

The quality circle starts functioning after the members are trained. At the first meeting
the circle members prepare a list of all problems which are related to their work area by
using brain storming technique. Once a list is prepared, the next step is to quantify
severity of these problems by means of collecting data. Next, is to make assignments to
various members for collection of data. After collection of data, a ‘Pareto diagram’ is
drawn to know the importance of the problems. Accordingly, members fix the priority for
analysis of problems. However, it is necessary to take precautions so that the circle
members do not waste time on minor problems or on projects where solutions are already
in process. It may also be prudent to guide the circle members about not taking up
complex problems in the initial stages, rather tackle problems of a simple nature to
develop confidence about finding solutions for bigger, more complex problems.

Analysis of a Problem

Once the problem has been selected, the circle members can start analysing the problem
with the help of two important statistical tools, brain storming and cause and effect. The
idea behind brain storming is to get all members involved, so that all underlying factors
can be studied. The leader asks members to list all probable causes. With the group's
consent, the key to major causes is picked up for analysis and development of a solution.

Development of a Solution

Once the major causes have been identified, circle members get together to propose
solutions. The agreed solution is normally being implemented by the members
themselves. In case the suggestions are to be implemented by some other department, the
circle members interact with their colleagues or circle members of the department where
the suggestions have to be implemented. In case of interface, a facilitator’s help is taken
by the members. After a certain period, when an effective solution has been arrived at,
the facilitator arranges the next phase to show to the management the achievements of
quality circle.

Implementation of the Solution

If the recommendations arrived by the quality circle members fall within the purview of
members’ jurisdictions, they with the approval of immediate authorities of the
department/section go ahead and implement the solution. If the solution to the problem
needs some investment, it would be referred to the competent level of management,
which should either promptly give effect to the recommendation or give a feed back
without loss of time to the quality circle why the recommendation is not implemented. At
29
times, recommendation is taken up for consideration by the steering committee where
clarifications, if required, are obtained from the circle members before the decision is
taken.

Management Presentation

Management presentation is a programme where the leader and the members of a circle
present their management information about what project they have been working and
what recommendation they wish to make. This event represents a most exciting form of
participants, communication and recognition to all. The recommendation of the solution
to the problem selected would be more effective and powerful if the presentation is made
in a systematic way. These case studies would also serve as effective educational tools in
future for the organisation and others.

Management presentation helps improve the communication between management and

employees, demonstrate management involvement and interest to quality circle activities,
and foster a good working relationship amongst all the employees in the organisation.
They also offer an opportunity to recognise quality circle members’ efforts. The
following guidelines are used by quality circle members for presentation before the
management:

(i) Presentation should not exceed fifteen minutes;

(ii) All members are introduced by the leader;

(iii) All members are encouraged to participate in the management presentation;

(iv) Cost saving and other salient points must be highlighted;

(v) Presentation should be made through problem solving tools and techniques; and

(vi) The leader closes the session by answering the questions. A good presentation will
also emphasise harmony, team work and cooperation.

17.6 CONCLUSION
In this unit, we have discussed various types of employee involvement activities. It is a
basic responsibility of the management to create conducive atmosphere for facilitation of
such activities. For all these activities, top management commitment is necessary because
success is totally dependant on the apex management of the organisation. By increasing
the involvement of workers in problem solving and decision making processes, the
employees become more motivated, more committed to the organisation and more
satisfied with their jobs resulting in the organisation achieving its objectives.

17.7 KEY CONCEPTS

Anarcho Syndicalism: Anarcho-syndicalism is a school of thought of socialism, which

advocates use of violence for socialist transformation of society by

30
 overthrow of bourgeois power and replacement by the rule of the
proletariat.
Bourgeois Society: As per Marxist critique of politico- administrative society, the
‘haves’ or the ‘bourgeois’ in a society thrive by exploiting the worker
class by appropriating the fruits of their labour (surplus value). The
power is derived from control over ‘means of production’ which gets
them political and administrative mileage. The interests of the bourgeois
and the proletariat (the working class) are irreconcilable.
Participation: Participation is the central theme in ethical management in industries.
Trade Unions and the management collaborate in appositive environment
for good ‘organisational health’. Ideological orientation of trade Unions,
strengthening of institutional structure and positive intent vase on mutual
trust on the part of both parties is the imminent requirement for
successful participation.

17.8 REFERENCES AND FURTHER READING

Basu, Durga Das, 1982, Commentary on the Constitution of India, Sixth Edition.

Dwivedi, R.S, 1984, Manpower Management: An Integrated Approach to Personnel

Management and Labour Relations, Eastern Economy Edition, Prentice Hall.

Dwivedi, R.S, 1990, Personnel Management IBH& Oxford Publishing House Private
Limited.

Hidaytullah, M, 1986, Constitutional Law of India, Bar Council of India Trust.

“Invest in India”, read online, at http://www.industrial relations.htm

Miller, Tahlman, 1978, Colliers Encyclopedia, William Habey and Bernard Johnson
(Eds), Maxmillan Educational Company,

Monappa, A, 1999, Industrial Relations, Tata McGraw Hill Publishing Company

Limited, New Delhi.

Rao, V.S, 2002, Human Resource Management, Excel Books, New Delhi.

Senge, P.M, 1990, "The Leader's New Work: Building Learning Organisations," Sloan
Management Review.

Senge, P.M, 1990, The Fifth Discipline: The Art and Practice of the Learning
Organisation.

Shukla, Rao & Praksah, 1991, Administration of Public Enterprises in India, Himalaya
Publishing House, Bombay.

Tripathi P.C, 1991, Personnel Management and Industrial Relations, Sultan Chand &
Sons, New Delhi

Walker, K.F, 1973, “Workers Participation in Management in Practice”, C.P. Thakur, and
K.C., Sethi, (Eds), An International Perspective in Industrial Democracy: Some Issues
31
and Experiences”, Shri Ram Centre for Industrial Relations, New Delhi.
40th Session of the Standing Labour Committee, November 29, 2004, New Delhi:
Action Taken Report on The Conclusions of The 39th Session Of Indian Labour
Conference Held on 16-18 October, 2003.

17.9 ACTIVITIES
1. Critically examine the schemes of workers participation in management in
India. What improvements would you suggest?

2. What is meant by collective bargaining? Examine the working of works

committees and joint management councils.

3. Discuss the definition, objectives and structure of quality circles and discuss its
applicability in India.

32
UNIT-18 INDUSTRIAL RELATIONS

Structure
18.0 Learning Outcome
18.1 Introduction
18.2 Industrial Peace
18.3 Labour Policy
18.4 Defining Grievance
18.5 Methods of Conflict Resolution
18.6 Labour Laws
18.7 Administrative Arrangement
18.8 Conclusion
18.9 Key Concepts
18.10 References and Further Reading
18.11 Activities

18.0 LEARNING OUTCOME

After reading thus Unit, you should be able to;
1. Explain Industrial Relations;
2. Know labour legislations;
3. Understand Causes of grievance and redress process; and
4. Discuss measures for a lasting solution to the problem of
Industrial Unrest.

18.1 INTRODUCTION

Industrial Relations are an integral aspect of social relations and cover

the entire gamut of work relations of an institution, internal and external.
Human relations form the core function of industrial relations since it is
the responsibility of the employer to establish healthy organisational
climate for consistently good performance.
The beginning of personnel work is traced to 1881 when Frederick W
Taylor developed a functional organisation at the plant of the Mid Vale
Steel Company and one of the foremen was called, shop disciplinarian.’
Industrial Relations entails study of human behaviour at the work place
focusing on the influence such relations have on an organisation’s
productivity. IR describes various programmes for dealing with
employees including personnel relations or activities for establishing or
maintaining an efficient loyal work force. Labour relations pertains to
union management relations such as the negotiating the union’s contract
and the carrying out of its provisions.” (Owen, 1987)
1.
The field of Industrial relations (IR) concerns the formal relations
between employers and their employees and generally encompasses the
work of personnel specialists, industrial engineers, psychologists and
labour relations experts (Robinson, 1983). Classical economics viewed
workers as instruments of production subject to the laws of supply and
demand. IR became a subject of scholarly attention in the 1920s with
Mayo’s Hawthorne experiments. The theory and practice of Industrial
Relations is an amalgam of various disciplines in social sciences and
humanities.
The subject is also referred to as ‘industrial and organisational relations’
or ‘organisational relations suggesting the wide arena of the subject
matter. In a large company, following activities may be considered
industrial relations functions:
“Recruiting and selecting new employees and developing the terms and
conditions of employment; classifying jobs and occupations; negotiating
with unions; implementing government regulations that affect the work
force; and instituting training programs; selecting and evaluating
workers: personnel processes described above constitute what is
normally called personnel administration or personnel management.
Much of this work requires knowledge of industrial psychology,
psychological measurement and statistics, psychological aspects of work
motivation productivity etc.” (Robinson, 1983).
Industrial organisational psychology involves application of concepts
and methods of experimental, clinical and social psychology to the
workplace. Industrial organisational psychologists are concerned with
such matters as personnel evaluation and placement, job analysis, worker
management relations(including morale and job satisfaction), workforce
training, and development (including leadership training) and
productivity improvement. This may involve working closely with
business managers, industrial engineers and human resources
professionals (Encyclopaedia Britannica Inc., 2002).
Defining Industrial Relations
Industrial relations, though a recognisable and legitimate objective, is
difficult to define since a good system of industrial relations involves
complex relationships between:
(a) Workers (and their informal and formal groups, that is, trade
union organisations and their representatives);
(b) Employers (and their managers and formal organisations like
trade and professional associations);
(c) The Government and other agencies involved.
Broadly, in western style economies, the parties (workers and employers)
are free to make their own agreements and rules. This is called
'voluntarism'. But it does not mean there is total noninterference by the
government. Government regulation is necessary to:
• Protect the weak (hence minimum wage);
• Outlaw discrimination (race or sex);
• Determine minimum standards of safety, health, hygiene,
conditions of service; and

2.
 • Prevent abuse of power by management or workers.
The personnel manager's involvement in the system of industrial relations
varies from organisation to organisation, but normally he or she is
required to provide seven identifiable functions, such as:
1. To keep abreast of industrial law (legislation and precedents) and to
advise managers regarding responsibilities entailing, discipline, welfare
measures, managing diversity etc.
2. To conduct (or assist in the conduct) of local negotiations (within the
plant) or act as the employer's representative in negotiations as a critic
and advisor in respect of trade, association policies or as a member of the
trade association negotiating team.
3. Interpretation of agreements and explanation of the same to line
managers;
4. To monitor the observance of agreement and help produce policies
that ensure agreements are followed within the organisation.
5. Managing crisis in change situations, correcting warning of mistakes
on the part of line managers.
5. Managing crisis in change situations, correcting, cautioning line
managers about mistakes
6. To provide the impetus and advice regarding modalities (devise the
machinery) for the introduction of joint consultation and worker’s
participation in decision-making in the organisation. Rules for flextime
correction of absenteeism and work related issues (boundary disputes) are
the three examples of the matters that may be settled by joint consultation
in with a more twenty-first-century outlook and philosophy. Human
resource management is very involved in promoting and originating ideas
in this field; and
7. To provide statistics and information regarding workforce numbers,
costs, skills etc. relevant to negotiations that is, the cost of pay rises,
effect on pay differentials, impact on recruitment, maintenance of
personnel records of training, experience, achievements, qualifications,
awards, pension and other records; to produce data in respect of
personnel matters like absentee figures and costs, statistics of sickness
absence, costs of welfare and other employee services, statements about
development in policies by other organisations, ideas for innovations; to
advise upon or operate directly, grievance, redundancy, disciplinary and
other procedures (Accel team, 2005).
In the above context, Dunlop(1958) defined industrial relations as an
area “which denotes the union management relations operating within
the spectrum of industrial relations system, which defines the role,
status and the conduct of different groups of people who work together
for productive purposes in an economy characterised by its peculiar
social and economic conditions prevailing under given
technological market and power context giving rise to the creation
of a body of rules to govern the interactions of the different groups of
people involved therein".
Industrial relations are a set of interdependent functions involving
historical, economic, social, psychological demographic, technological,
occupational, political, legal and other variables. Practically, it is difficult
3.
to study the impact of all factors on industrial relations. It is easy to
consider industrial relations only in respect of trade unions and labour
legislations. In a narrow legalistic sense therefore, industrial relations is a
subject of study and aspect of management which includes the
relationship between:
(a) Employers and employees
(b) Employers and trade unions
(c) Occupational organisations
(d) Trade Unions
(e) Trade unions and employer associations
Objectives of industrial relations could thus be specifically stated as:
1. Industrial peace and harmonious relations between employers
and employees;
2. Develop and progress of industry in a democratic fashion;
3. Safeguarding interests of both workers and management;
4. Establish and maintain industrial democracy;
5. Create environment of cooperation and harmonious work
relations;
6. Eliminate unfair labour practices; and
7. Control discipline and motivate employees.

Technology and Industrial Relations

Technology has significant implications for industrial relations especially
with regard to work process improvement and quality of work life in
organisations. Notably, organisation is also understood as a socio-
technical system bringing out the relationship between human resource
and technology. Technology is one of the major constituents of
organisational work. It also has implications for recruitment and training,
since use of technology means more induction of professionals and better
training of existing personnel in handling advanced technology. As
technology grows, specialisation increases, work gets minute and more
sophisticated; corresponding requirements of education on the part of
workers increases training costs.
Technological change also affects the work environment and human
relations at the work place. This requires changes and adjustments. The
impact of technological change depends on three factors, namely:
(i) The nature of change;
(ii) The speed at which the innovations are introduced; and
(iii) The method of the change

Certain benefits of technology may be noted thus;

1. It allows employees to perform better; manage more quantity and
produce better quality;

4.
2. It improves the quality of life (QWL) of employees;
3. It produces better working conditions;
4. It brings attitudinal change in employees; and
5. It increases the profitability of the organisation

Ergonomics and Industrial Relations

Ergonomics is the application of scientific knowledge to discovering how
best to fit a worker to his physical and social work conditions to provide
for maximum comfort and facility. Ergonomics maximises quality and
individual efficiency of the worker at a job. Ergonomic specialists collect
and analyse statistical data with regard to applied, occupational
psychology and physical anatomical aspects of work with a view to
achieving ‘perfect fit’ between technology and the individual.
Ergonomics is based on the belief that a comfortably placed worker will
be the best producing worker. Hence design of his seat, scientific
movements, position in the organisation with respect to speciality, formal
and informal work relations, motivation and morale; all collectively
determine work efficiency.
Organisations are increasingly engaging the services of ergonomic
specialists to study organisation design, equipment use, method study to
maximise efficiency and cut costs. Application of scientific
understanding of anatomy, physiology and psychology results in
improved productivity. Thus, ergonomic specialists are those with
formal education at degree level in these subjects (Accel team 2005).
Though ergonomics can be applied in a generalist way by people
belonging to other specialities like industrial engineers and psychologists,
an ergonomic specialist applies scientific study to apply ergonomics in its
true sense.
Fitting the task to the person is understood as ergonomics. Good
ergonomics;
• shortens learning times;
• makes the job quicker with less fatigue;
• improves care of machines;
• reduces absenteeism and material waste;
• Reduces labour turnover and tackles other signs of worker
malcontent, physical and mental fatigue; and;
• Meets the requirements of health and safety legislation.
Specific aspects in ergonomics could be listed as:
• Work-place design;
• Motion economy, facility of movement through scientific
analysis(muscular load, accuracy of movement) involving motion
study;
• Rest allowances;
• Job satisfaction; and
• Environmental control;
5.
 • Legal stress;
• Physical climate; physical temperature, humidity, etc.;
• Environmental and physical hazards, etc.; and
• Mental demands; data processing, communication (Accel team,
2005)

18.2 INDUSTRIAL PEACE

Mere absence of ‘industrial unrest' does not mean good industrial
relations. Industrial peace is the fruit of improved industrial relations and
better management of human resources over time. Inter-union rivalry has
deplorable consequences both for the organisation and the workers.
Certain imminent requirements of industrial peace are stated as follows:
1. Conducive working environment regarding social relations,
emphasis on procedural justice and physical conditions of work.
2. Attentive and responsible attitude towards the organisation and
work on the part of all concerned parties.
3. Active measures to ameliorate dissatisfaction among workers.
4. Mutual respecting and amicable settlement of differences in the best
interest of the organisation.
5. Speedy communication of decisions, especially those affecting
workers’ rights; workers’ involvement in such and other decisions
6. Integration of employees in the organisation
7. Proper management of employees pay and benefit schemes to
prevent misgivings. Seventy to eighty percent of conflicts have
been known to occur because of delays in this respect.
8. The management should also look after the social and other
economic needs of the employees.
9. Transparency of industrial policies would be conducive to
democratic functioning.
10. Management and employees should have mutual confidence and
cooperating attitude, which leads to new policy directions through
free and open-minded discussions on matters of industrial progress.
11. Arrangement for need based training for workers.
12. System of group bargaining to manage conflicts better.
13. Most importantly, economic growth, which distributes rewards
equitably, creates employment opportunities and alleviates poverty,
is the only lasting solution of the problem of industrial unrest.

Industrial Unrest: Issue with striking work

Supreme Court judgment in the T.K Rangarajan vs. Government of
Tamil Nadu and Others, 2003,( SOL case no. 429) denying the right to
strike as a legal moral or equitable right has invited much criticism. In an
earlier judgement, in Kameshwar Prasad vs. State of Bihar, 1962
6.
 (Supp3 SCR 369) the Apex court had settled that the right to strike is not
a fundamental right. But denying it as moral right in the Rangarajan case
has invited criticism. Workers have the right to strike, even without
notice unless it involves a public utility service; employers have the right
to lockout, subject to the same conditions as a strike. (Desai, 2005)
It is conceded that a worker has no other means of defending her or his
real wage other than seeking an increased money wage. Earnings of the
capitalist are contingent upon the worker’s continued cooperation. The
argument is drawn from Ricardian and Marxian classical political
economy that states that a capitalist earns by alienation worker’s rights
(Justice Ahmadi: B.R. Singh v. Union of India, 1990labIC 389(396) SC).
Besides the Industrial Disputes Act, 1947, the Trade Unions Act, 1926
also recognises the right to strike. Sections 18 (xiii) and 19 (xiv) of the
act confer immunity upon trade unions on strike from civil liability.
India is a member of the International Labour Organisation (ILO). A
conjoint reading of Articles 51(c) and 37 implies that principles laid
down in international conventions and treaties must be respected and
applied in the governance of the country. This is implicit from Article
51(c) and the enabling power of Parliament to enact laws for
implementing the international conventions and norms by virtue of
Article 253, read with Entry 14 of the Union List in the Seventh Schedule
of the Constitution.
Any international convention not inconsistent with fundamental rights
and in harmony with its spirit must be read into these provisions to
enlarge the meaning and content thereof, to promote the object of the
Constitutional guarantee. (Justice Verma; Vishakha vs. State of Rajasthan
(1997)6SCC241 at 249). Of the Directive Principles of State Policy,
Article 51(c) provides that the state shall endeavor to foster respect for
international law and treaty obligations in the dealings of organised
people with one another. Article 37 reads as, “the provisions contained in
this part shall not be enforceable by any court, but the principles therein
laid down are nevertheless fundamental in the governance of the country
and it shall be the duty of the state to apply these principles in making
laws" (Desai, 2005).
Finding A Lasting Solution to Labour Problems
It is conceded that legislation and institutional arrangements in
pursuance to legislation are only a partial solution to the problem of
industrial unrest. Core issues have to be tackled for achieving lasting
industrial peace. To that end, vocational training of workers and
arrangements for housing and social security schemes has to be given
fillip. At the macro level, employment generation and poverty alleviation
programmes need to be taken up earnestly to tackle unrest among people
in general and working classes in particular. The onus is on the
management of organisations and the government to take desired steps in
that direction.
Employment and Training Schemes
With a macro perspective, human resource development in the economy
has to move forward in a planned way. Solutions have to be found to
economic and social problem like unemployment, poverty, ill health and
gender discrimination for healthy environment in organisations.
7.
Education has to incorporate vocational training for youth as also existing
training programmes in institutions and industry have to be technically
updated, jobs enriched and enlarged, with a view to imparting need based
skills to employees in particular and students in general to equip them to
face diverse challenges in life. The same has to be attempted with added
vigour in the face of industrial sickness and privatisation of public sector
units. Steps will have to be taken to ensure a measure of relief and
assistance to retrenched workers who are thereby reduced to a state of
helplessness. The same has to be ensured via planning built into yearly
budgets. Current strategy for employment generation in India underlines
the following significant areas: (40th Session, Standing Labour
Committee)

• Generating additional employment opportunities through

the encouragement of labour intensive sectors.
• Accelerating the rate of growth of GDP with a particular
emphasis on sectors likely to ensure spread of income to
the low segments of the labour force.
• Restructuring of the following sectors in favour of labour
intensive activity for generating additional gainful
employment opportunities:
• Agriculture & Allied.
• Greening the country through Agro
Forestry.
• Energy Plantation for Biomass power
Generation.
• Rural Sectors and Small and Medium
Enterprises (SMEs).
• Education and Literacy.
• Employment through ICT Development
• Health, Family and Child Welfare
Considerations in Labour Law Reform
Vital reforms cannot be secured without the cooperation and goodwill of
the workers. Such understanding can be brought about by creating
confidence in workers through provision of necessary safeguards to
protect their interests. The greatest anxiety experienced by the workers is
with regard to the stability of employment. Reform should be ‘rational’ in
that effective arrangements should be made for retraining and transferring
retrenched workers to other jobs on the basis of expressed consent.”
(Mathew, 2003).
Presently, a permanent worker can be removed from service only for
proven misconduct or for habitual absence due to ill health, alcoholism
and the like, or on attaining retirement age. In other words, the doctrine
of ‘hire and fire’ is not approved within the existing legal framework. In
case of misconduct the worker is entitled to the protection of Standing
Orders to be framed by a Certifying Officer of the Labour Department
after hearing management and labour, through the trade union.
Employers must follow principles of ‘natural justice’, which again is an
area that is governed by judge-made law. An order of dismissal can be
8.
challenged in the labour court and if it is found to be flawed, the court
has the power to order reinstatement with continuity of service, back
wages, and consequential benefits. This again is identified as an area
where greater flexibility is considered desirable for being competitive.
Both pros and cons regarding proposed change need to be studied to
evolve acceptable policy in this regard. Holistic and not partial
appreciation from the industry’s standpoint may not be the correct
approach. Opinions regarding the same differ among scholars and policy
makers.
Under the present law, any industrial establishment employing more
than a hundred workers must make an application to the government
seeking permission before resorting to lay-off, retrenchment, or closure;
employers resorting to any of the said forms of creating job losses, is
acting illegally and workers are entitled to receive wages for the period of
illegality. As per proposed reforms such securities would no longer be
available. Drastic change may need to be guarded against. An important
feature of the Industrial Disputes Act is the stipulation that existing
service conditions cannot be unilaterally altered without giving a notice
of 21 days to the workers and the union. Similarly if an industrial dispute
is pending before an authority under the IDA, then the previous service
conditions in respect of that dispute cannot be altered to the disadvantage
of the workers without prior permission of the authority concerned. This
has been identified as a form of rigidity that hampers competition in the
era of liberalisation. The same issue of equity and justice comes up in this
particular context. The challenge is to reconcile management and
workers’ interests.
The most distinctly visible change from globalisation is the increased
tendency for subcontracting. Generally, this is done through the use of
cheaper forms of contract labour, where there is no unionisation, no
welfare benefits, and quite often not even statutorily fixed minimum
wages. Occasionally, the tendency to bring contract labour to the mother
plant itself is seen. This is very often preceded by downsizing, and since
there is statutory regulation of job losses, the system of voluntary
retirement with the ‘golden handshake’ is widely prevalent, both in the
public and private sectors. While cost control may be an imperative
human side of the enterprise is not to be lost sight of. Contract labour is a
pressing issue presently. Steps need to be further taken to ameliorate
their condition (Mathew, 2003).
Impetus to Research
Government undertakes special programmes of studies and surveys of
aspects such as working and living conditions, family budgets, wage
census, index of earnings, patterns of absenteeism, productivity, etc.
Adequate and reliable data on labour matters should be further built up.
To that end, there is need for sustained and objective research on a
systematic basis. Modalities for the same were discussed at a conference
on Labour Research held in September 1960, 2005. Provision for
research in labour matters through some new institutional facilities
outside the set-up of the government is being considered. It is proposed to
have the association and assistance of organisations of workers and
employers as well as other concerned parties.

9.
Industrial Housing
Although the subsidised Industrial housing scheme has been in operation
for some years, the situation in respect of housing of industrial workers
has not improved and in several centers has even deteriorated. While
considerable improvement has occurred in the living and working
conditions of employees in large and organised industries, owing both to
state activity and trade union action, a great deal of scope for the same
remains in respect of the workers engaged in agriculture and unorganised
industries. Their conditions should be a matter of special concern to the
government as well as to the organisations of labour.
Workers’ Cooperatives
Presently, cooperative credit societies and cooperative consumer stores
are being proposed at the level of the trade unions. Some progress has
been made in the formation of miners' cooperative societies through the
help of the Coal Mines Welfare Fund Organisation. A few workers'
cooperative housing societies also exist in some industrial centers.
Cooperative activity is expected to result in immense benefits to workers
ad their families.
The Unorganised Sector
The National Sample Survey Organisation (NSSO) survey of 1999-2000
has estimated that out of a total workforce of about 397 million, only 28
million are in the organised sector and remaining 369 million in the
unorganised sector. The workforce in the unorganised sector comprise of
237 million in the agricultural sector, 41 million in manufacturing and 91
million in services including the construction workers.
The unorganised sector is characterised by the lack of labour law
coverage, lack of organisational support, low bargaining power and
institutional back-up, making it extremely vulnerable to economic and
social exploitation. In the rural areas, it comprises landless agricultural
labourers, small and marginal farmers, share croppers, persons engaged
in animal husbandry, fishing, horticulture, bee-keeping, toddy tapping,
forest workers, rural artisan, s etc., where as in the urban areas, it
comprises mainly manual labourers in construction, carpentry, trade,
transport, communication, etc., and also includes street vendors,
hawkers, head load workers, cobblers, tin smiths, garment makers, etc.
There are some welfare schemes implemented by the central government
through the Directorate General Labour Welfare for specific groups of
unorganised sector workers, viz. for those engaged in ‘beedi’, non-coal
mines and coal industries. These are apart from the National Social
Assistance Programme (NSAP) consisting of schemes for old age
pension, family benefit and maternity benefit. Besides, some of the state
governments like Kerala and Tamil Nadu have also been implementing
welfare programmes for certain categories of the unorganised sector
workers. The government of Madhya Pradesh enacted a separate Law
for the workers in the unorganised sector. There are group insurance
schemes such as the Jan Shree Bima Yojana, which provide insurance
cover of Rs. 20,000 in case of natural death; Rs. 50,000 in case of death
or permanent total disability and Rs. 25,000 in case of partial permanent
disability due to an accident. Persons in the age group of 18-60 years
and those living below or marginally above the poverty line are eligible.

