HUMAN RESOURCE MANAGEMENT (UNIT 1: Introduction to Human Resource Management)

Concept of Human Resource Management (HRM)

▪ According to the Invancevich and Glueck, HRM is concerned with the most effective use of people to
achieve organizational and individual goals. It is the way of managing people at work, so that they give
their best to the organization.
▪ HRM can be defined as a process of procuring, developing and maintaining competent resources in
the organization so that goals of an organization are achieved in an effective and efficient manner. In
other words, HRM is an art of managing people at work in such a manner that they give best to the
organisation.

Functions of Human Resource Management

Human Resources management has an important role to play in equipping organizations to meet the
challenges of an expanding and increasingly competitive sector. Increase in staff numbers, contractual
diversification and changes in demographic profile which compel the HR managers to reconfigure the
role and significance of human resources management. The functions are responsive to current staffing
needs, but can be proactive in reshaping organizational objectives. The functions of HRM can be
discussed under two heads: (i) Managerial Functions, and (ii) Operative Functions.

Managerial Functions of HRM

▪ Planning: Planning is necessary to determine the goals of the organisation and lay down policies and
procedures to reach the goals. For a human resource manager, planning means the determination of
personnel programs that will contribute to the goals of the enterprise, i.e., anticipating vacancies,
planning job requirements, job descriptions and determination of the sources of recruitment.
▪ Organizing: Once the human resource manager has established objectives and has developed plans
and programs to reach them, he must design and develop organisation structure to carry out the
various operations. The organisation structure basically includes grouping of personnel activity
logically into functions or positions, assignment of different functions to different individuals etc.
▪ Directing: The direction function is meant to guide and motivate the people to accomplish the
personnel programs. The personnel manager can motivate the employees in an organisation through
career planning, salary administration, ensuring employee morale, developing cordial relationships
and provision of safety requirements and welfare of employees.
▪ Staffing: Staffing is the process of hiring eligible candidates in the organization or company for
specific positions. In management, the meaning of staffing is an operation of recruiting the employees
by evaluating their skills, knowledge and then offering them specific job roles accordingly.
▪ Controlling: Controlling is concerned with the regulation of activities in accordance with the plans,
which in turn have been formulated on the basis of the objectives of the organisation. It involves the
observation and comparison of results with the standards and correction of deviations that may occur.
It involves performance appraisal, critical examination of personnel records and statistics and
personnel audit.
Operative Functions of HRM

▪ Procurement: It refers to a series of activities undertaken by the HR manager for filing the present and
future vacancies of the organization. The activities include job analysis and designing, HR planning,
recruitment and finally, the selection of suitable employees.
▪ Development: It refers to both employees’ training and management development. HR managers
are responsible for conducting and supervising training and development programmes for
employees. The purpose of a training and development programme is to increase the employees’
competencies in their job by improving their knowledge, skills and abilities.
▪ Compensation: It refers to the determination of the pay scale and other benefits for the employees.
Establishing and maintaining the pay system of an organization is one of the principal jobs of the HR
managers. They must devise ways to ensure fair and equitable pay rates. They must also regularly
manage the performance evaluation system of the organization and continuously design reward
systems such as performance-linked incentive plans and bonus and flexible work schedules.
▪ Maintenance: This function aims at retaining efficient and experienced employees in the organization.
This calls for creative HR practices. In this regard, HR managers are responsible for offering a wide
range of HR programmes covering occupational safety, health promotion and physical fitness, canteen
facilities, recreation activities, transportation programmes, employee suggestion schemes, career
counselling and growth for creating a positive work environment.
▪ Integration: It consists mainly of industrial relations and aims at ensuing good relations between the
management and employees. HR managers have to implement industrial relations programmes that
would ensure ethical and fair treatment in disciplinary action, grievance redressal, and career
management processes. They should also counsel the employees and the management to prevent,
and, when necessary, resolve disputes over labour agreements or other labour relations issues.
▪ Emerging issues: Effective management of human resources depends on refining HRM practices to
changing conditions. Hence the need to look at other important issues that can motivate people to
give their best in a dynamic and ever-changing environment.

Evolution of Human Resource Management

The early part of the century saw a concern for improved efficiency through careful design of work. During
the middle part of the century emphasis shifted to the availability of managerial personnel and employee
productivity. Recent decades have focused on the demand for technical personnel, responses to new
legislation and governmental regulations, increased concern for the quality of working life, total quality
management and a renewed emphasis on productivity. Let us look into these trends more closely by
examining the transformation of personnel function from one stage to another in a chronological
sequence.
 Concept Explanation
Labour was regarded as a commodity to be bought and sold. Wages
Commodity Concept were based on demand and supply. Government did very little to
protect workers.
Factor of Production Labour is like any other factor of production, viz, money, materials, land,
Concept etc. Workers are like machine tools.
Welfare measures like safety, first aid, lunch room, rest room will have a
Goodwill Concept
positive impact on workers’ productivity.
Management must assume a fatherly and protective attitude towards
employees. Paternalism does not mean merely providing benefits but it
Paternalistic Concept
means satisfying various needs of the employees as parents meet the
requirements of the children.
To improve productivity, physical, social and psychological needs of
workers must be met. As Mayo and others stated, money is less a factor
Humanitarian Concept in determining output, than group standards, group incentives and
security. The organisation is a social system that has both economic and
social dimensions.
Employees are the most valuable assets of an organisation. There
Human Resource Concept should be a conscious effort to realise organisational goals by satisfying
needs and aspirations of employees
Employees should be accepted as partners in the progress of a
company. They should have a feeling that the organisation is their own.
Emerging Concept To this end, managers must offer better quality of working life and offer
opportunities to people to exploit their potential fully. The focus should
be on Human Resource Development.

Growth of HRM in India

▪ Early phase: Though it is said that P/HRM a discipline is of recent growth; it has had its origin dating
back to 1800 B.C. For example: the minimum wage rate and incentive wage plans were included in
the Babylonian Code of Hammurabi around 1800 B.C. The Chinese, as early as 1650 B.C. had
originated the principle of division of labour and they understood labour turnover even in 400 B.C.
The span of management and related concepts of organisation were well understood by Moses
around 1250 B.C. and the Chaldeans had incentive wage plans around 400 B.C. Kautilya, in India (in
his book Arthasastra) made reference to various concepts like job analysis, selection procedures,
executive development, incentive system and performance appraisal.
▪ Legal phase: The early roots of HRM in India could be traced back to the period after 1920. The Royal
commission on labour in 1931 suggested the appointment of labour officer to protect workers’
interests and act as a spokesperson of labour. After Independence, The Factories Act 1948, made it
obligatory for factories employing 500 or more workers. “In view of legal compulsions and the
enumeration of duties the entire approach of organisations toward their personnel was to comply with
the laws and keep the welfare officers busy with routine functions” Meanwhile two professional bodies,
viz., the Indian Institute of Personnel Management (IIPM) Kolkata and the National Institute of Labour
Management (NILM) Mumbai have come into existence in 1950s.
▪ Welfare phase: During the 1960s the scope of personnel function has expanded a bit, covering labour
welfare, participative management, industrial harmony, etc. “In this period, the human relations
movement of the West had also had its impact on Indian organisations”. The legalistic preoccupations
slowly gave way to harmonious industrial relations and good HR practices.
▪ Development phase: In 1960s and 70s the HR professionals focused more on developmental aspects
of human resources. The emphasis was on striking a harmonious balance between employee
demands and organisational requirements. HRD has come to occupy a centre stage and a focal point
of discussion in seminars, conferences and academic meets. The two professional bodies, IIPM and
NILM, were merged to form the National Institute of Personnel Management (NIPM) at Kolkata.
▪ Growth-oriented phase: During the 1990's, organisational restructuring and cost cutting efforts have
started in a big way-thanks to the pressures of liberalisation, privatisation and globalisation (LPG era)
forcing companies to focus attention on employee capabilities product/service quality, speedy
response, customer satisfaction etc. Changing demographics and increasing shortages of workers
with the requisite knowledge, skills and ability have grown in importance. The issue of workforce
diversity has assumed greater importance-in view of the cultural, religious social, regional
backgrounds of workers, especially in global sized companies such as Reliance, Ranbaxy, Asian Paints,
TISCO, etc.

Period Emphasis Status Roles

▪ Welfare management ▪ Welfare administrator
1920-30 Clerical
▪ Paternalistic practices ▪ Policeman
▪ Appraiser
Expanding the role to cover
▪ Advisor
labour, welfare, industrial
1940-60 Administrative ▪ Mediator
relations and personnel
▪ Legal Advisor
administration
▪ Fire fighting
▪ Efficiency, effectiveness
▪ Change agent
dimensions added
▪ Integrator
1970-80 ▪ Emphasis on human values Developmental
▪ Trainer
▪ Aspirations, dignity,
▪ Educator
usefulness
▪ Developer
▪ Counsellor
Incremental productivity gains Proactive, growth-
1990s-Present ▪ Coach
through human assets oriented
▪ Mentor
▪ Problem solver

Distinction between HRM and Personnel Management (PM)

The difference between HRM and Personnel Management is listed below:

Basis HRM PM
HRM is proactive in nature. It is not only
PM is mainly reactive in nature. It satisfies
concerned with the present organizational
Nature itself by ensuring peaceful labour-
conditions but foresees future necessities
management relations in the present.
and then acts appropriately.
HRM is a resource-centric activity, focusses
PM, which is basically employee-centric,
more on the managerial aspects, in terms
Scope/ aims at hiring, training, compensating and
of delegating the responsibility of HRM to
Focus maintaining the existing workforce of the
line authority and management
organization.
development.
HRM emphasizes open-ended contracts,
which can be modified depending upon PM emphasizes the strict observance of
the demands of the business. Management defined rules, procedures and contracts
Emphasis
assumes the responsibility to motivate the that govern the relationship between the
employees and constantly inspires workforce and the management.
performance based on team spirit.
PM considers job satisfaction and morale as
HRM is based on the principle that better
a source of better performance. It works on
Principles performance itself is a cause of job
the foundation that a contended worker us
satisfaction and morale.
a productive worker.
HRM seeks to develop the competencies of
PM is a regular, status quo-based
the employees on a sustained basis. Skill
administrative function: Employees get
Functions formation and development are
uniform rewards based on job evaluation
recognized as the main characteristics of
and job worth.
HRM.
Distinction between HRM, PM and Human Capital Management (HCM)

Benchmarks PM HRM HCM

Succeeded PM and ruled
Represents the latest
Succeeded Industrial roost for a long period.
development but yet to
Relations (IR) but Gained worldwide
Evolutionary gain wide acceptance in
preceded HRM. Dates recognition. Started
management and
roughly during 1960s. during 1980s and carried
academic circles.
acceptance even today.
Predominantly emphasis Human resources are not
Treat human beings as
on mundane activities the company’s property,
valued assets to be
Emphasis such as employee hiring, are owned by employees
valued, used and
remunerating, training but given on rent to
preserved
and harmony. companies
Outcomes of
People Value for money Added value Created value
Management
Strategic differentiators,
Efficiency of HR activities, Effectiveness of HR output organizational capability,
Measurement
compliance against business plan potential for
transformation
Investors and Board, managers and
Reporting Regulators
stakeholders employees

Objectives of Human Resource Management

The principal objectives of HRM may be listed as follows:

▪ To help the organisation reach its goals: HR department, like other departments in an organisation,
exists to achieve the goals of the organisation first and if it does not meet this purpose, HR department
(or for that matter any other unit) will wither and die.
▪ To employ the skills and abilities of the workforce efficiently: The primary purpose of HRM is to
make people’s strengths productive and to benefit customers, stockholders and employees.
▪ To provide the organisation with well-trained and well-motivated employees: HRM requires that
employees be motivated to exert their maximum efforts, that their performance be evaluated properly
for results and that they be remunerated on the basis of their contributions to the organisation.
▪ To increase to the fullest the employee’s job satisfaction and self-actualisation: It tries to prompt
and stimulate every employee to realise his potential. To this end suitable programmes have to be
designed aimed at improving the quality of work life (QWL).
▪ To develop and maintain a quality of work life: It makes employment in the organisation a
desirable, personal and social, situation. Without improvement in the quality of work life, it is difficult
to improve organisational performance.

Nature of Human Resource Management

Human Resource Management is a process of bringing people and organisations together so that the
goals of each are met. It tries to secure the best from people by winning their wholehearted cooperation.
In short, it may be defined as the art of procuring, developing and maintaining competent workforce to
achieve the goals of an organisation in an effective and efficient manner. It has the following features:

▪ Pervasive force: HRM is pervasive in nature. It is present in all enterprises. It permeates all levels of
management in an organisation.
▪ Action oriented: HRM focuses attention on action, rather than on record keeping, written procedures
or rules. The problems of employees at work are solved through rational policies.
▪ Individually oriented: It tries to help employees develop their potential fully. It encourages them to
give their best to the organisation. It motivates employees through a systematic process of
recruitment, selection, training and development coupled with fair wage policies.
▪ People oriented: HRM is all about people at work, both as individuals and groups. It tries to put
people on assigned jobs in order to produce good results. The resultant gains are used to reward
people and motivate them toward further improvements in productivity.
▪ Future-oriented: Effective HRM helps an organisation meet its goals in the future by providing for
competent and well-motivated employees.
▪ Development oriented: HRM intends to develop the full potential of employees. The reward structure
is tuned to the needs of employees. Training is offered to sharpen and improve their skills. Employees
are rotated on various jobs so that they gain experience and exposure. Every attempt is made to use
their talents fully in the service of organisational goals.
▪ Integrating mechanism: HRM tries to build and maintain cordial relations between people working
at various levels in the organisation. In short, it tries to integrate human assets in the best possible
manner in the service of an organisation.

Scope of Human Resource Management

The scope of HRM is very wide. Research in behavioural sciences, new trends in managing knowledge
workers and advances in the field of training have expanded the scope of HR function in recent years. The
Indian Institute of Personnel Management has specified the scope of HRM thus:

▪ Personnel aspect: This is concerned with manpower planning, recruitment, selection, placement,
transfer, promotion, training and development, lay off and retrenchment, remuneration, incentives,
productivity, etc.
▪ Welfare aspect: It deals with working conditions and amenities such as canteens, creches, rest and
lunch rooms, housing, transport, medical assistance, education, health and safety, recreation facilities,
etc.
▪ Industrial relations aspect: This covers union-management relations, joint consultation, collective
bargaining, grievance and disciplinary procedures, settlement of disputes, etc.

HR Policies

Human resource policies are continuing guidelines on the approach of which an organization intends to
adopt in managing its people. They represent specific guidelines to HR managers on various matters
concerning employment and state the intent of the organization on different aspects of Human Resource
Management such as recruitment, promotion, compensation, training, selections etc. They therefore serve
as a reference point when human resources management practices are being developed or when
decisions are being made about an organization’s workforce.

In developing HR Policies, there should be clear and consistent statement of the organization’s policies
regarding all conditions of employment and procedures for their equal and fair implementation. In order
to fulfil this objective, policies and procedures should be:

▪ Clear and specific, but provide enough flexibility to meet changing conditions.
▪ Comply with all appropriate law and regulation.
▪ Consistent amongst one another and reflect an overall true and fair view approach to all employees.

Types of HR Policies (on the basis of description):

On the basis of description, policies may be general (these policies do not relate to any specific issue in
particular, and are formulated by an organization’s leadership team) or specific (these policies are related
to specific issues like staffing, compensation, collective bargaining, etc. and specific policies must confirm
to the pattern laid down by the general policies).
Factors affecting development of HR Policies

HR policies are developed by making decisions and taking actions on the day-to-day problems of the
organization. The process of developing HR policies involves the assessment of the following factors:

▪ Identify the purpose and objectives, which the organization wishes to attain regarding its Human
Resources department.
▪ Analysis of all the factors under which the organization’s HR policy will be operating.
▪ Examining the possible alternatives in each area which the HR policy statement is necessary.
▪ Implementation of the policy through the development of a procedure to support the policy.
▪ Communication of the policy and procedures adapted to the entire organization.

Advantages of setting up HR Policies

The following advantages are achieved by setting up HR policies:

▪ They help managers at various levels of decision making to make decisions without consulting their
superiors. Subordinates are more willing to accept responsibility because policies indicate what is
expected of them and they can quote a written policy to justify their actions.
▪ They ensure long term welfare of employees and makes for a good employer-employee relationship
as favouritism and discrimination are reduced. Well-established policies ensure uniform and
consistent treatment of all employees throughout the organization.
▪ They lay down the guidelines pursued in the organization and thereby minimizes the personal bias of
managers.
▪ They ensure prompt action for taking decisions because the policies serve as standards to be followed.
They prevent the wastage of time and energy involved in repeated analyses for solving problems of a
similar nature.
▪ They establish consistency in the application of the policies over a period of time so that each one in
the organization gets a fair and just treatment. Employees know what action to expect in circumstances
covered by the policies. Policies set patterns of behavior and permit employees to work more
confidently.