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10
 A proposal to enact a comprehensive central legislation for the
agricultural workers had been under consideration of the Ministry of
Labour, since 1975, to enact a uniform central legislation for the
agricultural workers. It is currently caught in divergent views expressed
by state governments. The main reservation is regarding creation of a
corpus for the implementation of the welfare measures for the
agricultural workers. While some states were of the view that enactment
of law may lead to social tension, some others were of the view that the
legislation may lead to ‘industrial atmosphere’ in the agricultural sector.
Some states wanted the matter to be left to the states and some others
were of the view that the central government should bring the central
legislation but bulk of the provisions should be left to the state
governments. (40th Session Standing Labour Committee)

18.3 LABOUR POLICY

Articulation of labour policy and the ideology pursuant to it is a
significant determinant of organisational working. The objective of
labour policy is to ensure an environment conducive for labour
management cooperation. Principles pursued in pursuance of avowed
objectives constitute labour policy.
In today’s environment of globalisation, the abundant availability of
trained manpower in scientific, technical and managerial fields is one of
the main attractions to foreign investors in India. India’s competitive
advantage lies in furthering this human capital development. To this end,
labour laws revision is being suggested. Labour legislation makes
provision to safeguard workers’ rights as well as protect the interests of
employers and promote healthy industrial relations. Laws have been
enumerated from the constitution of India where labour is a concurrent
subject.
There can be many perspectives to goals and objectives of labour policy,
for example capitalistic and socialistic in a mixed economy. Similarly,
implementation could be viewed from many different perspectives.
Industrial Relations are currently gripped in the ideological conflict
between leftists and right wing nationalists. While the former advocate
socialist policies, the latter perceive efficiency in the free market.
It is not hard to understand why industrial relations suffer from
ideological and practical ambiguity, especially in developing countries
like India, where immense socio political diversity prevails. It may not be
advisable for instance, to make agreeable policy with an exclusively
urban or western perspective with regard to labour that has a predominant
rural agricultural background (Dwivedi, 1990). Industrial relations in
India should take into account such other unique ecological factors and
specific considerations; for instance, many workers’ problems are due to
cultural incongruence between rural and urban life. Organisational
culture assumes added significance here. Training as well as orientation
schedules for new entrants to organisational life, for instance, must take
cognisance of this real problem and come up with practicable solutions.
There is pay disparity between organised and unorganised sectors and
also within the organised sector for example, in the banking and
manufacturing sectors. There is reported imbalance between inducements
and contributions and the HR function shows a negative orientation in
.
11
that the emphasis is on tackling problems piecemeal instead of a
comprehensive attempt at their prevention and pre-emption. There is
stress on imparting responsibility rather than engineering a climate of
responsibility itself. Besides there are eternal factors viz. inflation,
disparity in pay in public and private sectors, more indirect taxes than
direct, retrenchment etc. which create dissatisfaction, apathy and decline
in work ethic.(Dwivedi, 1990)
The government has a vital role to play in structuring industrial relations.
The government seeks to maintain balance by establishing legal, social
and economic norms of work life. The government also endeavours to
adapt the legislative and administrative organs to changes in social ideals
and norms. Environmental and organisational constraints on rationality of
decision making processes have to be considered. Problem of
irreconcilability between long and short term goals due to
implementation roadblocks is also an issue (Dwivedi, 1990). To clarify
further, it is not possible to limit consideration to the economic
dimension when social and political are equally important. These
metamorphose into larger sociological perspectives concerning relation
between man and society; man’s existence in a group or a collective
undertaking (gestalt psychology), contributing to and being affected in
turn by sociological processes inhering in groups. Goal setting for labour
policy is rather difficult as precision may be lost in the myriad concerns
to be answered.
In India, the formulation of labour policy has been mainly based on the
deliberations and recommendations of the Indian Labour Conference and
the Standing Labour Committee. In addition to the above tripartite
consultative organisations, the government of India appoints consultative
tripartite committees for individual industries. There are also tripartite
wage boards for evolving wage structures in selected industries. Labour
legislation is hard to implement.
The Indian government has used a mix of approaches, such as legislation,
administrative action, tripartite consultation, persuasion and education to
achieve its objective of harmony and industrial peace.
There is alleged lack of uniformity and repetitiveness in Indian labour
legislation. The study group appointed by the National Commission on
Labour in 1967 was in favour of introducing a simplified standardised
labour code on an all India basis:
• To ensure a machinery for progressive enhancement of real wages
for workmen in the foreseeable future;
• To ensure increase in production of material goods so that the
price line can be maintained and the standard of living increased.;
• To reduce work stoppages to the minimum by providing effective
machinery for settlement of disputes either through collective
bargaining or if necessary through a speedy process of industrial
adjudication; and
• To provide the trade unions their rightful place in the democratic
set up.

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12
 A code of discipline in industry in India, which applies both to the public
and to the private sector, has been accepted voluntarily by all the central
organisations of employers and workers and has been in operation since
the middle of 1958. The code provides that:
• A regular grievance procedure be laid down in all
undertakings and complaints should receive prompt
attention. The legal means of redress should be followed
through the normal channels and there should be no direct,
arbitrary or unilateral action on either side.
• Management and workers agree to avoid litigation, lock-
outs, sit-down and stay-in strikes. There should be no
recourse to intimidation, victimisation or 'go-slow' tactics.
The unions should not engage in any form of physical
duress and should discourage unfair practices such as
negligence of duty, careless operation, damage to
property, interference with or disturbance to normal work
and insubordination.
• The employers should allow full freedom to workers in the
formation of trade unions. A union guilty of a breach of
the code of discipline loses its right to such recognition.
• Both sides are pledged to the scrupulous and prompt
implementation of awards, agreements settlements and
decisions.
• Every employee should have the freedom and right to join
a union of his choice. Ignorance and backwardness of
workers should not be exploited by any organisation.
• Casteism, communalism and provincialism should be
eschewed by all unions and there should be no violence,
coercion, intimidation or personal vilification in inter-
union dealings.
• It is enjoined that there should be unreserved acceptance
of and respect for democratic functioning of trade unions
and all central organisations should combat the formation
and continuance of company unions.
• The failure to implement awards and agreements has been
a complaint on,' both sides and if this were to continue, the
codes would be bereft of all meaning and purpose. A
machinery for implementation and evaluation has,
therefore, been set up at the center and in the states to
ensure observance by the parties of the obligations arising
from the codes and from laws and agreements.

18.4 DEFINING GRIEVANCE

Grievance can be defined as employee dissatisfaction or feeling of

personal injustice relating to his or her employment conditions. Dale
Yoder defines grievance as "a written complaint filed by an employee
claiming unfair treatment". The International Labour Organisation (ILO)
.
13
defines grievance as "a complaint of one or more workers in respect of
wages, allowances, conditions of work and interpretation of service
stipulation, covering such areas as overtime, leave, transfer, promotion,
seniority, job assignment and termination of service". In the opinion of
National Commission of Labour, "complaints affecting one or more
individual workers in respect of wage payment, overtime, leave, transfer,
promotions, seniority, work assignment and discharges constitute
grievance".
According to Michael J. Jucius, the term ‘grievance’ implies ‘any
discontent or dissatisfaction, whether expressed or not; whether valid or
not, arising out of anything connected with the company that an
employee thinks, believes or even feels, is unfair, unjust or inequitable".
For the purpose of this unit, grievance is understood from a narrow
perspective as concerned with the interpretation of contract or award as
concerns employment.
Causes of Grievances
The causes of grievances may broadly be classified as follows:
(A) Grievance resulting from working conditions
(i) Improper placements
(ii) Frequent changes in schedules or procedures
(iii) Non-availability of proper tools, machines and equipment
for accomplishing assigned tasks
(iv) Tight production standards or exacting schedules
(v) Unfavourable physical conditions at the work place
(vi) Failure to maintain proper discipline (excessive discipline or
lack of it)
(vii) Poor relationship with the supervisor

(B) Grievances arising out of management policy

(i) Wage payment and job rates

(ii) Leave
(iii) Overtime
(iv) Seniority
(v) Transfer
(vi) Promotion, Demotion and Discharge
(vii) Hostility toward labour union

(C) Grievance resulting from alleged violation of

(i) The collective bargaining agreement

(ii) Central or state laws
.
14
 (iii) Past practices
(iv) Organisation's rules
(v) Avoidance of management's responsibility

(D) Grievances resulting from personal maladjustment owing to:

(i) Over-ambition
(ii) Excessive self esteem
(iii) Impractical attitude towards life.

Effects of Grievances
Grievances have an adverse effect on organisational climate. Adverse
effects are expressed as:
(i) Lack of interest in work and commitment
( ii ) Low productivity
( iii ) Increase in waste and costs
( iv ) Increase in absenteeism
(v) Increase in employee turnover
( vi ) Spreading indiscipline and unrest
( vii ) Increase in number of disciplinary cases
Discovering Grievances
The following are the important tools, which help in discovering
grievances:
(A) Exit Interview: Employees generally quit organisations because
of dissatisfaction at the work or availability of better prospects
elsewhere. Exit interviews can provide vital information about
employees’ grievances, specifically, their reasons for leaving the
organisation.
(B) Gripe Boxes: These are boxes in which employees drop
anonymous complaints about felt dissatisfactions. It is different
from suggestion scheme system, where employees drop named
suggestions with an intention of receiving rewards.
(C) Opinion Surveys: Group meetings, periodical interviews with
employees, collective bargaining sessions are some other means
through which information is procured about employee
dissatisfactions before they turn to grievance.
(D) Open Door Policy: Employees are provided unrestricted access to
the management. Open door policy may be useful in small
organisations but can be impracticable in large organisations
where top management do not have the time to attend to personal
grievances of workers.

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15
Grievance and Industrial Relations
Environment of cordiality and co-operation is reflected in increased
productivity in organisations with 'zero' grievance rate. It is also a sign of
healthy industrial relations prevailing in the organisation.

One of the major problems in Indian industrial relations scenario is lack

of appreciation of distinct boundaries between the areas of grievance
procedure, collective bargaining and worker's participation in
management
The appointment of labour welfare officers in every industry, where five
hundred or more employees work, is mandatory under the provision of
the Factories Act, 1948. But the Factories Act 1948 gives limited scope
to Welfare Officers in areas of welfare, working conditions and safety,
etc.
In the absence of an accepted grievance procedure, the culture of the unit
as well as either the provisions under Factories Act 1948 or the Industrial
Disputes Act 1947, are depended on for settlement.
Grievance Redress Procedure
Generally, grievance rate is reflected in the number of written grievances
for one hundred employees in one year. A typical grievance rate is in
between five to twenty. However, well-managed organisations with
mature industrial relations have succeeded in lowering rates. Effective
administration however tends to mitigate its negative effect. Fair, open
and prompt treatment of problems as they arise, reduces
misunderstandings. Increased participation also is an effective way to
reduce grievances.
Grievance Handling Machinery
A grievance handling machinery prescribes the method by which a
grievance is filed and carried through prescribed procedure to a
settlement or solution. Therefore every organisation needs established
procedure for handling grievances. Some general principles which serve
as guidelines in establishing a system of positive grievance
administration are as follows:
1 Grievances should be addressed promptly;
2 Procedures and forms airing grievances must be easy to utilise and
well understood by employees and their supervisors; and
3 Direct and timely avenues of appeal from rulings of line supervision
must exist.
The most common grievance procedure features in four steps, which are
shown in Fig.1 (Pettefer, 1970).
First Step: - The first step involves presentation of employee grievance to
the immediate supervisor who forms the first rung in the ladder. If the
concern is unionised, a representative of the union would join for better
articulation. This step offers the greatest potential for improved labour
relations. Large number of grievances gets settled at this stage but
grievances relating to the issues or policies of the organisation are beyond
the jurisdiction of the supervisor. The aggrieved employee may approach
the next rung for such grievances.
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16
 Second Step: - The second rung may be the personnel officer or some
middle line manager who is approached for resolution. If the concern is
unionised, some higher personnel in the union may join. Events are stated
as they are perceived, identifying the portion of the contract, which
allegedly has been violated and the settlement desired to be effected. If
grievance is not adjusted at this step, it is taken to the third rung.

Third Step: The top management constitutes the third step, which handles
grievance involving company wide issues. The top union representatives
join in the process. Redress of grievances becomes complex and difficult
at this stage because by now they acquire political hues and colours. If
grievance does not get settled by the top management and top union
leadership, then in the fourth and final step, it is referred to an impartial
outside person called an 'arbitrator'.
Fourth Step: - If the grievance has not been settled within the
organisation, it goes to a third party for mediation. This stage involves
conciliation; arbitration; adjudication. The matter may even be referred to
a labour court. In case of mediation (conciliation or arbitration) the
mediator may have no authority to decide but may only facilitate contact.
In case of an adjudicator or labour court, the decision is binding on the
parties, subject to the statutory provisions for appeal to higher courts.

Figure – 1 Four-Step Grievance Procedure

IV Step
Conciliation
Arbitration
Ad judication

III Step Top Management Top Management

II Step Middle Management Middle level Union leader

I Step Supervisor Union representative

Aggrieved Employee

Model Grievance Procedure

Model grievance procedure was formulated in pursuance to the code of
discipline adopted by the sixteenth session of the Indian Labour
Conference in 1958. A model grievance redress procedure (as shown in
Figure 2) contains five successive time bound steps, each leading to the

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17
next in the event of the non-acceptance of the previous decision
(Monappa, 1999)
Fig.2. Model Grievance Procedure

Grievant Management
Step – I Grievant conveys Officer designated by management to deal
verbally with grievance at this initial stage. To reply
in 48 hrs.

Not satisfied, go to

Head of Department reply in three days

Step-II Grievant
Departmental representative

Decision un-satisfactory

Grievance committee to decide in 7 days

and report to the manger. Time limit for
Step-III Grievant management to communicate its decision
Departmental representative in 3 days.

Decision not in time or not satisfactory

Step-IV Grievant Appeal to management for revision. A

Departmental representatives week for appeal to be considered.

No agreement

Step V Grievant management Voluntary arbitration within a week after

may refer to Union decision from step IV

These five steps are as under:

1. An aggrieved employee shall first present his grievance verbally in
person to the officer designated by the management for this purpose.
Answer shall be given within forty- eight hours of the presentation of
complaint.
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2. If the employee is not satisfied with the decision of first step or fails
to receive an answer within the stipulated period, he shall, either in
person or accompanied by his departmental representative, present his
grievance to the head of the department. The departmental head is
expected to give his reply within three days of the presentation of
grievance.
3. If the decision of the departmental head is found unsatisfactory, the
aggrieved employee may request, forwarding grievance to the
grievance committee, which sends its recommendations to the
manager within seven days of receiving the employee's request. The
management implements unanimous recommendations of the
grievance committee. In the event of difference of opinion among the
members of the grievance committee, the views of the members,
along with the relevant papers are placed before the manager for final
decision. In either case, the final decision of the management is
communicated to the employee by the personnel officer within three
days from the receipt of the grievance committee's recommendations.
4. If the decision of the management is not communicated to the
employee within that period, or if it is unsatisfactory, the employee
shall have the right to appeal to the management for a revision. In
making this appeal, the employee, if he so desires, shall have the right
to take a union official along with him to facilitate discussion with the
management. The management shall communicate its decision within
a week of the employee's revision petition.
5. If no agreement is possible, the union and the management refer the
grievance to voluntary arbitration within a week of the receipt by the
employee of management's decision.

In case of any grievance arising out of discharge or dismissal of an

employee, the above-mentioned procedure shall not apply. Discharged or
dismissed employee shall have the right to appeal either to the dismissing
authority or to a superior authority that shall be specified by the
management within a week from the date of dismissal or discharge.

18.5 METHODS OF CONFLICT RESOLUTION

The Industrial Disputes Act seeks to regulate industrial relations in the
country. Its main objective is to provide for just and equitable settlement
of disputes by negotiation, conciliation, mediation, voluntary
arbitration, and compulsory adjudication. However, in most cases
employer- employee relations are determined by direct collective
bargaining.
The focus of the Industrial Disputes Act, 1947 is on efficient alternative
mechanisms for dispute settlement, such as, reference to Industrial
Tribunals, compulsory adjudication, conciliation, etc.
The conciliation machinery provided for in the Act, can take note of the
existing as well as apprehended disputes either on its own or on being
approached by either of the parties. Since the final decision is with the
parties themselves, they cannot complain that their practical freedom has

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been impaired or that they have been forced into an unacceptable
settlement (section 25).
Section 6 provides for the constitution of a Court of Inquiry, that enquires
into the merits of the issues and prepares a report on them that is
"intended to serve as the focus of public opinion and of pressure from
Government authorities" Section 10 A provides for voluntary arbitration.
Voluntary arbitration seems to be the best method for settlement of all
types of industrial disputes. Apart from these, Sections 7, 7A and 7B deal
with the constitution of adjudicatory authorities, viz., Labour Courts,
Tribunals or National Tribunals, respectively.
Conciliation
The objective of conciliation is to bring about an agreed solution through
mediation by adopting constitutional means not coercive or inhibitory
tactics either by the management or the workers. When parties engaging
in collective bargaining are unable to arrive at a settlement, either party
or the government may commence conciliation proceedings before a
government appointed conciliation officer whose intervention may
produce a settlement, which is then registered in the labour department
and becomes binding on all parties Conciliation machinery can take note
of a dispute either on its own or when approached by one or both
concerned parties. Unlike conciliation under the Industrial Disputes Act
where there are statutory authorities to conduct conciliation, conciliation
under the 1996 Act is not made compulsory. Under section 62 of the Act
the party initiating conciliation sends to the other party a written
invitation to conciliate, briefly identifying the subject of the dispute. The
role of conciliator is to assist the parties in an independent and impartial
manner, in reaching an amicable settlement. He has to guide them with
objectivity, fairness and justice. Efficacy of conciliation has declined
over the years due to expressed worker preference for the legal option in
comparison to conciliation. (Murti &Murti, 2005)
If conciliation fails, it is open to the parties to invoke arbitration, or, for
the appropriate government to refer the dispute to adjudication before a
labour court or a tribunal whose decision may then be notified as a
binding award on the parties. Disputes may be settled by collective
bargaining, conciliation, or compulsory adjudication.
Voluntary Arbitration
The essence of arbitration is the settlement of disputes by a tribunal
chosen by the parties themselves, rather than by the courts constituted by
the state. The popularity of arbitration as a mode of settling disputes is
owing to the fact that "the arbitration is regarded as speedier, more
informal and cheaper than conventional judicial procedure and provides a
forum more convenient to the parties, who can choose the time and place
for conducting arbitration and the procedure for carrying it through with
facility. Further, where the dispute concerned is a technical matter, the
parties can select an arbitrator who possesses appropriate special
qualifications in the matter".
Even though arbitration is a substitute process for civil suit and for
obtaining a decision judicially arrived at by an independent impartial
authority appointed by the consent of contending parties, arbitration
clauses cannot be imposed on the parties. Consent of both parties for
arbitration is a precondition for referral or resort to the option. The
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20
arbitral tribunal is given the power to use mediation, conciliation and
other procedures as it might decide, during the arbitral proceedings to
encourage settlement of disputes. Parties are free to determine the
number of arbitrators depending upon the nature of the agreement. The
grounds on which award of an arbitrator may be challenged before the
court have been severely cut down. The award can be quashed only for
invalidity of the agreement, want of jurisdiction on the part of the
arbitrator or want of proper notice to a party of the appointment of the
arbitrator or of arbitral proceedings or a party being unable to present its
case. At the same time, an award can now be set aside if it is in conflict
with the public policy on a ground which covers, inter alia, fraud and
corruption. (Murti and Murti, 2005)
This method has not been very popular, especially in northern India
despite provision for the same in the Industrial Disputes Act of 1947.
(Ghosh, 1969) This has been mostly because of non availability of
suitable arbitrators and also because voluntary arbitration leaves no
room for the parties to go in appeal. Though voluntary arbitration is
representative in character and stresses on responsibilities, rights and
obligations of both parties in equal measure, has lamentably been, in
effect, thwarted by trade unions. They have been and seen to resort to
recalcitrant tactics following adverse decisions.
Adjudication
Adjudication is relied upon most by workers for settlement of disputes.
The government has the discretion to refer an industrial dispute for
adjudication to a labour court or an industrial tribunal or an industrial
court. Each case is studied separately for referrals. Adjudication as a
method of resolution is criticised on the following grounds:

1. Adjudication leads to delay in settlement of disputes.

2. Problems are exacerbated further by additional conflicts and
strikes during proceedings.
3. It has relegated unions to the status of agents of litigation from
their ideal role as ideological constructive bodies. Their
ideological base has resultantly been deemphasised or eroded.
4. It has thwarted development of collective bargaining which is
widely practised in developed nations.
The following points need to be kept in mind while handling grievances:
1. A grievance should not be postponed in the hope that people will
"see the light" themselves.
2. Written records should be maintained.
3. All relevant facts regarding grievance should be collected by the
management and proper records maintained.
4. The employee should be given time off to pursue the grievance-
related matter.
5. The management should make a list of all possible solutions and
later evaluate them one by one in terms of their total impact on the
organisation.

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 6. Decision once reached should be communicated to the employee
and acted upon promptly by the management.
7. Follow up must be taken by the management to determine whether
action taken has brought about the desired change in the employee's
attitude.

Conflict Resolution for Central Government Employees

The Joint Consultative Machinery (JCM) and compulsory arbitration for
central government employees has been in operation since 1966. It
provides a forum for consultation between the government of India in its
capacity as employer and the general body of employees at three levels.
At the apex level, there is a National Council, with departmental councils
and office councils at the ministry/department and office levels
respectively. The National Council deals with general matters concerning
Central Government employees, such as pay of common categories,
dearness allowance, matters relating to categories of staff, common to
two or more departments, which are not grouped together in a single
departmental council. Matters affecting staff of a single department are
considered in the departmental council and local or regional questions at
the level of office councils. Prior approval of the chairman is taken before
a subject is included in the agenda for consideration of the National
Council. The council’s recommendation became operative after the
approval of government is obtained. If there is final disagreement at the
level of JCM on arbitral issues, it is open to either side to refer the matter
to the Board of Arbitration. The Board of Arbitration follows quasi
judicial procedures. Awards of the Board of Arbitration can be modified
or rejected by the Government with the approval of the Parliament only
on grounds of “National Economy” and “social justice.”
Working of the JCM
As per the assessment of the fifth pay commission, the scheme of JCM
has functioned well and been able to provide a viable platform for sorting
out problems through consultation between employees and the
government. This is evidenced by the fact that since 1968, no general
strike has taken place. In Railways the last general strike took place as far
back as in 1974.
In most cases the awards of the board of arbitration are accepted by the
government. Inordinate time is expended between receiving such awards
and implementing them. The fifth pay commission has called for a
specific time limit on implementation of such awards.

18.6 LABOUR LAWS

To have better understanding of industrial relations, it is better to know
the labour laws in India since independence.
1. Relating to Service Conditions: - Trade Union Act, 1926;
Industrial Employment (Standing Orders) Act, 1946; Industrial
Disputes Act, 1947; Employment Exchange (Compulsory
Notification of Vacancies) Act, 1959; Contract Labour Act, 1970;

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 and Sales Promotion (Employees Conditions of Service) Act,
1976.
2. Relating to Wages and Salary: The Payment of Wages Act, 1936;
Minimum Wages Act, 1948; Payment of Bonus Act, 1965; and
Equal Remuneration Act, 1976.
3. Relating to Social Security: Workmen's Compensation Act,
1923; Employees State Insurance Act, 1948; Employees
Provident Fund and Miscellaneous Provisions Act, 1952;
Maternity Benefit Act, 1961; Payment of Gratuity Act,1972;
and Employee's Pension Scheme, 1995.
4. Relating to Safety and Welfare: The Factories, Act, 1948;
Plantation Labour Act, 1951; and Mines Act, 1952, etc.

The Unorganised Sector

Many of the laws mentioned above apply to the unorganised sector
also. In some cases, a separate notification may be necessary to
extend the application of a particular law to a new sector.
It is useful to notice that some pieces of legislation are more general
in character and apply across the board to all sectors. The Trade
Union Act 1926, The Minimum Wages Act 1948, The Contract
Labour (Regulation and Abolition) Act 1970, The Workman’s
Compensation Act 1923, and The Payment of Wages Act 1936 are
examples of this type. In certain cases, even the IDA, 1947, would be
included.

In addition to the above, there are special sectoral laws applicable to

particular sectors unorganised like the Building and Construction
Workers Act, 1996; the Bonded Labour System (Abolition) Act,
1976; The Interstate Migrant Workers Act, 1979; The Dock
Workers Act, 1986; The Plantation Labour Act, 1951; The
Transport Workers Act, The Beedi and Cigar Workers Act, 1966;
The Child Labour (Prohibition and Regulation) Act, 1986; and The
Mine Act, 1952.

A recent trend has been to seek the creation of a welfare fund

through the collection of a levy from which medical benefits or
pension provisions are made, like, Kerala, where a large number of
such boards have already been set up to take care of welfare in
different sectors of employment.

The Industrial Disputes Act, 1947

The Industrial Disputes Act, 1947 was enacted to make provisions for
investigation and settlement of industrial disputes and for providing
certain safeguards to the workers.
It provides for a special machinery of conciliation officers, work
committees, court of inquiry, Labour courts, Industrial Tribunals and
national Tribunals, defining their powers, functions and duties and also
the procedure to be followed by them.
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It also enumerates the contingencies when a strike or lock-out can be
lawfully resorted to, conditions for lay off, retrenching discharging or
dismissing a workman, circumstances under which an industrial unit can
be closed down and several other matters related to industrial employees
and employers.
The Central Government is the appropriate government for the industries,
which are carried on:
(a) By or under the authority of the central government;
(b) By a railway company;
(c) A controlled industry, specified for this purpose;
(d) In relation to certain industries enumerated in sec 2(a) of the act
(Central government has delegated its power in respect of 199 industries
to the state government)
The Workman’s Compensation Act, 1923
The Workman’s Compensation Act, 1923, covers all cases of accidents
arising out of and in the course of employment’ and the rate of
compensation to be paid in a lump sum, is determined by a schedule
proportionate to the extent of injury and the loss of earning capacity. The
injured person can claim the compensation. In the case of his death the
dependent can claim the compensation. This law applies to the
unorganised sectors and to those in the organised sectors who are not
covered by the Employees State Insurance Scheme, which is
conceptually considered to be superior to the Workman’s Compensation
Act.
The Employees’ State Insurance Act, 1948
The Employees State Insurance Act, 1948, provides a scheme under
which the employer and the employee must contribute a certain
percentage of the monthly wage to the Insurance Corporation that runs
dispensaries and hospitals in working class localities. It facilitates both
outpatient and in-patient care and freely dispenses medicines and covers
hospitalisation needs and costs. Leave certificates for health reasons are
forwarded to the employer who is obliged to honour them. Employment
injury, including occupational disease is compensated according to a
schedule of rates proportionate to the extent of injury and loss of earning
capacity. Payment, unlike in the Workmen’s Compensation Act, is
monthly.
The Maternity Benefit Act, 1961
The Maternity Benefit Act of 1961 is applicable to notified
establishments. Its coverage can therefore extend to the unorganised
sector also, though in practice it is rare. It regulates employment of
women in certain establishments for a certain period before and after
child birth and provides for maternity and other benefits. The Act applies
to mines, factories, circus, industry, plantation and shops and
establishments employing ten or more persons, except employees
covered under the Employees State Insurance act, 1948.
A woman employee is entitled to 90 days of paid leave on delivery or on
miscarriage. Similar benefits, including hospitalisation facilities are
available under the law

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There are two types of retirement benefits generally available to workers.
One is under the Payment of Gratuity Act and the other is under the
Provident Fund Act. In the first case a worker who has put in not less
than five years of work is entitled to a lump sum payment equal to 15
days’ wages for every completed year of service. Every month the
employer is expected to contribute the required money into a separate
fund to enable this payment on retirement or termination of employment.
In the latter scheme both the employee and the employer make an equal
contribution into a national fund. The current rate of contribution is 12
percent of the wage including a small percentage towards family pension.
This contribution also attracts an interest, currently 9.5 percent per
annum, and the accumulated amount is paid on retirement to the
employee along with the interest that has accrued.
Equal Remuneration Act of 1976
This Act applies to an extensive range of classes of employment listed in
the schedule which includes the informal sector. It requires employers to
pay all workers, men and women equal remuneration for equal work
done. Remuneration is defined as the basic wage or salary and includes
payments in kind. "Same work or work of a similar nature" is defined as
work in respect of which the skill, effort and responsibility are the same
when performed under similar working conditions or where any
differences are not of practical importance in relation to the conditions of
employment.
Discrimination on the basis of gender is deemed unacceptable.
Employers must also not discriminate on the basis of sex in the
recruitment of workers for the same or similar work, or in any terms or
conditions of employment, such as promotion, training or transfer.
However, priority reservation in recruitment is allowed in relation to any
"class or category of persons". Employers are also subject to record
keeping requirements
The provisions of this law are regularly monitored by the Central
Ministry of Labour and the Central Advisory Committee. In respect of an
occupational hazard concerning the safety of women at workplaces, in
1997 the Supreme Court of India announced that sexual harassment of
working women amounts to violation of rights of gender equality. As a
logical consequence it also amounts to violation of the right to practice
any profession, occupation, and trade. The judgment also laid down the
definition of sexual harassment, the preventive steps, the complaint
mechanism, and the need for creating awareness of the rights of women
workers.
According to Government sources, out of 407 million total workforce, 90
million are women workers, largely employed (about 87 percent) in the
agricultural sector as labourers and cultivators. In urban areas, the
employment of women in the organised sector in March 2000 constituted
17.6 percent of the total organised sector.
Employees State Insurance Act, 1948
This Act is administered by the Employees State Insurance Corporation
made up of representatives of employees and employers. The funds under
the Act come from employer and employee contributions. All employees
are required to be insured under this act, which provides certain benefits
to employees subject to a wage limit
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25
The Act provides for the payment of maternity benefit which is described
as periodic compensation to women who are insured in the event of
confinement, miscarriage, sickness related to pregnancy, confinement,
premature birth. Confinement is defined as labour (including still birth)
after 26 weeks of pregnancy. Compensation is paid if the competent
authority certifies that the employee is eligible. In addition, the Act
provides for the conditions for the payment of maternity benefits, its rates
and the period for which it is to be paid to be set by Central Government.
Payment of Bonus Act, 1965
The Act applies to all factories and every other establishment, which
employs twenty or more workmen. It provides for a minimum bonus of
8.33 percent of wages. The salary fixed for eligibility purposes is Rs.
3,500 per month and the payment is subject to the stipulation that the
bonus payable to employees drawing wages or salary between Rs 2,500
and Rs. 3,500 per month would be calculated as if their salary or wages is
Rs. 2,500 per month.
Trade Unions Amendment Act, 2001
Salient features of the Trade Unions (Amendment) Act, 2001:
ƒ No trade union of workmen shall be registered unless at least 10%
or 100, whichever is less, subject to a minimum of 7 workmen
engaged or employed in the establishment or industry with which
it is connected are the members of such trade union on the date of
making of application for registration;
ƒ A registered trade union of workmen shall at all times continue to
have not less than 10% or 100 of the workmen, whichever is less,
subject to a minimum of 7 persons engaged or employed in the
establishment or industry with which it is connected, as its
members;
ƒ A provision for filing an appeal before the Industrial Tribunal /
Labour Court in case of non-registration / restoration of
registration has been provided;
ƒ All office bearers of a registered trade union, except not more
than one-third of the total number of office bearers or five,
whichever is less, shall be persons actually engaged or employed
in the establishment or industry with which the trade union is
connected;
ƒ Minimum rate of subscription by members of the trade union is
fixed at one rupee per annum for rural workers, three rupees per
annum for workers in other unorganised sectors and 12 rupees per
annum in all other cases; and
ƒ For the promotion of civil and political interest of its members
unions are authorised to set up separate political funds.
Contract Labour Regulation and Abolition Act, 1970
The contract labour (regulation and abolition) act 1970 has been enacted
to regulate the employment of contract labour in certain establishments
and provide for its abolition in certain circumstances and related matters.
The act provides for the constitution of Central and State Advisory
Boards to advise the concerned governments on matters arising out of the

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administration of the Act. The Central Advisory Contract Labour Board
has also constituted a number of committees to enquire into the question
of prohibition of contract labour system in different establishments.
Child Labour (Prohibition and Regulation) Act, 1986
The Child Labour (Prohibition & Regulation) Act, 1986 prohibits
employment of children in hazardous occupations and processes and
regulates their employment in some other areas.
Industrial Employment Standing Orders Act, 1946
The Industrial Employment (standing orders) Act, 1946, applies to every
industrial establishment wherein 100 (reduced to 50 by the central
government in respect of the establishments for which it is the
appropriate Government) or more workmen are employed. All regional
labour comissioners have been declared certifying officers in respect of
the establishments falling in the central sphere. Central labour
commissioner, joint labour commissioner and deputy labour
commissioners have been declared appellate authorities under the act.
Hours of Employment Regulations, 1961
It regulates hours of work and periods of rest. Workers aggrieved by
classification can approach regional labour commissioner who is
empowered to decide such cases.
Health and Safety of Workers
The provisions of the Factories Act ensure that protection of the health
and safety of workers in all industries is maintained. Since it is a
statutory obligation, both employers and employees are required to
observe the safety and protection requirements. Noncompliance with
these requirements would call for penal action from the concerned
government authority.
Termination of Employment
The Industrial Disputes Act provides strict rules for layoff,
retrenchment and compensation. No employee in any industrial
establishment who has worked for more than one year may be
retrenched without being given one month's notice in writing indicating
the reasons for retrenchment. The employee is also entitled to
compensation equivalent to 15 days' pay for each year of service
completed. The government has activated the National Renewal Fund
(for rehabilitation and retraining of workers displaced from such units)
on a non-statutory basis.
Tax concessions have been extended to beneficiaries under approved
Voluntary Retirement Schemes (VRS) of private-sector companies and
employees of an authority established under a central, state or
provincial act or local authority that meet the guidelines framed for this
purpose.
Certain other amenities, such as canteens, rest shelters, first-aid centers,
crèches (day-care centers for female employees' children), and
educational and recreation centers, etc., are to be provided by the
employer in factories, mines and plantations. Large industrial units
outside the main cities sometimes provide subsidised housing for their
workers. Some states require the setting up welfare fund the

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 contributions payable by the employer, employees and the state
government for promoting activities connected with the welfare of
labor.

18.7 ADMINISTRATIVE ARRANGEMENT

The Organisation of the Chief Labour Commissioner (C) known as
Central Industrial Relations Machinery was set up in April 1945, charged
mainly with duties of prevention and settlement of industrial disputes,
enforcement of labour laws and promotion of welfare of workers in the
undertakings falling within the sphere of the Central Government.
Presently, there are 18 regions each headed by a Regional Labour
Commissioner .The Industrial Relations Division (Policy Legal) within
the Ministry of Labour deals with labour legislation and schemes
applicable to all organisations in India.
The Ministry of Labour has the responsibility to protect and safeguard the
interests of workers in general and those constituting the deprived and the
marginal classes of society in particular. The Ministry seeks to achieve
this objective through enacting and implementing labour laws regulating
the terms and conditions of service and employment of workers. All
labour laws provide for an inspectorate to supervise implementation and
also have penalties ranging from imprisonment to fines. Cases of non-
implementation need to be specifically identified and complaints filed
before magistrates after obtaining permission to file the complaint from
one authority or the other.

18.8 CONCLUSION
Industrial Relations involve human problems which require human
solutions. Legislation may assist pre-empt and tackle problems, but
lasting solution lies in addressing the key concerns of poverty and
unemployment among the masses. Industrial Relations are currently
going through a phase of transition in India. Socialist rhetoric is slowly
giving way to a capitalist orientation. If labour reforms are carried out,
which seems likely, industrial climate will undergo a drastic change. The
feasibility of proposed changes would have to be discussed thoroughly
before the imperatives of globalisation are accepted. Free entry and exit
of firms and unimpeded hire and fire of labour could be inimical to
labour security. Concerns of labour welfare have to be reconciled with
competitiveness of businesses which presently feel thwarted due to
‘rigid’ labour laws.

18.9 KEY CONCEPTS

Grievance: Grievance is manifest discontent. Grievance articulation

requires institutional mechanism to nip discontent in the
bud. Grievance articulation and redress form part of
corporate social responsibility. The idea of organisation
as a social unit is stressed and also endorsed by
recognition of these aspects of organisational

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 functioning. An organisation is a human enterprise
requiring human solutions to human problems.
Industrial Unrest: Strikes, lock outs and indiscipline on the part of
workers are manifestations of industrial unrest. There
are many causatives of such unrest, which could be
classified as specific organisational problems such as ,
poor pay, , lack of benefit and assistance schemes, and
wider socio- economic problems like unemployment and
poverty in the country.
Negotiation: Negotiation functions as a ‘safety valve’ by providing
outlet for cathartic reactions on the part of workers in
organisations. The Human Relation School of Thought
epitomised the idea of constructive management- worker
interface. By Follett’s understanding, conflict should be
resolved with a positive perception, without insisting on
either “domination” or “compromise” on the part of any
party. The idea of Negotiation is to avoid referral the
dispute to courts, or adjudication, which might involve
protracted proceedings.
Retrenchment: Lay off of workers, following mergers and an
acquisition of undertakings is termed retrenchment.
Retrenchments are a problem area in personnel
administration in the era of globalisation where mergers
and acquisitions have become a common business
strategy, especially in free- market economies which
practice hire and fire policy of employment and free
entry and exit of firms.

18.10 REFERENCES AND FURTHER READING

“Arbitration”, read online, at http://www.murti&murti.com
Davis, Keith, 1972, Human Behaviour at Work, Tata McGraw Hill
Publishing Company, New Delhi.
Desai, Mihir, Combat Law; Vol. 2; Issue 6, read online at
http://www.indiatogether.org/combatlaw/vol.2/issu
e6/index.htm
Dwivedi, R.S, 1984, Manpower Management an Integrated Approach to
Personnel and Labour Relations, Eastern Economy Edition, Prentice
Hall.
Dwivedi, R.S, 1990, Personnel Management, Oxford and IBH.
Encyclopaedia Britannica Inc., 2002
“Ergonomic Work Method”, “Ergonomic Indicators Checklist”, read
online at, http://www.ataccelteam.com/index.html
“Human Resource Management, Function 5, Industrial Relations,” read
online at http://www.accel-team.com/index.html
Koshy, J.B, 2001, Keynote Address at the National Conference on
Arbitration Procedure and the Courts, read online at
http://www.ficci.com/icanet/role.htm

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29
Labour Rules/Legislation, read online at
http://www.indiabusiness.nic.in/invest-
india/labour.htm
Mamoria, C.B, 1998, Personnel Management, Himalaya Publishing
House, Mumbai.
Mathew, Babu, 2003, “A Brief History of Labour Legislation in India”,
2001, Asian Labour Update, Issue no. 46, read online at,
http://www.amrc.orghk/alu7.htm
Miller, Tahlmann, 1987, Colliers Encyclopaedia, Habey, Willaim and
Bernard Johnson, (Eds), Maximillain Educational Company.
Monappa, A., 1999, Industrial Relations, Tata McGraw Hill Publishing
Company Limited, New Delhi.
Organisation of Chief Labour Commissioner, read online at
http://www.labour.nic.in/clc/welcome.html
Owen, Robert, Colliers Encyclopaedia, 1987, Maximillain Educational
Company
Rao, V. Bhaskar, 1978, Employer-Employee Relations Concept, New
Delhi.
Rao, V. Bhaskar, 1995, Arbitration in Public Service, Khanna, New
Delhi.
Report of the 40th Session of the Standing Labour Committee, New
Delhi, November 29, 2004: Action Taken Report on the Conclusions of
the 39th Session of Indian Labour Conference Held on 16-18 October
2003.
Robinson, James, 1983, Encyclopaedia American, Glorier Incorporated,
Arete Pulishing Company.
Tripathi, P.C, 1991, Personnel Management and Industrial Relations,
Sultan Chand & Sons, New Delhi
18.11 ACTIVITIES
1. Address the semantic confusion between Personnel Management,
Human Resource Management and Industrial Relations.
2. Discuss the scope of Industrial Relations in the context of
democracy and social change.
3. Evaluate Conciliation, Arbitration and Adjudication as dispute
resolving mechanisms by quoting relevant examples.

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UNIT-19 DISCIPLINE AND GRIEVANCES

Structure

19.0 Learning Outcome

19.1 Introduction
19.1.1 Aspects of Discipline

19.1.2 Progressive Discipline

19.1.3 Requirements of Effective Discipline

19.2 Approach of Negative Discipline

19.2.1 Reasons of Indiscipline

19.2.2 Judicial Approach to Discipline

19.3 Disciplines in Civil Service

19.3.1 Issue with Discipline

19.3.2 All India Civil Service Conduct Rules, 1968

19.4 Conclusion

19.5 Key Concepts

19.6 References and Further Reading

19.7 Activities

19.0 LEARNING OUTCOME

After going through this unit, you should be able to;

• Gain understanding positive and negative concepts of discipline;

• Know the details of disciplinary procedure; and;

• Understand Civil Service Conduct Rules.

19.1 INTRODUCTION
Promotion and maintenance of employee discipline is vital for smooth
functioning of an organisation. The fundamental purpose of discipline is
to establish harmonious relationship between the employers and
employees. Other incidental purposes are, willing acceptance of the
rules, regulations and procedure of the ‘system’ (society, organisation),
1.
on the part of workers, securing responsible behaviour on the part of
employees, developing a sense of equanimity and spirit of tolerance and
adjustment among superiors and subordinates, improving overall
effectiveness of the organisation by emphasising organisational culture.

Discipline, in a more inclusive sense, refers to the state of employee self-

control and effectiveness at work. It indicates the development of genuine
team work and proper appreciation of the hierarchal superior-subordinate
relationship. Behaviour of employees is also governed by informal
norms. Such informal rules and norms that support and legitimise
organisational practice are based on the conventions and culture of the
organisation.

Discipline may be corrective or pre-emptive, depending on whether it

comes into effect pre or post-occurrence of alleged aberrant behaviour.
Disciplinary action acts as a deterrent or potentially thwarts future
undesired behaviour or corrects aberrant behaviour on the part of an
employee. In its negative aspect, disciplinary action implies punishment.
Satisfactory results cannot be obtained however, if discipline is perceived
only in terms of control and punishment.

Discipline in its positive aspect implies training of the mind that leads to
self-control, character, orderliness and thereby efficiency at work. It
indicates the development of genuine teamwork and proper appreciation
of the hierarchical superior- subordinate relationship.

19.1.1 Aspects of Discipline

The positive concept of discipline assumes a certain degree of self-

discipline. The concept of discipline is related to the idea of ‘self –
actualisation’ (Maslow, 1954) at work which represents higher order
need satisfaction of employees. Such discipline is achieved when
management applies the principles of positive motivation along with
appropriate leadership. Positive discipline is also known as ‘co-
operative discipline’ or ‘determinative discipline.’

Behaviour of employees is also governed by informal norms besides

formal. Such informal rules and norms that support and legitimise
organisational practice are based on the conventions and culture of the
organisation. It would be pertinent here to discuss the major aspects of
discipline.

Peter Senge’s (1990) idea of personal mastery, systems thinking and

mental models is applicable here. ‘Systems thinking is ‘concerned with a
shift of mind from seeing parts to seeing the whole, from seeing people as
helpless reactors to seeing them as active participants in shaping their
reality, from reacting to the present to creating the future.’

Personal mastery entails developing the self with commitment to truth.

Mental models are our perception of the world. Directing energy towards
positive pursuits in organisations involves fostering openness in
organisational climate. It also involves seeking to distribute responsibly,
far more widely, while retaining coordination and control. “Learning
organisations are localised organisations that believe in decentralisation
and delegation. Workers are encouraged to take up responsibility and are
2.
relied upon to produce expected results.” (Senge, 1990). Senge discusses
these concepts in the context of organisations as learning systems.
Adoption of innovative ways is an imminent aspect of discipline, by the
modern inclusive understanding of the concept.

Positive discipline requires certain pre-requisites to be effective. The

same are recounted as follows:

(a) The aim is to help and not harm employees;

(b) Communication of requirements of job and rules to the

employees are necessary to secure better compliance;

(c) Performance standards should be fair and consistent throughout

the organisation;

(d) Superior should create a climate of responsibility and observe

self-discipline, to lead by example. The principle is ‘example is
better than precept’;

(e) Individual differences among men are recognised and methods

applied take the specifics of each case into account; and;

(f) Employee gains a sense of security with the knowledge of scope

of actions, particularly limitations thereof, which help him
conform better to organisational stipulations (concerning formal
and informal norms of work behaviour).

19.1.2 Progressive Discipline

Progressive discipline is liberal in nature and ideally progresses

sequentially and systematically through a prescribed series of steps to be
effective. These steps are as follows: oral reprimand, written reprimand,
second written warning, temporary suspension and finally, dismissal or
discharge. Observance of the sequence ensures compliance with the
principle of ‘natural justice’, represented diagrammatically (Wayne and
Noe, 1985):

3.
 Fig.1 Progressive Discipline Steps
No Oral Suspension
Written
disciplinary Warning Warning
action

No No No No

Does this Does this Does this Does this

Improper
Behaviour
violation Yes violation Yes violation Yes violation
warrant warrant warrant more warrant
disciplin more than a written more than a
ary than oral warning? suspension
action? warning ?

In view of above facts, the idea is endorsed that it is important to have

self-discipline for healthy organisational behaviour.

19.1.3. Requirements of Effective Discipline

Requirements of effective discipline are different in the present climate

of ‘knowledge era,’ where employees are better educated and do not
acquiesce unquestioningly to autocratic behaviour. Unions also exert
considerable influence on disciplinary matters. For effective discipline
the following principles need to be considered: -

1. Discipline should be constructive, in that, emphasis should be

on work efficiency and not mere compliance with rules and
regulations.

2. Disciplinary action should not be initiated unless there is

imperative need for it and no other means is expected to be
effective.

3. Discipline is not to be administered unthinkingly. Each case

should be treated keeping the specifics in view.

4. All facts regarding a case should be collected to gain proper

appreciation of the case.

5. Employee should be given a fair chance to explain his side of

the story.

6. Attempt should be made to know the worker’s perception. It

helps better appreciation of the situation. Also, admission of
mistake on the part of the offending party should be
encouraged.

4.
 7. Employee should not be disciplined in the presence of his
colleagues or subordinates.

8. Right timing of action is important. Action should be taken as

soon as possible after the occurrence of questionable behaviour

9. Corrective measure should be adequately served in order to be

effective.

10. Consistency in disciplinary action is important.

11. Once disciplinary action is taken, normal attitude should be

resumed towards the offending employee.

12. Occasions of ‘disciplining’ should be reduced to the minimum

by showing constant and sincere interest in each worker's
welfare on and off the job.

13. Admission of mistake should be encouraged on the part of the

offending party.

14. Every action taken requires auditing in due course to judge its
efficacy, specifically in terms of;

(a) The extent to which the situation was corrected.

(b) Extent to which the employee realised his mistake.

(c) Impact on organisational climate.

19.2 APPROACH OF NEGATIVE DISCIPLINE

Employees are forced to obey orders and compliance is exacted as per
rules by use of coercive means such as penalties, threat, fear or force.
Such discipline is known as punitive, corrective or autocratic discipline.
This approach to discipline inhibits behaviour and ensures only a
minimum standard of performance on the part of employees. The
approach of negative discipline entails: -

(a) 'Big shock', rule-through 'fear' or 'be tough' line;

(b) Punishment is to be deterrent i.e., make one an example for

others;

(c) There is no emphasis on ‘why’ regarding punishment;

(d) No fact is essential to explain it; and

(e) Dealing with misconduct is important

19.2.1 Reasons of Indiscipline

5.
Indiscipline implies, unabashed nonconformity to formal and informal
stipulates of work behaviour of the organisation, which has the effect of
disrupting organisational practice. Environmental (socio-economic and
socio-cultural) and behavioural factors contribute to expressed impunity
on the part of workers. It has been found, that many cases of indiscipline
in an organisation arise out of managerial actions and decisions. Such
actions and decisions are recounted below:

(i) Lack of proper communication

(ii) Ineffective leadership

(iii) Unfair labour practices

(iv) Inadequate wages and salary system

(v) Unreasonable declaration of payment of bonus or non payment

(vi) Ineffective grievance procedure

(vii) Victimisation by the management, without assigning reasons for

actions

(viii) Inappropriate placement policy, leading to employee resentment.

(ix) Undesirable derogatory behaviour of senior officials

(x) Error of judgement of the management leading to gross

impropriety

(xi) Unfavourable physical working conditions and social working

relations

(xii) Divide and rule' policy of the management.

Other incidental causes with wider systemic implications are:

(i) Illiteracy and low intellectual level of workers

(ii) Social background of workers, such as drinking habit,

oppressive family structure, caste discrimination, etc.

(iii) Natural reaction of workers towards rigidities and

multiplicity of rules

(iv) Employee's personal problems and subjective fears

(v) Incorrigible tendency to flout organisational rules and

instructions in some cases

Some other manifestations of disorderly behaviour displayed during work

hours at the establishment include:

• Sleeping while on job

6.
 • Disobedience, smoking in a prohibited area

• Failure to obey safety rules

• Concealing defective work

• Unauthorised collection of funds, and

• Allowing unauthorised persons to operate machines, etc.

In a nutshell, indiscipline is the result of inter-related and underlying

general, socio economic, or particular organisational factors, for
which the management and the employees, both are responsible.
Control requires effective leadership. Leadership function should not
be construed as a management prerogative alone. Employees are
expected to exhibit an equal measure of responsibility for
maintenance of organisational discipline.

Indiscipline if allowed to grow creates an environment of non-

cooperation in the organisation, whereby strikes, go slow tactics, and
unauthorised absenteeism and loss of production are potentially possible.

Clause 14 of the model standing orders provided in the Industrial

Employment (Standing Orders) Act (1946) give an illustrative list of
omissions and commissions which are regarded as constituting
misconduct, and refers to disciplinary action that needs to be taken in
case of misconduct. Indiscipline is categorised into two broad groups: (i)
minor or moderate offences (ii) serious offences. It is difficult to give an
exhaustive account of all behaviours constituting indiscipline.
Examination of facts relating to indiscipline would however be desirable.

Categories of Offences

A. Minor or Moderate Offences

Minor or moderate offences include:

• unauthorised absence on one or more scheduled work days

• leaving job or work area without proper authorisation

• wandering around to the general disquiet, and ,

• fighting

B. Serious Offences

Serious offences involve malicious damage or wilful destruction to

organisational property, gross insubordination, deliberate negligence of
duty, stealing and fraud, carrying dangerous weapons inside
organisational premises, promotion of gambling, frequent repetition of
offensive act (s), striking work, tempering with official records,
misappropriation of funds etc.
7.
Disciplinary Action

The disciplinary action process is dynamic and on-going but there is no

hard and fast rule to deal with it. Discipline involves behaviour-
management skills, which may be subjectively determined. Several
concepts regarding administration of disciplinary rules have been
developed. Counselling and educating employees can be effectively and
positively applied to check indiscipline. One view regarding disciplinary
action is commonly referred to as the ‘Hot Stove Rule'.