Human Resource Development (HRD)

The concept of Human Resource Development (HRD) was first introduced by Leonard Nadler in 1969 in a
conference in US. “He defined HRD as those learning experience which are organized, for a specific time,
and designed to bring about the possibility of behavioural change”.

According to Prof. T.V. Rao, HRD is a process by which the employees of an organisation are helped in a
continuous and planned way to (i) acquire or sharpen capabilities required to perform various functions
associated with their present or expected future roles; (ii) develop their journal capabilities as individual
and discover and exploit their own inner potential for their own and /or organisational development
purposes; (iii) develop an organisational culture in which superior-subordinate relationship, team work
and collaboration among sub-units are strong and contribute to the professional well-being, motivation
and pride of employees.”

Difference between HRM and HRD

Both are very important concepts of management specifically related with human resources of
organisation. Human resource management and human resource development can be differentiated on
the following grounds:

▪ Orientation: The human resource management is mainly maintenance oriented whereas human
resource development is development oriented.
▪ Organisation structure: Organisation structure in case of human resources management is
independent whereas human resource development creates a structure, which is inter-dependent and
inter-related.
▪ Aims: Human resource management mainly aims to improve the efficiency of the employees whereas
aims at the development of the employees as well as organisation as a whole.
▪ Responsibility: Responsibility of human resource development is given to the personnel/ human
resource management department and specifically to personnel manager whereas responsibility of
HRD is given to all managers at various levels of the organisation.
▪ Motivation: HRM motivates the employees by giving them monetary incentives or rewards whereas
human resource development stresses on motivating people by satisfying higher-order needs.

Sources:

▪ Ashwathappa, K. Human Resource Management:L Text and Cases, McGraw Hill Education, New Delhi.
▪ VSP Rao, Human Resource Management: Text and cases, First edition, Excel Books, New Delhi.
▪ Gary Dessler, “Human Resource Management”, Seventh edition, Prentice-Hall of India P. Ltd., Pearson.
 HUMAN RESOURCE MANAGEMENT (UNIT 2: Acquisition of Human Resources)

Concept of Human Resource Planning (HRP)

 According to Bruce Coleman, Human Resource Planning is the process of determining manpower
requirements and the means for meeting those requirements in order to carry out the integrated plan
of the organisation.
 Human Resource Planning (HRP) is the process through which an organization ensures that it has the
right personnel who are capable of performing those functions that help it to achieve its objectives.

Objectives of Human Resource Planning

 To ensure optimum use of human resources currently employed

 To avoid balances in the distribution and allocation of human resources
 To assess or forecast future skill requirements of the organisation
 To provide control measure to ensure availability of necessary resources when required
 To control the cost aspect of human resources

Importance of Human Resource Planning

 Future Personnel Needs: Human resource planning is significant because it helps to determine the
future personnel needs of the organization. If an organization is facing the problem of either surplus
or deficiency in staff strength, then it is the result of the absence of effecting HR planning.
 Part of Strategic Planning: HRP has become an integral part of strategic planning of strategic
planning. HRP provides inputs in strategy formulation process in terms of deciding whether the
organization has got the right kind of human resources to carry out the given strategy. HRP is also
necessary during the implementation stage in the form of deciding to make resource allocation
decisions related to organization structure, process and human resources.
 Creating Highly Talented Personnel: It is the discretion of HR manager that will enable the company
to recruit the right person with right skills to the organization. Manpower planning in the form of skill
development is required to help the organization in dealing with this problem of skilled manpower
shortage.
 International Strategies: An international expansion strategy of an organization is facilitated to a
great extent by HR planning. The HR department’s ability to fill key jobs with foreign nationals and
reassignment of employees from within or across national borders is a major challenge that is being
faced by international business.
 Foundation for Personnel Functions: HRP provides essential information for designing and
implementing personnel functions, such as recruitment, selection, training and development,
personnel movement like transfers, promotions and layoffs.

Human Resource Planning: Quantitative and Qualitative Dimensions

In the case of forecasting human resource needs in an organization, there is less emphasis on highly
quantitative techniques because of emphasis on qualitative aspect of forecasting. Usually a combination
of the following methods is used:

Quantitative Considerations Qualitative Considerations

▪ Economic considerations relating to the
determination of the economic situation and ▪ Work-load analysis (discussed later)
future sales and production estimates
▪ Auditing of employees involves
▪ Expansion programmes in future
preparation of skill inventory
▪ Availability of existing manpower resources of ▪ Study of work standards is necessary for
different kinds the quality of workers required
▪ Rate of labour turnover
 ▪ Resignations and retirements, promotion,
demotion, separation, transfers, dismissals and
lay off etc.

Steps in the Human Resource Planning (HRP) Process

HRP essentially involves forecasting personnel needs, assessing personnel supply and matching demand-
supply factors through personnel-related programs. The planning process is influenced by the overall
organizational objectives and the business environment.

 Environmental scanning: It refers to the systematic monotoring of the external forces influencing the
organization. Some of the factors pertinent for HRP are economic factors (general and regional
conditions), technological changes (robotics, automation etc.), demographic conditions (age, literacy
etc.), political and legislative issues (laws and administrative rulings), social concerns (child care,
educational facilities and priorities).
 Organizational objectives and policies: HR plans must be based on and derived from organizational
objectives. In developing these objectives, specific policies need to be formulated to address the
following questions:
 Are vacancies to be filled by promotions from within or hiring from outside?
 How do the training and development objectives interface with the HRP objectives?
 What union constraints are encountered in HRP and what policies are needed to handle these
constraints?
 How to enrich employees’ job? Should the routine and boring jobs continue or to be
eliminated?
 How to downsize the organization to make it more competitive?
 HR Demand Forecast: Demand forecasting is the process of estimating the future quantity and quality
of people required to meet the future needs of the organization. The basis of the forecast must be the
annual budget and long-term corporate plan, translated into activity levels for each function and
department. The reasons to consider a HR demand forecast are: (i) it can help quantify the jobs
necessary for producing a given number of goods, or offering an given amount of services, (ii)
determine what staff-mix is desirable in the future, (iii) assess appropriate staffing levels in different
parts of the organization, so as to avoid unnecessary costs, (iv) prevent shortages of people where and
when they are needed most, and (v) monitor compliance with legal requirements with regard to
reservation of jobs. The demand forecasting techniques are:
 Managerial Judgement Method: Managerial judgement technique is very common
technique of demand forecasting. This approach is applied by small as well as large scale
 organisations. This technique involves two types of approaches i.e. 'bottom-up approach' and
'top-down approach'. Under the 'bottom-up approach', line mangers send their departmental
requirement of human resources to top management. Top management ultimately forecasts
the human resource requirement for the overall organisation on the basis of proposals of
departmental heads. Under the Top-down approach', top management forecasts the human
resource requirement for the entire organisation and various departments. This information is
supplied to various departmental heads for their review and approval. However, a combination
of both the approaches i.e. 'Participative Approach' should be applied for demand forecasting.
Under this approach, top management and departmental heads meet and decide about the
future human resource requirement. So, demand of human resources can be forecasted with
unanimity under this approach.
 Delphi Technique: Delphi technique is also very important technique used for estimating
demand of human resources. This technique takes into consideration human resources
requirements given by a group of experts i.e. mangers. The human resource experts collect the
manpower needs, summarises the various responses and prepare a report. This process is
continued until all experts agree on estimated human resources requirement.
 Work-Study Technique: This technique is also known as 'work-load analysis'. This technique
is suitable where the estimated work-load is easily measurable. Under this method, estimated
total production and activities for a specific future period are predicted. This information is
translated into number of man-hours required to produce per units taking into consideration
the capability of the workforce. Past-experience of the management can help in translating the
work-loads into number of man-hours required. Thus, demand of human resources is
forecasted on the basis of estimated total production and contribution of each employee in
producing each unit items. The following example gives clear idea about this technique.
 Ratio-Trend Analysis: Demand for human resources is also estimated on the basis of ratio of
production level and number of workers available. This ratio will be used to estimate demand
of human resources. The following example will help in clearly understanding this technique.
 Econometrics Models: These models are based on mathematical and statistical techniques
for estimating future demand. Under these models, the relationship is established between the
dependent variable to be predicted (e.g. manpower/human resources) and the independent
variables (e.g., sales, total production, work-load, etc.). Using these models, estimated demand
of human resources can be predicted.
 HR Supply Forecast: It determines whether the HR department will be able to procure the required
number of personnel. Specifically, supply forecast measures the number of people likely to be
available from within and outside an organization. Supply forecasting of human resource requirements
includes the following:
 Staffing Table shows number of employees in each job together with their age, gender,
qualification, position, experience, etc. This helps to know whether the current employees are
properly utilised or not.
 Historical data on promotion, transfer and turnover is used to estimate future availability of
workforce.
 Skills Inventory is an assessment of knowledge, skills, experience and growth potential of
current employees to be kept updated every year. We can assess the suitability of current
employees for future job requirements.
 Age Inventory shows age-wise number and category of employees and it is useful for future
selection and promotion of employees.
 Personal replacement charts show the present performance and promotability of inside
candidates for important positions such as General Manager, Vice President, etc.
 HR Programming: Once an organization’s personnel demand and supply are forecast, the two must
be reconciled or balanced in order that vaccines can be filled by the right employees at the right time.
 HR Plan Implementation: Implementation requires converting an HR plan into action. A series of
action programmes are initiated as a part of HR plan implementation. Some such programs are
 recruitment, selection and placement, training and development, retraining and redeployment; the
retention plan, redundance plan and the succession plan.
 Control and Evaluation of the Program: The HR plan should include budgets, targets and standards.
It should also clarify responsibilities for implementation and control, and establish reporting
procedures, which will enable achievements to be monitored against the plan. These may simply
report on the numbers employed against establishment and on the numbers recruited against the
recruitment targets.
 Strategic HR Initiatives to Manage Surpluses and Shortages: Some of the strategic HR initiatives to
manage surpluses and shortages include the following:
Strategies for managing Surpluses Strategies for managing Shortages
» Hiring freeze » Recruit new permanent employees
» Do not replace those who leave » Offer incentives to postpone retirement
» Offer voluntary retirement schemes » Rehire retirees part-time
» Reduce work hours » Attempt to reduce turnover
» Leave of absence » Work current staff overtime
» Across the board pay cuts » Subcontract work to another company
» Layoffs » Hire temporary employees

Concept of Job Analysis

According to Edwin B. Flippo, job analysis is defined as “the process of studying and collecting
information relating to the operations and responsibilities of a specific job. The immediate products of
this analysis are job descriptions and job specifications.”

Purposes of Job Analysis

Job analysis has a lot of uses to HR managers, as shown below:

 Organizational Design: It involves building a network of relationships among various functions and
positions. Job analysis provides the relevant information for completing the total steps of
organizational design. It provides the base for identifying the contents of different jobs, their
interrelationship and interdependence, responsibility involved in a job, and authority that may be
required to perform the job.
 Acquisition of Personnel: It involves human resource planning, recruitment and selection, and
orientation and placement. For HRP, job analysis provides information for forecasting human resource
needs in terms of knowledge, skills and experience. It also provides help in planning for promotions
and transfers by indicating lateral and vertical relationships among different jobs. Next, the total
process of recruitment and selection is based on the principle of matching jobs and individuals. In this
process, the form of tasks and responsibilities and individual-related factors in the form of knowledge,
 skills and experiences are matched. Again, job analysis helps in orientation and placement of
personnel by further matching jobs and individuals. This further matching is needed when personnel
are selected for a group of jobs rather than for specific jobs.
 Human Resource Development: In today’s dynamic business environment, HRD is undertaken as a
continuous process to match individuals and job requirements. Such matching is indicated by the
information provided by job analysis. It helps in career planning (wherein, job analysis provides
information about the opportunities in terms of career paths and jobs availability in the organization),
and training and development (wherein job analysis provides valuable information to identify training
and development needs of various individuals).
 Job Evaluation and Compensation: Job evaluation is the process of determining the relative worth
of different jobs in an organization with a view to link compensation, both basic and supplementary,
with the worth of the jobs, which is determined on the basis of job characteristics and job holder
characteristics. This is provided by job analysis in the forms of job description and job specification.
 Performance Appraisal: It involves assessment of actual job performance by an employee in the light
of what is expected of him. Such as assessment is used for promotion, pay increase, and identification
of training needs. Job analysis helps in determining performance standards against which actual job
performance is measured.
 Safety and Health: Job analysis helps in taking preventive measures for maintaining safety and health
of employees at the workplace by providing information about unhealthy and hazardous
environmental and operational conditions in various jobs.
 Employee Counselling: Job analysis helps in providing counselling to employees in different areas.
These areas may be the choice of careers and rehabilitation. Employees are unable to bear the stress
of a particular job either because of job contents or the adverse working conditions like hazardous
work environment may be advised to opt for other jobs or may be advised for voluntary retirement.

Job Description and Job Specification

Job Description

 Job Description is a written statement showing job title, tasks, duties and responsibilities involved in a
job. It also prescribed the working conditions, hazards, stress that it can produce and the relationship
with other jobs. According to Flippo, a job description is “an organized, factual statement of duties
and responsibilities of a specific job. In brief, it should tell what is to be done, how it is done and why.
It is a standard of function; in that it defines the appropriate and authorized content of a job.”
 A job description generally contains the following information:
 Job title, code number, department/ division
 Job contents in terms of activities or tasks performed
 Job responsibilities towards effective job performance
 Working conditions specifying specific hazards
 Social environment prevailing at the workplace
 Machine, tools and equipment
 Extent of supervision given and received
 Relationship with other jobs—vertical, horizontal and diagonal
 The purposes of a job description involve the following:
 Clarifies employer expectations for the employee
 Provides the basis of measuring job performance
 Provides a clear description of the role for job candidates
 Provides continuity of role parameters irrespective of manager interpretation
 Enables pay and grading systems to be structured fairly and logically

Job Specification

 Job Specification (also known as man or employee specification) is a statement of minimum

acceptable qualities required in a job incumbent for the effective performance of the job. In contrast
to job description, which provides various features of the job, job specification specifies various
 features of the job holder. According to Flippo, a job specification is “a statement of the minimum
acceptable qualities necessary to perform a job properly. It is a standard of personnel and designates
the qualities required for acceptable performance.”
 A job specification is prepared on the basis of job description, and its basic contents are as follows:
 Personal characteristics (age, gender, education, job experience, extracurricular activities etc.)
 Physical characteristics (height, weight, chest, vision, hearing, health, voice, poise etc.)
 Mental characteristics (general intelligence, memory, judgement, foresight etc.)
 Social and psychological characteristics (emotional stability, flexibility, manners, creativity etc.)
 The purposes of a job specification involves the following:
 It helps candidates analyze whether are eligible to apply for a particular job vacancy or not
 It helps recruiting team of an organization understand what level of qualifications, qualities and
characteristics should be present in a candidate to make him or her eligible for the job opening
 It gives detailed information about any job including job responsibilities, desired technical and
physical skills, conversational ability and much more
 It helps in selecting the most appropriate candidate for a particular job

Steps in the Job Analysis Process

Job analysis is a process involving different steps to be undertaken in a sequential manner.

 Determination of Uses of Job Analysis: Initially, job analysis was used primarily for recruitment and
selection. Therefore, job analysis used to be brief and simple. As the complexity of managing human
resources increased, the scope of the uses of job analysis also increased covering many more areas.
In large organizations, job analysis is used for various purposes, hence it is undertaken more
comprehensively, systematically and in written form. In smaller organizations, it is used for limited
purposes and job analysis process is mostly informal, based on limited amount of information.
 Strategic choices in Job Analysis: There are certain strategic choices with regard to job analysis
before any organization, which wants to take it systematically. They include (i) the extent of employee
involvement in job analysis, (ii) the level of details of the analysis, (iii) timing and frequency of the
analysis, (iv) past-oriented versus future-oriented job analysis.
 Information Collection: In collecting information for job analysis, the major decisions involved are (i)
the type of information to be collected, (ii) methods to be employed for information collection, and
(iii) people involved in information collection. Some of the information required for job analysis include
the following:
» Work Activities:
o Description of work activities/ tasks
o Interface with other jobs and equipment
o Procedures used
o Behaviour required on the job
» Machines, Tools, Equipment and Work Aids Used:
o List of machines, tools etc. used
o Materials processed with list of machines, tools etc.
o Products and services made with list of machines, tools etc.
 » Job Context:
o Physical working conditions
o Organizational context
o Social context
o Work schedule
o Financial and non-financial incentives
» Personal Requirements:
o Specific skills
o Specific education and training
o Work experience
o Physical characteristics
o Aptitudes
 Information Processing: It involves editing and classifying information into different relevant
categories, and preparing job description and job specification, which are the two outcomes of job
analysis. Job description is a written record of a job describing its nature, duties and liabilities involved,
location, working conditions, hazards of internal and external nature, and its relationship with other
jobs. Job specification refers to the summary of minimum and/ or desirable qualities that the job
incumbent must possess in order to perform the job effectively.

Methods of Collecting Information for Job Analysis

 Personal observation: The analyst observes the worker(s) doing the job. The tasks performed, the
pace at which activities are done, the working conditions, etc., are observed during a complete work
cycle. During observation, certain precautions should be taken; for example, (i) the analyst must
observe average workers during average conditions, (ii) the analyst should observe without getting
directly involved in the job, and (iii) the analyst must make note of the specific job needs and not the
behaviours specific to particular workers.
 Interview: The interview method consists of asking questions to both incumbents and supervisors in
either an individual or a group setting. The reason behind the use of this method is that jobholders
are most familiar with the job and can supplement the information obtained through observation.
Workers know the specific duties of the job and supervisors are aware of the job's relationship to the
rest of the organisation.
 Log Records: In this method, also called diary method, the job holder is asked to maintain a diary
recording in detail the job-related activities each day. If done judiciously, this method provides
accurate and comprehensive information about the job. This overcomes memory lapses on the part
of the job holder. As recording of activities may spread over several days, the method, thus, becomes
time-consuming one.
 Critical Incidents: This method is based on the job holder’s past experiences on the job. They are
asked to recapitu-late and describe the past incidents related to their jobs. The incidents so reported
by the job holders are, then, classified into various categories and analysed in detail. Yes, the job
analyst requires a high degree of skill to analyse the incidents appropriately described by the job
holders. However, this method is also time-consuming one.
 Questionnaire: The questionnaire is a widely used method of analysing jobs and work. Here the
jobholders are given a properly designed questionnaire aimed at eliciting relevant job-related
information. After completion, the questionnaires are handed over to supervisors. The supervisors can
seek further clarifications on various items by talking to the jobholders directly. After everything is
finalised, the data is given to the job analyst. There are two major forms of questionnaire in the context
of job analysis: (i) The Position Analysis Questionnaire (The PAQ is a standardised questionnaire,
developed at Purdue University, to quantitatively sample work-oriented job elements. It contains 194
items divided into six major divisions. The PAQ permits the management to scientifically and
quantitatively group), (ii) Management Position Description Questionnaire (MPQD is a standardised
instrument designed specifically for use in analyzing managerial jobs. The 274-item questionnaire
contains 15 sections).
 Checklist: The checklist method of job data collection differs from the questionnaire method in the
sense that it contains a few subjective questions in the form of yes or no. The job holder is asked to
tick the questions that are related to his/her job. Checklist can be prepared on the basis of job
informa-tion obtained from various sources such as supervisors, industrial engineers, and other
people who are familiar with the particular job.
 Functional Job Analysis: It is a worker-oriented job analysis approach that attempts to describe the
whole person on the job. It tries to examine the fundamental components of "data, people and things".
There are five steps to be followed:
 The first involves the identification of the organisation goals for the FJA analysis. This analysis
describes what should be, as well as, what is.
 The second step is the identification and description of tasks, where tasks are defined as
actions. The task actions may be physical (operating an electrical typewriter), mental (analysing
data) or interpersonal (consulting another person). The task statements developed in FJA must
conform to a specific written format.
 The third step deals with analysis of tasks. Each task is analysed using 7 scales. These include
three worker function scales (data, people, things), a worker instruction scale (degree of
supervision imposed) and three scales of reasoning, mathematics and language.
 In the fourth step the analyst develops performance standards to assess the results of a worker's
tasks.
 The final step deals with the development of training content needed by the jobholder.

Job Design

 Job design is the logical sequence of the process of job analysis and involves conscious efforts to
organize tasks, duties and responsibilities into a unit of work so as to business objectives. According
to Michael Armstrong, Job Design is “the process of deciding on the contents of a job in terms of its
duties and responsibilities, on the methods to be used in carrying out the job, in terms of techniques,
systems and procedures, and on the relationships that should exist between the job holder and his
superior subordinates and colleagues.”
 The purpose of job design is discussed as follows:
 Facilitating the interest of employees towards the job and enhancing their satisfaction
 Increasing employee motivation and productivity
 Enhancing employees’ skills by identifying their training needs
 Covering the modern needs of employee participation
 Making the communication process clear and effective in the organization

Job Design Approaches

 There are five popular approaches to

job design, namely, job rotation, job
engineering, job enlargement, job
enrichment and socio-technical
systems.
 There are two dimensions, namely,
impact (on the vertical axis, and refers
to the degree to which a job design
approach is linked to the factors
beyond the immediate job, such as
reward systems, performance
appraisal methods, leadership,
customer needs, organizational
design, working conditions and team
composition and norms), and
complexity (on the horizontal axis,
 and refers to the degree to which a job design approach requires the involvement of individuals with
diverse competencies at various organizational levels and high level of decision-making competency
for successful implementation).
 The approaches of job design are discussed as follows:
 Job Rotation: Continuous handling of tasks related to simple jobs can make work monotonous
and dull. Job rotation helps workers do away with the monotony by allowing them to work on
different jobs which involve different skills and work activities. Job rotation is the practice of
shifting employees from one job to another in a planned and systematic manner.
 Job Engineering: Job engineering focuses on the tasks to be performed, methods to be used,
workflows among employees, layout of the workers, performance standards, and
interdependence among people and machines. Specialization of labour is the hallmark of job
engineering. Experts often examine these job design factors by means of time-and-motion
studies, determining the time required to do each task and the movements needed to perform
it efficiently.
 Job Enlargement: It refers to the expansion of the number of different tasks performed by an
employee in a single job. It is also called horizontal loading, and focuses on enlarging jobs by
increasing tasks and responsibilities. It attempts to add somewhat similar tasks to the existing
job so that it has more variety and be more interesting.
 Job Enrichment: It simply means adding a few more motivators to a job to make it more
rewarding. To be specific, a job is enriched when the nature of the job is exciting, challenging
and creative, or gives the job holder more decision-making, planning and controlling power. It
is concerned with designing jobs that includes a greater variety of work content, require a
higher level of knowledge and skill, give worker more autonomy and responsibility, and
provide opportunity for personal growth.
» Difference between Job Enrichment and Job Enlargement:

Basis Job Enlargement Job Enrichment

Concept A technique of job design in A management tool used to
which the task related to a single motivate employees, by adding
job are increased. responsibilities in the job.
Objective To decreases the boredom in To make the job more
performing a redundant task. challenging, interesting and
creative.
Outcome May or may not be positive. The result of job enrichment is
always positive.
 Socio-Technical Systems: Socio-technical systems design refers to an approach to design that
consider human, social and organisational factors, as well as technical factors in the design of
organisational systems. The rationale for adopting socio-technical approaches to systems
design is that failure to do so can increase the risks that systems will not make their expected
contribution to the goals of the organisation.
Concept of Recruitment

Recruitment is the process of finding and attracting capable applicants for employment. The process
begins when the new recruits are sought and ends when their applications are submitted. The result is a
pool of applicants from which new employees are selected. In the total process of acquiring and placing
human resources in the organization, recruitment falls in between different sub-processes.

Merits/ Demerits of Internal Sources of Recruitment

Merits of Internal Sources of Recruitment Demerits of Internal Sources of Recruitment

Limited Choice: The organization is forced to
Economical: The cost of recruiting internal select candidates from a limited pool and may
candidates is minimal. have to sacrifice quality and settle for less qualified
candidates.
Suitable: The organization can pick the right
candidates having the requisite skills. The Inbreeding: It discourages entry of talented
candidates can choose a right vacancy where their people, available outside an organization.
talents can be fully utilized.
Inefficiency: Promotions based on length of
Reliable: The organization has knowledge about
service rather than merit may prove to be a
the suitability of a candidate for a position.
blessing for inefficient candidates.
Satisfying: A policy of preferring people from Bone of Contention: Recruitment from within may
within, offers regular promotional avenues for lead to infighting among employees aspiring for
employees. limited, higher-level positions in an organization.

Merits/ Demerits of External Sources of Recruitment

Merits of External Sources of Recruitment Demerits of External Sources of Recruitment

Wide Choice: The organization has the freedom to
Expensive: Hiring costs could go up
select candidates from a large pool with requisite
substantially. .
qualifications.
Injection of Fresh Blood: People with special skills
and knowledge could be hired to stir up the existing Time-Consuming: It takes time to advertise,
employees and pave the way for innovative ways of screen, to test and to select suitable employees.
working.
Motivational Force: It helps in motivating internal Demotivating: Existing employees who have
employees to work hard and compete with external put in considerable service may resist the
candidates while seeking career growth. process of filing up vacancies from outside.
Long-term Benefits: Talented people could join
Uncertainty: There is no guarantee that the
the ranks, new ideas could find meaningful
organization, ultimately, will be able to hire the
expression, and a competitive atmosphere would
services of suitable candidates.
compel people to give their best and earn rewards.
Internal Sources of Recruitment

 Present Employees: Promotions and transfers from among the present employees can be a good
source of recruitment. Advantages of promotion are: (i) it is good public relations (ii) it builds morale
(iii) it encourages ambitious individuals. Disadvantages of promotion: It can be dysfunctional to the
firm as the advantage of hiring outsiders who may be better qualified and skilled is denied.
 Employee Referrals: When employees recommend successful referrals, they are paid monetary
incentives, which are called ‘finders fees’. Advantages: (i) many prospects can be reached at a very low
cost (ii) In an organization with large number of employees; this approach can provide quite a large
pool of potential applicants. Disadvantages: (i) possibility of inbreeding, manifesting in groups of
people quitting one firm and joining another (ii) they demand unacceptable privileges and often
threaten to quit if demands are not met
 Former Employees: Some retired employees may be willing to come back to work on a part-time
basis or may recommend someone who would be interested in working for the company. Advantage:
the performance of these people is already known.
 Previous Applicants: Those who have previously applied for jobs can be contacted by mail.
Advantage: it is a quick and inexpensive way to fill an unexpected opening.

External Sources of Recruitment

 Professional or Trade Associations: Many associations provide placement services for their
members, which may consist of compiling job seekers’ lists and providing access to members during
regional or national conventions. Many associations publish or sponsor trade journals or magazines
for their members, which carry classified advertisements from potential recruiters. Advantage: Useful
for attracting highly educated, experienced or skilled personnel.
 Advertisements: These constitute a popular method of seeking recruits due to their wide reach. Want
ads (usually in newspapers) describe the job and the benefits, identify the employer, and tell those
who are interested how to apply. Many organizations place what is referred to as a blind ad, one in
which there is not identification of the firm. Using the blond ad relieves the firm from having to respond
to any individual who applies.
 Employment Exchanges: They have been set up all over the country in accordance with the
provisions of the Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959. The major
functions of the exchanges are to increase the pool of possible applicants and to do preliminary
screening.
 Campus Recruitment: Colleges, universities, research laboratories, sports fields and institutes are
fertile ground for recruiters. The IIMS and the IITs are on the top of the list of avenues for recruiters.
Disadvantage: it is often an expensive process, even if the recruiting process eventually produces job
offers and acceptances.
 Walk-ins, Write-ins and Talk-ins: The most common and least expensive approach for candidates is
direct applications, in which job seekers submit unsolicited application letters or resumes. They can
also provide a pool of potential employees to meet future needs. Write-ins are those who send in
written enquiries and such job seekers are asked to complete application forms for further processing.
Talk-ins require the job aspirants to meet the recruiter on a specified date for detailed talks.
 Consultants: They are retained by organizations for recruiting and selecting managerial and executive
personnel. They keep the prospective employer and the employee anonymous. However, the cost can
be a deterrent factor.
 Contractors: They are used to recruit casual workers. The names of the workers are not entered in the
company records and to this extent, difficulties experienced in maintaining permanent workers are
avoided.
 Displaced Persons: Siting and implementation of a project in an area would result in displacement of
several hundred inhabitants. It is a social responsibility of the business. Such people are a recruitment
source, not only for the project, which caused the displacement, but also for other companies located
elsewhere.
 Radio and Television: They are used sparingly by government departments only to reach certain
types of job applicants such as skilled workers. Private sector companies are hesitant to use such media
because of high costs and due to the fear, that that such advertising would make them look desperate
and damage their image.
 Acquisitions and Mergers: When organizations combine into one, they have to handle a large pool
of employees, some of whom may no longer be necessary in the new organization. Consequently, the
new company has, in effect, a pool of qualified job applicants.
 Competitors: Popularly called poaching or raiding, this method involves identifying the right people
in rival companies, offering them better terms and luring them away. From a legal perspective, an
employee is expected to join a new firm only after obtaining a ‘No Objection Certificate’ from his/her
previous employer.
 E-Recruiting: Employers, using the Internet, can electronically screen candidates’ soft attributes,
direct potential hires to a special website for online skill assessment, conduct background checks over
the Internet, interview candidates via videoconferencing, and manage the entire process with web-
based software. Advantage: Companies benefit immensely through cost-savings, speed
enhancement and extended worldwide candidate reach through the Internet.

Concept of Selection

Selection is the process of differentiating between applicants in order to identify and hire those with a
greater likelihood of success in a job.

Recruitment vs Selection

▪ Immediate Objectives: The basic objective of recruitment is to attract maximum number of

candidates so that more options are available. The basic objective of selection is to choose the best
out of the available candidates.
▪ Process: Recruitment adopts the process of creating application pool as large as possible (positive
process), while selection adopts the process through which more candidates are rejected (negative
process).
▪ Techniques Involved: Recruitment techniques are not very intensive, requiring high skills. In the
selection process, highly specialized techniques are required, and hence only personnel with specific
skills (e.g. expertise in using selection tests) are involved.
▪ Outcome: The outcome of recruitment is application pool, which becomes the input for the selection
process. The outcome of selection process is in the form of finalizing candidates who will be offered
jobs.

Process of Selection

A comprehensive selection process involves the various steps as shown below:

▪ Application Pool: The basic objective at the recruitment level is to attract as much worthwhile
applications as possible so that there are more options available at the selection stage.
▪ Screening of Applications: Prospective employees have to fill up some sort of application forms,
which have a variety of information about the applicants like their personal bio-data, achievements,
experience etc. Such information is used to screen the applicants who are found to be qualified for the
consideration of employment.
▪ Selection Tests: They normally supplement the information provided in the application forms and
give information about their aptitude, interest, personality etc. that cannot be known by application
forms.
▪ Interview: The basic idea here is to find out overall suitability of candidates for the jobs. It also
provides an opportunity to give relevant information about the organization to the candidates.
▪ Checking of References: Many organizations ask the candidates to provide the names of referees
(e.g. previous employers, persons associated with the educational institution of the candidate etc.)
from whom more information about the candidate can be solicited. Such information may be related
to character, working etc.
▪ Physical Examination: It is carried out to ascertain the physical standards and fitness of prospective
employees. While many organizations do not carry physical examinations at all, others carry on a very
comprehensive basis.
▪ Approval by Appropriate Authority: Organizations may designate the various authorities for
approval of final selection of candidates for different categories of candidates. For top-level managers,
board of directors may be the approving authority, while for lower levels; even functional heads
concerned may be the approving authority.
▪ Final Selection: After the approval of the competent authority, the selection is final and the candidate
concerned may be informed accordingly.
▪ Employment Contract: The relationship between the organization and its employees is a contractual
one. The implications of contractual relationship is that both employees and the organization must
enter into the employment contract indicating various terms and conditions of employment.
▪ Evaluation: Evaluation of
the total selection
programme may be ALTERNATIVE
undertaken during the DIAGRAM:
process and after the
process. During the
process, the evaluation
tries to measure the
reliability and validity of
various steps used in the
selection process and
after the process is over, it
measures the outcome of
the selection process in
terms of the performance
of those who have been
selected.
Concept of Application Blank

It is a structured form to seek relevant information from the candidate, which may be useful in the selection
decision. Its size may vary from a single page to multiple pages depending on the nature of position for
which it has been designed. The contents of an application blank should be such that these help:
(a) To make judgement on substantive matters such as ‘has the applicant necessary educational
qualifications and experience to perform the job effectively’?
(b) To draw conclusions about the applicant’s progress and growth in his/her previous work assignments
(c) To have information about the biographical facts for record purposes

Types of Selection Tests

They are popularly called psychological tests as they measure the psychological characteristics of a
person. It is an instrument used to measure various characteristics of the candidate not disclosed by their
employment application forms. It is essentially an objective and standardized measure of a sample of
behaviour. There are of the following types:
 Ability Tests: The ability of a person is his capability to engage in some behaviour, and constitutes his
intelligence (capacity to think abstractly), skills (proficiency to use the knowledge to do a work) and
aptitudes (potential abilities that have not been fully applied). There are various kinds of ability:
 Mechanical Ability: Ability to visualize how parts fit together into a whole
 Motor Coordination Ability: Ability to move the body effectively to perform physical tasks
 Intellectual Ability: General intelligence or reasoning; verbal and numerical ability
 Creative Ability: Innovative and artistic ability; aesthetic judgement
 Achievement Tests: Also called performance test or trade test, it is concerned with what one has
accomplished. A candidate’s knowledge may be measured through his answers to certain questions
or his performance in a practical test.
 Aptitude Tests: These tests measure whether an individual has the capacity or latent ability to learn a
given job if given adequate training. Aptitudes can be divided into general and mental ability or
intelligence and specific aptitude such as mechanical, clerical, manipulative capacity etc.
 Intelligence Tests: These tests try to measure the level of intelligence of a candidate and generally
includes verbal comprehension, word fluency, memory, inductive reasoning, number facility, speed of
perception, special visualization etc. The scores on the test are usually expressed numerically as
Intelligence Quotient (IQ), which can be calculated as follows: IQ= (Mental Age/ Actual Age) x 100.
 Personality Tests: These tests prove deeply to discover clues to an individual’s value system, his
emotional reactions and maturity and characteristic mood. They are expressed in such traits like self-
confidence, tact, emotional control, optimism, decisiveness, sociability, conformity, objectivity,
patience, fear, distrust, initiative, judgment dominance or submission, impulsiveness, sympathy,
integrity, stability and self-confidence. There are 2 widely used personality tests:
 Thematic Apperception Test: It is intended to evaluate a person's patterns of thought,
attitudes, observational capacity, and emotional responses to ambiguous test materials.
 Myers-Briggs Type Indicator (MBTI): It uses a questionnaire to assess personality and
differentiates people in terms of four dimensions—sensing, intuiting, judging and perceiving.
 Interest Tests: It is designed to discover a person’s area of interest, and identify the kinds of jobs that
will satisfy him. It generally measures interest in outdoor, mechanical, computational, scientific, clerical
activities etc.