According to this approach, disciplinary action should follow precepts

such as: -

1. Burns Immediately - Disciplinary action should be taken

immediately for maximum impact.

2. Provides Warning - It is also important to provide advance

warning to errant employee to deter future occurrence of
unacceptable behaviour. The analogy offered to express the
situation is; punishment grows in succeeding stages, as one ‘feels
the heat’ as one moves closer to a stove and is likely to be burnt
on touching it;

3. Gives Consistent Punishment - Disciplinary action should be

consistent. As with a hot stove, each should be affected (burnt) in
equal measure (to an equivalent degree) by it (on touching it);
and;

4. Burns Impersonally- Disciplinary action should be impersonal.

In order to maintain the motivation and morale of employees at a

desirable level, it is relevant to adopt a formal system for dealing with
indiscipline. Informal approach to managing discipline is not
recommended as it creates bitterness, is mostly based on hear say, and
also lacks effectiveness. The formal system mainly refers to the
judicial approach.

19.2.2. Judicial Approach to Discipline

In order to ensure security of jobs, the government has assured a measure

of protection to industrial workers from apprehended misuse of
managerial power of hire and fire.

Industrial Employment (Standing Orders) Act, 1946, defined the

conditions of recruitment, discharge, disciplinary action, holidays, leave,
etc. This act is applicable to industrial establishments where hundred or
more workmen have been employed. Under this act, every establishment
is required to submit standing orders for approval of the Labour
Commissioners of the respective areas. A copy of this draft is forwarded
to the trade union of workmen or to individual workmen requiring them
to submit their objections within fifteen days from the receipt of the draft.
8.
If modifications or additions have been made by the parties, the
Commissioner sends a copy of the certified standing orders to the
employer. Any party aggrieved by the orders of the commissioner can
appeal to the appellate authority. The order of the appellate authority is
final. The standing orders come into force at the expiry of thirty days
from the date on which the copies are sent by the certifying officer.

Acts amounting to Misconduct:

1. Wilful insubordination or disobedience;

2. Theft, fraud or dishonesty in connection with employer’s business

3. Refusal to accept any order or notice or charge sheet

communicated in writing;

4. Wilful damage to work in progress or property of the employer ;

5. Non-observance of safety precautions or rules;

6. Taking or giving bribe or any other form of illegal gratification;

7. Late attendance and absence without leave on more than four

occasions within a month;

8. Habitual absence without permission for more than ten

consecutive days or overstaying the sanctioned leave without
sufficient grounds or any satisfactory explanation;

9. Absenting without express permission;

10. Assault, abuse or threat to any officers or colleagues ;

11. Drunkenness or reporting to duty under the influence of alcohol;

12. Smoking or spitting in prohibited areas;

13. Sleeping while on duty;

14. Unlawful interference in the work of other employees;

15. Habitual neglect ;

16. Malingering or pursuing slow down tactic;

17. Preaching or inciting violence;

18. Striking work without tendering fourteen day’s notice ;

19. Conviction in any court of law for any criminal offence;

20. Unauthorised communication of official documents;

21. Collecting money or canvassing for any purpose during work

hours without permission of the management;

9.
 22. Organising meetings in company premises without the consent of
the management;

23. Money lending or carrying on any private business activity within

the premises of the organisation;

24. Giving false information about personal particulars, name, age,

father’s name, qualification, previous experience, etc., at the time
of employment;

25. Spreading rumours or giving false information or making

defamatory statements, which bring the management or officers
into disrepute;

26. Speculation in any commodity;

27. Abetment or commission of any act of misconduct;

28. Breach of any rule applicable to the establishment.

From the above recount, it is clear that the model standing orders specify
the terms and conditions of employment and define day-to-day employer-
employee relationship. The Manager has the right to take disciplinary
action against subordinates for misconduct but has to observe the
principles of natural justice in the process. The subordinate should be
given ‘reasonable opportunity’ of being heard.

Domestic Enquiry

There is no statutory regulation of disciplinary action. However, case law

has been developed by the Supreme Court, the High Courts and Labour
Courts and Industrial Tribunals in India. Awards of courts have indicated
detailed procedure for disciplinary action and made it compulsory on the
part of the management to hold domestic enquiry before a worker is
punished for misconduct.

The principle behind domestic enquiry is to do justice to the accused. No

employee should be punished unless proven guilty. The rules of ‘natural
justice’ require that a party should be afforded the opportunity of
providing relevant evidence and that the evidence of the opponent should
be taken in his presence and that he should be given the opportunity of
cross examining the witnesses who were examined in support of the
charges and no materials should be relied upon against him without
availing an opportunity of explaining.

The purpose of an enquiry is to ascertain facts with respect to a case. This

has to be done through oral evidence given witnesses or documents
produced by the official counsel in support of arguments.

In cases where an employee has been punished, it has to be established

that action taken was in conformity with legal requirements, and, even

.
10
otherwise, manifestly just. In this context certain legal aspects which
managers might come across when dealing with a delinquent employee
need to be discussed.

(a) When there is reported misconduct on the part of an employee,

the manager should immediately arrange for a preliminary
investigation. Disciplinary action should be instituted only if there
is a prima facie case against the employee and that too, if the
management is convinced that corrective action like oral
reprimand or warning would not be sufficient to meet the
situation.

(b) If the management decides that the misconduct alleged against the
employee is grave enough to warrant issue of a charge sheet and
institution of further proceedings, certain simple guidelines
should be followed to ensure that no unjust action is taken against
the employee.

These principles have been discussed by the Highest Court of the

country and form the corner stone of legal requirements of
disciplinary proceedings. The same are: -

(i) Action taken should be in good faith;

(ii) There should not be victimisation or any unfair labour

practice;

(iii) Proceedings should be free from basic errors and

principles of natural justice should always be
observed; and;

(iv) Case against an employee should be based on the

material facts presented during the proceedings.

The management has full power to regulate internal administration but

any action taken by the management opposed to above principles is
bound to be resisted by workmen and quashed by the courts on grounds
of victimisation.

Victimisation implies punishment of an innocent employee in an arbitrary

manner, and, also, illegally, because he has in some way displeased the
employer. An active member of union is given punishment quite out of
proportion to the gravity of the offence simply because he has incurred
the displeasure of the employer.

If findings at the enquiry are based on extraneous considerations or the

employee is held guilty and punished for an act not mentioned in the
charge sheet, the enquiry officer is held guilty of basic error.

Procedure of Domestic Enquiry

From the above analysis, it is clear that disciplinary proceedings

(including holding an enquiry) cannot be deemed to have been properly
instituted, unless the following requirements have been met: -

.
11
 (a) The employee concerned has been informed of the charges
levelled against him. Sufficient notice has to be given to the
employee to enable him to prepare his defence and ready all
documentary evidence;

(b) Enquiry officer should be unbiased and independent. He may be a

senior officer of the organisation or an outsider or a lawyer, as
mentioned in the standing orders of the organisation;

(c) Witnesses are to be examined in the presence of the employee, in

respect of the charge or charges levelled against him;

(d) Employee is to be given a fair opportunity to cross- examine the

witnesses;

(e) Employee are to be given a fair opportunity to produce his

witnesses, including him self in his defence; and ;

(f) Enquiry officer is required to record his findings with reasons for
the same in his report.

Apart from the principles of natural justice, the other two requirements
are:

(1) Unbiased enquiry proceedings; and ;

(2) Opportunity to the other party to be heard in good faith.

The Supreme Court has set out the duties of a Labour Court in terms of
its role in domestic enquiry. First step is to determine the validity of a
domestic enquiry. If no enquiry or a defective enquiry was held, the
labour court can quash the proceedings and conduct a fresh enquiry on its
own. Both the management and employee are allowed to produce
witnesses and adduce evidence in their support. Based on the principles
discussed above a domestic enquiry consists of the following stages: -

Issue of Charge Sheet: - The charge sheet should be carefully drafted and
should be based on a written complaint or report. It must contain, in clear
terms, full particulars of information regarding date, time, place,
description etc., relating to alleged offence. The relevant standing orders
should also be cited. The charge sheet should be duly served to the
employee.

Reply to the Charge Sheet: - A specific time period should be allowed to

the employee to submit his explanation in reply to the charge sheet. If
reply to the charge sheet is found satisfactory, there is no question of any
enquiry and the employee is exonerated of the charge. If satisfactory, the
employee should be intimated and asked to attend the enquiry.

Enquiry: - The enquiry officer should not have any personal knowledge
of the incident, nor should have any personal interest in the case. Enquiry
officer should also not be a likely witness in the case.

Examination of Witnesses: - The charge sheet should be read over and

explained to the employee concerned who should again attest to
.
12
understanding it. The complainant and his witnesses should be examined
before the charge-sheeted employee. The employee can be asked to make
any statement regarding the incident on which he stands charged. The
under lying principle is that the complainant should prove the
commission of offence and the employee concerned is not to be required
to disprove the charges levelled against him.

Admission of Guilt: - If the charge- sheeted employee admits to guilt, it

does not necessarily follow that the enquiry is to be dispensed with. To
ensure that any punishment awarded has been justly meted out, it is
suggested that even when the employee admits guilt, a formal enquiry
should be held to have his admission confirmed.

Findings: - On the material available to the enquiry officer in the course

of the enquiry, should be considered the evidence on record and he state
his own conclusions. The object of holding an enquiry is to enable an
independent person to arrive at a just decision as to charge. The
conclusion should be recorded precisely and clearly indicating the
reasons for arriving at the same. No extraneous information should be
relied on and the totality of the evidence should be considered. On receipt
of enquiry report, appropriate authority examines the proceedings,
evidence, documents and the findings of the enquiry officer. In case the
appropriate authority agrees with the findings of the enquiry officer and
decides to impose punishment on the basis of conclusions arrived at, the
second stage of enquiry begins because it is the right of the delinquent
employee to make a presentation against such findings in the report
which is the demand of the reasonable opportunity as has been laid down
by the Supreme Court in MD, ECIL vs. K Karunakaran(1993). Denial of
the right to a copy of the enquiry report amounts to denial of ‘reasonable
opportunity’ and violation of Articles 14 and 21 of the Constitution of
India and principles of ‘natural justice’. Accordingly, a copy of the
enquiry officer's report is supplied by the disciplinary authority to the
delinquent employee, for him to submit his explanation against the
findings of the enquiry officer against. In response, the delinquent
employee has a right to question the fairness and findings of the enquiry
officer and the employee submits his explanation or representation
against the report. The explanation so submitted by the employee is to be
considered by the disciplinary authority the seriousness of the charges
proven against the employee. Punishment order is passed in accordance
by the disciplinary authority. Punishment should be based on the findings
of the enquiry and should be in proportion to proven misconduct and
considering the past record of the employee.

Punishments for Misconduct

(i) Workmen who are adjudged guilty of a major misconduct are liable
to any of the following punishments: -

(a) Withholding increment (s)

(b) Demotion to a lower post in the same cadre or to a lower cadre

(c) Suspension; or;

(d) Dismissal
.
13
(ii) The employer may award the following punishments for minor
misconduct: -

(a) Fine

(b) Warning

(c) Censure

Imposition of Fine: - A fine shall be imposed in accordance with the

provisions of the Payment of Wages Act, 1936, by the officer authorised
to impose fines. The proceeds of all the fines realised are to be remitted
to the Welfare Commissioners under U.P. Welfare Funds Act, 1965 as
per the rules made there under.

Punishment should be only awarded after affording reasonable

opportunity of being heard to the workmen in accordance with the
principles of natural justice.

19.3 DISCIPLINE IN CIVIL SERVICE

Government servants have to comply with strict norms of behaviour
relating to prevention of corruption and personal and professional ethical
conduct. Enquiries are instituted against government employees in case
of breach of stated provisions in accordance with Article 311of the
Constitution of India. It reads as under:

Dismissal, removal or reduction in rank of persons employed in civil

capacities under the Union or a state

(1) No person who is a member of a civil service of the Union

or an all India service or holds a civil post under the Union
or a state shall be dismissed or removed by an authority
subordinate to that by which he was appointed.

(2) No such person as aforesaid shall be dismissed or removed

or reduced in rank except after an inquiry in which he has
been informed of the charges against him and given a
reasonable opportunity of being heard in respect of these
charges.

(3) Provided that where it is proposed after such inquiry, to

impose upon him any such penalty, such penalty may be
imposed on the basis of the evidence adduced during such
inquiry and it shall not be necessary to give such person
any opportunity of being of making representation on the
penalty proposed.

(4) Provided further that this clause shall not apply-

a. where a person is dismissed or removed or reduced in rank

on the ground of conduct which has led to his conviction
on a criminal charge; or
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14
 b. where an authority empowered to dismiss or remove a
person as aforesaid, a question arises whether it is
reasonably practicable to hold such inquiry as is referred
to in clause 2, the decision thereon of an authority
empowered to dismiss or remove such person or reduce
him in rank shall be final.

The distinction between ‘dismissal’ and ‘removal’ lies in the

consequences of the respective orders. In the former case, the person is
ineligible for reemployment in government service, while in the latter
case he is eligible. To constitute ‘reduction’ in rank within the meaning
of clause (2), there should be reduction relating to classification as a
government servant, and such reduction or demotion must be by way of a
penalty. The decision should cast entail ‘stigma’ on the employee and
entail of penal consequences to imply dismissal, reduction in rank or
dismissal within the meaning of Article 312. Punishment may not be
handed down to a civil servant by any authority subordinate to that by
which he was appointed. The term ‘subordinate’ refers to subordination
in rank and not in respect of ‘function.’ The power under article
311cannot be delegated. But the power to inquire to the charges against
the employee and report may be delegated to a subordinate authority or to
an independent individual or a tribunal provided the final consideration
and dismissal is by the appointing authority. The advice of the union
public service commission is taken in every case where it is necessary to
consult the commission before making an order imposing penalty
(Hidaytullah, 1986). Members of defence services or those who hold an
any post connected with defence like civilians in defence establishments
are not governed by the clause. It has also been held that employees of a
government company or of statutory corporation being juristic entities
apart from the state cannot be said to hold civil posts within the meaning
of the clause.

As per Central Civil Services (Classification, Control and Appeal) Rules,

1965, Part IV , Suspension (Rule 10), “The appointing authority or any
authority to which it is subordinate or the disciplinary authority
empowered in that behalf by the President, by general or special order,
may place a Government servant under suspension:-

a. Where a disciplinary proceedings against him is

contemplated or pending; or; where, in the opinion of the
authority aforesaid, he has engaged himself in activities
prejudicial to the interest of the security of the state; or

b. where a case against him in respect of any criminal

offence is under investigation, inquiry or trial:

Provided that, except in case of an order of suspension made by

the Comptroller and Auditor-General in regard to a member of the
Indian Audit and Accounts Service and in regard to an Assistant
Accountant General or equivalent (other than a regular member of
the Indian Audit and Accounts Service), where the order of
suspension is made by an authority lower than the appointing
authority, such authority shall forthwith report to the appointing

.
15
 authority the circumstances in which the order was made.” (R.
Kannan)

Penalties classified as per Rule, 11 are as follows:

A. Minor Penalties-

i. censure;

ii. withholding of his promotion;

iii. recovery from his pay of the whole or part of any pecuniary loss
caused by him to the Government by negligence or breach of
orders;

iv. withholding of increments of pay;

B. Major Penalties

v. reduction to a lower stage in the time-scale of pay for a specified

period, with further directions as to whether or not the
Government servant will earn increments of pay during the period
of such reduction and whether on the expiry of such period, the
reduction will or will not have the effect of postponing the future
increments of his pay;

vi. reduction to lower time-scale of pay, grade, post or Service which

shall ordinarily be a bar to the promotion of the Government
servant to the time-scale of pay, grade, post, or Service from
which he was reduced, with or without further directions
regarding conditions of restoration to the grade or post or Service
from which the Government servant was reduced and his seniority
and pay on such restoration to that grade, post or Service;

vii. Compulsory retirement;

viii. removal from service which shall not be a disqualification for

future employment under the Government;

ix. dismissal from service which shall ordinarily be a disqualification

for future employment under the Government

The President may impose any of the penalties specified in Rule 11

on any Government servant (Rule 12)

The President or any other authority empowered by him by general or

special order (Rule 13) may:

a. institute disciplinary proceedings against any Government

servant;

b. direct a disciplinary authority to institute disciplinary

proceedings against any Government servant on whom
that disciplinary authority is competent to impose under
these rules any of the penalties specified in rule 11.

.
16
A disciplinary authority competent under these rules to impose any of the
penalties specified in clauses (v) to (ix) of Rule 11 may institute
disciplinary proceedings against any Government servant for the
imposition of the penalties specified in clauses (v) to (ix) of Rule 11
notwithstanding that such disciplinary authority is not competent under
these rules to impose any of the latter penalties. (ibid.)

19.3.1 Issue with Discipline

It is felt that discipline in government is based on ‘archaic’ rules

governing civil service neutrality and anonymity. Particularly, the
Weberain construct of the ideal type bureaucracy is held unsuitable for
development administration by a leading group of scholars. While
specific merits of the arguments may be discussed separately, it would be
in order for the purpose of this discussion to glance at conduct rules for
civil servants in India to take sides in the raging controversy about strict
construction of the rules. The same has to be appreciated in the context of
‘good governance’ that forms the informing ideal to administration in
general and development administration in particular. It is opined that
bureaucracy needs to be multi skilled, horizontally integrated with other
organisations, both government and non- government and more
expressive and articulate with respect to responsiveness and better
accountability of personnel in order to be people friendly and truly
effective. Present rules ‘gag’ the service and make it unresponsive to
peoples’ aspirations. Some select provisions of All India Civil Service
Conduct rules could now be studied, as mentioned in the following text.

19.3.2 All India Civil Service Conduct Rules 1968

Rule 3(1) states the requirement and desirability of every member of

the service maintaining absolute integrity and devotion to duty and
refrain from acts unbecoming of a member of the service. Implications
of the rule are as follows:

Every member shall:

• Ensure integrity and devotion to duty of those under his control

and authority;

• Shall be courteous;

• Shall not employ time wasting tactics; and

• Shall act in his own best judgment except when acting under the
explicit order of the superior. He cannot evade responsibility by
seeking instructions or approvals when not necessary.

{Note 1-Oral orders, if absolutely necessary, should be put down in

writing as soon as possible.

Note2- A candidate who regularly falls short of deadlines and quality

targets should be deemed lacking in devotion to duty within the meaning
of rule 3(1)
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17
Note 3-Engagement in proselytising activities are a just ground for
initiating disciplinary action against a civil servant under rule 3.}

Rule 4: Employment of near relatives in companies or firms.

No member shall use his position to secure employment for members of

his family in private undertakings (rule 4. cl.1) Employment of a near
relative or a member of family with a private undertaking having official
dealings with the government requires previous sanction (rule 4-cl.2a) or
communication forthwith (rule 4-cl. 2b) to the government.

In case of employment of a family member (s) with a private

undertaking, or interest in the affairs of the firm, directly or indirectly,
concerned member shall refrain from any dealing relating to awards of
contracts to the undertaking. If such eventuality arises, the direction of
the superior should be taken. As per rule 13 (3), every member of the
service shall, if any member of his family is engaged in a trade or
business, or owns or manages an insurance agency or commission
agency, report that fact to the government.

Rule 5: Taking part in politics and elections.- As per rule 5, no member

of the service can in any way be associated with the activities (fund
raising or active association) of any political party or organisation with
political overtones or support any political movement or activity
ideologically or financially (rule 5-cl.1). As per rule 13 (2), a member of
the service may, without the previous sanction of the government,-

(a) undertake honorary work of a social or charitable nature, or

(b) undertake occasional work of a literary, artistic or scientific

character, or

(c) participate in sports activities as an amateur, or

(d) take part in the registration, promotion or management (not

involving the holding of an elective office) of a literary, scientific
or charitable society, or of a club, or similar organisation, the
aims or objectives of which relate to promotion of sports, cultural,
or recreation activities, registered under the societies registration
act, 1860 (21 of 1860), or any other law for the time being in
force; or

(e) take part in the registration, promotion or management (not

involving the holding of an elective office) of a co-operative
society substantially for the benefit of the members of the service
or government servants registered under the co-operative societies
act, 1912 (2 of 1912), or any other law for the time being in force
in any state:

Provided that:

(i) he shall discontinue taking part in such activities, if so directed by

the government; and

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18
 (ii) in a case falling under clause (d), or clause (e) of this sub-rule, his
official duties shall not suffer thereby and he shall, within a period of
one month of his taking part in such activity, report to the government
giving details of the nature of his participation.

The restriction extends to members of his family, in case of organisations

involved or suspected to be involved in activities subversive of the
government. In case of such eventuality, a report shall immediately be
made to the superior (rule5-cl.2)

In case of ambiguity regarding application of the rule, question shall be

referred to the government for decision (rule5-cl.3).

No member of the service shall bring to bear, his influence, on the

political process in any way, such as canvassing for a political party in
elections or interfering in any other way (5-4) for example, propagating
political ideology, giving indication of voting preferences, display of
electoral symbols on vehicle etc.(explanation to rule 5).

Rule 6: Connection with press or radio: - Previous sanction of the

government shall not be required when the member of the service, in the
bonafide discharge of his duties or otherwise, publishes a book or
contributes to or participates in a public media (rule13-cl.f) provided that
he shall observe the provisions of the rules and at all times make it clear
that the views expressed are of his own and not that of the government.
Participate in, or associate himself in any manner, in the making of:-

(i) a sponsored media (including radio, television

programme, or

(ii) a media programme commissioned by Government media,

but produced by an outside agency, or

(iii) a privately produced radio or television or other media

programme including a video magazine; provided that no
previous permission shall be necessary in the case a
member of the service participates in a programme
produced by the ‘Doordarshan’ on a subject dealt with by
him in his official capacity.

Provided that he shall observe the provisions of rules and at all times
make it clear that the views expressed, are of his own and not those of
the government.

Rule 7: Criticism of government policy:

As per rule 7, members of service are prohibited from:

- Publicly criticising government policy through publications or

announcements (does not include bona fide discharge of duty);
and

- Affecting relations between the central and state governments or

the Government of India with foreign states

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19
Rule 9: Unauthorised communication of information:

Rule 9 prohibits unauthorised communication of information (except in

accordance with general or specific order to that effect from the
government or in the course of performance of official duties assigned ‘in
good faith’) on the part of members of the service (right to information)
Quoting from documents not authorised to have access to, is deemed
unauthorised communication within the meaning of the rule (explanation
to rule 9)

No member of the service may subscribe to fund raising activity, for

any object whatsoever, except with the previous sanction of the
government (rule 10).

Rule 13: Previous sanction of the government is needed to:

(a) Engage directly or indirectly in any trade or business, or

(b) Negotiated for or undertake, any other employment, or

(c) Hold an elective office, or canvass for a candidate or candidates for an

elective office, in any body, whether incorporated or not, or

(d) Canvass in support of any business of insurance agency, commission

agency etc. owned or managed by any member of his family, or

(e) Take part, except in the discharge of his official duties, in the
registration, promotion or management of any bank or other company
registered or required to be registered under the Companies Act, 1956, or
any other law for the time being in force, or of any co-operative society
for commercial purposes.

Rule 14- Investment, lending and borrowing: As per rule 14 (1), No

member of the Service shall speculate in any stock, share or other
investments but this provision will not apply to occasional investment
made through Stock-brokers or other persons duly authorised on
licence under the relevant law.

As per rule 14 (2), No member of the service shall make or permit any
member of his family or any person acting on his behalf to make any
investment, which is likely to embarrass or influence him in the
discharge of his official duties.

As mentioned in Rule 14 (3), if any question arises whether any

transaction is of the nature referred to in sub-rule (1) or sub-rule (2) it
shall be referred to the government for its decision.

According to 14 (4) (i), No member of the service shall save in the

ordinary course of business with a bank or a public limited company,
himself or through any member of his family or any person acting on
his behalf.

.
20
(a) Lend or borrow or deposit money as a principle or agent, to, or from,
or with, any person or firm or private limited company within the local
limits of his authority or with whom he is likely to have official dealings
or otherwise place himself under pecuniary obligation to such person or
firm; or

(b) Lend money to any person at interest or in manner whereby return in

money or kind is charged or paid;

As per rule 14 (4) (ii) When a member of the Service is appointed or

transferred to a post of such nature as would involve him in the breach
of any of the provisions of sub-rule (2) or sub-rule (4), he shall,
forthwith report the circumstances to the Government and shall
thereafter act in accordance with such order as may be made by the
Government.

Rule 16 deals with movable, immovable and valuable property: As per

rule 16 (1) every member of the service, on his first appointment to the
service, submit a return of his assets and liabilities in such form as
prescribed by the government giving full particulars.

As per rule 16 (2), every member of the service shall submit an annual
return giving full particulars regarding the immovable property
inherited by him or owned or acquired by him or held by him on lease
or mortgage, either in his own name or in the name of any member of
his family or in the name of any other person.

In accordance with Rule 16(3), No member of the service shall, except

with the previous knowledge of the government:

(a) Acquire any immovable property by lease, mortgage,

purchase, gift or otherwise, either in his own name or in the name
of any member of his family; or

(b) Dispose of by lease, mortgage, sale gift or otherwise any

immovable property owned by him or held by him either in his
own name or in the name of any member of his family:

As per rule 16 (4) every member of the service shall intimate the
government in respect of each transaction, whose value exceeds
Rs.15,000/- within a month of the completion of such transaction.

Previous sanction of the government shall be necessary in case of

transaction with a person having official dealings with the member of
the service.

As per rule16 (5), a member of the service is required to furnish a full

and complete statement of such movable or immovable property held
or acquired by him or on his behalf or by any member of his family

Rule 17 reads that for vindication of official act, recourse to the court
or press might be had after obtaining previous sanction of the
government. If within twelve weeks such sanction is not granted the
same is taken as accepted.