Types of Interview

Selection interview, also known as employment interview, is a formal, in-depth conversation conducted to
evaluate the acceptability of candidates for employment. There are different types of selection interview:
 Structured Interview: In this type, the interview is designed and detailed in advance. A structured
interview is pre-planned, accurate, and consistent in hiring the candidates.
 Unstructured Interview: This type of interview is an unplanned one, where the interview
questionnaire is not prepared. Here, the effectiveness of the interview is very less and there is a
tremendous waste of time and effort of both the interviewer and the interviewee.
 Group Interview: In this type of interview, all the candidates or a group of candidates are interviewed
together. They are conducted to save time when there is a large number of applications for a few job
vacancies. A topic will be given to discuss among the candidates and the interviewer judges the
innovativeness and behaviour of each candidate in the group.
 Depth Interview: Depth interview is a semi-structured interview, where the candidates have to give a
detailed information about their education background, work experience, special interests, etc. The
interviewer takes a depth interview and tries in finding the expertise of the candidate.
 Stress Interview: Stress interviews are conducted to discover how a candidate behaves in stressful
conditions. In this type of interview, the interviewer will come to know whether the candidate can
handle the demands of a complex job. The candidate who maintains his composure during a stress
interview is normally the right person to handle a stressful job.
 Individual Interview: In an individual interview, the interview takes place one-on-one i.e., there will
be a verbal and a visual interaction between two people, an interviewer and a candidate. This is a two-
way communication interview, which helps in finding the right candidate for a vacant job position.
 Informal Interview: Such interviews are conducted in an informal way, i.e., the interview will be fixed
without any written communication and can be arranged at any place. There is no procedure of asking
questions in this type of interview, hence it will be a friendly kind of interview.
 Formal Interview: A formal interview held in a formal way, i.e., the candidate will be intimated about
the interview well in advance and the interviewer plans and prepares questions for the interview. This
is also called as a planned interview.
 Panel Interview: Panel interview, as the name indicates, is being conducted by a group of people. In
this type of interview, three to five members of the selection committee will be asking questions to the
candidates on different aspects. The final decision will be taken by all the members of the panel
collectively.
 Exit Interview: Exit interviews are conducted for those employees who want to leave the organization.
The importance of the exit interview is to discover why an employee wants to leave his job.

Concept of Placement

Placement is the process of finding an appropriate fit between the people and the positions in an
organization. It is actually the determination of the job, which an accepted candidate is to be assigned to,
and his assignment to that job. It includes initial assignment of new employees, and promotion, transfer
or demotion of present employees.

Importance of Placement

 When an organization chooses an exact number of candidates for the specific vacancies available in
the organization, placement becomes simple and easy.
 Placement becomes crucial when the organization selects the candidates in a general manner and
then places them in the jobs at a later stage.
 Proper placement helps to improve employee morale. The capacity of the employee can be utilised
fully if he is placed on the job for which he is most suitable.
 Right placement also helps to reduce labour turnover, absenteeism and accident rates. If a candidate
adjusts himself to the job and continues to perform as per expectations, it might mean that the
candidate is properly placed.
 Job placement also involves reassigning the jobs among the existing employees.

Challenges in Placement

 Cultural and Behavioural Incompatibility: Organizations should consider the behavioural

compatibility between the superiors and the freshly joining subordinates. Cultural compatibility
should also be considered as culture differs within the organization and across departments.
 Nature of Job: Jobs can be independent or dependent. Independent jobs are performed by the
employees with little help from others. Hence, placement for such jobs is simple and straightforward.
 In case of interdependent jobs like assembly-line jobs in the production department and pooled jobs
involving teamwork, job placement is difficult.
 Level of Adaptability: When the employees exhibit a high degree of flexibility and openness, it can
facilitate the process of placement. Placement becomes difficult when the employees exhibit stiffness.

Concept of Orientation

Orientation is the process of introducing a new employee to the organization and the organization to the
employee by providing relevant information. A formal orientation is preferable because it tries to bridge
the information gap of the new employee. It may contain the following information:

 About the Organization (mission and philosophy, objectives, product lines, etc.)
 HR Policies and Rules (training and development, promotional avenues, pay scale, vacations, leave
rules, etc.)
 Employment Benefits (provident funds, insurance benefits, gratuity benefits, retirement benefits, etc.)
 Introduction to supervisors, co-workers/ officials, subordinates, etc.
 Job Duties (job objectives, relationship to other jobs, office timings, breaks, etc.)

Importance of Orientation (Induction)

 Overcoming Employee Anxiety: New employees experience a lot of anxiety in an organization,

which is a natural phenomenon for human beings; they experience anxiety in a new environment,
which may interfere with the training process.
 Overcoming Reality Shock: An employee joins an organization with certain assumptions and
expectations (such as lucrative salary and perquisites, social status, prestige, etc.). When these
expectations are incompatible with the reality of the situation, he experiences a ‘reality shock.’
 Accommodating Employees: Proper employee orientation helps to accommodate new employees
with existing employees by developing acquaintances and understanding of the various aspects of
the job, which the newcomer is expected to confront.
 Cultural Alignment: Organizations often have unique cultures that influence how work is done,
decisions are made, and relationships are formed. Orientation programs help newcomers understand
and align with the organization's culture, fostering a sense of belonging and cohesion.
 Enhanced Engagement and Retention: Effective orientation programs increase employee or
member engagement by demonstrating that the organization values their presence and is invested in
their success. This positive experience early on can contribute to higher retention rates and lower
turnover.
 Improved Performance: Properly onboarded individuals are likelier to perform well in their roles from
the outset. By equipping them with the necessary knowledge, skills, and resources during orientation,
organizations set their employees or members up for success and contribute to overall performance.
 Risk Mitigation: Orientation can help mitigate unfamiliar risks, such as safety hazards, compliance
violations, or breaches of protocol. Organizations minimize the likelihood of costly mistakes or legal
issues by educating newcomers about relevant policies, procedures, and regulations.
 Foundation for Learning and Growth: Orientation is often just the beginning of a continuous
learning journey. By providing a solid foundation of knowledge and resources, orientation programs
lay the groundwork for ongoing learning and professional development, empowering individuals to
grow within their roles and beyond.

Concept of Socialization

Socialization is a process through which individuals learn and internalize the norms, values, behaviors, and
social skills necessary to function effectively within a particular society or group. It begins in early
childhood and continues throughout life, shaping an individual's identity, beliefs, attitudes, and behaviors.
Some of the critical aspects of socialization are discussed as follows:
  Learning Norms and Values: Socialization teaches individuals the accepted norms, values, and
cultural practices of their society or social group. These norms and values dictate appropriate
behavior, attitudes, and beliefs within specific social contexts.
 Development of Self-Identity: Socialization contributes to developing an individual's self-
concept and self-identity. Through interactions with others and societal feedback, individuals form
perceptions of themselves and their place in the world.
 Role Acquisition: Socialization helps individuals understand and internalize the roles they are
expected to fulfill within society, such as roles related to gender, family, occupation, and
community. This includes learning the behaviors, responsibilities, and expectations of each role.
 Transmission of Culture: Socialization is crucial for transmitting cultural knowledge, traditions,
language, and customs from one generation to the next. It ensures the continuity and preservation
of cultural heritage within societies over time.
 Formation of Social Bonds: Socialization fosters social bonds and relationships with others.
Through interactions with family members, peers, teachers, and other social agents, individuals
develop interpersonal skills, empathy, and the ability to collaborate and communicate effectively.

Managing Transfers

Transfer is a form of internal mobility of human resources, which involves movement of an employee from
one section to another section of the same department, one department to another department, one unit
to another unit, one place to another place, or one function to another function, in the form of job rotation
without any change in the employee’s status, responsibilities and pay.

Types of Transfer (Reasons for Transfer)

There are different types of transfer:

 Production Transfer: It is also known as flexibility or organizational transfer. The basic purpose of such
transfer is to stabilize employment in an organization. The occasion for such transfers arises because
of uneven change in quantity of production in different departments/ units, surplus or shortage of
workers in different departments at the initial level of placement.
 Plant Transfer: It aims at stabilization of employment of personnel as in production transfer, except
with one difference that employees are transferred from one plant to another plant. The need for such
transfers arises if two plants have different stage of stabilization.
 Shift Transfer: Where the production runs into shifts, most of the continuous production processes
run based on three shifts and employees and transferred from one shift to another over the period.
 Remedial Transfer: It is effected by transferring an employee from a section/ department in which he
cannot adjust himself with either his boss or his co-workers. This may be because of initial faulty
placement of the employee without matching his profile with that of the group.
 Versatility Transfer: It is in the form of job rotation of an employee with a view to acquire multiple
skills required for different jobs and to understand the relationship of one job with others, and how a
job affects and is affected by others.
 Tenure Transfer: It is more common in government administration and is based on the principle that
an official should not stay more than the prescribed period, usually three years, at a particular place to
ensure that he does not get involved in politicking informal groups.
 Penal Transfer: It is effected to penalize an employee whose behaviour does not match with the
officially required behaviour. In business organizations, such type of transfer is made to get rid of a
difficult trade union activist, an intriguer etc.

Principles of Transfer
 The policy should be fair, impartial and practicable so that there is no unnecessary conflicts between
the employees and the organization
 Objectives of different types of transfer should be spelled out clearly to avoid misgivings
 The policy should lay down the bases on which transfers are to be effected, whether it would be based
on seniority, skills and competence or any other factors
Promotion Decisions

It is an advancement in the organization, which involves a change from one job/ position to another that
is better in terms of status and responsibility. Ordinarily, the change to better job is accompanied with
increased monetary compensation and privileges.

Types of Promotion
 Horizontal Promotion: This type of promotion involves an increase in responsibility and pay with the
change in the designation. However, the job classification remains the same.
 Vertical Promotion: Here, there is a change in the status, responsibilities, job classification and pay.
Sometimes, this type of promotion changes the nature of job completely.
 Dry Promotion: It refers to an increase in responsibilities and status without any increase in pay or
other financial benefits.

Need for Promotion

It is desirable to analyse how a promotion serves the needs of the organization and the individual.
Promotion serves the organizational and individual needs in the following manner:
 Promotion is used as a reward for better work performance and organizationally approved form of
behaviour. People will work harder if they feel that this will lead to promotion.
 Promotion provides need satisfaction to personnel, which enhances their morale, productivity and
loyalty to the organization.
 Because of increased loyalty, which is developed among personnel through promotion, the
organization is able to retain its talented personnel that is the utmost need of any organization in this
era of high competition.
 Promotion provides avenues for continuous learning and developing of personnel as it depends on
promotability, which is a result of continuous learning and development. This process increases
individual and hence organizational effectiveness.

Demerits of Promotion

 Employees may feel that once they are promoted, they will lose more benefits, which they enjoy in the
form of overtime payment, statutory bonus, incentive bonus etc. than what they derive out of
promotion.
 For some employees, settling at a particular level of position is more satisfying than attempting for
promotion, which requires continuous standing on one’s toes.
 Some employees do not want promotion because it may involve transfer from one place to another
place. For such employees, affiliation to a particular place is more important than the benefits
associated with promotion.

Promotion Decisions: Seniority vs Merit Considerations

Merits of Promotion on Merit Basis Demerits of Promotion on Merit Basis

1. When merit is adopted as a basis for 1. The main difficulty in weighing merit in making
promotion, it ignites employees to show better promotion decisions is the lack of objective
performance continuously, as they feel that criteria. If the organization is not well equipped
their merit would be rewarded suitably. for measuring merit objectively, it will lead to
chaos.
2. If the promotion is based on merit, it helps in 2. It ignores the basic fact that a person matures
attracting and retaining competent with age and many of the emotional
employees. intelligence-related competencies increase
with age.
 3. By adopting a merit-based policy of 3. Differentiating one employee from another on
promotions, an organization can build up a merit basis shows weakness in an
pool of competent people who are a source for organization’s HR system.
creating and sustaining competitive advantage
for the organization.

Merits of Promotion on Seniority Basis Demerits of Promotion on Seniority Basis

1. Seniority as the basis for promotion is based on 1. Number of years of experience does not
objectivity and equality. The use of such criteria necessarily correspond with quality of
as performance appraisal, selection tests and experience. The basis logic behind experience
superiors’ opinions leads many employees to is that an experienced person may weed out
feel that promotions are not made fairly, which the undesirable practices over the period and
ultimately result in declining morale and may retain only the desirable practices.
productivity.
2. To grant promotions based on seniority is to 2. If employees are assured of being promoted
reward employees for loyalty. No one would after putting certain years of service, they may
deny that loyalty deserves rewards. become complacent towards better
performance.
3. Experience contributes to ability, if meaningful. 3. Competent people are not attracted by the
Studies show that employees with the longest seniority promotional policy; hence,
service often are better prepared for organizations following this policy fail to attract
promotion than management is initially willing talented people. Even if some talented people
to admit. join such an organization, they tend to leave it
at the earliest.

Promotion on Merit-cum-Seniority Basis

Taking the advantages of both seniority and merit, many organizations adopt the policy of promotion on
merit-cum-seniority basis with varying emphasis on merit and seniority. From the above discussion,
neither seniority nor merit can be sound criterion for promotion. In the interest of efficiency, justice and
for satisfaction of employees,
a compromise between
seniority and merit should be
worked out. Seniority should
be given due weightage but
fitness i.e., merit should not be
forgotten. Promotion should,
therefore, be given based on
merit-cum-seniority. This will
afford the employees due
recognition for their length of
service while at the same time
provide built- in-incentive for
better performance.
According to Pigors and
Myers (1981), seniority should be considered, but only when the qualifications of two candidates for a
better job are, for practical purposes, equal.

Sources:

▪ Ashwathappa, K. Human Resource Management:L Text and Cases, McGraw Hill Education, New Delhi.
▪ VSP Rao, Human Resource Management: Text and cases, First edition, Excel Books, New Delhi.
▪ Gary Dessler, “Human Resource Management”, Seventh edition, Prentice-Hall of India P. Ltd., Pearson.
 HUMAN RESOURCE MANAGEMENT (UNIT 3: DEVELOPMENT OF HUMAN RESOURCES)

Concept of Orientation (Induction)

Orientation is the process of introducing a new employee to the organization, and the organization to the
employee by providing him relevant information. A formal orientation is preferable because it tries to
bridge the information gap of the new employee. It may contain the following information:
(a) About the Organization (mission and philosophy, objectives, product lines etc.)
(b) HR Policies and Rules (training and development, promotional avenues, pay scale, vacations, leave
rules etc.)
(c) Employment Benefits (provident funds, insurance benefits, gratuity benefits, retirement benefits
etc.)
(d) Introduction to supervisors, co-workers/ officials, subordinates etc.
(e) Job Duties (job objectives, relationship to other jobs, office timings, breaks etc.)

Importance of Orientation (Induction)

1. Overcoming Employee Anxiety: New employees experience lot of anxiety in an organization, which
is a natural phenomenon for human beings; they experience anxiety in a new environment, which may
interfere with the training process.
2. Overcoming Reality Shock: An employee joins an organization with certain assumptions and
expectations (such as lucrative salary and perquisites, social status, prestige etc.). When these
expectations are incompatible with the reality of the situation, he experiences a ‘reality shock’.
3. Accommodating Employees: Proper employee orientation helps to accommodate new employees
with existing employees by developing acquaintances and understanding of the various aspects of
the job, which the newcomer is expected to confront.