.
21
Members of the service are obligated to observe cultural norms in
personal and official capacity. The same are enumerated under rule
17 A:

(i) Observe strictly, the existing policies regarding age of

marriage, preservation of the Environment, Wild Life and
Cultural heritage:

(ii) Observe the existing policies regarding crime against

women and

(iii) Observe the two children family norms.

Rule 18, makes canvassing for political or other influence to bear

upon superior authority is deemed undesirable conduct on the part of
a service member.

Personal ethical conduct is stipulated for public servants. Rule 19(1)

prohibits a member of service from entering into or contract a
marriage with a person having a spouse living unless the government
sees that such marriage is permissible under the personal law
applicable to such member and the prospective spouse or on other
grounds and permits such a marriage. Also, a member of the service
who has or proposes to marry a foreign national shall intimate the
government of such marriage/intent.

20. Consumption of intoxicating drinks and drugs-A member of the

service shall:

Strictly abide by any law relating in intoxicating drinks or drugs in

force in any area in which he may happen to be for the time being20.
(a);

Not be under the influence of any intoxicating drink or drug during

the course of his duty and shall also take due care that the
performance of his duties at any time is not affected in any way by
the influence of such drink or drug20. (b);

Not consume any intoxicating drink or drug in a public place20. (bb);

not appear in a public place in a state of intoxication 20 (c);

not use such drinks or drugs to excess 20 (d).

Above rules have to be studied in the context of ethics in governance.

As has been seen government servants are expected to be model
employees in that both their personal and professional conduct is
expected to be exemplary. Their behaviour is expected to
approximate the ‘ideal’. It corroborates the idea that it is indeed
people who make an organisation and individual discipline
constitutes organisational discipline. (Ministry of Personnel Pension
and Pensioners’ Grievances: Official Release, 2005)

.
22
19.4 CONCLUSION
An attempt has been made in the text of this Unit to clarify the meaning
and importance of discipline and conduct rules towards effective working
of an organisation. Special focus has been on explanation of discipline in
empowerment organisations and relevant rules from All India Civil
Service Conduct Rules have been highlighted.

19.5 KEY CONCEPTS

Enquiry: The legal process of inquiring into a dispute is termed an

enquiry. Rules of natural justice deem that punishment
should follow proper judicial procedure. It should not be
arbitrary in any manner. Each party should have a
reasonable opportunity of being heard and judgment should
be handed down in a fair and impartial manner.
Indiscipline: Non conformity with rules and regulations of an
organisation constitute indiscipline. Indiscipline could result
from express violation of some rule on the part of the
employee which constitutes indiscipline in the legal sense or
simply unethical or unacceptable behaviour on the part of
the offending employee.
Victimisation: Punishment of an innocent employee. Victimisation
implies harassment. Victimisation is matter of legal
interpretation. The court decides what constitutes a general
disciplinary action and when an action could be interpreted
as an instance of victimisation.
19.6 REFERENCES AND FURTHER READING
Kannan, R, Central Civil Services (Classification, Control
and Appeal) Rules, 1965, read online at,
geocities.com/kstability/index.html

Mamoria, C.B, 1998, Personnel Management, Himalaya Publishing

House Mumbai

Maslow, A.H, 1954, Motivation and Personality, New York, Harper

and Row.

Monappa, A, 1999, Industrial Relations, Tata McGraw Hill

Publishing Company Limited, New Delhi.

Owen, Robert, 1987, Colliers Encyclopaedia, (Ed) William Habey,

Maximillain Educational Company.

Senge, Peter, 1990, The Fifth Discipline: The Art and Practice of the
Learning Organisation.

Tripathi, P.C, 1991, Personnel Management and Industrial Relations,

Sultan Chand & Sons, New Delhi.
.
23
 Wayne, R and Robert M. Noe, 1985, The Management of Human
Resource.

Letter No. 11017/40/94-AIS (III) dated 8.11.1994, Ministry of

Personnel, Public Grievances and Pensions, All India Civil Service
Conduct Rules.

19.7 ACTIVITIES
1) Discuss the negative and positive concepts of discipline. Analyse
the extent to which positive discipline is practicable.

2) Why is indiscipline caused? Who bears the responsibility? Bring

your own ideas on the subject.

3) Discuss All India Service Conduct Rules in the specific context of

discipline.

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24
UNIT-20 ASSESSING HUMAN RESOURCE
MANAGEMENT EFFECTIVENESS
Structure
20.0 Learning Outcome
20.1 Introduction
20.2 Clarifying concepts
20.3 Purposes of Assessing Human Resource Effectiveness
20.4 The Four C’s Model
20.5 Effectiveness Standards
20.6 Assessing Effectiveness of HR Management
20.7 Process Perspectives for Effectiveness
20.8 Conclusion
20.9 Key Concepts
20.10 References and Further Reading
20.11 Activities

20.0 LEARNING OUTCOME

After reading this Unit, you should be able to:
• Explain managerial effectiveness and suggest criteria for evaluating the
effectiveness of management;
• Discuss the role of HR department and line and staff managers in enhancing
management effectiveness;
• Discuss performance assessment purposes; and
• Explain four C’s model for assessing human resources management.

20.1 INTRODUCTION
Human Resource Management (HRM) is an important and integral component of an
organisation (public or private organisation) and of the organisation’s administrative
processes. HR management both shapes, and is shaped, by organisational processes.
HRM addresses the concern of human resources through a set of functions or activities
that are designed to influence the effectiveness of the organisation’s employees. These
include activities such as recruitment, staffing, training and development, and
compensation. From a strategy viewpoint, the activities seek to match the ability and
motivation of employees with the requirements and rewards at the job. A critical outcome
of concern in HRM is the attraction of the necessary numbers and types of employees to
the organisation. Without effective HRM, the organisation produces its goods and
services inefficiently and may even place its very survival at risk.

1
 The most significant HR outcome involves the contributions made by employees to the
achievement of the organisation’s goals. These contributions are called employee
performance, meaning how effectively employees carry out their job responsibilities and
thereby make a contribution to the organisation’s goal attainment. Employee performance
is significant and purposeful because it serves as a crucial outcome variable in assessing
the effectiveness of HR management.

20.2 CLARIFYING CONCEPTS

Peter Drucker (1973), a founding father of management theory, distinguished efficiency
and effectiveness as, “effectiveness is the foundation of success, efficiency is a minimum
condition for survival after success has been achieved. Efficiency is concerned with
doing things right. Effectiveness is doing the right things". Efficiency relates to the
conversion of inputs into outputs, with special attention on how the inputs are used.
Effectiveness relates to the production of outputs, which are intended to yield certain
desired outcomes (Sapru, 2002). Efficiency (an input – output concept) is the ability to
minimise the use of resources (labour, materials, and time) in achieving organisational
objectives, that is, doing things right (Stoner, Freeman and Gilbert, 1996).
Management effectiveness depends upon managerial performance, which, in turn, is
defined as “the measure of how efficient and effective a manager is, that is how well he
or she determines and achieves appropriate objectives” (ibid. p.9). The manager must
think in terms of performance, rather than personality. It is not so much what a manager
does, but what he achieves that is significant. “Managerial effectiveness has to be defined
in terms of output rather than input, by what a manager achieves rather than by what he
does.” (Reddin, 1970).
Focusing on assessing effectiveness suggests that its components and characteristics be
systematically assessed (measured) by the organisation.

20.3 PURPOSES OF ASSESSING HRM EFFECTIVENESS

Human resource management is a staff function. Its managers advise the line managers
throughout the organisation. The HRM process is an ongoing procedure that tries to keep
the organisation supplied with the right people in the right positions when they are
required.
Human resource activities are conducted both by individual (line) managers throughout
the organisation and by specialised (staff) managers within the HR department. Since the
HR department has the responsibility of administering the numerous activities (dealing
with recruitment, training, career development, industrial relations, etc.), assessing the
effectiveness of the human resource management is quite important and would seem to
be the greatest aid to improving the HR management’s functioning. Results of the
assessment will indicate how effective HR management has been in the past. The results
may serve as an input to guide employees and HR activities in the future. The assessment
of HR management serves a wide variety of purposes as explained in the succeeding text.
(a) To Influence Employee Performance
One of the basic beliefs of HR managers is that the objectives of an organisation should
be to produce a good or a service for its customers or clients at a price they are willing to
pay and at a cost of production, which will permit the employers (government,
stakeholders, owners) a reasonable profit. To this organisation’s goal, the objective of HR
2
managers is to see that the resources available to their organisation are used efficiently
and effectively. It follows that these managers should be concerned with improving the
performance of their employees.
(b) To Meet Rapid Challenges
Because of rapid scientific and technological changes, the problem of human resource
development has become particularly acute. Not only must new employees and managers
be trained, but also, present ones must be retrained and their skills upgraded. The
assessment of the performance of the HR managers requires them to pay attention
towards enhancing the knowledge and skills of their employees required for meeting
today’s organisation’s challenges and address the issue of employment. A steadily
increasing level of educational achievement and the acceleration of technological changes
are accompanied by an increased emphasis on training and education by the management.
Consequently, there is a pressure to institute and upgrade formal organisational and
developmental programmes.
(c) Motivational Purposes
The mere process of assessing has a motivational effect on HR managers. It fosters
initiative, develops a sense of devotion and intensifies the management’s effort toward
achievement of organisational goals (Winfield, Bishop and Porter, 2000). Assessment is
also beneficial to the employees to the extent that it gives them better understanding of
job responsibilities, of relationships with co-workers, of the work expected of them, and
of their training needs. The process also aids the assessors by providing them with a
greater understanding of their subordinate’s job behaviour, the job itself, and each
employee’s strengths and limitations. Developing human resources is the responsibility
of the organisation. It can be hypothesised that the economic returns from development
justify the expenditure of scarce resources to develop HR managers and employees.
Assessment has been used for making the HR managers responsible for the performance
of assigned tasks. It also helps individual managers with self-development as the
assessment of performance enables the individual managers to acquire a greater sense of
worth, dignity and well being as they become more valuable to their organisation. It
provides a sense of satisfaction in personal and social achievements. It follows that more
highly developed and responsible managers will cause fewer problems and will have
greater job satisfaction.
(d) Administrative Purposes
Assessment of the HR management also serves an administrative purpose. Traditionally,
management has used performance assessments primarily to make administrative
decisions relating to employees. Questions pertaining to promoting an employee,
choosing employees for layoffs or transfers and making salary increase recommendations
are examples of such administrative decisions. Managers responsible for such decisions
need to obtain and use measures of employee performance.
Further, assessment for administrative reason helps the HR management to place
employees in positions where their abilities can be best used and can be helpful in
assigning employees to appropriate future positions. High performance is encouraged by
rewarding the highest performers with incentives such as, salary increases and
promotional opportunities, etc.
(e) Employee Feedback and Development
The assessment of the HR management can be used for employee development. It
provides employees with information regarding the performance expectations of their
3
supervisors, feedback regarding subsequent performance, and advice or counseling to
help employees meet expectations that have not been met. In part, the feedback helps
employees realise their potential as high-performers (the self-developmental objective).
Feedback encourages self-development through both instrumentality and expectancy
perceptions (the link between effort and performance).
(f) Evaluation of Policies and Programmes
Assessment (measure) of performance can also be used to evaluate policies and
programmes implemented to influence work behaviour. An evaluation of managerial
programmes for redesigning jobs, for example, might involve a comparison of employee
performance before jobs were changed with performance following the change, or, a
comparison might be made between performance in the department where the change had
been implemented and that of a similar department where the task redesign programme
had not been introduced.
In addition, the purpose of performance assessment will determine the basis for
comparison, the techniques to be used in assessment, the role of the supervisor, and the
distribution to be made of the assessment (Klatt, Murdich and Shurter, 1978).

20.4 THE FOUR C’s MODEL

To assess the effectiveness of the HRM process within an organisation, Michael Beer and
associates (Beer, Spector, Lawrence, Mills, Walton, 1985), have proposed a four C’s
model: referring to competence, commitment, congruence and cost-effectiveness.
Competence
Questions to be addressed herein, are: how competent are personnel in the performance
of their work? Do they need extra or specialised training? Performance assessment by
managers can help a formal organisation determine what potential it has?; and To what
extent do HRM policies attract and develop personnel with skills and knowledge needed
now and in the future?
Commitment
How committed are personnel to their work and organisation? could it be ascertained
through interviews and questionnaires?; More information can be gathered thorough
personnel records on voluntary retirement, absenteeism, and grievances. To what extent
do HRM policies increase the commitment of employees to their work and organisation?
Congruence
Is there congruence or contract between the basic philosophy and goals of the
organisation and its personnel? and Is there trust and common purpose between
managers and employees?. Incongruence can be found in the frequency of strikes,
conflicts between superiors and subordinates, and employees grievances. Low level of
congruence results in low levels of trust and common purpose, stress in the relationship
between subordinates and superiors may resultantly increase. The important question is,
what levels of congruence between management and employees do HRM policies and
practices increase?
Cost-Effectiveness
Are HRM policies cost-effective in terms of pay, turnover, absenteeism, strikes and
benefits? More than assessing the extent of the four C’s model within an organisation is

4
the problem of assessing HRM outcomes. In other words, how does one make
judgements about the long-term effects of HRM policies on personnel and societal well
being and organisational effectiveness? In the ultimate analysis, managers need the
participation of a broad range of shareholders, union leaders and managers to obtain the
data needed to assess the impact of HRM policies and practices.
Through modified HRM policies to enhance commitment, competence, congruence and
cost-effectiveness, an organisation enhances its capacity to adapt to changes in its
environment. High commitment, for instance, has meant better communication between
employees and the management. High competence has meant that employees are well
trained in their skills and can take on new roles and jobs as needed. They can respond to
changes in environmental demands. Cost-effectiveness has meant that human resource
costs, such as pay, benefits and absenteeism, are kept equal or less than those of
competitors. Higher congruence has meant that all stakeholders including the employees
and managers share a common purpose in the organisation.

20.5 PREPARING EFFECTIVENESS STANDARDS

Effectiveness standards are the general output requirements of a managerial position.
They define the function of the position. The heart of Management by Objectives is the
establishment of effectiveness standards. Reddin (1970) points out that a manager should
understand the following with a view to preparing effectiveness standards:
1. Levels of effectiveness standards
2. Bases of effectiveness standards
3. Frames for objectives
4. Who drafts objectives?
5. Soundness of objectives; or,
6. Unsatisfactory objectives
7. Classes of objectives
8. Errors to avoid
Levels of Effectiveness Standards
For Reddin, there are three general levels of effectiveness standards: Corporate,
Departmental and Managerial.
(i) Corporate standards are concerned with the enterprise as a whole and are
established by the top team. The term corporate standards may refer to such
matters as employee development, employee relations, and technological position.
(ii) Departmental or divisional standards are concerned with the particular
contribution a sub unit of an organisation can make to the organisation as a whole.
They may be concerned with service demands, and the integration of the
department’s role and its standards with those of other departments.
(iii) Managerial standards are directly concerned with the outputs of a particular
managerial position.

5
Bases of Effectiveness Standards
There are numerous standards on which the outputs of managerial positions may be
based. Many are directly measurable using existing data generating devices such as
accounting or reporting systems. Major areas in which managers set effectiveness
standards are profitability, sales targets and logistics management etc. Using this
information, a competent manager can select the effectiveness standards, which directly
apply to his position.
Objectives Setting
Once effectiveness standards are set, they are converted into objectives. Examples of the
many possible bases, which can be selected for an objective are, unit processed,
competitors results and market statistics.
Reddin suggests that managerial objectives may be drafted in one of the following four
ways:
1. Superior
2. Superior Subordinate
3. Superior Superior
Subordinate Staff Subordinate
4. Subordinate Superior
One method entails superior drafting them for the subordinate. The second method
involves the superior setting the objectives and then discussing them with the
subordinate. The third method involves a third party, an internal or external consultant,
who meets both privately and jointly with the superior and subordinate and engineers
their agreement to a set of objectives and measurements. The fourth and recommended
method is for the subordinate to draft a set of proposed objectives and over a series of
several meetings, work out with his superior, what his objectives should be. By this
method, both sides contribute evenly to the objectives and both develop a thorough
understanding of what they mean.
According to Reddin, in casting up objectives managers and assessors should see that
these are measurable and specific. To him following are the sound objectives:

SOUND PROBABLY UNSOUND

Measurable Non-measurable
Quantitative Qualitative
Specific General
Results-centered Activity-centered
Individual Shared
Realistic Optimistic or pessimistic
Time-bounded Time-extended

6
Above objectives should be realistic and time bound, with clear time limits for
completion. Using the paired list as a guide, it is an easy matter to detect unsatisfactory
objectives. Without training, managers sometimes propose objectives as, ‘satisfy my
superior’, ‘keep my subordinates happy’ etc. These are clearly unsatisfactory as
objectives.
Classes of Objectives
For Reddin, there are three classes of objectives: standard, special, and developmental. (i)
Standard objectives are those based directly on the established effectiveness standards of
the position. (ii) Special objectives refer to feasibility studies, which explore new areas,
new systems, and other more creative and different areas. Special objectives typically
have a far lower priority than standard objectives. (iii) Developmental objectives are
primarily concerned with the development of the manager’s professional competence.
Errors to Avoid
The following errors, which can occur in casting objectives by the managers, have been
listed as follows (Reddin):
(i) Objectives too high (overload)
(ii) Objectives too low (underload)
(iii) Objectives not measurable
(iv) Cost measurement too high
(v) Too many objectives
(vi) Too long time period
(vii) Too shot time period
(viii) Imbalanced emphasis.
(ix) Too complex or elegant objectives.
Complex objectives tend to be produced as hedges against unsatisfactory performance.
Reddin suggests that managers should be wary of the above errors in the introductory
stages of installing a 'management by objectives' system.

20.6 ASSESSING EFFECTIVENESS OF HR MANAGEMENT

Assessing the effectiveness of HR activities is vital to the success of the organisation.
Effectiveness questions are examined for both individual managers and the HR
department. Particular emphasis is placed on the HR department and the multiple ways
through which the effectiveness may be judged.
Human Resource Department
In a small organisation the HR function may be a part of the general management. As
organisation size increases, so does the likelihood of finding the HR function housed
within one or more formal departments or separately as the HR departments.
Management of the organisation creates a personnel (P) or HR department. At the
corporate level, HR department is divided into major P/HR activity areas (planning,
employment, compensation, training and development and industrial relations). Managers
of both line and staff conduct HR activities.

7
Employees in the HR department are generally staff employees. They along with the
department exist to serve the line management. In fact, it is line management, which
creates the HR department. Within the overall framework, there seem to be three more
specific roles for the HR department, service, advisory, and control roles.
(i) Service Role: Certain HR activities are performed as direct services to the line
management such as employment laws and regulations, which impose record –
keeping requirement on the organisation.
(ii) Advisory Role: In its advisory capacity, the HR department lends its expertise by
providing advice to line management on the conduct of HR activities.
(iii) Control Role: The control role goes beyond the advisory and service roles because
the HR department directly influences line management.
Having referred to the activities and role that the HR department performs, we have to
assess its effectiveness. The effectiveness of the HR department ultimately can be
determined by judging how well the department performs in achieving the matching
process. However, this must now be done at an aggregate level, corporate and/ or
operating, at which the department is functioning to serve line management. All of this
will depend on the structure of the organisation and the placement of the HR
department(s) within it.
Approaches of Assessment of Effectiveness
For assessing HRM effectiveness, some approaches have been suggested:
i. Managerial performance appraisal systems;
ii. Aggregate outcome data;
iii. Aggregate cost data;
iv. Utility analysis; and
v. Constituent opinions.
Managerial Performance Appraisal Systems
In order to assess an individual manager’s performance vis-à-vis his or her subordinates’
outcomes, some managerial performance appraisal systems have been suggested. The HR
department normally administers such systems. Thus, one way to assess the effectiveness
of the department would be to determine if it is providing an effective appraisal system to
the management.
To be effective, performance measures should aid the management in fulfilling two
requirements. First, the measurement system must identify in what ways there can be
positive employee contribution to the organisation. This component is referred to as
identifying the dimensions of performance. Second, the system should help establish
standards of contributions for each performance dimension identified in the first step.
That is, a procedure should help managers differentiate between employees who are
performing well and those who are performing poorly on assigned tasks.
Aggregate Outcome Data
In this approach, results of performance of individual employees can be fed into the HR
department for aggregation and analysis. For example, the department can compile data
on job satisfaction on an annual basis. Results of outcome assessments of individual
employees regarding job satisfaction can be shown for the current year and the two

8
previous years. With these data, two basic issues involving effectiveness of the HR
department can be addressed: outcome levels and outcome trends.
(i) Outcome Levels: This is a judgement about whether the organisation’s current
outcome levels are acceptable and consistent with its goals and strategies. In case
outcome levels are found to be less than desired, then this becomes, at least in part a
judgement that the HR department is lacking in effectiveness. Such feedback and
conclusions can be helpful to the top management in bringing about improvements in
management.
(ii) Outcome Trends: This involves judging whether the outcome levels are moving in
the desired directions over time. For example, one could examine certain indicators
related to job satisfaction or voluntary turnover. These judgements about outcomes could
indicate about the effectiveness of the working of the HR department.
Aggregate Cost Data
It may be mentioned here that HR activities cannot be cost-free. Thus, costs associated
with their occurrence need to be compiled and analysed (Cascio, 1987). Thus, both cost
analysis and budget allocation analysis are explained as such:
(i) Cost Analysis: Cost analysis involves maintaining detailed records of the costs
incurred for a specific activity or programme, such as a particular training programme.
Often it is useful to compute these costs on a per employee basis; and
(ii) Budget Allocation Analysis: Budget allocation analysis involves an examination
of how the total HR department budget is allocated to the major PHR activities.
Typically, it is done by calculating the percentage allocation of the budget to each
activity. Judgement about the data in cost and budget allocation analysis can be helpful to
top management in improving HR management’s effectiveness.

Utility Analysis
Utility analysis is another useful means of evaluating the effectiveness of the HR
department. It seeks to estimate both the costs and benefits of an HR activity in economic
terms (Bourdeau, 1990). The idea is to provide management, information that can be used
to answer questions as; is it worth it? Utility analysis involves making numerous guess
estimates. These usually involve programme costs, economic value of such programme
benefits as an increase in job performance, how big the impact of the programme is
expected to be on employees, and how many employees are likely to be affected by the
programme.
Constituent Opinions
Finally, the assessment of the effectiveness of the HR department can be studied in
relation to the opinions and observations of the constituents, which the department serves.
These constituents include employees, line and staff managers, union leaders, and
possibly, even government officials.
Such information could be collected through a questionnaire (Mahler, 1979). Examples
of constituent interview and questions about the effectiveness of the HR department
include:
How appropriate is human resource planning in the oganisation? Is the HR department
recruiting candidates in relation to the organisation’s requirement? Is the HR department
organising training programmes acceptable to the organisation’s employees?
9
Responses to the questions are analysed and a report is prepared for the top management.
The report contains both positive and negative evaluation information, along with
recommendations to bring about improvements in the HR department’s functioning.
Another mechanism that has been used to gather such information is to survey the
constituents to determine what they view as meaningful criteria for evaluating the HR
department’s effectiveness. After the constituents have identified and reasonably agreed
upon these criteria, they can then proceed to actually evaluate the department, using
interviews and/or questionnaires. In this way, the constituents not only evaluate the
department, but also participate in developing the criteria on which they will base their
assessments.
Tsui (1987) has identified five criteria for evaluating the effectiveness of the Human
Resource Department: (i) responsiveness, (ii) managing cost and negative performance,
(iii) productivity and innovativeness, (iv) training and development, and (v) affirmative
action accomplishments. These criteria were used as the basis for the actual assessment
of HR department effectiveness. Thus the effectiveness of the HR department, it is
argued, is indeed, a mater of reputation it establishes with the people it serves.
The Criteria for Evaluating the Effectiveness of Human Resource Departments include:
A. Responsiveness:
1. Quickness and effectiveness of responses
2. Employees’ trust and confidence
3. Level of cooperation from the HR department
4. Degree of objectivity and neutrality
5. Average response time to employee inquiries
6. Degree of uniformity and fairness
7. Average time taken to resolve disputes
8. Number of personnel files lost or misplaced
9. Employees’ opinion of HR department’s effectiveness
10. Degree to which HR department is open and available
11. Degree of mutual respect and teamwork among line managers
12. Legal conformity of pay plans and benefit programs
13. Degree of involvement in employee grievances
14. Quality of service provided
15. Accuracy of benefit enrolment data
16. Results of personnel audits
17. This HR department compared to others.

B. Managing Cost and Negative Performance:

1. Voluntary versus (vs.) involuntary turnover rate
2. Number of complaints from job turnover rate

10
3. Number of equal pay complaints
4. Rate of voluntary controllable turnover
5. Number of terminations due to poor performance
6. Staffing cost per employee
7. Acceptance per offer ratio
8. Ratio of HR department headcount to population served
9. Number of applicants to each open position
10. Number of grievances filed and resolved
11. Number of complaints that go outside company
12. Percentage of employees received performance appraisal
13. Percentage of employees with development plans

C. Proactive Approach and Innovativeness

1. Innovation of personnel policies to enhance employee morale and company
allegiance
2. Frequency of line management consultation with HR department.
3. Presence of a “standout” accomplishment or result
4. Having a strategy to support line management business plans
5. Effectiveness in developing a positive company image among employees.
6. Performance against goals
7. Evaluation by corporate HR
8. Effectiveness in dealing with poor performing employees
9. Satisfaction of clients – managers and employees
10. Quality of information and advice to top management
11. Time lapse between establishment of policies at HR and practice in field units.
12. Number of programs initiated by the HR department directed toward enhancing
the effective utilisation of the “people" resource.

D. Training and Development

1. Number of training programs held per year
2. Percentage of employees who participated in training
3. Training course effectiveness ratings
4. Number of hours of training per employee.