Concept of Training

Dale S. Beach has defined training as the organized procedure by which people learn knowledge and/or
skill for a definite purpose. Training refers to the teaching and learning activities carried on for the primary
purpose of helping members of an organization acquire and apply the knowledge, skills, abilities, and
attitudes needed by a particular job and organization. According to Edwin Flippo, training is the act of
increasing the skills of an employee for doing a particular job.

Importance of Training

Benefits to the Business Benefits to the Employees

1. Trained workers can work more efficiently. 1. Training makes an employee more useful to a
firm.
2. They use machines, tools, materials in a proper 2. Training makes employees more efficient and
way, thus eliminating wastage. effective by combining materials, tools and
equipment in the right manner.
3. There will be fewer accidents, as training 3. Training enables employees to secure
improves the knowledge of employees promotions easily and they can realize their
regarding the use of machines and equipment. career goals comfortably
4. Trained workers can show superior 4. Employees can avoid mistakes, accidents on
performance and can turn out better quality the job. They can handle hobs with confidence
goods by putting the materials, tools and and their morale would be high.
equipment to good use.
5. Training makes employees more loyal to an 5. Effective training can enable employees to
organization as they will be less inclined to cope with organizational, social and
leave the unit where there are growth technological change, and serves as an
opportunities. invaluable HR investment.
Training vs Development
Although the terms are used synonymously, training is quite different from that of development. The
differences are noted as follows:
Training Development
▪ Training is skills focused ▪ Development is creating learning abilities
▪ Training is presumed to have a formal ▪ Development is not education dependent
education
▪ Training needs depend upon lack or ▪ Development depends on personal drive and
deficiency in skills ambition
▪ Trainings are generally need based ▪ Development is voluntary
▪ Training is a narrower concept focused on job ▪ Development is a broader concept focused
related skills on personality development
▪ Training may not include development ▪ Development includes training wherever
necessary
▪ Training is aimed at improving job related ▪ Development aims at overall personal
efficiency and performance effectiveness including job efficiencies

Training and development may be seen in the context of a continuum in which training content proceeds
in continuity rather than in discrete form because an individual proceeds in his job hierarchy and what he
has learned at a particular job is transferred to another job because of transfer of learning. The training
and development continuum has been presented below:

Identifying Training and Development Needs

Identification of training and development needs arises on continuous basis. Need for training and
development arises to maintain the match between employees’ capability and their job requirements in
terms of knowledge, skills and attitudes. Knowledge refers to the possession of information, facts, and
techniques of a particular field. Skills refer to the proficiency required to use the knowledge to do a work.
Attitudes refer to the persistent tendency to feel and behave in a favourable or unfavourable way towards
some persons, objects and ideas. The key issues at assessing training and development needs are as
follows:

1. Are all the gaps between employees and job requirements to be filled through training and
development programmes? It may be mentioned that training and development is a costly affair, and
it should not be viewed as a cure for all ills in the organization.
2. Should training and development needs assessment cover all employees at all levels or should it be
restricted to few groups of employees?
3. Should training and development needs assessment take only present requirements or future
requirements too?
4. What model of training and development needs assessment be applied?
5. From where and how will relevant information be collected?
6. Who will be responsible for collecting information, analysing it, and reporting its results?

Analysis for Assessing Training and Development Needs

There are three types of analysis, which are required for identifying training and development needs. They
are:
1. Organization Analysis: It is a systematic effort to understand where training effort needs to be
emphasized in the organization. It involves a detailed analysis of the organization structure, objectives,
human resources and plans. The starting point in organizational analysis is the identification of its long-
term objectives and defining its operational objectives.
2. Task Analysis: It entails a detailed examination of the job, its various operations, and the conditions
under which it has to be performed. In task analysis, the following guidelines may be adopted:
a. Listing the duties and responsibilities of the task under consideration using job description as
a guide
b. Listing the standards of job performance
c. Comparing actual performance against standards
d. If there is a gap, identifying the parts of the job which are giving troubles in effective job
performance
e. Defining training needed to overcome such troubles
3. Person Analysis: The focus of person analysis is on the individual employee, his abilities, his skills,
and the inputs required for job performance, or individual growth and development in terms of career
planning. It helps to identify whether the individual employee requires training and, if so, what kind of
training.

Designing Training Programmes

Every training and development programme must address certain vital issues:
Trainees should be selected based on self-nomination, recommendations of
Who are the trainees? supervisors or by the HR department itself. Whatever is the basis, it is
available to have two or more target audiences.
Training and development programmes may be conducted by several
Who are the trainers? people, including immediate supervisors, co-workers, members of the HR
staff, outside consultants etc.
What are the methods
and techniques of Discussed later
training?
The inputs passed on to the trainees in training and development
programmes are education, skills etc. There are three basic levels at which
What should be the
such inputs can be taught. At the lowest level, the employee must acquire
level of training?
fundamental knowledge. The goal of the next level is skills development.
The highest level aims at increased operational proficiency.
Training and development programmes are more likely to be effective when
What learning they incorporate the learning principles such as employee motivation,
principles are needed recognition of individual differences, reinforcement, goals, schedules of
learning etc.
The decision of where to conduct the training programs comes down to the
Where is the
following choices: (i) at the job itself (ii) on site but not the job, for example,
programme
in a training room in the company (iii) off the site, such as in a college
conducted?
classroom or conference centre.

Methods and Techniques of Training

Training and development methods are means of attaining the desired objectives in a learning situation.
The following table presents information about skills and knowledge required by personnel, training and
development methods relevant for these, and target trainees.
Skills Training & Development Methods Target Trainees
Job instruction training Operative
Technical skills Vestibule training Operative
Apprenticeship Operative
Sensitivity training Supervisory; managerial
Behavioural skills
Transactional analysis Supervisory; managerial
 Role playing Supervisory; managerial
Case study Managerial
In-basket exercise Managerial
Decision-making skills Management games Managerial
Brainstorming Managerial
Syndicate Managerial
Job rotation Managerial
Multi-skills Coaching/ understudy Managerial
Mentoring Managerial
Deliberation Supervisory; managerial
Knowledge
Lecture/ conference Supervisory; managerial

Some of these training and development methods can be used on the job, while others can be used off
the job.

On-the-job Training and Development: In this method, the trainee learns while he is actually engaged
in doing a job. This engagement may be on a specific job or there may be job rotation. This technique
involves ‘learning by doing itself’. It involves the following types:

It is also known as ‘training through step-by-step’. It involves listing of all necessary

steps involved in the job performance with a sequential arrangement of all steps. It
involves the following steps:
1. Providing job information to the trainees by emphasising its importance,
general description of the job and duties, and responsibilities involved
Job instruction
2. Positioning the trainees at the workplace and explaining them the various steps
training (JIT)
involved in job performance and the reasons for these steps
3. Allowing the trainees to try out work performance on the basis of the steps
involved and correcting the errors committed by them
4. Encouraging the trainees to ask questions about the job performance and
satisfying them with further explanation.
It is a method of training in crafts, trades and technical areas is one of the oldest and
the most commonly used method especially when proficiency in a job is the result
Apprenticeship of a relatively long period of training. The areas in which apprenticeship training is
offered are numerous ranging from the job of a draughtsman, machinist, printer,
tool-maker, electrician etc.
It is a learning through on-the-job experience. Ait involves direct personal
Coaching/ instructions and guidance usually with demonstration and continuous critical
Understudy evaluation and correction. In the understudy method, the trainee works normally as
assistant under the direction and supervision of a person.
It is a technique for human resource development, which has entered the business
field quite recently, but it has been in practice for long. In mentoring, a senior
Mentoring manager acts as a friend, philosopher, and guide to a new recruit and provides him
the support that the latter needs. The mentor provides such support to develop the
overall personality of his mentee.
Job rotation, or channel method of development, involves movement of a manager
from one job to another job, from one plan to another plan on a planned basis. In
this case, the movement is not meant for transfer but is meant for learning the
Job Rotation interdependence of various jobs so that the trainee can look at his job in broader
perspective. It may be restricted to different jobs within a broad functional area like
sales or marketing research, or to sales promotion, or may extend beyond the
functional area like movement from marketing to production or vice-versa.
Managerial personnel may be developed through their participation in
deliberations and decision-making in group form such as committees, task forces,
Participation in
project assignments etc. These groups are created by taking managers across a
Deliberations
number of functional areas to solve particular problems being faced by the
organization.
Off-the-job Training and Development: In a dynamic environment where things change at a fast pace,
new ways of doing things are required which cannot be generated by on-the-job training and
development. Therefore, personnel are required to learn something away from their workplace.
The concept of vestibule school/ training centre is that people will learn and
develop skills while working in the situations similar to what they will face after they
Vestibule are put on the actual job. It offers several advantages: (i) as the training is provided
Training in a different place, there is lesser distraction of trainees’ attention (ii) since the
training is away from the actual production process, it is not affected by the training
process
They are knowledge-based management development methods. In these
methods, an effort is made to expose participants to concepts and theories, basic
Lectures and
principles, and pure and applied knowledge in any particular area. While lecture
Conferences
method emphasizes one-way communication, the conference method provides an
opportunity for two-way communication.
As a method of management development, syndicate refers to a group of trainees
and involves the analysis of a problem by different groups with each group
Syndicate
consisting of 8-10 members. The syndicate method is quite helpful in developing
analytical skills in the participants and their approach for understanding others.
It is a technique to stimulate idea generation for decision-making. It is a conference
technique, by which a group attempts to find a solution for a specific problem. It is
done by amassing all the ideas contributed by its members spontaneously. It
Brainstorming
provides an opportunity to remove various social and psychological blocks, which
come in the way of idea-generation, and creates favourable atmosphere for
imaginative power to generate ideas for problem solving.
It involves the duplication of organizational situations in a learning environment.
Though there are different methods of training under simulated situations and each
of these involves a particular procedure, simulated learning involves the following:
Simulation (i) in simulation, essential characteristics of a real-life situation are presented in
Training abstracted form (ii) participants in the training program are required to do
according to the situation prescribed and to see the problem from the viewpoint of
various roles given in the situations (iii) the role of instructor is quite restricted to
allow the trainees to participate fully.
Also known as laboratory or T-group, it is a small-group interaction process in the
unstructured form, which requires people to become sensitive to others’ feelings in
order to develop reasonable groups activity. The positive consequences of
sensitivity training are: (i) it results in more supportive behaviour, people that are
Sensitivity more sensitive and more considerable managers (ii) participants to the training
Training programme become more open and self-understanding. The negative
consequences are: (i) many participants of sensitivity training have reported a
feeling of humiliation, manipulation, and decline in self-confidence and
psychological damage (ii) it incites anxiety with many negative impacts like causing
the people to be highly frustrated, unsettled and upset.
It offers a model of personality and dynamics of self and its relationship to others
that makes possible a clear and meaningful discussion of behaviour. TA refers to a
Transactional
method of analysing and understanding interpersonal behaviour. When people
Analysis (TA)
interact, there is a social transaction in which one person responds to another. The
study of these interactions between people is called transactional analysis.
It generally focusses on emotional issues rather than actual ones. The essence of
Role Playing role playing is to create a realistic situation, and then have the trainees assume the
parts of specific personalities in the situation.
It is a simulation technique designed around the ‘incoming mail’ of a manager, A
variety of situations is presented in this exercise, which would usually be dealt by a
In-basket manager in his typical working day. In this method, the trainee is given certain
Exercise incidents and his reactions are not down. Through the feedback of his behaviour,
the trainee comes to know his behavioural pattern and tries to overcome the one,
which is not productive or functional.
 A case is a description of a situation involving problems to be solved. It is a
description of an actual situation in business, which provokes, in the reader, the
need to decide what is going on, what the situation really is or what the problems
Case Study
are, and what can and should be done. Case study can provide stimulating
discussions among participants, as well as excellent opportunities for individuals to
defend their analytical and judgement abilities.
Also known as business games, it is a popular technique, which is used at the
management development level. It is an involvement-oriented process for skill
Management development, particularly analytical and group processes. Management game is a
Games form of simulation which involves a sequential decision making exercise structured
around a hypothetical model of an organization’s operations in which participants
assume roles in managing the operations.
This training method is chosen while preparing a second-line leader to take up the
Work role of the headship, in which case, the candidate could not benefit by sending
Shadowing them to any other formal training program. The best way to be trained for a future
Method executive position would be through direct participant observation of the crucial
events that take place in the present incumbent’s work life.
Large Scale This method stresses upon the sharing of expertise by all the participants, unlike
Interactive other methods where the instructor supplies most of the inputs and might even look
Events (LSIE) down upon trainees as people who are ignorant or unskilled in the topic being
Method covered.

Difference between Coaching and Mentoring

Basis of Difference Coaching Mentoring

Coaching is a method in which an Mentoring is an advisory process

individual is supervised by a superior in which a fresher gets support
Definition
person to improve his competencies and guidance from a senior
and capabilities. person.

Orientation Task Relationship

Period Short-term Long-term

Relationship Type Formal Informal

A coach who imparts coaching has A mentor is a person having good

Specializes in
expertise in the concerned field. knowledge and experience.

Concept of Management Development

According to Yoder, Management Development is “a programme of training and planned personal

development purporting to prepare and aid managers in their present and future jobs.” Management
development is a systematic process of training and growth by which managerial personnel gain and
supply skills, knowledge, attitudes and insights to manage the work in their organisations effectively and
efficiently. Management development programme includes the activities — short courses, leadership
courses, management education and training programmes, coaching, guiding and mentoring. These
programmes can be conducted in-house or outside by consultants or experts.

Characteristics of Management Development

▪ According It is an organised process of learning rather than a haphazard or trial and error approach.
▪ It is a long-term process as managerial skills cannot be developed overnight.
▪ It is an ongoing exercise rather than a “one-shot” affair. It continues throughout an executive’s entire
professional career because there is no end to learning.
▪ Management development aims at preparing managers for better performance and helping them to
realise their full potential.
▪ Executive development is guided self-development. An executive can provide opportunities for
development of its present and potential managers. Bill the image for learning has to come from the
executive itself. Executive development is possible only when the individual has the desire to learn
and practice what he learns.

Objectives/ Purpose of Management Development

▪ To sustain better performance of managers throughout their careers.

▪ To improve the existing performance of managers at all levels.
▪ To encourage existing managers to increase their capacity to assume and handle greater
responsibility.
▪ To enable the organisation to have the availability of required number of managers with the required
skills to meet the present and anticipated (future) needs of the organisation.
▪ To replace elderly executives who have risen from the ranks by highly competent and academically
qualified professionals.

Career Development

Career is progress or general course of action of a person in some profession or in an organization. Career
planning is a process whereby an individual sets career goals and identifies the means to achieve them.
Where the organization intervenes in planning, it becomes organizational career planning. Career
development refers to a formal approach used by the firm to ensure that people with proper
qualifications and experiences are available when needed. Career management is the process of
enabling employees to better understand and develop their skills and interests and use them for the
benefit of the organization and self.

Stages in Career Development

A career includes many positions, stages and transitions just as a person’s life does. It can be easily
understood if we think of a career
consisting of several stages. There are
typically five stages in career
development:

1. Exploration: This is the career

stage, which usually ends in one’s mid-
twenties as one makes the transition
from college to work. From an
organizational standpoint, this stage
has least relevance as it takes place
prior to employment. For the
individual, this is the stage of self-
exploration seeking answers to various
puzzling questions about careers.
2. Establishment: This is the
career stage where one begins the
search for work and picks up the first
job. It includes the first experiences on
 the job, peer group evaluations, personal tensions and anxieties that confront a person trying to make
his mark. This period is characterized by committing mistakes, learning from those mistakes and
assuming increased responsibilities.
3. Mid-Career: It is a stage that is typically reached between the age of 35 and 50. At this point, one may
continue to show improved performance, level off or begin to decline. Mistakes committed by the
individual would be viewed seriously and may invite penalties as well.
4. Late Career: This is the stage where one relaxes a bit and plays the part of an elder statesperson. For
those who continue to grow through the mid-career stage, this is the time to command respect from
younger employees. An individual’s varied experiences and judgement are greatly valued and they
can teach others and share their experiences with others.
5. Decline: During this period, a person’s attention may turn to retirement. The achievements of a long
career and the frustrations and anxieties that go along with that phase are left behind.

Managing Transfers

Transfer is a form of internal mobility of human resources, which involves movement of an employee from
one section to another section of the same department, one department to another department, one unit
to another unit, one place to another place, or one function to another function, in the form of job rotation
without any change in the employee’s status, responsibilities and pay.