E. Affirmative Action Accomplishments

1. Minority promotion rate

11
2. Percentage of minority in applicant pool
3. Minority turnover rate
4. Affirmative action goal attainment

HR Activities: Line and Staff Management

It is needless to emphasise that HR activities (dealing with personnel matters) are
conducted by managers belonging to both line and staff. Line managers (such as
executive officer, Education Officer, etc.,) are those, with direct responsibility to the
administrative process for establishing goals and strategies and their implementation. On
the other hand, staff managers (such as accounting managers, managerial employees,
etc.,) are primarily concerned with providing line managers specialised aid and with
maintaining coordination and control mechanisms.
Both line and staff managers have an important role to play in attaining the organisation’s
goals. Mainly due to their varying roles in the administrative process, line and staff
managers have differing perspectives on how to best manage human resources in the
organisation. HR decisions that line managers make in the supervision of subordinates
involve such diverse areas as task assignments, performance appraisal and feedback,
training and development, promotions, staffing, discipline, etc.
From a line manager’s perspective, the HR activities done by the manager are intended to
influence the match between each subordinate and his job. The manager’s effectiveness
in achieving the match can be assessed by gauging the standing of each subordinate on
the HR outcomes. In other words, the individual manager’s HR management
effectiveness is determined by assessing how well he attracts and retains subordinate, and
maximises their job performance, attendance, satisfaction and maintains discipline.
Assessing HR management effectiveness, generally, occurs through the organisation’s
managerial performance appraisal system. Generally speaking, influencing the outcomes
of subordinates would first be defined as a standard job requirement for the manager.
Accordingly the manager’s handling of this requirement would be assessed periodically.
Results of the assessment would then be given to the manager, and would influence
reward decisions for the manager. Such feedback and rewards will be useful in
motivating effective management of human resources in the organisation.

Human Resource Planning

The assessment o the effectiveness of the HR management can also be studied in relation
to human resource planning. HR Planning involves two major support functions. In the
first place, it seeks to forecast the numbers and types of employees that will be required
on each job in some future time period. Secondly, armed with forecasting results,
managers may develop plans for coping with the results through a series of coordinated
strategies. HR planning is designed to anticipate likely future events in and around an
organisation and assess their likely human resource implications and outcomes in the
absence of concentrated action, and then, when the prognostication is not encouraging, to
design concerted actions that will alter events to bring about more favourable HR
management effectiveness.
The assessment of HR planning will help in the formulation of a human resource strategy
that establishes an organisation’s major goals and indicates the ways in which these goals

12
will be pursued, that is, which HR activities will receive priority and what the major
policies will be in each area.

20.7 PROCESS PERSPECTIVE FOR EFFECTIVENESS

It is noted that the assessment of effectiveness of human resource management has not
been adequate and there has been little success in efforts to improve it. A broader
perspective of appraisal and assessment is emerging with focus on entire appraisal
process. There appears to be two ways for improving assessment results: (i) ability to
assess; and (ii) motivation to assess.
Ability to Assess
The ability to assess has come to mean that the assessor should have a sufficient
knowledge about the criteria and methods involved in assessing the effectiveness of the
HR management. In some situations, it may be necessary to provide the assessor with
assistance for information on HR activities. Knowledge of effectiveness standards would
help the assessor for valid appraisals of the HR activities. Top management must clearly
specify what standards of performance are to be followed. In this connection it is
suggested that training can be quite useful for this purpose and thus can help improve
assessment accuracy.
Motivation to Assess
An assessor or manager will not be motivated to evaluate effectively unless performance
appraisal is recognised as an important dimension of his job, a dimension that if
performed well, will be rewarded. He should not be punished for providing accurate
appraisals. Studies suggest that the purpose of the appraisal influences motivation to
evaluate and hence the results obtained (Megginson, 1977).

20.7 CONCLUSION
Human Resource Management has an added responsibility for enhancing the
contributions of employees towards the effectiveness of the organisation. These
contributions are seen in terms of specific HR outcomes, especially, selection,
performance, attendance and satisfaction of employees. Influencing employees on these
outcomes necessitates matching task requirements and rewards with individual capability
and motivation. To implement this matching process several HR activities are undertaken
by the HR department in conjunction with the line managers. To this end, assessing the
effectiveness of the HR activities is important. There are multiple methods for doing this.
The purpose of assessment is to influence employee performance and to improve the
organisation’s effectiveness.

20.9 KEY CONCEPTS

Actual Performance: The actual performance is a record of the extent to which the
objective, not the programme, was actually achieved.

13
Effective Standard: An effectiveness standard is a general output requirement of a
managerial position which remains basically unchanged from year
to year.
Measurement Method: A measurement method is a clear statement of how the
attainment of the objective is to be measured. If no measurement
method is available, a note is made on the steps being taken to
provide one, or if not, some expression such as “subjective
judgments’ is added. This should be avoided.
Objective: What the manager plans to accomplish, stated as clearly and
specifically as possible. There may be more than one objective for
a particular effectiveness standard. Essentially, an objective is an
effectiveness standard, or part of one, which is as specific, as time-
bounded, and as measurable as possible.
20.10 REFERENCES AND FURTHER READING
Beer, Michael, Bert Spector, R. Lawrence Paul, Q.D. Mills, Walton E. Richard, 1985,
Human Resource Management, Free Press, New York.
Boudreau, W, 1990, “Utility Analysis for Human Resource Management Decisions,”
M.D. Dunnette, (Ed), Handbook of Industrial and Organisational Psychology, Rand
McNallv, Chicago.
Cascio, W.F, 1987, Costing Human Resources: The Financial Impact of Behavior in
Organisations, Second Edition, Boston, Kent.
Drucker, Peter, 1973, Management Tasks, Responsibilities, Practices, Harper & Row,
New York.
Heneman, Herbert et al, 1993, Personnel/Human Resource Management, Fourth Edition,
Universal Book Stall, New Delhi.
Klatt, Lawrence, Robert Murdock and Fred E. Schuster, 1978, Human Resources
Management, Richard Irwin Inc., Illinois.
Mahler, W.R, 1979, “Auditing PAIR”, D. Yoder and H.G. Heneman (Eds), ASPA
Handbook of Personnel and Industrial Relations, Bureau of National Affairs,
Washington.
Megginson, Leon, 1977, Personnel and Human Resources Administration, Third Edition,
Richard Irwin Inc., Illinois.
Reddin, William, J, 1970, Managerial Effectiveness, McGraw-Hill, London.
Sapru, R.K, 2002, Development Administration, Second Edition, Sterling Publishers,
New Delhi.
Stoner, James, R. Freeman & Gilbert Daniel, 1996, Management, Sixth Edition, Prentice
Hall of India, New Delhi.
Tsui, A.S, 1997, “Defining the Activities and Effectiveness of the Human Resource
Department”, Journal of Human Resource Management, Vol. 26.
Winfield, Peter, Bishop Ray and Porter Keith, 2000, Core Management, Butterworth,
Oxford.

14
20.11 ACTIVITIES

1) What types of skills are necessary for HR department manager to

be effective?
2) What is management effectiveness? Discuss main standards for
assessing management effectiveness.
3) Discuss the role of the HR department in evaluating human
resource effectiveness.

15
UNIT 21 HUMAN RESOURCE AUDIT
Structure
21.0 Learning outcome
21.1 Introduction
21.2 Aspects of HR audit
21.3 Audit Relationships
21.4 Designing Information Systems for HR Audit
21.5 Approaches to HR Audit
21.6 Components of the Audit Report
21.7 Conclusion
21.8 Key Concepts
21.9 References and Further Reading
21.0 LEARNING OUTCOME
After reading this Unit, you should be able to:
• Understand the nature, importance and scope of HR audit;
• Describe the approaches to HR audit; and
• Design information systems for HR auditing.

21.1 INTRODUCTION
Human Resource (HR) audit is an important aspect of the human resource management.
It is now receiving a great deal of attention from HR practitioners. HR audit is used as a
tool for review of the effectiveness of human resource practices. It is a tool for evaluating
the personnel activities of an organisation. It gives feedback about HR functions not only
to operating managers but also to HR department about how well operating managers are
meeting their HR duties. In brief, audit is an overall quality control check on HR
activities in a public organisation and an evaluation of how these activities support
overall organisational strategy. HR audit also helps clarify organisational and
management goals. Since the appropriateness of organisational goals and objectives set to
be achieved can be questioned in relation to the problems being addressed, HR audit
provides procedures for evaluating goals and objectives. Audit may result in efforts to
restructure management practices and goals. It may also contribute to the craft of new
policies emergence of and potential solutions. HR audit concerns the consideration
whether a previously adopted policy alternative should be replaced with another or
persisted with given the imperatives of efficiency and economy.

Thus, HR audit is an effort to analyse organisational goals and practices and improve
upon personnel performance. K. Aswathappa (2002) has mentioned ten benefits resulting
from HR audit:

1
 1. Identification of the contributions of the HR department to the organisation;
2. Improvement of the professional image of the HR department;
3. Encouragement of greater responsibility and professionalism among members
of the HR department;
4. Clarification of the HR department’s duties and responsibilities;
5. Stimulation of uniformity of HR policies and practices;
6. Finding solution of critical personnel problems;
7. Ensuring timely compliance with legal requirements,;
8. Reduction of HR costs through more effective personnel procedures;
9. Creation of increased acceptance of the necessary changes in the HR
department, and;
10. A thorough review of the department’s information system.
Systematic audit can help build strong rapport between the department and operating
managers, and can reveal outdated assumptions that should be changed to meet the
department’s objectives and future challenges. Further, planned assessment creates
discipline in personnel staff and encourages them to move away from intuitive techniques
to a more rigorous assessment of the likely benefits to be achieved.
According to Gray (1965), “the primary purpose of personnel audit is to assess how
various units are functioning and how they have been able to meet the policies and
guidelines which were agreed upon and to assist the rest of the organisation by
identifying the gap between objectives lay out and results achieved. The end product of
an evaluation should be to formulate plans for corrections or adjustments.” Thus, audit
helps the management evaluate how well its policies as a whole are pursued and
identifies trouble areas that require particular attention.
21.2 AREAS OF HR AUDIT
The scope and subject areas of HR audit are very wide. It represents a ‘whole man
approach,’ in that it assumes that the management of human resources involves much
more than the practice of selecting, training and firing employees. The field of human
resource audit includes : (a) Recruitment and selection, (b) Training and development, (c)
Promotion, transfer, and career development, (d)Performance appraisal and job
evaluation, (e) Morale and discipline, (f) Salary, rewards and benefits, (g) Personnel
policies, procedures and programmes, (h) Employer – employee relations, and (i)
Research.
The HR management audit allows rating the extent to which an organisation has basic
HR activities in place and how well they are being performed. In deciding upon rating,
there is need to consider how other managers and employees would rate the activities.
The total scope provides a guide for actions that will improve HR activities in the
organisation. Robert Mathis and John Jackson (2000) give the following chart for HR
audit.
The following figure contains a checklist of HR audit which can be of great help to HR
management.

2
 Figure: Sample HR Audit Checklist
Instructions: For each of the items listed below, an organisation can be rated using the
following scale:
VERY GOOD (complete, current, and done well) 3 points
ADEQUATE (needs only some updating) 2 points
WEAK (needs major improvements/changes) 1 point
BASICALLY NONEXISTENT 0 points
Chart for HR Audit
I. Legal Compliance III. Maintaining Human Resources
1. Equal employment opportunity requirements
14 Formal wage/salary system
2. Immigration reform
15 Current benefits programs/options
3. Health and safety
16 Employee recognition programs
4. Wage and hour laws
17 Employee handbook/personnel
5. Employment-at-will statements
Policy manual
6. Privacy protection
18 Absenteeism and turnover control
7. ERISA reporting/compliance
19 Grievance resolution process
8. Family/medical leave
20 HR record-keeping/information system

II. Obtaining Human Resources IV. Developing Human Resources

21. New employee orientation program
9. Current job descriptions and specifications
22. Job skills training programs
10. HR supply-and-demand estimates (for 3 years)
23. Employee development programs
11. Recruiting process and procedures
24. Job related performance appraisal
12. Job-related selection interviews
25. Appraisal feedback training of managers
13. Physical exam procedures
- Total Points

HR AUDIT SCORING

Evaluate the score on the HR audit as follows:

60-70 HR activities are complete, effective, and probably meeting most legal compliance
requirements.
45-59 HR activities are being performed adequately, but they are not as complete or effective as they
should be. Also, it is likely that some potential legal risks exist.
30-44 Major HR problems exist, and significant attention needs to be devoted to adding and changing
the HR activities in the organisation.
Below 30 Serious potential legal liabilities exist, and it is likely that significant HR problems are not
being addressed.

3
It is easy to announce policies but difficult to ensure their compliance. Promulgation of
progressive policies such as promotion, on the basis of merit and nondiscriminatory
hiring, may not be enough. Such policies are rarely self-enforcing, and some sort of
auditing is required to ensure that they are implemented on a uniform basis.

It may be mentioned here that it is the top management’s function to make regular check-
ups. But top management is often too busy handling immediate problems and hardly has
the time to carry out the function unaided. Consequently, standards decline gradually,
causing long-term damage. Often the fall and deterioration of standards is so gradual that
it might be difficult to adequately monitor them.

In the public sector, the policy states that all promotions are to be based on capability,
irrespective of length of service. But a strong union frequently puts pressure on the
management to promote senior employees. The tendency is felt in public organisations
and all promotions go to the most senior employees. Apparently, merit and capability
appear to be no longer significant factors.

Further it is observed that line management often defers action until a serious crisis
erupts. A staff group like personnel, who have the technical resources and the perspective
to ask potentially embarrassing questions on a regular basis, performs an important
function. Regular audit identifies specific areas that require attention. This makes it
possible to detect significant trends before they take the shape of crises. In addition,
regular audits keep subordinates regularly alert as to what is expected of them.

Auditing Organisational Health

Auditing is equally important to assess the ‘organisational health’. Increasingly, HRD
departments are being asked to audit overall effectiveness of an organisation’s human
resource utilisation. A healthy organisation is one which is able to develop the hidden
talents and capacities of its personnel and provide career and promotional opportunities to
them to fulfill their ambitions for attaining rewarding positions. Relevant here, as
measures include the amount of human resource development practices being
undertaken, the percentage of personnel who avail themselves for voluntary educational
programmes and changes in the skill levels of the personnel.

Standards of Accountability
In most public sector undertakings, a system of Memorandum of Understanding (MoU)
has been introduced for the purpose of improving organisational performance. The
emphasis in this instrument is on achieving the negotiated and agreed objectives (P.E.
survey, 2002-03). Managers expect to be held to the memorandum of understanding for
enforcement of standards of accountability. In effect, the MoU establishes a target and at
the end of the target period, both management of the public enterprise and the
government compare the expected standard of performance with the actual level of
achievement. Shortfalls, if any, are indicators that further investigations and remedial
actions are required. In the human resources arena, managers may have standards for
4
such objectives as hiring of employees, training, labour productivity and overtime
utilisation. Actual achievements have to be assessed against such set standards.

Policy Implementation Audit

A policy pronouncement has little meaning if it is not implemented in true spirit.
Personnel also get involved in auditing some aspects of the manager’s job particularly
those which have been the subject of top management policy pronouncements. To meet
the management’s objective of paying its employees, salary and other benefits, the HRD
department must regularly compare its pay scales with wages paid by other companies.
Similarly, when top management decides that women are to receive equal considerations
for promotions in administration, implementation of such policies will depend on
continued audit and surveillance. To take another example, universities provide
sabbatical leave to teachers for engaging in meaningful research. If not properly audited,
such sabbatical leave by teachers may come to be used simply to take up teaching
assignments to earn extra money. Similarly, government undertakings may encourage
managers to provide employees, reasonable time off with salary to participate in
community service activities such as family planning drive or literacy drive. It is easy to
understand why this policy needs to be monitored and audited. Ethical standards may
need to be enforced as a matter of organisational policy. Time and cost pressures may
compel the manager to reject requests from subordinates for time off with pay to
participate in community activities that seem to interfere with the employee’s immediate
job. If granted, the same would need to be monitored.

Cost - Benefit Comparisons

Audit is also undertaken to assess whether the management’s policies are sensible and
effective and whether the policies are really achieving the results consistent with costs.
Budget is a good example of such comparison. Often budgets are made without a study of
the actual needs given for various activities. They are often incremental in nature and
substance, that is, the executive agencies who draw them up assume that the next year’s
allocations will most likely be a percentage above the previous year’s figure.
Increasingly, however, management has begun asking whether the unit performance is
comparable with costs and where funds can be shifted to obtain better performance.
In case of human resource, there is need for continuous scrutiny to ascertain: (i) whether
the resources going into any given programme are producing results of greater value than
cost involved; and (ii) whether the resources used in one programme could produce more
for the organisation, if all parts were redirected to other programmes. Clearly, if more
money is spent on selection, better candidates can be considered by the organisation.
Therefore, budgets must be regularly audited to find if possible reallocations of funds
might produce greater returns to the organisation. Ideally, no expenditure should be
made unless it increases the value of human assets. The human resource department can
perform the critical function of alerting the top management to the broad range of human
resource implications of the policy in question.
Absenteeism Record
Absenteeism can be regarded as an indicator of organisational health. The Department of
Human Resources watches absenteeism to analyse the employee’s dislike for the job or

5
the bosses in question. It has been observed that absenteeism is generally higher in
industries where the work is long and where workgroups are large.

Turnover Rate
Turnover rate (quit rate) is another measure for direct observation of how well things are
progressing. It is a measure of changes in the work force overtime. The figure in turnover
can be affected by the selection of new employees, lay offs and voluntary resignations.
Resignation factor is obviously the most critical to a management concerned with
auditing organisational health.
It is observed that turnover tends to be higher in organisations that are larger, have longer
workweeks and higher absenteeism rates. Similarly, turnover tends to be lower if there is
relatively high unemployment, workers are more experienced, and also older, also,
When business is booming and the labour market is tight (when there are lots of jobs and
relatively few unemployed), capable human resource is hard to recruit. Large
organisations may pay handsome salaries and have lower quit rates and high-paid
employees may also have lower quit rates. Quit rates have been seen to be relatively high
in private sector and low in public sector.

Attitude Surveys
Attitude surveys are techniques employed to determine how personnel feel about their
jobs, bosses, management programmes, organisational climate and organisational change
policies, personnel policies, etc. Surveys attempt to elicit more detailed answers through
‘open-ended’ questions.
These attitude or morale surveys reveal ‘illnesses’ if any, afflicting organisational health
though not the exact source or nature of the problem. (Likert, 1965)
Monappa and Saiyadain (1978) provide a number of yardsticks and indices for the
purpose of evaluation, viz. “… averages in the levels of employee turnover or
absenteeism; cost figures or each major activity or function; accident frequencies;
grievances; suggestions; internal data indicators wage and salary surveys employees’
state insurance scheme statistics, productivity indications for certain jobs and or
machines, staffing and manning tables, job analyses and descriptions; evaluation data
regarding selection instruments”.

Company Records Measures

Even without the use of surveys, the organisation produces information that can be
reassessed by staff experts with a view to obtaining measures of personnel effectiveness
relating to scrap records, number of accidents, strikes and grievances, and suggestions
from employees, customers and shareholders.

21.3 AUDIT RELATIONSHIPS

In many organisations often, staff managers are also placed in the position of appraising
the work of line managers and reporting their findings to the upper management.
Personnel may audit how well line managers keep payroll costs in line or how well they
6
utilising training resources. Personnel auditing thus discloses excessive and costly
turnover that may be afflicting organisational practice.
There are four more elements that could be considered prerequisites in HR auditing.
First, successful personnel managers learn that they are more effective in bringing about
improved performance if they discuss the results of their evaluations with the manager
before sending them to the higher management. This affords the manager the opportunity
to improve his performance before the boss learns of performance ‘lag’. Instead of
pressure technique, the staff report becomes a device to help the manager remove or
reduce defects in operations and meet the standards established as desirable by the top
management. To that purpose, HR audit creates healthy relationships between the staff
and line groups.
Second, personnel are asked to associate line managers in data collection and
interpretation processes from the beginning. It is important that line is afforded a voice in
deciding what data should be gathered and how it should be disseminated. Often,
personnel distribute the data to the managers concerned without commenting. Here
itself, supervisors themselves are encouraged to interpret and give meaning to data
collected.
Third, line managers will be ready to accept a staff controls report if they can see how its
contents will help them achieve their objectives, and if it is timely, personnel’s chief job
is to help the line management detect and handle its own problems. Here, the line’s
motivation to learn rises as it acknowledges there is a problem to be tackled.
And finally, the extent to which personnel develop impersonal, quantitative measures
reduces the staff line conflict that usually afflicts the auditing process.

21.4 DESIGNING INFORMATION SYSTEM FOR HR AUDIT

Human resource audit is a difficult exercise. It requires the designing of an effective

human resource information system to be effective. The most important issues related to
the HR information system may be:
(a) Collecting data
In collecting data, often there is the problem of bias if the same is done by managers or
individual supervisors on their own performance. For example, if supervisors who report
their own department accident records may be tempted to suppress or hide potentially
embarrassing incidents. Generally, it is observed that data collected by outsiders,
consultants and university based researchers appear more credible than insider reports.
(b) Asking questions of the data
Data, which is to be collected, should provide useful information to enhance
organisational effectiveness. Often the data is found to be misleading. Therefore, for
most purposes, trend comparisons may be preferable.
(c) Interpreting the data
Looking at the quantity and quality of data, it is the responsibility of the HR department
to assist the management in analysing and data interpreting the data.

7
(d) Stimulating remedial action
Most organisations in the public sector are seen generating more than the adequate
quantity of data. But the main purpose is to stimulate remedial action. In some cases, the
action may require consultation between the supervisor and the higher management. In
some other cases, it might be useful to have the staff responsible for data collection with
the line management in jointly arriving at an agreement regarding the implications drawn
from data. Without such participation, there can be serious misinterpretations of data.
Here, it may be mentioned, that generating data is costly even with computers. Its
quality can overwhelm, line managers who may be deluged with more data than they can
profitably use. Therefore, considering the cost of data collection, only the data relevant to
human resource audit should be collected. Further if the organisation practices a policy of
decentralisation, the central office staff will be limited primarily to an advisory function,
although it may also perform occasional auditing tasks to assure the top management of
largely harmonious industrial relations. Line managers will be more willing to accept an
audit report if its expert contents to help them achieve their objectives better.
It is critical for the HR department to develop a working relationship with the line
particularly the top management that balances any constraining forces with timely
participation and sharing. As auditors, personnel managers should consider difficulties
each manager faces in meeting the standards set for his unit by the line management.

21.5 APPROACHES TO HR AUDIT

Auditors may adopt any of the five approaches for the evaluation purpose:
(i) The comparative approach, (ii) The outside consultant approach, (iii) The
statistical approach, (iv) The compliance approach, and (v) The management
by Objectives - MBO approach, (Werther and Davis, 1996)
I. Comparative Approach
In the comparative approach, the auditors attempt to identify another firm or company as
the model. They collect and analyse data of their own company and compare it (data)
with those of the model company.
II. Consultant Approach
One way to improve the organisation's performance is to use certain effective standards
developed by an outside consultant. These standards are used by the auditors as
benchmarks for comparative purposes.
III. Statistical Approach
In the statistical approach, certain statistical measures of performance are developed
based on the company's existing data. Examples of such measures are absenteeism and
accident rates. These data aid auditors in assessing the positive and negative experts of
company’s performance.
IV. Compliance Approach
Under the compliance approach, auditors review past results and actions to determine if
those activities comply with the legal norms and the company's policies and procedures.

8
V. Management by Objectives (MBO) Approach
The 'management by objectives' (MBO) approach entails specification of goals against
which performance is assessed. By this approach, managers set objectives in their
specific areas of responsibility and auditors assess the actual performance by comparing
it with the objectives.
The methods for evaluating and disseminating data take the form of:
(i) Comparison between time periods;
(ii) Comparison of organisations (even among and between public and private
organisations);
(iii) Trend lines, frequency distributions and statistical correlations;
(iv) Ratio analysis (labour cost variances); voluntary turnover rate;
(v) Classification of data (amount of absenteeism, scrap records, time lost in
accidents); and;
(vi) Graphical or pictorial displays.
21.6 COMPONENTS OF THE AUDIT REPORT
After auditing the policies, practices and required areas of the human resource
management, a report has to be prepared for consideration of the line or the top
management. The report may be presented in the following order:
i. Table of contents;
ii. Preface or introduction giving a statement of objectives, scope, research
methodology and techniques of the HR audit;
iii. A summary of the conclusions and recommendations of the HR audit;
iv. The main report with analysis of data of each section or department concerned;
v. A Summary which is general comprehensive in nature and more in comparison to
the brief prepared at the beginning of the HR audit report;
vi. An appendix containing supporting data, which might be too voluminous to
appear in the body of the audit report.

21.7 CONCLUSION
The preceding pages analyse the meaning, importance and role of the human resource
audit. Auditing helps the top and line management evaluate how well its policies on a
whole are working. It appraises the overall effectiveness of an organisation’s human
resource utilisation. It stimulates the subordinates to pay particular attention to the areas
assigned highest priority by top management. Regular human resource audits make it
possible to detect significant trends before they generate crises. Besides, regular audits
make the whole personnel control process less threatening. Thus, human resource audit
helps identify policies and practices that need to be modified or changed in response to
the changing circumstances.

9
21.8 KEY CONCEPTS

Absenteeism: Absenteeism is the number of days a worker does not report for work.
The rules of the organisation specify and determine absenteeism.
Sanctioned leave does not count for absenteeism
Attitude Surveys: Attitude surveys involve research techniques which are used to
determine the feelings of employees about their jobs and organisations.
Such surveys are vital for better craft of management policy based on
policy inputs articulated and also gain insight into employee grievances,
expectations and general organisational culture outlook.
Turnover: Turnover is a measure of change in the work force over time. Surveys are
needed to find out the reasons why employees chose to leave the
organisation or prefer employment in some other organisation. High
turnover rates indicate lack of success on the part of an organisation.
21.9 REFERENCES AND FURTHER READING

Aswathappa, K, 2002, Human Resources and Personnel Management, Tata McGraw-

Hill, New Delhi.
Government of India, Ministry of Industry, Public Enterprises Survey 2002-2003,
Department of Public enterprises, New Delhi.
Gray, R.D, 1965, “Evaluating the Personnel Department”, Journal of Personnel
Psychology, Vol. 42, No. 3.
Likert, Rensis, 1968, The Human Organisation, McGraw –Hill, New York
Mathis, Robert and John Jackson, 2000, Human Resource Management, Thomson
South, West Edition Singapore.
Monappa and M.S.Saiyadin, 1978, Personnel Management, Vikas, New Delhi.
Werther, William B. and Keith Davis, 1996, Human Resources and Personnel
Management, 5th Edition, McGraw-Hill, New Delhi.
21.10 ACTIVITIES

1. Define “human resource audit” and discuss its role in human resource
management.
2. Discuss the objectives of the human resource audit. Identify the data to be
collected for purpose of human resource audit.
3. Explain the components of HR Audit Report.

10
UNIT-22 MANAGING CHANGE AT THE
WORKPLACE
Structure
22.0 Learning Outcome
22.1 Introduction
22.2 Causes or Forces of Change
22.3 Effects of Change on Employees
22.4 Sources of Resistance to Change
22.5 Dealing with Resistance to Change
22.6 Approaches to Change
22.6.1 Lewin’s 3 Step Model
22.6.2 Action Research
22.6.3. Organisational Development
22.7 Management Goals and Actions for Introducing Change
22.8 Conclusion
22.9 Key Concepts
22.10 References and Further Reading
22.11 Activities

22.0 LEARNING OUTCOME

After reading this Unit, you should be able to:
• Understand change and its effect on organisations and people;
• Explain the major causes for resistance to change and it can be avoided; and
• Discuss managerial actions for change management.

22.1 INTRODUCTION
All organisations whether public or private, face a dynamic and changing
environment today. This is necessitating organisations to adapt to change. Change
within an organisation calls for a modification of the relationships, responsibilities,
and behaviour of individuals in the organisation. While not every change may
require significant adjustment, change is the rallying cry among today’s managers
worldwide, and is a daily event in most work environments. To illustrate the variety
of change, technology is changing jobs and organisations. The substitution of
computer control for direct supervision, for example, is resulting in wider spans of
control for managers. Indeed every member of the organisation is affected by
changes in all the human resource management as well as by innovations introduced
by the manager. It is the function of the manager to work with each subordinate to
obtain acceptance of new directions and commitment to change.
1
People want change at the workplace for:
(i) better methods of work;
(ii) improved job;
(iii) less control;
(iv) higher outputs and profit;
(v) change in the attitude of higher management;
(vi) securing stability in the organisation; and
(vii) increased individual satisfaction and social well–being.
For Stephens Robbins, (2001) ‘change’ refers to making things different. What
distinguishes ‘planned change’ from ‘routine change’ is its scope and magnitude.
Planned change is “the deliberate design and implementation of a structural
innovation, a new policy or goal, or a change in operating philosophy, climate or
style.
22.2 CAUSES OR FORCES FOR CHANGE
Stephen Robbins summarises six specific forces that are acting as stimulants for
change:
FORCES FOR CHANGE
S.No. Force Examples
1. Nature of the workforce • More cultural diversity
• Increase in professionals
• Many new entrants with inadequate
skills
2. Technology • Faster and cheaper computers
• TQM programs
• Reengineering programs
3. Economic shocks • Asian real estate collapse
• Russian devaluation of the ruble
• Changes in oil prices
4. Competition • Global competitors
• Mergers and consolidations
• Growth of e-commerce
5. Social trends • Attitude toward smokers
• Delayed marriages by young people
• Popularity of sport-utility vehicles
6. World politics • Collapse of Soviet Union
• Opening of markets in China
• Black rule of South Africa
This is not a definitive list but it should give the idea of the diversity of pressures
that can cause change.
1. Economic conditions have continued to factors imposing changes on
organisations. Developments in India between 1999 and 2003 made
organisations realise how vulnerable markets can be to inflow and outflow of

2
 capital. This pressure forced organisations to examine closely what they were
doing in order to be able to compete in export markets.
2. Whether at home or abroad, all organisations face some competition.
Heightened competition means that established organisations need to defend
themselves against both traditional competitors that develop new products
and services, and small entrepreneurial firms with innovative offerings.
3. Further, it should also be realised that government policy can be impacted on
a local, national and international basis. The impact that politics has on
organisations by way of local or European legislation is well known.
4. Technological change has greatly affected the way organisations operate and
communicate. Sophisticated information technology is also making
organisations more responsive.
5. Resource availability also affects organisations. As resources become scarce,
organisations have to change and adapt to business without them.
6. People who are the customers or consumers are also putting pressure on
organisations to meet their changing and growing needs. As people are
improving upon their education and becoming more aware of their power,
they are influencing governments to introduce more legislation to protect
them at work.
Klatt, Murdick and Schuster (1978) opine that each manager must be concerned
with introducing four types of changes in the human resource system:
1. Innovations by subordinates;
2. Changes which the manager originates;
3. Changes imposed by higher management;
4. Changes imposed by the environment.
The effect of any change caused by the above factors is, generally, a change in the
individual manager’s responsibility of the total human resource system. Such
changes, affect the formal organisation, the informal organisation, roles, the
attitudes of individuals, and possibly, physical factors, such as, equipment, the
processing of work, the plant or office layout.
Innovations by Subordinates
As young people become employed, they bring with them new sets of values that
affect organisational goals and objectives. This poses new issues for managers who
are tied to past values and attitudes. One such issue is corporate social
responsibility. In progressive companies, managers are strongly urged to stimulate
productive and creative thinking by subordinates.
New ideas and innovation by the subordinate is the arena in which the manager may
exercise the most positive influence in furthering both organisational and individual
goals. This opportunity to make the maximum contribution they can is what workers
frequently want most from their jobs (Weaver, 1976)
Changes the Manager Originates
The manager may introduce such changes gradually, vary the timing, modify them,
or even withdraw them if this seems appropriate. The manager also has the

3
advantage of being able to obtain ready acceptance by evolving required changes
with the cooperation of subordinates.
Changes imposed by the Higher Management
The manager is required to introduce changes at the workplace for the subordinates,
which are imposed by the higher management.
Klatt and his associates mention examples of internally imposed changes as:
(i) Changes in the requirements for transfers or promotions;
(ii) Changes in work rules or work hours;
(iii) The introduction of a female or black manager;
(iv) A new procedure for reporting or preparing reports;
(v) Speedup in the production line or change in the product mix;
(vi) The transfer of some employees to a new work station or location;
(vii) Change from a manual procedure to an automatic process;
(viii) Change to a new incentive system or compensation plan;
Changes Induced by the Environment.
Klatt and his associates point out some inputs from the environment which require
change within a particular manager’s organisation and operations:
(i) New laws or government regulations. ;
(ii) Technological advances;
(iii) Personal turnover;
(iv) Changes in the environment. ,
(v) Computerisation of operations;
(vi) Competition;
(vii) Materials shortages;
(viii) Changing values and aspirations;
(ix) Business cycles.
As noted earlier, technological innovations, such as, introduction of a large-scale
computer, produces a new organisation structure, new positions and new
interpersonal relationships. New conflicts over responsibilities consequently arise,
and produce shifts in organisational patterns and roles.

22.3 EFFECTS OF CHANGE UPON EMPLOYEES

We should recognise that most changes that begin internally within the organisation
has positive and progressive intentions and, in fact, may be necessary for the
survival of the organisation. Further, the external forces may pressure for changes at
the workplace.
The question is, on introduction of changes at workplace, what is their impact upon
the employees of the organisation? Change demands that modifications and stability
must occur. Judson (1966) suggests that these adjustments must be made in three
4
different ways for every employee in behavioural patterns, in psychological outlook
and in social adaptation (Judson, 1966). Behavioural patterns must be adapted to fit
new regulations, procedures and methods of operation. New patterns of
communication, cooperation and interaction may also be modified.
The psychological effect or change is the attitude developed by an employee toward
change on the basis of his own ability to cope with its demands. Judson further
suggests that there is a range of attitudes usually representative of employees
reacting to change that runs from open, complete acceptance of change to active
resistance to it (see Figure I) These attitudes, of course, result in behavioural
patterns that may attempt to enhance the outcome of change, try to impede the
progress of change, or take a neutral, more passive position toward it.
Figure 1: Range of attitudes toward change and resulting behaviour

Enthusiastic cooperation and support

Cooperation
ACCEPTANCE Cooperation under pressure from management
Acceptance
Passive resignation
INDIFFERENCE Indifference
Apathy; loss of interest in the job
Doing only what is ordered
Regressive behaviour
PASSIVE RESISTNACE No learning
Protests
Working to rule
Doing as little as possible
ACTIVE RESISTANCE Slowing down
Personal withdrawal
Committing ‘errors’
Spoilage
Deliberate sabotage

The social adaptations change calls for alterations in the relationships between
employees, their superiors, their colleagues, their subordinates and the informal
groups to which they belong. Change often affects the degree of social interaction
between individuals and may also have an impact upon roles, status, cohesiveness,
and patterns of identification and acceptance between people.
In addition to Judson’s suggestions described above, change may also have an
impact upon employees’ job freedoms and constraints and new environment at the
workplace.
It has been found that changes, even relatively minor and limited ones, tend to
produce stress and tensions in employees. Gardner and Moore (1964) long ago
found that “the cost in employee feelings of anxiety and insecurity and the loss of
productive energies and efficiency, engendered by changes affecting the well-being
and status of employees, are significant items of human and economic expense.” It
5
is surprising therefore, that many managers still view adaptation to a work change
as an individual problem which the employee must sort out himself.

22.4 SOURCES OF RESISTANCE TO CHANGE

Robbins identifies five reasons why individuals resist change: habit, security,
economic factors, and fear of the unknown and selective information processing. In
addition, he identifies six major sources of organisational resistance: structural
inertia, limited focus of change, group inertia, threat to expertise, threat to
established power relationships and threat to established resource allocations. The
individual and organisations, which after all are collections of individuals, both
resist change. Of course, there is little resistance to change in a company in which
the previous outcomes of changes have been positive. Second, the fact that an
individual is well educated or highly intelligent does not mean that he or she will be
less resistant to a necessary, logical change introduced by the manager. In fact, a
highly educated employee is likely to come up with more rationalisations for not
making a change (Davis, 1967).
A number of explanations have been advanced for the development of attitudes and
behaviour patterns of resistance to change.
Economic Reasons
Large part of employees’ resistance to organisational change lies in the element of
fear because employees are afraid that change will result in the loss of something
important to them. All changes, promotion, transfer, demotion, reorganisation,
merger, retirement and most other managerial actions, produce loss. Despite the fact
that change is necessary and is often for the better, at some level of consciousness,
individuals experience the threat of this displacement of loss.
Personal Reasons
When change takes place, employees face a potentially uncomfortable period of
adjustment as they settle into a new organisational structure or a redesigned job.
Many employees, who possess years of experience in their area of work, do not wish
to learn new skills. New techniques pose the threat of personal obsolescence.
Change may undermine the fulfillment of any or all human needs, physical
maintenance, security, affiliation, social esteem (recognition and reputation),
competence, power, achievement and hope. When a new superior comes on the
scene, for example, an employee may immediately become concerned about the
protection of his needs for security, competence and power and social esteem.
Similarly employees may resent the fact that they did not have a part in the change
decision.
Social Reasons
Organisational changes which break long time social relationships may be feared by
the employees. An employee who does not participate in the changes affecting
relationships with others may resent change. Similarly, employees are likely to
oppose change which threatens their group status.
Political Reasons
Political considerations may also act as the sources of resistance to change. At the
political executive level, change may mean shifts in power and the realignment of
6
power cliques. The unions representing organised production, clerical and some
professional employees may fear that changes will reduce and affect the informally
developed power of these groups in some offices or workplaces.
Tensions may occur as a result of the pressures from uncertainty, insecurity, or from
other concerns. But there will be no problem of concern to the manager involving
the development of a strategy for change. However, change often results in
resistance, and negative employee reactions may doom the success of programmes
of change if not handled properly.

22.5 DEALING WITH RESISTANCE TO CHANGE

Kotter and Schlesinger suggest a number of tactics for use by change agents in
dealing with resistance to change: education and communication, participation and
involvement, facilitation and support, negotiation and agreement, manipulation and
co-optation and explicit and implicit coercion. The following is a brief description
of each:
Education and Communication
Resistance to change can be reduced through adequate communication to those
affected by intended changes. Lack of clear communication leaves room for
distorted interpretation of facts and intentions. If employees receive the full facts
and information and get any misunderstanding cleared up, resistance will be
minimised.
Participation and Involvement
Employees are less likely to offer resistance to decisions for change which they
have participated in making. Assuming that the participants have the experience and
knowledge to contribute, their involvement can reduce resistance, obtain
commitment, and increase the quality of the change decision.
Facilitation and Support
By offering counseling, guidance and training during the change process, the
management can deal with the fear and anxiety that employees may have about not
being able to cope with change.
Negotiation and Agreement
Another way for the change agent to deal with potential resistance to change is to
use negotiation as a tactic. For example change needs can be overcome by offering
lucrative redundancy packages to key workers or golden handshakes to departing
chief executives.
Manipulation and Co-optation
Distorting facts to make them appear more attractive, withholding undesirable
information, and creating false rumours to get employees to accept a change are all
explanations of ‘manipulation’. On the other hand, ‘co-optation’ is a form of both
manipulation and participation. It seeks to buy off the potential workers and leaders
who resist change by giving them a key role in the change decision.

7
Coercion
Coercion tactic is used by managers to force people to accept a change decision.
Some examples of coercion are threats of transfer, loss of promotions, negative
performance evaluations, and poor letters of recommendation.
In brief, it is suggested that management should use a range of these approaches to
introduce change successfully, often by combining them and recognising their
strengths and constraints.

22.6 APPROACHES TO CHANGE

There are mainly three popular approaches to managing change, (1) Lewin’s Classic
Three-step Model of the Change Process,(2) Action Research, and (3)Organisational
Development.
22.6.1. Lewin’s Three-Step Model
Lewin (1951) made an effort in the process of bringing about effective change.
According to him most efforts at change fail for the reason that people are unwilling
to alter long-established attitudes and behaviour. To overcome this obstacle, Lewin
developed a three-step sequential model of the change process. It involves (1)
“unfreezing” the present behaviour pattern, (2) “changing” (movement) or
developing a new behaviour pattern, and then (3) “refreezing” or reinforcing the
new behaviour (See, Figure 2)
(i) Unfreezing, involves making the need for change so obvious, that the
individual, group, or organisation can readily see and accept it.
(ii) Changing, involves discovering and adopting new attitudes, values and
behaviours. A trained change agent leads individuals, groups or the entire
organisation through the process. During this process, the change agent will
foster new values, attitudes, and behaviour through the processes of
identification and internalisation. Organisation members will identify with
the change agent’s values, attitudes, and behaviour, internalising them, once
they perceive their effectiveness in performance.
(iii). Refreezing, means locking the new behaviour pattern by means of supporting
or reinforcing mechanisms, so that it becomes the new norm.
Lewin’s three-step change model depicts three stages, namely unfreezing,
movement and refreezing. When the driving forces are equal and opposite,
we are in a state of ‘equilibrium’. The restraining forces which hinder
movement from the existing equilibrium can be decreased. But when the
driving forces result in movement toward our required situation, we
encourage communication, participation and education to help change
behaviour. In the final stage driving forces, move to a consolidation change,
that is, a new behaviour. At this stage, it is important for the management to
stabilise the new situation by balancing the driving and restraining forces.
The formal rules and regulations governing behaviour of those affected by
the change should also be revised to reinforce the new situation.
22.6.2 Action Research
By Action Research is meant, a change process based on the systematic collection
of data and then selection of a change action based on what the analysed data
8
indicates (Stoner, Freeman, Gilbert, 1996). The importance lies in providing a
scientific methodology for managing planned change. The Action Research process
consists of five steps: diagnosis, analysis, feed back, action, and evaluation.
The diagnosis is analogous to the physician search to find what specifically ails a
patient. In action research, the change agent asks questions, interviews employees,
reviews records, and listens to the concern of employees after this analysis of data is
done. The third step–feedback requires sharing with employees, what has been
found from steps one and two. The employees, with the help of the change agent,
develop action plans for bringing about any needed change. In the fourth step, the
employees and the change agent carry out the specific actions to correct the
problems that have been identified. The final step of action research is evaluation of
the action plan’s effectiveness. Using the initial data gathered as a benchmark, any
subsequent changes can be compared and evaluated.
Two specific benefits are seen from the action research. First, it is problem-
centered. The change agent objectively looks for problems and the type of problem
determines the type of change action. Second, because action research involves
largely employees in the process, resistance to change is reduced.
22.6.3 Organisational Development
Organisational development (OD) is concerned with the process of change rather
than used to encompass a collection of change itself. Although OD frequently
includes structural and technological changes, its primary focus is on changing
people and the nature and quality of their working relationships. Formally, OD has
been defined "as a top management-supported, long range effort to improve an
organisation’s problem solving and renewal process, particularly through a more
effective and collaborative diagnosis and management of organisation culture, with
special emphasis on formal work team, temporary team, and inter-group culture
with the assistance of a consultant or facilitator and the use of the theory and
technology of applied behavioural science, including action research".(French and
Bell, 1981)
Robbins (2001) briefly identifies the following underlying values in most OD
efforts:
I. Respect for people: Individuals are perceived as being responsible,
conscientious, and caring. They should be treated with dignity and respect.
II. Trust and support: The effective and healthy organisation is characterised by
trust, authenticity, openness, and a supportive climate.
III. Power equalisation: Effective organisations deemphasize hierarchical
authority and control.
IV. Confrontation: Problems shouldn’t be swept under the rug. They should be
openly confronted.
V. Participation: The more that people who are likely to be affected by change
are involved in the decisions surrounding that change, the more will they be
committed to implementing those decisions”.
OD Techniques for Change
Following are some of the OD techniques for bringing about change:

9
(i) Sensitivity Training
Sensitivity training or T-groups (training groups) refers to a method of changing
behaviour through unstructured group interaction. Members are brought together in
a free and open environment in which participants discuss issues and study their
interactive processes, loosely directed by a professional behavioural scientist.
The objectives of the T-groups sought to be achieved, include increased ability to
emphasise with others, improved listening skills, greater openness, increased
tolerance of individual differences, and improved conflict resolution skills.
(ii) Survey Feedback
Survey feedback is a tool for assessing attitudes held by organisational members;
identify discrepancies among member perceptions, and solving these differences.
Under the survey feedback approach (Edwards Thomas), a questionnaire is usually
completed by all members on relevant issues in the organisation and workplaces.
(iii) Process Consultation
In process consultation, a consultant works with organisation members to help them
understand the dynamics of their working relationships in group or team situations.
The consultant helps the group members to change the ways they work together and
to develop the diagnostic and problem-solving skills they need for more effective
problem solving (Schein, 1969)
(iv) Team Building
Organisations are increasingly relying on teams to accomplish work tasks. Team
building utilises high-interaction group activities to increase trust and openness
among team members (Dyer, 1994). This approach analyses the activities, resource
allocations, and relationships of a group or team to improve its effectiveness. The
team building can also address itself to clarifying each member’s role on the team.
(v) Inter-group Development
Inter-group development seeks to change the attitudes, stereotypes, and perceptions
that groups have to each other. This approach seeks to improve inter-group relations
through a method which emphasises problem- solving. In this approach, each group
meets independently to develop lists of its perception of itself, the other group, and
how it believes the other group perceives it. The groups later share their lists, after
which strengths and weaknesses are discussed.
22.7 MANAGEMENT GOALS AND ACTIONS FOR
INTRODUCING CHANGE
Klatt and his associates say that the manager involved in any type of change goes
through four steps:
(i) “Recognises that a change is necessary or desirable;
(ii) Determines the ideal change;
(iii) Decides how to implement the change;
(iv) Introduces the most practical form of the ideal change”.
Further, they suggest that each of these steps can produce an undesirable reaction or
a particular resistance from the employee:

10
(i) “To the very idea of a change
(ii) To the intended change.
(iii) To the method of implementing the change.
(iv) To the changed state itself”.
The effective manager will keep these four areas of possible resistance in mind in
trying to avoid resistance, before it develops any further. When the change is under
consideration, it is appropriate for the management to determine what its goals and
objectives are, in bringing about change.
In the first place, it would seem important to define organisational objectives that
support the philosophy of providing positive benefits for the organisation, the
management and the community in general. Unless organisational objectives specify
the pursuit of mutually beneficial results, changes may fall short of providing
fulfillment for everyone.
Changes can be considered on the basis of whether or not they will contribute
effectively to the reasonable fulfillment of responsibilities for the organisation, the
owners, employees, customers, and citizens of the community at large. However,
when external factors make change necessary, care can be observed to try to share
the reasons for the change with those affected, and to channel the modifications, so
that they have the interests of everyone. It may be mentioned here that changes that
offer minimal opportunities for success and desirable results normally should not be
given serious consideration because the adverse effects of adaptation to change will
often overshadow the attainable merits.
Second, it would seem desirable and essential to allow and encourage employee
participation in deciding whether or not the change should be made and how it
should be made. Participation helps in the disclosure of the causes of change, its
consequences, and its implications so that uncertainties concerning it are avoided.
Participation in the change process is one of the most useful tools of management
for the successful introduction and implementation of alterations and innovations at
the workplaces.
Third, when an official decision to change is reached a modification of those
affected by change usually is helpful. A public enterprise that is informed or knows
a year in advance that it will be necessary to transfer several employees to new jobs
can take the necessary steps to provide the reorientation, training, equipment
realignment, social adjustment, and other actions necessary to be ready for the
transfer when it finally happens. Employees appreciate advance communication of
changes that affect them personally so that they can begin to make physical,
psychological, and social readjustments.
Fourth, it would be of mutually beneficial results if such managerial policies are
adopted as provide protection and support for employees when faced with change. A
wage policy that guarantees that employees cannot be forced by any changing
events to accept jobs with lower pay scales within the organisation removes some of
the economic threat of change. Likewise, a policy of retraining employees whose
skills have become obsolete lends encouragement when technology forces change.
Most policies that provide protection from fears of loss and threats will improve
attitudes toward impending changes.

11
Fifth, there may be an apprehension of fears and personal losses because of change
at the workplaces. Judson suggests the use of ‘tentative approach’ for overcoming
fears (Judson, 1986). This technique is basically the establishment of a trial period
of change in which employees are asked to work under the new requirements or
conditions without actually accepting the change and committing themselves to
abide by its new demands. By this technique, those involved with strong
preconceptions are in a better position to regard the change with greater objectivity.
Moreover, the management is better able to evaluate the method of change and
make any necessary modifications before carrying it out more fully. The tentative
approach has a way of defusing potentially explosive rejection of change.
Sixth, it is equally important to give attention to the change agents selected to
introduce change. Selection of individuals as change agents who are respected and
who have the confidence of other workers, improves the probabilities of successful
reactions and adjustments to change.
Seventh, certain fruitful efforts can be made to provide for compensation or
substitution for personal losses. When the employees lose something as a result of
change that cannot be prevented (loss of wages, loss of desirable social climate, loss
of freedom, and so forth), an effort can be made to substitute something else for the
loss.
And, finally, implementing change and getting its acceptance is an important
managerial function. This requires support from the labour unions, informal work
groups, influential individuals and government agencies. For example, employee’s
unions and informal work groups within the formal organisation may encourage
members to give favourable responses to change when the benefits of change are
communicated and understood. Influential individuals both within and outside
organisations may be persuasive in leading individuals to respond favourably to
change. Government agencies sometimes provide financial and advisory assistance
in the implementation of changes.

22.8 CONCLUSION
We live in a world of change. Change is a continuous process. Continuity is as
important for the success of an organisation, as, change. Change frequently results
from internal plans to improve the performance of the organisation and to benefit
organisational members and others. Change also may be a result of external
influences, including economic, technological and social factors.
The discussion in this Unit provides explanations for the resistance and rejection of
change that frequently occur. Fear often prevails in employees when change is
introduced. The individuals who serve as change agents also play a part in eliciting
acceptance or rejection of change.
It should be the purpose of the management to maximise the effects of change at
workplaces and to minimise the negative consequences upon the organisation and its
owners, employees, customers and citizens of the community at large. If the
managerial actions suggested in this Unit are implemented, the results of change
will be beneficial to employees at the workplaces and to the management as a
whole.

12
22.9 KEY CONCEPTS
Action Research: The method through which change agents learn what
improvements are needed and how the organisation can
best be aided in making those improvements.
Change Agent: The individual leading or guiding the process of change
in an organisational situation.
Refreezing: Transforming a new behavioural pattern into the norm
through reinforcement and support mechanisms.
Sensitive Training: An early personal growth technique that emphasises
increased sensitivity in interpersonal relationships.
Team Limiting: A method of improving organisational effectiveness at
the team level by diagnosing barriers to team
performance and improving interteam relationships and
task accomplishment.
Unfreezing: Making the need for change so obvious that the
individual, group or organisation can readily see and
accept that change must occur.

22.10 REFERENCES AND FURHTER READING

Davis, Keith, 1967, Human Relations at Work, 3rd Edition, McGraw Hill
Book Co.
Dyer, W, 1967, Team Building: Issues and Alternatives, Reading, Mass
Addison–Wesley.
Edwards, J.E. and Thomas M.D., 1993, “The Organisational Survey
Process”, P. Rosenfield and Others(Eds), Improving Organisational Surveys,
Newbury Park, Sage, Newbury Park
French, Wendell L. and Bell H. Cecil, 1981, Organisational Development,
3rd Edition, Prentice Hall, New Delhi.
Gardner, Burleigh B. & Moore G. Moore, 1964, Human Relations in
Industry, 4th Edition, Richard D. Irwin, Homewood Illinois.
Judson, Arnold S, 1966, A Manager’s Guide to Making Changes, John Wiley
and Sons, London.
Klatt, Lawrence, Robert G. Murdock, and Fred.E. Schuster, 1978, Human
Resources Management, Richard Irwin, Illinois.
Kotter, J.P. and L.A. Schlesinger, “Choosing Strategies for Change”,
Harvard Business Review, Vol. 27, No. 2.
Lewin, K, 1951, Field Theory in Social Science, Harper and Row, New
York.
Robbins Stephens P, 2001, Organisational Behaviour, Ninth Edition Prentice
Hall of India.
Schein, Edgar H, 1969, Process Consultation, Reading, Mass Addison –
Wesley.
13
 Stoner, James, R.E. Freeman and Gilbert Daniel, Management, Sixth Edition
Prentice Hall, New Delhi.
Thomas, John M. and Warren G. Bennis (Eds.), 1972, The Management of
Change and Conflict, Penguin, Baltimore.
Weaver, Charles N, 1976 “What Workers Want Most from Their Jobs,”
Journal of Personnel Psychology.