Types of Transfer (Reasons for Transfer)

There are different types of transfer:

1. Production Transfer: It is also known as flexibility or organizational transfer. The basic purpose of such
transfer is to stabilize employment in an organization. The occasion for such transfers arises because
of uneven change in quantity of production in different departments/ units, surplus or shortage of
workers in different departments at the initial level of placement.
2. Plant Transfer: It aims at stabilization of employment of personnel as in production transfer, except
with one difference that employees are transferred from one plant to another plant. The need for such
transfers arises if two plants have different stage of stabilization.
3. Shift Transfer: Where the production runs into shifts, most of the continuous production processes
run based on three shifts and employees and transferred from one shift to another over the period.
4. Remedial Transfer: It is effected by transferring an employee from a section/ department in which he
cannot adjust himself with either his boss or his co-workers. This may be because of initial faulty
placement of the employee without matching his profile with that of the group.
5. Versatility Transfer: It is in the form of job rotation of an employee with a view to acquire multiple
skills required for different jobs and to understand the relationship of one job with others, and how a
job affects and is affected by others.
6. Tenure Transfer: It is more common in government administration and is based on the principle that
an official should not stay more than the prescribed period, usually three years, at a particular place to
ensure that he does not get involved in politicking informal groups.
7. Penal Transfer: It is effected to penalize an employee whose behaviour does not match with the
officially required behaviour. In business organizations, such type of transfer is made to get rid of a
difficult trade union activist, an intriguer etc.

Principles of Transfer

1. The policy should be fair, impartial and practicable so that there is no unnecessary conflicts between
the employees and the organization
2. Objectives of different types of transfer should be spelled out clearly to avoid misgivings
3. The policy should lay down the bases on which transfers are to be effected, whether it would be based
on seniority, skills and competence or any other factors

Promotion Decisions
It is an advancement in the organization, which involves a change from one job/ position to another that
is better in terms of status and responsibility. Ordinarily, the change to better job is accompanied with
increased monetary compensation and privileges.

Types of Promotion

1. Horizontal Promotion: This type of promotion involves an increase in responsibility and pay with the
change in the designation. However, the job classification remains the same.
2. Vertical Promotion: Here, there is a change in the status, responsibilities, job classification and pay.
Sometimes, this type of promotion changes the nature of job completely.
3. Dry Promotion: It refers to an increase in responsibilities and status without any increase in pay or
other financial benefits.

Need for Promotion

It is desirable to analyse how a promotion serves the needs of the organization and the individual.
Promotion serves the organizational and individual needs in the following manner:
1. Promotion is used as a reward for better work performance and organizationally approved form of
behaviour. People will work harder if they feel that this will lead to promotion.
2. Promotion provides need satisfaction to personnel, which enhances their morale, productivity and
loyalty to the organization.
3. Because of increased loyalty, which is developed among personnel through promotion, the
organization is able to retain its talented personnel that is the utmost need of any organization in this
era of high competition.
4. Promotion provides avenues for continuous learning and developing of personnel as it depends on
promotability, which is a result of continuous learning and development. This process increases
individual and hence organizational effectiveness.

Demerits of Promotion

1. Employees may feel that once they are promoted, they will lose more benefits, which they enjoy in the
form of overtime payment, statutory bonus, incentive bonus etc. than what they derive out of
promotion.
2. For some employees, settling at a particular level of position is more satisfying than attempting for
promotion, which requires continuous standing on one’s toes.
3. Some employees do not want promotion because it may involve transfer from one place to another
place. For such employees, affiliation to a particular place is more important than the benefits
associated with promotion.

Promotion Decisions: Seniority vs Merit Considerations

Merits of Promotion on Merit Basis Demerits of Promotion on Merit Basis

1. When merit is adopted as a basis for 1. The main difficulty in weighing merit in making
promotion, it ignites employees to show better promotion decisions is the lack of objective
performance continuously, as they feel that criteria. If the organization is not well equipped
their merit would be rewarded suitably. for measuring merit objectively, it will lead to
chaos.
2. If the promotion is based on merit, it helps in 2. It ignores the basic fact that a person matures
attracting and retaining competent with age and many of the emotional
employees. intelligence-related competencies increase
with age.
3. By adopting a merit-based policy of 3. Differentiating one employee from another on
promotions, an organization can build up a merit basis shows weakness in an
pool of competent people who are a source for organization’s HR system.
 creating and sustaining competitive advantage
for the organization.

Merits of Promotion on Seniority Basis Demerits of Promotion on Seniority Basis

1. Seniority as the basis for promotion is based on 1. Number of years of experience does not
objectivity and equality. The use of such criteria necessarily correspond with quality of
as performance appraisal, selection tests and experience. The basis logic behind experience
superiors’ opinions leads many employees to is that an experienced person may weed out
feel that promotions are not made fairly, which the undesirable practices over the period and
ultimately result in declining morale and may retain only the desirable practices.
productivity.
2. To grant promotions based on seniority is to 2. If employees are assured of being promoted
reward employees for loyalty. No one would after putting certain years of service, they may
deny that loyalty deserves rewards. become complacent towards better
performance.
3. Experience contributes to ability, if meaningful. 3. Competent people are not attracted by the
Studies show that employees with the longest seniority promotional policy; hence,
service often are better prepared for organizations following this policy fail to attract
promotion than management is initially willing talented people. Even if some talented people
to admit. join such an organization, they tend to leave it
at the earliest.

Promotion on Merit-cum-Seniority Basis

Taking the advantages of both seniority and merit, many organizations adopt the policy of promotion on
merit-cum-seniority basis with varying emphasis on merit and seniority. From the above discussion, it is
clear that neither seniority nor merit can be sound criterion for promotion. In the interest of efficiency,
justice and for satisfaction of employees, a compromise between seniority and merit should be worked
out. Seniority should be given due weightage but fitness i.e., merit should not be forgotten. Promotion
should, therefore, be given
based on merit-cum-seniority.
This will afford the employees
due recognition for their
length of service while at the
same time provide built- in-
incentive for better
performance. According to
Pigors and Myers (1981),
seniority should be
considered, but only when the
qualifications of two
candidates for a better job are,
for practical purposes, equal.

Sources:

▪ Ashwathappa, K. Human Resource Management:L Text and Cases, McGraw Hill Education, New Delhi.
▪ VSP Rao, Human Resource Management: Text and cases, First edition, Excel Books, New Delhi.
▪ Gary Dessler, “Human Resource Management”, Seventh edition, Prentice-Hall of India P. Ltd., Pearson.
 HUMAN RESOURCE MANAGEMENT (UNIT 4: MOTIVATION OF HUMAN RESOURCES)

Concept of Performance Appraisal

Performance Appraisal is the process of evaluating the performance and qualification of the employees
in terms of the requirements of the job for which he is employed, for the purpose 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.

According to Dale Yoder, performance appraisal includes all formal procedures used to evaluate
personalities and contributions and potentials of group members in a working organization. It is a
continuous process to secure information necessary for making correct and objective decisions on
employees.

Nature of Performance Appraisal

▪ It should be simple and understandable by the employees. Any complications need to be avoidable.
▪ It should be suitable to be adopted for appraisal at regular intervals because periodic appraisal
enables the employees to improve.
▪ It should create the atmosphere of mutual understanding and confidence.
▪ The system should be capable of giving equitable justice to all employees. Therefore, it should be
objective and free from personal bias.
▪ The employees should be taken in confidence while preparing performance appraisal.
▪ The system should be suitable to the organisation from the points of its structure, needs and more
essentially based on latest development in the area.

Objectives of Performance Appraisal

▪ To identify employee weaknesses and strengths

▪ To identify and meet training needs and aspirations
▪ To generate significant, relevant and valid information about employee;
▪ To provide inputs to increments of rewards, transfers, promotion and salary administration
▪ To help in improving employee’s performance if he is not found to be suitable during the review
period
▪ To create a desirable culture and tradition in the organisation;
▪ To help in planning career development and human resources planning based on potentialities.
▪ To provide ‘deadlock’ and research data for improving overall human resources information system.

Importance of Performance Appraisal

▪ Assessment of Employee Performance: Performance appraisal helps supervisors to assess the work
performance of their subordinates. The strength, weaknesses and potentialities of employees, level of
performance is disclosed through performance appraisal.
▪ Improvement of Performance: The performance of employees is continuously scanned and
reviewed. This creates a psychological pressure on employees to perform well, as well as motivates
the employees. Performance appraisal helps to improve the performance of the employees.
▪ Designing Training and Development Programme: Performance appraisal helps in designing
training and development programme for the employees. Training and development programme are
designed considering the existing skill, knowledge, capability and performance of the employees as
disclosed by performance appraisal. This enables to improve the performance of the work force.
Performance appraisal also helps to assess the effectiveness of training and development programme
by analysing employee performance before and after training.
▪ Determination of Pay: Often the pay structure of employees is linked to performance of employees
and their productivity. Bonus and increment of salary are determined on the basis of performance of
employees.
▪ Decision Regarding Promotion and Transfer: Performance appraisal helps in decision making
regarding promotion and transfer. Performance appraisal on a continuous basis helps to evaluate the
improvement of employee performance, their skill, knowledge, capability so that they can be allotted
a new job.

Techniques of Performance Appraisal

A useful classification of appraisal methods may be to group them into two categories: traditional and
modern, based on the evolution of various methods of appraisal over the period of time. The classification
has been provided as follows:

Traditional Methods Modern Methods

▪ Straight Ranking method ▪ Appraisal by results or objectives
▪ Paired comparison ▪ Behaviourally anchored rating scales (BARS)
▪ Grading ▪ Assessment centres
▪ Forced distribution method ▪ 360-degree appraisal
▪ Forced choice method
▪ Checklist method
▪ Critical incidents method
▪ Graphic scale method
▪ Essay method
▪ Field review method
▪ Group Appraisal
▪ Confidential Report
▪ Self-evaluation

TRADITIONAL METHODS OF PERFORMANCE APPRAISAL

▪ Ranking Method: Each employee is compared to other employees doing the same job. Rater simply
ranks employees from high to low on a given performance dimension. Employee ranked first is
considered the best, and the one ranked the lowest rank is considered the worst. Drawbacks: Difficult
to rate many individuals and to make decisions regarding individuals in the middle of the rank order. It
only highlights the best or worst performance and does not indicate how good or bad the performer is.
▪ Paired Comparison Method: Each employee is compared with every other employee in the
workgroup. Comparisons are made between two people at the same time and a judgment is made as
to which person is superior. The number of pairs compared is determined by the formula N*(N-1)/2,
where N is the number of employees to be evaluated. Drawback: Complicated when the number of
individuals to be evaluated is large.
▪ Grading: Under this technique of performance evaluation certain categories of worth are determined
in advance and they are carefully defined. These selected and well-defined categories include grade
‘A’ for outstanding, ‘B’ for very good, ‘C’ for average, ‘D’ for poor etc. These grades are based on
certain selected features of employees such as knowledge, judgment, analytical ability, leadership
qualities, self-expression etc. The actual performance of employees is compared with the above
grades and employees are allotted grades that speak for their performance.
▪ Forced Distribution Method: This method is preferred when the number of employees to be
evaluated is very large. The rater assigns a fixed percentage of employees to each of the pre-
determined categories (e.g., Poor, Fairly Good, Good, and Excellent). Advantage: Does not allow the
rater to place all employees at the higher or lower end of the scale. Drawback: Not an appropriate way
to rate employees, as employee performance is not normally distributed in general.
▪ Forced Choice Method: Two or more statements are grouped together and the rater is asked to
indicate which statement best describes the employees being rated. The statements denote either
positive behaviour or negative behaviour. Weights are given to the different statements but the rater
does not know the weightage and is forced to make a choice. Advantage: Fairway to rate employees,
as the rater has no way of knowing the ratings of the two statements.
▪ Checklist Method: A checklist is a list of statements that describe the characteristics and performance
of employees on the job. The statements carry different values. The rater has to put a plus sign (+),
minus sign (-), or question mark (?) against each statement, depending on whether he feels that the
statement does or does not apply, or if there is a doubt, respectively. Drawback: Time-consuming and
expensive; the statements may be interpreted differently by different raters.
▪ Critical Incidents: They are behaviours that are important to success or failure on the job. The
supervisor keeps a written record of critical events and how different employees behaved during such
events. Drawback: Negative incidents are more easily noticed than positive ones, and the supervisors
may forget to record some critical incidents.
▪ Graphic Rating Scales: Performance is evaluated on the basis of rating factors or traits. Each factor is
represented by a horizontal line that indicates the range of the factor (e.g., Poor to Excellent). Raters
put a checkmark against the point on the rating scale applicable to the employee. Drawback: Rater’s
bias and misinterpretation may lead to errors in judgment.
▪ Essay Evaluation: Superiors write a detailed report regarding their opinion of their subordinates. The
report describes the strengths, weaknesses, and potentials of the employees. Advantage: Provides
considerable employee information if the superior provides an example for each judgment. Drawback:
Difficult to compare the performance of different employees and appraisal quality depends on the
rater’s writing ability.
▪ Field Review Method: An HR expert interviews the supervisors to evaluate their respective
subordinates. The appraiser makes a detailed note of the supervisor’s responses, conveys the note to
the superior, and places the report in the personal file of the employees.
▪ Group Appraisal: Employees are evaluated by a group of evaluators. The group of evaluators
determine the performance standards of the job, measure the actual performance of the employees,
and offer suggestions for improvement. Advantage: The presence of multiple evaluators reduces bias.
▪ Confidential Report: It is a report prepared by the employee’s immediate superior. It describes the
employee’s personality, behaviour, main achievements, strengths, and weaknesses.
▪ Self-Evaluation: Employees are asked to assess their own abilities and job performance. The central
idea is that no one knows an individual better than himself. Drawbacks: Lenient ratings to themselves;
Over-estimation of performance; Discrepancy between what an individual thinks of himself and what
others think about him.

MODERN METHODS OF PERFORMANCE APPRAISAL

▪ Management by Objectives (MBO): MBO involves a mutual agreement between the employee and
the supervisor on goals to be achieved in a given time. Focuses on results and actively involves
employees in their own evaluation. It consists of two phases: (i) Goal setting: Goals are set by mutual
agreement between the supervisor and the subordinate; and (ii) Performance review: Employee and
the supervisor meet after a specified period to discuss the extent to which the goals were met.
o Advantages:
→ Increases motivation
→ Reduces role conflict and role ambiguity
→ Early identification of problems
→ Periodic feedback
o Drawbacks:
→ Time-consuming
→ The disagreement between supervisors and subordinates
→ Resistance from managers as subordinates takes an equal part.
▪ Behaviourally Anchored Rating Scales (BARS): It is recently developed method of rating in
behavioural terms. The exponents of BARS claim that it is more reliable and advantageous method of
performance appraisal. It is designed to identify critical areas of performance of a job. Under this
method the behaviourally anchored ratings scales are outlined to recognize the critical areas of
effective and ineffective performance behaviour for getting results. The evaluator is required to
observe the behaviour of the employee while performing the job. He then compares these
behavioural observations with the behaviourally anchored rating scales. Experimental studies of BARS
 had collected eight performance criteria namely knowledge and judgment, human relations skills,
conscientiousness, skill in operation of register, organizational ability, skill in monetary transaction,
observational ability. This method is more valid and expected to give more reliable results as it
minimizes the errors in performance appraisal. It identifies measurable behaviour therefore more
scientific.
o Some of the features of BARS are:
→ Areas of performance to be evaluated are identified and defined.
→ Scales are anchored by descriptions of job behaviour that represent specific levels of
performance.
→ Performance dimensions are based on observable behaviours and job relevance as
BARS is customized for each job.
→ Since the raters, who will use the scales, are actively involved in the development
process, they are more likely to be committed to the final product.
o Advantages:
→ Accurate ratings as they are assigned by experts
→ Reliable and valid as it is job-specific and identifies observable and measurable
behaviour.
→ The use of critical incidents is useful in providing feedback to employees.
o Drawbacks:
→ Time-consuming
→ Job-specific as different BARS has to be developed for every job
▪ Assessment Centres: An assessment centre in an organization is the place where individuals are
assessed in a systematic and scientific manner. Its objective is evaluation of individuals for future
growth and development. Evaluations are based not on the job but on observations of behaviour and
on the results of psychological tests. Some of the assessment techniques include:
o Role-playing: The candidate acts out the role of a manager in a simulated situation.
o In-basket test: The candidate is placed in a simulated situation where he is given a number of
items that a manager is likely to encounter on the job, such as letters, reports, etc. The
candidate has to respond and make decisions on them.
o Leaderless group discussion: Members of the group are presented with a problem and they
have to interact with each other to arrive at solutions for the problem.
▪ 360-Degree Feedback: Performance information is obtained from multiple individuals including
one’s subordinates, peers, supervisors, and customers. It aims to provide accurate and diverse input
on an employee’s performance by seeking feedback from various sources. 360-degree feedback
system recognizes that performance varies and individuals behave differently in different situations. It
attempts to capture the variety of behaviour and improve the quality of performance appraisal. The
managers receive feedback through the 360-Degree Reports and a highly structured Individual
Development Plan (IDP).

Concept of Potential Appraisal

The potential appraisal refers to the appraisal i.e., identification of the hidden talents and skills of an
individual, which he/she may not be aware of. Potential appraisal is a future-oriented appraisal whose
main objective is to identify and evaluate the potential of the employees to assume higher positions and
responsibilities in the organizational hierarchy.