22.11 ACTIVITIES
1) Discuss managerial actions to enhance the positive side of change and to
minimise the negative consequences of change at workplaces.
2) Describe principal approaches to bringing about change.
3) Discuss the concept of organisational development (OD).

14
UNIT-23 STRESS MANAGEMENT

Structure

23.0 Learning Outcome

23.1 Introduction

23.2 Meaning of Stress

23.2.1. Negative Implications of Stress.

23.3 Sources of Stress

23.3.1 Environmental factors

23.3.2 Organisational Factors

23.3.3 Individual Factors

23.3.4 Individual differences

23.4 Consequences of Stress

23.4.1 Physiological symptoms

23.4.2 Psychological Symptoms

23.4.3 Behavioural Symptoms

23.5 Practice of Stress Management

23.6 Strategies to Manage Stress

23.7 Managing Stress: Ancient Indian Approaches

23.8 Conclusion

23.9 Key Concepts

23.10 References and Further Reading

23.11 Activities

1
23.0 LEARNING OUTCOME

After reading this Unit, you should be able to:

• Explain the meaning of stress and its consequences;

• Illustrate the potential sources of stress; and

• Describe the different approaches toward managing stress.

23.1 INTRODUCTION

Stress is a product of busyness of modern life. Tim Newton (1995) refers to stress as "an

epidemic plaguing modernity”. It has assumed grave dimensions ever since the

emergence of industrialism. From being a subject, which was barely a reference a century

ago, it has become so prevalent that for most people in the capitalist world, it is

unavoidable. Our concern in this Unit is with how this has come about, and with the ways

in which employees are said to feel and cope with stress. It is important to monitor stress

levels, analyse coping strategies and learn how to become stress–fit through a range of

stress management techniques. Stress is an additive phenomenon. It builds up overtime.

Stress is quintessentially a problem that must be borne by management and those in

senior positions, whether captains of industry or leaders of government.

2
23.2 MEANING OF STRESS

Stress is a "dynamic condition in which an individual is confronted with an opportunity,

constraint or demand related to what he or she desires and for which the outcome is

perceived to be both uncertain and important” (Robbins, 2001).

Beehr and Newman (1978) define stress “as a condition arising from the interaction of

people and their jobs and characterised by changes within people that force them to

deviate from their normal functioning”. According to Winfield, Bishop and Poter "stress

is essentially a psychological condition induced by external conditions that release or

restrict certain chemicals in the brain; this in turn can lead to psychological change in the

individual resulting in change of behaviour. It is associated with the psychological

perception of an individual about the pressure of contingencies. A pioneer of research on

stress has seen it as a response, not, as the environmental stimulus, or as a situation where

the demand exceeds the individual’s abilities to cope. For Seyle (1945), there are three

stages in the experience of stress:

(i) Alarm: The individual has lowered resistance when he or she is in a state of

psychological disequilibrium, which does not permit the individual to co-exist

conformably within the environment.

(ii) Resistance: The individual adapts to the stimulus, which permits him or her to

eventually return to a state of psychological equilibrium.

(iii) Exhaustion: It results when the willingness and ability to adapt to the stimulus

collapses. This will result in ‘giving up’ or resigning oneself to the inevitable

and lead to damage psychological and physical health.

3
It may be mentioned here that stress is not necessarily bad in itself; it has positive value.

It offers an opportunity for potential gain. Stress in a positive context induces employees

to rise to the occasion and perform at their best. For example, when an employee

undergoes annual performance review at work, he often feels stressed because he faces

opportunities, constraints and demands. A good performance review may reward him a

promotion and reaching a higher salary. On the contrary a poor review may prevent him

from achieving the promotion and higher station in life. An event that causes constant

worry to one can be a very useful challenge to another. When we are under stress, our

awareness, our senses and our mind are sharpened. We know many people who work best

under stress because they do not permit stress to create anxiety in them.

23.2.1 Negative Implications of Stress

Tim Newton observes ‘Stress appears almost as a necessary kind of comfort discourse, a

tranquillizer to cope with the diversity of competing messages about the truth of this

world, and the dreadful uncertainty of our times. The stress discourse reassures us by

explaining how it is normal to feel stressed in these conditions, and it provides strategies

to help us cope with them by being vigilant and stress-fit” (Newton, 1995). Stress at work

and job stress are a chronic disease caused by conditions in the workplace that negatively

affect an employee’s performance and his health. Work related stress in the life of

organised workers, consequently affects the health of the organisation. Negative

implications of stress for the organisation may be identified as under:

(a) Physical: (i) Poor performance resulting in fall in the quality and quantity of

work, (ii) Absenteeism at work, (iii) Negative fallout of business.

4
 (b) Social: (i) Increase in social tensions, (ii) Resistance to social change, (iii)

Withdrawal from normal social networks

(c) Psychological (i) Deterioration in morale, (ii) Hurdles in effective

communications (iii) Irrational judgements about others (iv) Sense of distrust

and alienation.

(d) Behavioural : (i) Poor decision making and its implementation (ii) Accidents

in workplaces (ii) Loss of potential human resources

23.3 SOURCES OF STRESS

One source of rise in stress is related to rapid pace of change. Stress, anxiety, depression,

phobias, all are part of the accepted fallout of the’ business’ of modern life, in which

technology, far from freeing time for leisure, only seems to accelerate the pace. To

Giddens, stress could be seen as in part a consequence of the increasing uncertainty of

modern life. As Giddens (1991) points out, we no longer have clear sources of authority,

such as those traditionally provided by religious authorities. Instead there is an”

indefinite pluralism of expertise” which “some individuals find it psychologically

difficult or impossible to accept.” By Giddens’ account, the problem of stress is likely to

appear as fundamentally social, moral and institutional.

For Cooper, stress is seen as the product of an interaction between individual needs and

resources and the various demands, constraints and facilitators within the individual’s

immediate environment. Cooper (1986) presents comprehensive overview of both the

causes of work stress and the organisational and individual problems, which may arise

when the individual worker experiences those stressors. The medical terminology

adopted by Cooper facilitates the task of sanitising organisation life by implying that both

5
the individual and the organisational outcomes of stress are self-evidently pathological

and thus in need of treatment rather than illumination.

Robbins’s model (this model adopts the transactional perspective found in many 1980s

models of stress) identifies three sets of factors: Environmental, organisational and

individual that act as stressors. These are briefly discussed as follows:

23.3.1 Environmental factors

Economic uncertainty does influence the stress levels among the personnel in the

organisation. For example, when the economy is contracting, people become increasingly

anxious about their security. Likewise political uncertainty, such as, political threats and

changes, can be stress inducing. Technological uncertainty can also cause stress because

innovations, such as, computers, robotics, automation are a threat to many people.

23.3.2 Organisational Factors

Pressures to avoid mistakes or complete tasks in time, work overload, unpleasant co-

workers and an insensitive boss in the organisation can cause stress among the

employees.

Lack of social support from colleagues and poor interpersonal relationships can cause

much stress. Similarly excessive rules and lack of participation in decisions that affect an

employee are instances of structural variables that might cause stress. Some chief

executive officers establish unrealistic pressures to perform in the shot run, impose

excessively tight controls, and routinely fire employees who do not come up to their

expectations.

6
23.3.3 Individual Factors

Individual factors, such as family issues, personal economic problems, marital difficulties

and discipline troubles with children are examples that create stress for employees. Some

people have wants that always seem to exceed their earning capacity.

23.3.4 Individual differences

It is already stated that some personnel thrive on stressful situations while they

overwhelm others. At least five variables – perception, job experience, social support,

belief in locus of control, and hostility have been found to be relevant moderators

(Robbins, 2001).

There is ample evidence to suggest that stress can be either a positive or a negative

influence on employee performance. For many people, low to moderate amounts of stress

enables them to perform their jobs better, by increasing their work intensity, alertness,

and ability to react. However, a high level of stress, or even a moderate amount sustained

over a long period, eventually takes its toll, and, performance declines. The impact of

stress on satisfaction is far more straightforward. Job-related tension tends to decrease in

general job satisfaction.

23.4 CONSEQUENCES OF STRESS

A manager or an employee in an organisation who is experiencing a high level of stress

may develop high blood pressure, ulcers, irritability, difficulty in making routine

decisions, loss of appetite, accident proneness, and the like. These can be subsumed

under three general categories, physiological, psychological, and behavioural symptoms.

7
23.4.1 Physiological symptoms

The early research led to the conclusion that stress could create changes in metabolism,

increase heart and breathing rates, increase blood pressure, bring on headaches, and

induce heart attacks. However, the link between stress and particular physiological

symptoms is not clear.

23.4.2 Psychological Symptoms

Job-related stress can cause job-related dissatisfaction. Job dissatisfaction, in fact, is “the

simplest and most obvious psychological effect” of stress. But stress shows itself in other

psychological states – for instance, tension, anxiety, irritability, boredom, and

procrastination. The research suggests that when people are placed in jobs in which there

is lack of clarity as to the incumbent’s duties, authority, and responsibilities, both stress

and dissatisfaction are caused.

23.4.3 Behavioural symptoms

Behaviourally related stress symptoms include, changes in productivity, absence, and

turnover, as well as changes in eating habits, increased smoking or consumption of

alcohol, rapid speech, fidgeting, and sleep disorders.

23.5 PRACTICE OF STRESS MANAGEMENT

Evidence of the medically damaging symptoms of work stress necessitates applying the

treatment of stress management. Stress management is increasingly drawing attention of

the management experts not only as a remedial measure but also as a way to resource

management. If the work place can be made a little more lovable the increase in the

achievement of the organisation may be many time more. If group stress can be removed

8
by introducing group discussions and recreational facilities a long lasting team spirit may

get developed.

There are mainly three forms of stress management practice: employee assistance

programmes (EAPs); stress management training (SMT); and stress reduction or

intervention (SI). (Murphy, 1986).

23.5.1 Employee Assistance Programmes

The first of forms of stress management practice is employee assistance programmes

(EAPs) which refers to the provision of employee counselling services by an

organisation. The forerunner of EAPs was the counselling programme undertaken at the

Hawthorne works of the Western Electric Company in Chicago in 1936 with a single

counseller and ended in 1956 with five counsellors.

Weiss has provided a detailed critical analysis of counselling and argues that EAPs

enshrine a convenient managerial ideology (Weigg, 1986). EAPs take holistic view of

the employee so that he or she can seek advice on almost any issue. It can enable

employees to have an easy access to trained counsellors getting personal insight and

practical solutions.

23.5.2 Stress Management Training

Stress management training (SMT) refers to training courses designed to provide

employees with improved coping skills, including training in techniques such as

meditation, bio-feedback, muscle relaxation and stress inoculation (Newton, 1992). This

method which has grown in popularity in recent years is designed to relieve tensions and

reduce frustrations. By helping their employees to learn Stress Management skills,

organisations promote workforces who are committed to being effective copers, the

9
definition of which is directly related to their job performance. Through an introduction

to stress concepts, the employee is taught to be wary of getting stressed.

23.5.3 Stress Intervention

The third form of SM practice is stress reduction or intervention (SI). This SI form,

however, appears only as a prescription by a small number of researchers, and has

received little application as an SM practice (Murphy, 1982). More or less explicit

feeling rules are made and generally they are already part of some professionals,

especially helpers. For example, police officials are taught and trained to curb their anger

when under provocation, and doctors are supposed to react coolly and dispassionately to

whatever ailments their patients bring. Indeed, the fact of being professional has come to

imply a set of rules about doing a job at an emotional distance from the customer or

customer with heavy sanctions against getting “too personally involved." That is theory.

However, some feeling rules are likely to be highly resistance to change.

23.6 STRATEGIES TO MANAGE STRESS

It is already stated that high levels of stress or even low levels of stress sustained over

long period of time can impair employee performance, and thus requires action by

management. What management considers as “a positive stimulus that keeps the

adrenalin running” may be seen as “excessive pressure’ by the employee. The following

discussion has been influenced by J.E. Newman and T.A. Beehr (1978) and J.M.

Ivancevich and others.

10
23.6.1 Individual Strategies

Individual approaches or strategies that have been found quite effective in reducing stress

include: (i) implementing time management and delegation techniques, (ii) increasing

physical exercise and practicing deep breathing and relaxation skills, and (iii) expanding

the social support network.

Studies have revealed that Yoga has cured or helped control several stress related

diseases – reducing blood pressure, controlling asthma and neuroticism (Ivanicavich,

Matteson Friedman, 1990).

A proper understanding and use of basic time management principles can help personnel

better cope with job tensions. Some well-known time management principles are: (i)

making a daily list of activities to be accomplished; (ii) prioritising activities in order of

importance and urgency; (iii) scheduling activities according to the priorities thus set,

and; (iv) knowing one’s daily cycle and handling the most demanding parts of the job

during the high part of the cycle when one is most alert and productive (Haynes, 1985).

Physical exercise including practice of deep breathing and relaxation skills increase heart

capacity, lower at-rest heart rate, provide a mental diversion from work pressures, and

offer a means to ”let off steam” (Keily, Hodgson, 1990). Research also supports that

having friends, family, or work colleagues to hear problems can help better cope with

tension.

23.6.2 Organisational Strategies

A few contributors to stress arise from organisational structure and management.

Organisational strategies that have proved effective include: improved personnel

selection and job placement, use of realistic goal setting, redesigning of jobs, increased

11
employee involvement, improved organisational communication, and establishment of

wellness programmes.

It is seen that individuals with little experience tend to be more liable to stress. While

management should not restrict hiring only experienced individuals with an internal

locus, such individuals may adapt better to high-stress jobs and perform those jobs more

effectively. Similarly individuals perform better when they have specific and challenging

goals and receive feedback on how well they are progressing toward these goals. The use

of goals can reduce stress as well as provide motivation.

Management should also consider redesigning of jobs. This gives employees more

responsibility, more meaningful work, more autonomy, and increased feedback and can

reduce stress because these factors give the employee greater control over work activities

and lessen dependence on others.

Therefore an organisation should establish a strategy for managing stress as part of an

employee health and performance improvement policy.

Management should also consider increasing employee involvement in decision making.

By giving these employees voice in those decisions that directly affect their job

performances, management can increase employee control and reduce this role stress.

Given the importance that perceptions play in moderating the stress-response

relationship, management can also use effective communications as a means to shape

employee perceptions and outlook.

Besides these, organisationally supported programmes, that focus on the employee’s total

physical and mental condition can reduce largely employee's stress and achieve higher

employee performance. For example, these programmes may provide workshops to help

12
employees quit smoking, control alcohol use, lose weight, balanced diet, and develop a

regular exercise programme.

23.7 MANAGING STRESS: ANCIENT INDIAN APPROACHES

Psychologists have shown keen interest in the age-old techniques prescribed in the

ancient Indian scriptures. Hindu psychology lays stress on the development of will, and

on the individual’s potential power of bringing out his inner strength. The Hindu

psychological technique essentially has two aspects: one is the realisation of the supreme

goal of life, and the other, is the cultivation of detachment.

According to the Bhagavadgita “the mind is restless and difficult to control”; but through

practising ‘Karmayoga’ one can cleanse the mind of its accumulated stress. When the

Karmayog relinquishes attachment both to action and its fruit, he ceases to have likes,

dislikes, and is therefore no longer swayed by the feelings of stress and frustration. It is

through the constant practice of maintaining evenness of mind with reference to action

one may perform, every moment of life, and under every circumstance are becomes a

Karmayogi (Radhakrishna, 1990). Tensions result when the mind suffers from

indecisiveness in relation to varying and conflicting emotions. Therefore one should work

with a perfect serenity indifferent to the results.

Some important stress management techniques, which have been emphasised in the

ancient Indian scriptures, are discussed below.

23.7.1 ‘Yoganidra’ (Meditation)

In most cases, standard management prescriptions cannot bring about mental relaxation,

primarily because individuals have worries at the back of their minds even when they

13
attempt to relax, physically. An employee may lie down on bed or take rest apparently

quite for couple of hours but he may have a racing heart. Even during sleep, his mind

may remain in an unconscious state. It is the three-fourth of the mind that remains in the

unconscious form. The unconscious mind is the storehouse of many contradictions.

Therefore, it is important to find a solution to this problem. Indian yogis have

recommended a few dynamic and strategic techniques for reducing stress.

Yoganidra or ‘meditation’ is a yogic tool for mind management; it takes case of both

internal and external relaxations because it aims to reach the inner self by going beyond

the physical and mental planes. Yoganidra is an approach that links up an individual’s

conscious awareness with the transcendental body. In fact, Yoga means unison and 'nidra

means the purest form of relaxation. Yoganidra is, in this sense, a total relaxation with

complete awareness about one’s spiritual origin. This complete self-awareness empowers

the mind to joyfully face the odds of any work environment and reduces tensions and

stresses of the employees.

In yoganidra, the posture is Shavasana, i.e., the posture of sense withdrawal. In this

posture one lies on his back with arms little away from the body and with legs slightly

apart. The whole body has to be in a relaxed state but one must not sleep. Once the body

becomes steady and relaxed the practitioner goes for breath awareness, i.e., the

practitioner continuously watches the cyclical movement of the breath between the throat

and naval. Next step is to make a "sankalpa", a target to be attained at the end. One

should repeat this sankalpa with unchanged words each time one practices Yoganidra.

Once sankalpa is made practitioner visualises different parts of his body in a systematic

fashion- from fingers to toes, from right hand side to left hand side. By doing, so one

slowly becomes aware of the life force moving within so that the physical relaxation

14
becomes a completely harmonised one. The practice ends with a mental repetition of the

words of the starting sankalpa. The practitioner sits up and breathes deeply. The best time

for doing Yoganidra is just before going to bed or in the morning.

Thus the strength of Yoganidra lies in its unification of physical relaxation with mental

relaxation. The posture of 'shavasana' is to help physical relaxation. When the mind is

directed to feel different parts of the body and to watch the normal breathing from navel

to nostril, it helps the body to relax without disturbing the awareness. During Yoganidra,

the heart rate slows down a little, the breathing rate goes down, the muscle tension is

reduced and the blood levels of lacate and cortical which are associated with anxiety and

stress decrease.

23.7.2 Practice of ‘Rajyoga’

‘Rajyoga’ is another technique for reducing mental stress. It is an eight-tier system of

practice developed by Indian yogis. In the first part of Rajayoga, the purification of mind

is stressed. This is to be achieved by abstaining from forceful possession and pleasure, by

following the path of truth and nonviolence and by solemnly rejecting any gift. For

example, if we do not accept any gift and follow the path of honesty, business ethics will

get intermingled with work culture in a spontaneous and natural way. Thus, the first step

of Rajyoga, if practiced with sincerity and zeal, cannot only purify the minds of

individuals but also clean the collective mind of an organisation.

The second part of Rajyoga is the regular practice of internal and external cleanliness,

mental happiness and worship (niyama). In fact, external cleanliness can also help in

cleaning the internal dirt. For example, if we can keep the workplace neat and clean we

are sure to get a positive response from all the individuals. These positive interactions

can be beneficial for both organisation and its employees.

15
Yogic posture and controlled breathing ‘asana’ ‘pranayama’ are the third and fourth parts

of Rajyoga. Importance of these two is clear from the fact that our body is the store house

of energy and the purpose of breathing is to intake this energy from the environment. A

controlled and systematic breathing can help us in generating more energy and vitality

which can be channeled in multiple directions for more creative works. These also help in

reducing mental stresses.

The practice of withdrawal of mind from external stimulators (pratyabhara) is the fifth

part of Rajyoga. It equips the mind to be delinked from the stressor so that the very cause

of stress can be removed.

The sixth part of Rajyoga is the practice of conceptualisation. By this is meant the act of

concentrating waves of thought on a particular issue. In conceptualisation, basic objective

is to concentrate on a single idea disallowing multitudes of waves that break up on the

shore of the mind. If this objective is achieved, the mind works with complete awareness,

perfection and unattachment. Continuation of this act of conceptualisation for at least one

hundred and forty four seconds is known as concentration or meditation (dhyan).

When one realises this stage, this becomes the seventh part of Rajayoga. At this state the

mind becomes free from stresses and strains, free from mental dirt, free from the

reactions of the past happenings. This free mind is what we call as the purified mind, the

mind that can establish creative link between conscious and unconscious states. Of

course, there is another stage in rajyoga which is aimed at realising the oneness in the

universe.

The study conducted by Carrington and Epheren (1975) reveals that if practiced under an

experienced guide meditation can make positive changes to the inner and outer states of

an individual. They noted better stability and steadiness of mind, greater tolerance,

16
greater independence, less paranoid tendencies, decreased psychosomatic conditions and

freeing blocks in the creative energy.

Yama and Niyama, the first two steps of Rajayoga are purificatory processes for higher

mental development. “Non-violence, truthfulness, non-stealing, continence, internal and

external purification, contentment, and self-control constitute ‘yama’ and ‘niyama’;

‘asana’, the practice of posture of relaxation or non-tension; and ‘pranayama’, the

breathing exercises, aim at releasing the neuro-muscular system and pacifying the

restlessness of the mind; ‘dharana’, the practice of concentration, and ‘dhyana’, the

practice of meditation, aim at the development of will-power; ‘dhyana’ strengthens the

conviction that man is basically divine, and develops the perception to realise the self”

(Dhan, 1998)

Moderately strenuous exercises, yogas reduce mental tensions and stress. Factors like

eating and drinking habits, social relationships and the pattern of work interact with one

another to determine the level of health.

23.8 CONCLUSION

We find that employee stress is an increasing problem in organisations. The existence of

work stress, however, does not mean lower performance. The study findings indicate that

stress can be either a positive or negative influence on employee performance. However,

a high level of stress, or even a moderate amount of stress sustained over a long period,

eventually takes its toll and can lead to reduced employee performance. The foregoing

pages examine the place of role stress and the interaction of personality and job

environment. Further pages examine individual and organisational approaches as well as

ancient Indian strategies toward managing stress.

17
23.9 KEY CONCEPTS

Asana: Yogic posture is known as ‘asana’ in Sanskrit. Ancient Indian Yogis

believed in compatible existence of man and nature. Asanas seek to restore
lost balance by restoring calm and energising the body.
Depression: It implies a severe mental disorder involving overwhelming sadness that
arrests the entire course of a person’s life. Depression is different from a
general feeling of sadness. It is a pathological condition which requires
immediate medical attention. Depression does not respond to palliatives.
Dhyana: Meditation is known by the Sanskrit term, dhyana. Dhyana literally means
concentration. Dhyana illumines the soul and clears confusions and
disillusionments resulting there from.
Pranayama: Breathing exercises are known by the Sanskrit terminology, ‘Pranayama’.
The word means the life force or the vital force in humans. It is believed
that breath control leads to mind control and sense control which imparts
balance too life.
Stimulant: It leads to physiological and mental arousal in the central nervous system. It
makes the individual perform effectively, for the time that the person is
stimulated by responding to a drug, behaviour, prevailing circumstances etc.

23.10 REFERENCES AND FURTHER READINGS

Beehr, T.A. and J.E. Newman, 1978, “Job Stress, Employee Health, and

Organisational Effectiveness”, Personnel Psychology.

Bhan, Sumbali Kirnan, 1998, Stress Management, Sterling Publishers, New Delhi

Carrington I.P. and H.S. Epheren, 1975, “Clinical Use of Meditation”, Current

Psychiatric Therapy, Vol. 15.

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Cooper, A.C. and S. Cartwright, Mental health and Stress in the Workplace, based on

the work of Hans Seyle.

Cooper, C, 1986, “Job Distress”, Bulletin of the British Psychological Society, Vol.

39.

Giddens, A, 1991, Modernity and Self-Identity Cambridge Polity Press.

Haynes, M.E, 1985, Practical Time Management, Penn well Books, Tulsa

Ivancevich, M, M.T. Matteson, S.M. Freedman and J.S. Phillips, 1990, “Worksite

Stress Management Interventions”, The American Psychologist.

Kiely, J. and G. Hodgson, 1990, “Stress in the Prison Service: The Benefits of

Exercise Programs”, Human Relations Journal.

Macan, T.H, 1994, “Time Management Test of A Process Model”, Journal of

Applied Psychology.

Murphy, L.R, 1988, “Workplace Interventions for Stress Reduction and Prevention”,

C.L. Cooper and R. Payne (Eds), Causes, Coping and Consequences of Stress at

Work, Chichester, Wiley.

Murphy, L.R, 1986, “A Review of Organisational Stress Management Research”,

Journal of Organisational Behavior Management.

Newman, J.E. and T.A. Beehr, 1979, “Personal and Organisational Strategies for

Handling Job Sress”, Journal of Personnel Psychology.

Newton, T.J., 1992 “Stress Management in Caring Services”, Duncan (Ed), The

Evolution of Public Management, Macmillan. , Basingstoke.

Newton, Tim, 1992, Managing Stress, Sage, London.

Radhakrishnan, S, 1970, The Bhagavadgita, Blackie, Bombay.

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 Robbins Stephens, P, 1992 Organisational Behavior, Ninth Edition, Prentice-Hall,

New Delhi.

Schuler, R.S, 1980, “Definition and Conceptualisation of Stress in Organisations”, in

Organisational Behavior and Human Performance.

Weiss, R.M, 1986, Managerial Ideology and the Social control of Deviance in

O rganisations , Praeger, New York.

Winfield, Peter, Ray Bishop and Keith Porter, 2000, Core Management for HR

Students and Practitioners, Oxford, Butterworth-Heinemann.

23.11 ACTIVITIES

1 How are opportunities, constraints, and demands related to stress? Give an

example of each.

2 What can management do to reduce employee stress? Briefly discuss ancient

Indian practices of stress management.

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