Difference between Performance Appraisal vs Potential Appraisal:

▪ Potential Appraisal is a forward-looking process while performance appraisal is backward looking

process.
▪ Any good or worse assessment results of performance appraisal may not be a good factor for potential
appraisal. However, current performance of an employee could testify whether he/she is flexible in
new working conditions.
Concept of Employee Counselling

Performance counselling is a process initiated by the counsellor (guide, mentor etc.) or the manager to
assist the employee or subordinate to gain knowledge, understanding and insights on a performance
concern. It is an interactive process between the employee and his counsellor to anticipate likely problems
in job performance, defining proactive actions to overcome those problems, and implementing those
actions on a continuing basis. The steps involved in effective performance counselling are:

▪ Rapport between employee and counsellor: Rapport between the employee and the counsellor
can be developed by building trust, mutual respect and empathy.
▪ Exploring information about performance: Here, the counsellor with the help of the employee
explores the employee’s current job performance.
▪ To define future goals: Once the employee assesses his strengths and weaknesses, the counsellor
tries to make him realize what his problems are and to realistically set performance goals for the future.
▪ Drawing action plans: Counselling interviews should end with specific action plans for the
development of employees. The counsellor assists the employee in thinking of alternative ways to deal
with a problem.

Concept of Job Evaluation

Job evaluation is a process of determining the relative worth of the various jobs within the organisation,
so that differential wages may be paid to jobs of different worth. It is the process of analysing and assessing
jobs to ascertain their negative worth using the assessment as the basis for a balanced wage structure.

Difference between Job Evaluation and Performance Appraisal:

▪ Performance appraisal is concerned with comparative merit of individuals, while job evaluation does
not take into account the individual abilities of the jobholder.
▪ Performance appraisal considers the individual abilities while job evaluation considers the
requirement of the job in terms of job specification and job description.
▪ The purpose of performance appraisal is to take the decisions regarding the pay, transfer, promotion
etc. while the purpose of job evaluation is to determine the worth of the job.
▪ Performance appraisal rates the man not the job but job evaluation determines the relative worth of
the job.

Methods of Job Evaluation

Job evaluation methods are of two categories—quantitative and qualitative.

QUALITATIVE METHODS OF JOB EVALUATION

▪ Point Ranking Method: All the jobs are ranked in order of their importance from simplest to the
toughest order, each job being higher than the previous one in the sequences. A committee of several
executives is constituted, which analyse the description of jobs and ranks them in order of importance.
The committee does not have specific factors before it but the things like nature of job, working
conditions, supervision required, responsibilities involved etc. are considered while raking the jobs.
These factors are not given any weight age. Following steps are taken in ranking.
o Advantages:
→ It is very easy to understand and easy to explain to employees.
→ This method is economical in operation as compared to other methods.
→ It can be installed without any delay as it requires minimum time.
o Disadvantages:
→ The ranking is not based on standard criterion so human bias due to presences of
human factor cannot ruled out.
→ Because factors like skill, responsibility, efforts etc. are not analysed separately, the
wage rate paid for different jobs influence the rates.
▪ Job Grading Method: In this method jobs are classified or graded in groups and each job is assigned
to one of the grades or classes. With the help of job analysis, information about different jobs is
collected and they are put under different grades as per their nature, importance, responsibility and
other requirements. For each grade or class there is different rate of wages. The jobs may be graded
as skilled, unskilled, clerical, administrative, etc. This method is considered to be an improvement over
ranking method in that a predetermined scale of values is provided.
o Advantages:
→ A systematic criterion is followed in grading various jobs. It is easy for the workers to
understand the standard used for classification.
→ The method is simple to understand and easy to operate. It does not require any
technical background.
→ It is easy to determine and implement pay scales for various grades or classes.
→ This method is successfully used in government departments.
o Disadvantages:
→ The classification of jobs is done by some of the executives, human bias exists in this
method because no set standards are available for classification.
→ No job analysis is essential in this method; there is a possibility of wrong classification
for jobs.
→ With the increase in number of jobs, the system becomes difficult to implement.
→ The system is not suitable for large organizations because of its not- flexibility.

QUANTITATIVE METHODS OF JOB EVALUATION

▪ Point System: This is the most widely used technique of job evaluation. It involves quantitative and
analytical approach to the measurement of job value. A number of important factors to be considered
in each job are identified. The degree of each factor is also determined for assigning points. Various
factors are assigned points and sum of them gives us an index for the relative importance or weight
age of the job that are related. The point system is based on these assumptions that important factors
of each job can be determined for evaluating it. The points of different jobs are later on, converted
into wage rates.
o Advantages:
→ It gives us a numerical basis for wage differentials.
→ The scale, once decided can be used for fairly a long period.
→ A job can easily be evaluated in money terms as these are assigned according to points
connected with that job.
→ The system of job evaluation being systematic and objective is more acceptable to
workers as well as management.
o Disadvantages:
→ The use of this method involves high cost, it cannot be adopted by medium or small-
scale units.
→ The task of defining job factors and then degree of factors is a time-consuming task.
→ The selection of factors and then sub factors is a difficult proposition.
→ The allotting of marks to various factors and sub – factors is also a difficult job.
▪ Factor Comparison Method: This method is a combination ranking and point system of job
evaluation. It was first developed by E.J. Benge in 1926. In this method the relative rank of the various
jobs is evaluated in relation of monetary scale some key jobs are identified in the organization at the
first instance and then ranked considering one factor at a time, in this method five factors are generally
evaluated for each job i.e., mental efforts, skill, physical effort, responsibilities and working conditions.
Following steps are taken under factor comparison method.
o Advantages:
→ This system is systematic where every job factor is quantified.
→ It can easily be explained to workers.
→ The relative value of each job is determined by comparison with some key job.
 → As the number of factors used is limited, it helps in avoiding overlapping.
o Disadvantages:
→ It is difficult to operate as selection of unfairly paid jobs as key jobs can result in
considerable error.
→ There may be frequent changes in wage levels requiring adjustment in key jobs.
→ The system is complex and cannot be easily understood by non- supervisory staff or
unskilled labour.
→ This method is expensive and small units cannot afford to use it.

Concept of Compensation

Compensation includes direct cash payments, indirect payments in the form of employee benefits and
incentives to motivate employees to strive for higher levels of productivity. Compensation management
is an integral part of human resource management and helps in motivating the employees and improving
organizational effectiveness. The term compensation refers to reimburse-ment, disbursement of
incentives, and a strategic issue with regards to salary and wage administration. Direct financial payments
include pay in the form of salary, wages, incentives, commissions, and bonuses. Indirect financial
payments are given in the form of insurances.

COMPENSATION POLICIES

Compensation policies range from basic shift differentials for employees who work outside normal
business hours – such as swing shifts or graveyard shifts – to strategies that reward employees for high-
level performance that reaches organizational goals. Having a written reward and compensation policy
also helps employees understand consequences and how to align their work with their goals.

▪ Employee Incentives: They are a part of some employers’ reward and compensation strategies.
Incentives can be based on number of factors, such as performance, sales or other standards the
company uses to reward employees for attaining organizational and career goals.
▪ Merit Increases: Performance appraisal reviews are an integral part of compensation policies on merit
increases. Employers typically require that supervisors and managers conduct performance appraisals
for employees who report to them. Performance appraisals use job descriptions, performance
standards and work logs to determine if employees are meeting the employer’s expectations in terms
of productivity and quality of work.
▪ Pay for Performance: A pay-for-performance compensation policy is similar to a merit increase
because it’s based on employee performance. The difference between a merit increases and a pay-
for-performance policy is that pay-for-performance increases are not usually limited to specific
percentages based on achieving a certain rating. Pay-for-performance policies increase employee
salaries based on performance that advances the organization’s goals.
▪ Annual Review: Human resources staff or compensation and benefits specialists should review
compensation policies annually basis to ensure the company is maintaining a competitive edge.

Components of Employee Remuneration (Financial and Non-Financial)

The financial components of remuneration are:

▪ Wage and Salary: A wage is referred to as remuneration to workers, particularly hourly-rated

payment. Salary refers to remuneration paid to white-collar employees including managerial
personnel.
▪ Incentives: They are additional payment to employees besides the payment of wages and salaries,
often linked with productivity, either in terms of higher production or cost savings or both.
▪ Fringe Benefits: They include such benefits, which are provided to employees either having long-
term impact like provident fund, gratuity, pension, or occurrence of certain events like medical,
benefits, accident relief etc.
▪ Perquisites: These are normally provided to managerial personnel either to facilitate their job
performance or to retain them in the organization. They include company car, club membership, stock
options etc.

The non-financial components of remuneration include challenging job responsibilities, recognition of

merit, growth prospects, competent supervision, comfortable working conditions, job sharing, flexitime
etc.

Methods of Wage Payments

There are two basic methods of wage payment. One method relates to the hours the employee is at work,
regardless of his output (time rate system). The other method is related to the production or output,
regardless of the time taken for production (piece rate system).

▪ Time Wage System: In this method, a worker is paid for the amount of time he has spent on the job.
The wages depend upon the period, which may be an hour, a day, a week, a month etc. Thus, it is a
non-variable method of wage payment. The amount of wages under this system is calculated as:
Wages = Time spent by the worker × Rate of wages according to time.
▪ Guaranteed Time Rates: In this system, the payment is at the time rates, but adjusted to the cost of
living. Merit awards for personal qualities, skills, abilities etc. are also considered. The employer
compensates the high labour cost by increasing the price of the products.
▪ Piece Rate System: Here, the workers are paid at a stipulated rate per piece or unit of output. Here,
speed is the basis of payment, instead of time. Here, the rate is fixed per piece of work and the worker
is paid according to the number of pieces completed or the volume of work done by him, regardless
of the time taken for completion. The amount of wages to be paid to a worker under this system is
calculated as: Wages = Units of production × Rate per unit. They are of 3 types:
o Straight Piece Rate: In this method, payments are made based on a fixed amount per fixed
units produced without regard to the time taken.
o Piece Rate with Guaranteed Time Rate: Workers are paid minimum wages based on time
rates. It may include guaranteed wages according to time rate plus a piece rate payment for
units above a required minimum, or piece rate with a fixed dearness allowance or cost of living
bonus.
o Differential Piece Rate: In this case, the increase in rates is proportionate to the increase in
output.
▪ Incentive Wage System: There are two basic systems of wage payment—time rate system and piece
rate system. Both the systems have their merits and demerits. No system can be considered suitable
for all times and under all circumstances. To maintain the merits of both the systems and to overcome
the demerits of these systems, some experts have developed the systems of incentives wage. These
systems are also known as incentive wage systems, progressive wage system and bonus schemes etc.
Under these systems, both the time and speed are considered as the basis of wage payment. These
systems provide incentives to the workers to produce more and more maintaining the quality as well.
The workers are paid bonus or premium for the additional work. It is important to note that almost all
the systems incentive wages provide for minimum guaranteed wages to the workers.

Concept of Incentive Plans

Incentive plans are methods in which employees of an organization are kept motivated for the work that
they do, and are given incentives on reaching or accomplishing certain organization goals. It usually
comprises of incentives like profit sharing, project bonuses, stock options, sales commission etc.

Types of Incentives: Incentives can cover both financial as well as non-financial aspects. The financial
incentives include the following:

▪ Individual-output linked incentives: They are given to workers at shop-floor level whose outputs can
be measured quantitatively.
▪ Bonus: It is the extra payment, which is received as a reward for doing one's job well, along with salary
of the employee, and is the gesture of appreciation from the organization towards their employees.
▪ Scanlon plan: It is a cost saving, gain sharing, productivity-incentive plan in which any saving (agreed
upon standard labour cost per unit of output subtracted from actual labour cost per unit of output) is
shared equally between the workers and the organization.
▪ Profit sharing: It is the distribution of a portion of an organization’s profit among employees at the
end of the financial year. The organization’s profit is earned through the cooperative approach of all
organizational members and hence it should be shared just like shareholders get dividend for their
investment in capital.
▪ Co-partnership: Employees participate in the equity capital of a company. In this case, employees
become shareholders of a company and may exercise control over it as other shareholders do.
▪ Employee stock option: It grants specified employees of a company the right to buy a certain amount
of company shares at a predetermined price for a specific period.
▪ Cafeteria compensation plan (smorgasbord plan): In this type, employees are sometimes allowed
to select their own incentive schemes from a variety of stated possibilities. Cafeteria plan selections
include insurance options, such as contributions to health savings accounts, or group term life
insurance and disability insurance.

The non-financial incentives include an interesting and challenging job, social importance of job status,
opportunity for personal growth, opportunity for promotion, motivational environment etc.

Concept of Fringe Benefits

These are on-the-job benefits, which come in a form other than money. They are offered by some
employers to certain employees, usually for the purpose of enticing highly qualified individuals to accept
or maintain employment at their companies. The importance of fringe benefits are discussed as under:

▪ Employee demands: Employees demand more and varied types of fringe benefits rather than pay
hike because of the reduction of tax burden on the part of employees.
▪ Trade Union demands: Trade unions compete with each other for getting more and newer varieties
of fringe benefits to their members.
▪ Employer’s preference: Employers also prefer fringe benefits as they improve morale and works as
an effective advertisement.
▪ As a social security: Employers must provide benefits like safety measures, compensation in case of
accidents, medical facilities etc., with a view to provide security to their employees against various
contingencies.
▪ To improve human relations: Fringe benefits satisfy the worker’s economic, social and psychological
needs

Concept of Performance-Linked Compensation

A performance-linked incentive (PLI) is a form of payment from an employer to an employee, which is

directly related to the performance output of an employee and which may be specified in an employment
contract. PLI may either be open-ended (does not have a fixed ceiling) or close-ended (has an upper
ceiling which is normally stipulated in the employment contract). Open-ended incentives are normally
applicable to revenue-generating activities (e.g., sales), while close-ended incentives are associated with
support functions (e.g., operations, human resources, administration, etc.)

The main objectives of pay for performance are categorised into three main groups:

▪ Stimulating High Level of Performance by Connecting with Performance to Pay: Performance-

related pay can be an important tool for greater organisational change in cases where direct incentives
are quite limited or cannot be given to all employees. The underlying developments in performance
management have a much greater impact than the associated pay improvement.
▪ Embedding High-Performance Culture Across the Organisations: PRP establishes a culture of high
performance within an organisation. Every employee is expected a certain level of performance, for
which he/she will be paid.
▪ View of Justice and Equality: With respect to justice and equality, PRP has a popular acceptance
among the employees since they believe that it is the correct method of payment and individuals
should be rewarded for their better performances.

Following are the conditions essential for successful pay for performance (i.e., PLIs):

▪ Interconnected with Performance Management: Performance Related Pay (PRP) should be

interconnected with the performance management or with the appraisal process.
▪ Customized to the Organisational Needs: Performance-related pay should be customised
according to the current needs of an organisation.
▪ Balanced Basis of PRP: PRP rewards should be offered to the employees on a balanced combination
of output factors (such as work performance) and input factors (like individual’s talent or skills that may
include proof of academic qualifications).
▪ Flexibility: There should be flexibility in offering rewards in various ways, e.g., the organisation may
give additional rewards to their employees instead of simply increasing their overall salary.
▪ Teamwork: One should be appreciated for working as a member of the team, as appreciating a single
member individually may result in unhealthy competition between the team members.

Concept of Executive Compensation

Executive compensation is composed of the financial compensation and other non-financial awards
received by an executive from their firm for their service to the organization. Executive pay is an important
part of corporate governance, and is often determined by a company's board of directors. It includes base
salary, bonus, long-term incentives and perquisites payable to executives.

COMPONENTS OF EXECUTIVE COMPENSATION

The remuneration to executives comprises of the following:

▪ Salary: It is supposed to be determined through job evaluation and serves as the basis for other types
of benefits. Salary, as a component of total remuneration is not significant as it is subject to deductions
at source and is capped by governmental regulations. Hence, they are offered hefty incentives and
attractive perquisites.
▪ Bonus: It is usually short-term (annual) and is based on performance. For example, in some systems,
the annual bonus is tied by the formulae to the share price or the ROI.
▪ Long-term Incentives: Stock options are long-term benefits offered to executives. They are attractive
because executives must use their own resources to exercise their right to purchase the stock.
Moreover, the executives are assuming the same risk as all other shareholders, namely, that the price
could move in either direction.
▪ Perquisites: They constitute a major source of income for executives. In addition to the normally
allowed perks like provident fund, gratuity etc., executives enjoy special parking, plush office, vacation
travel, well-furnished houses, club memberships etc.
 HUMAN RESOURCE MANAGEMENT (UNIT 5: MAINTENANCE OF HUMAN RESOURCES)

Concept of Employee Health

The well-being of an employee in an industrial establishment is affected by accidents and ill health, both
physical as well as mental.

▪ Physical Health: Ill health of employees results in reduced productivity, high unsafe acts, and
increased absenteeism. Healthy employees are more productive, more safety conscious, and are more
regular to work. Some of the health services provided to employees by organizations are pre-hiring
medical check-up for all employees, first-aid treatment following an accident, and treatment of minor
complaints such as cough, cold, headaches etc.
▪ Mental Health: Mental health has become important areas of concern for employers. Mental
breakdowns are common today because of pressures and tensions. Mental illness takes its toll through
alcoholism, high employee turnover, poor human relationships etc. Mental health services are
generally rendered through psychiatric counselling, cooperation and consultation with outside
psychiatrists and specialists.
▪ Noise Control: Noise can only be minimized but cannot be completely eliminated. Constant exposure
to noise not only impairs hearing ability and has an adverse effect on the general health of employees.
▪ Work Stress: Stress refers to an individual’s response to a disturbing factor in the environment and
the consequence of such reaction. Stress is mostly understood to be negative. However, it has a
positive dimension also, as it brings out something better from an individual (eustress).

Concept of Employee Safety

Due to rapid industrialization, mechanical, electrical, chemical and radiation hazards have increased at the
workplace and industrial workers are exposed to such hazards, which result in accidents on and off. An
accident is an occurrence in an industrial establishment causing bodily injury to a person, which makes
him unfit to resume his duties in the next 48 hours.

Accident

Major Minor

Fatal Disability

Temporary Permanent

Total Partial Total Partial

A minor accident is one that causes injury of minor nature like a scratch. A major accident is one that either
may be fatal or causes disability. A temporary partial disability reduces the earning capacity of the
employed person but may be entitled to commission. A permanent partial disability reduces his ability to
earn income from any employment. A total disability, either of temporary or permanent nature
incapacitates the person and makes it impossible to engage in any work he was capable of performing at
the time of the accident which resulted in that disability.

FACTORS CAUSING ACCIDENTS

Some of the work-related factors which cause accidents to occur are:

▪ Nature of Job: Some jobs like that of a crane operator are more prone to accidents than that of a
supervisor.
▪ Nature of Machinery and Equipment: Some machinery and equipment like hand lift trucks, wheel
borrows, chemical tanks, boilers etc. cause have greater scope of causing accidents.
▪ Poor Physical Conditions: Poor physical conditions in the workplace causing accidents may be due
to hazardous plant and machinery layout, defective work procedures in and around machinery, unsafe
storage, congestion, overloading etc.
▪ Psychological Workplace Climate: They may appear in the form of mental fatigue, anxiety,
monotony, frustration, which cause inattention in workers and become prone to accidents.
▪ Work Schedules: Work schedules involving long hours of continuous working generate fatigue, which
may cause accidents. Night shifts often generate more accidents as people are not accustomed to
working in the night.

MEASURES OF EMPLOYEE SAFETY

The major issues involved in design and implementation of safety measures are:

▪ Safety Policy: The policy should decide the level of protection it will offer to its employees. It must
also decide whether it will adopt a proactive or reactive approach to providing safety measures.
▪ Safety Engineering: The most important function of safety engineering is to eliminate the risks posed
by the operation of machines, by the processes of manufacturing products and by the structure and
layout of plants and equipment.
▪ Guarding of Machines: Machines, which pose danger to the workers working on these, should be
properly covered and fenced and guards should be properly designed so that they prevent all access
to the danger zone.
▪ Plant Maintenance: There are two options for plant maintenance: preventive maintenance (maintain
the plant regularly) and breakdown maintenance (get the plant repaired when it stops working or
causes accidents)
▪ Safety Devices: They may include safety glasses to protect the eyes from the hazards of fire, glare or
dust; gloves to protect hands against acids; safety shoes etc.
▪ Safety Training: It seeks to develop safety consciousness among employees and build favourable
attitudes in them towards safety measures and precautions

Concept of Employee Welfare

Labour welfare work is work for improving the health, safety and general well-being and the industrial
efficiency of the workers beyond the minimum standard laid down by labour legislation. It refers to such
services, facilities and amenities, which may be established in, or near undertakings to enable persons
employed therein to perform their work in healthy and congenial surroundings and provide them with
amenities conducive to good health and high morale.

SIGNIFICANCE OF EMPLOYEE WELFARE

▪ Enables workers to have a richer and more satisfying life

▪ Improve the physical and psychological health of employees, which will enhance their efficiency and
productivity
▪ Absorbs the shocks injected by industrialization and urbanisation on workers
▪ Promotes a sense of belongingness among works, preventing them from resorting to unhealthy
practices like absenteeism, labour turnover, strike etc.
▪ Prevents social evils like drinking, gambling etc. by improving the material, social and cultural work
conditions

TYPES OF WELFARE FACILITIES

It may be intramural activities, which are provided within the establishment (such as washrooms, rest
centres, canteens, library, medical aid etc) or extramural, which are undertaken outside the establishment
(such as family planning, child welfare, cooperative stores, credit societies etc.)
Concept of Social Security

It is the protection given by society to its members against contingencies of modern life such as sickness,
unemployment, old age, invalidity, industrial accidents etc. The basic objectives of social security are
compensation (offer financial help when the worker is in a state of physical distress due to accidents,
sickness, invalidity etc.), restoration (enable the worker to recover from the shocks injected by the
inhuman industrial work, rehabilitate himself and get on with his work in a useful manner) and prevention
(extend monetary assistance to workers so that they can get rid of sickness, idleness etc.)

TYPES OF SOCIAL SECURITY

They are of two types, namely social insurance (protection of the individual against economic hazards
(such as unemployment, old age, or disability) in which the government participates or enforces the
participation of employers and affected individuals) and social assistance (benefits are offered to persons
of small means by the government out of its general revenues).

Concept of Employee-Employer Relations

Industrial Relations is concerned with the systems, rules and procedures used by unions and employers
to determine the reward for effort and other conditions of employment, to protect the interests of the
employed and their employers, and to regulate the ways in which employers treat their employees.

Employee relations can be seen primarily as a skill set or philosophy, rather than as a management
function or a well-defined area of activity. The emphasis of employee relations continues to shift from
collective institutions, such as trade unions and collective bargaining to relationships with individual
employees. Employee relations skills are seen by employers as critical to achieving performance benefits
through a focus on employee involvement, commitment, and engagement.

OBJECTIVES OF INDUSTRIAL RELATIONS

▪ To establish harmonious relationship between operatives and management by providing safeguard

to their respective interests and developing understanding and goodwill between them
▪ To avoid industrial conflicts and to develop mutuality among the interests of these parties
▪ To raise productivity in the organization and to curb employee turnover and absenteeism
▪ To avoid the interference of the government in the working of the relationship between employees
and employers

Concept of Industrial Dispute

It refers to any dispute or difference between employers and employers or between employers and
workers, or between workers and workers, which is connected with the employment or non- employment
or the terms of employment and conditions of employment of any person.

CAUSES OF INDUSTRIAL DISPUTE

▪ Economic Factors: They include the following:

o Wages: Most often, pressure from workers for upward revision of wages becomes the cause
of disagreement between labour and management.
o Incentives: It becomes a source of dispute because workers may perceive that incentives are
not adequate in comparison to the company’s profit, which is generated through their efforts.
In addition, there may be protest from workers and unions about how incentives are calculated.
o Benefits: Factors such as leave with wages, medical benefits, pension, facilities for subsidized
services to employees and their dependents etc. create disputes between the workers and
management.
o Working Conditions: Along with physical facilities and physical work environment, the work
schedule, hours of work, shift system etc. cause industrial disputes.
▪ Management Practices: They include:
 o Unfair Labour Practices: They include interference or threat of use of coercion in exercising
the rights of workers to organize trade union activities according to legal provisions and forcing
workers to join a particular trade union or discharging or dismissing workers by way of
victimization, discrimination etc.
o Ineffective Supervision: If the working climate of the organization is quite authoritarian, the
workers may not be able to voice their grievances which suggest that everything is good on
the industrial front but the situation may become explosive with time, leading to acute industrial
dispute.
o Violation of Trade Union Practices: There may be situations where the management violates
the norms such as through codes of conduct, grievance procedures, agreements entered into
between labour and the management etc., which may cause disputes.
▪ Trade Union Practices: They include:
o Union Rivalry: Here, any settlement arrived at between management and a union is opposed
by other unions irrespective of the most favourable conditions for the workers in the given
situation. This rivalry leads to violence and other forms of disputes.
o Non-Cooperative Approach: Many trade unions and their leaders proceed on the assumption
that what they do is right and what management does is wrong. This makes trade unions adopt
a non-cooperative approach and they oppose all settlements.
▪ Legal and Political Factors: They include:
o Multiplicity of Labour Laws: The existence of multiple labour laws creates more confusions
and litigations in the guise of being comprehensive. Industrial relations departments of many
organizations as well as trade unions remain busy to identify the legal lacuna to use this in their
favour.
o Political Interference: It also contributes in the emergence of industrial disputes. It occurs
through the politicisation of trade union activities or direct interference of political parties and
their workers.

CONCEPT OF COLLECTIVE BARGAINING

It refers to a process by which employers on the one hand and representatives of employees on the other,
attempt to arrive at agreements concerning the conditions under which employees will contribute and be
compensated for their services. It comprises of four types of activities:

▪ Distributive Bargaining: It involves haggling over the distribution of surplus. Under it, the economic
issues like wages, salaries and bonus are discussed. In distributive bargaining, one party’s gain is
another party’s loss.
▪ Integrative (Cooperative) Bargaining: This involves negotiation of an issue on which both the parties
may gain, or at least neither party loses. For example, representatives of employer and employee sides
may bargain over the better training programme or a better job evaluation method.
▪ Attitudinal Structuring: It involves shaping and reshaping some attitudes like trust or distrust,
friendliness or hostility between labour and management to maintain smooth and harmonious
industrial relations.
▪ Intra-organizational bargaining: This is a type of manoeuvring to achieve consensus with the workers
and management and resolve internal conflicts. For example, women workers may feel that their
interests are not looked after properly.

SETTLEMENT MACHINERY OF INDUSTRIAL DISPUTES

The machinery for settlement of industrial disputes between employers and employees consists of three
methods:

▪ Conciliation: It refers to the process by which representatives of workers and employers are brought
together before a third party (individual or group) with a view to persuading them to arrive at an
agreement by mutual discussion between them. The alternative name, which is used for conciliation,
is mediation.
▪ Arbitration: It is a process where the conflicting parties agree to refer their dispute to a neutral third
party known as ‘Arbitrator’. Arbitration differs from conciliation in the sense that in arbitration the
arbitrator gives his judgment on a dispute while in conciliation, the conciliator disputing parties to
reach at a decision. Arbitration may be voluntary arbitration (both the conflicting parties appoint a
neutral third party as arbitrator, and the latter acts only when the dispute is referred to him/her) or
compulsory arbitration (both the disputing parties can request the government to refer their dispute
for arbitration, and the arbitrator’s judgment by the is binding on the parties to the dispute)
▪ Adjudication: The ultimate legal remedy for the settlement of an unresolved dispute is its reference
to adjudication by the government, which can refer the dispute to adjudication with or without the
consent of the disputing parties. When the dispute is referred to adjudication with the consent of the
disputing parties, it is called voluntary adjudication. When the government herself refers the dis-pute
to adjudication without consulting the concerned parties, it is known as compulsory adjudication.

Grievance Handling and Redressal

It is a state of dissatisfaction over some employment-related issues. Complaints affecting one or more
individual workers in respect of wage payments, overtime, leave, transfer, promotion, seniority, work
assignment and other discharges constitute grievances.

CAUSES OF GRIEVANCE

The factors responsible for causing grievances are:

▪ Wages and Working Conditions (wage rates and payment methods, overtime and incentive schemes,
poor physical conditions at the workplace, very tight production standards)
▪ Supervision (poor relationship with the supervisor, failure to maintain proper disciplines, poor
supervision styles, unclear and vague job instructions)
▪ Management policies and practices (lack of opportunities for career growth, unfair penalties imposed
for misconduct, hostility towards trade union activities, improper implementation of agreements and
awards)
▪ Maladjustment of employees (work too hard or too easy to be interesting and motivating, too much
ambitious to adjust with the present work, improper attitudes towards work creating dissatisfaction)

CONCEPT OF GRIEVANCE HANDLING

For handling grievances, a grievance handling machinery called grievance procedure must be provided.
It is a problem-solving, dispute-settling machinery, which has been set up following an agreement to that
effect between labour and management. It is the means by which a trade union or an employee makes
and processes his claim that there has been a violation of the labour agreement by the company.

ESSENTIAL PREREQUISITES OF A GRIEVANCE PROCEDURE

They include the following:

▪ Conformity with statutory provisions: Due consideration must be given to the prevailing legislation
while designing the grievance handling procedure
▪ Unambiguity: All employees should know whom to approach first when they have a grievance,
whether the complaint should be verbal or written etc.
▪ Simplicity: If the procedure is complicated, it might discourage employees and they may fail to use it
properly
▪ Promptness: It must be promptly handled and necessary action must be taken immediately
▪ Training: The supervisors and union reps should be properly trained in all aspects of grievance
handling
▪ Follow-up: The HR department should keep track of the effectiveness and functioning of the
procedure
STEPS IN GRIEVANCE HANDLING

▪ Identify grievances: Employee dissatisfaction or grievance should be identified by the management

if they are not expressed. If they are expressed, the management should quickly acknowledge them.
▪ Define correctly: The management should define the problem properly, and accurately after it is
identified.
▪ Collect data: Complete information should be collected from all the parties relating to the grievance,
and classified as facts, data, opinions etc.
▪ Analyse and solve: The information should be analysed, alternate solutions to the problem should
be developed and the best solution should be selected.
▪ Prompt redressal: The grievance should be redressed by implementing the solution.
▪ Implement and Follow-up: Implementation of the solution must be followed up at every stage in
order to ensure effective and speedy implementation

SAMPLE GRIEVANCE REDRESSAL PROCEDURE

 Unit 5 (Missing Portions): Maintenance and Motivation of Human Resources

Concept of HR Audit

An HR Audit is a thorough review and assessment of a company's HR policies, practices, and procedures. The
primary purpose of this audit is to identify potential problems or areas for improvement within the HR function.
By conducting an HR Audit, businesses aim to ensure compliance with regulatory standards, enhance efficiency,
and improve overall workforce management.

There are two main ways to conduct an HR Audit:

 External HR Audit: This involves hiring an independent, external company specialising in HR audits. The
benefit of this approach is that it provides an objective and unbiased review of the company’s HR
practices. External auditors can often identify issues that may not be apparent to internal staff due to
their fresh perspective and specialized expertise.
 Internal HR Audit: Alternatively, a company can have its own HR department perform the audit. This type
of audit allows for ongoing monitoring and quick responses to identified issues. It also helps build a
culture of continuous improvement within the HR team.

Purpose of HR Audit

The HR Audit serves as a comprehensive tool to evaluate and enhance the efficacy of human resource
management within an organization. Its primary purposes are:

 Compliance and Regulation: HR Audits help ensure that an organization's HR practices comply with
relevant laws and regulations. This is crucial for avoiding legal issues and penalties arising from non-
compliance.
 Compensation and Benefits: The audit examines whether the compensation and benefits packages are
competitive and fair. This helps in attracting and retaining top talent, as well as ensuring that the
packages comply with legal standards and align with industry norms.
 Adaptation to Trends and Laws: It keeps the organization updated with the latest HR trends and changes
in employment laws. This ongoing adaptation is vital for maintaining operational effectiveness and legal
compliance.
 Employee Retention: By identifying the reasons behind employee turnover, HR Audits can provide
insights into what changes are necessary to improve employee retention rates. This might involve
adjustments in various HR practices, from hiring processes to employee engagement strategies.
 Process Improvement: The audit reviews and suggests improvements for HR processes, procedures,
organizational structures, and job descriptions. Enhancing these elements can lead to more efficient
operations and better alignment of HR strategies with business objectives.
 Employee Relations: HR Audits also focus on understanding and addressing employee grievances.
Organizations can foster a more positive and productive work environment by identifying common issues
employees face and addressing them effectively.

Concept of Workers Participation in Management (WPM)

Workers' participation in management (WPM) is a concept that involves the engagement of subordinate
employees in various aspects of organizational decision-making within their workplaces. This participation can
be either individual or collective, allowing workers to influence decisions that affect their work and work
environment.

The core philosophy behind workers' participation in management emphasizes several key principles:

 Democratic Participation in Decision-Making: WPM promotes the idea that workers should have a
voice in the decision-making processes at all levels of the organization. This approach fosters a
democratic work environment where the views and ideas of the workforce are valued.
  Employer-Employee Collaboration: By involving workers in the decision-making process, there is
greater collaboration between employees and management. This collaboration can lead to better
understanding, trust, and mutual respect, enhancing workplace relations and productivity.
 Minimum State Intervention: The philosophy supports the notion that the state's role should be limited
to creating favourable conditions for WPM rather than imposing strict regulations. This allows for more
flexible and adaptive approaches to management based on the specific needs of the organization and its
workforce.
 Realization of Social Justice: WPM is seen as a tool for achieving a greater measure of social justice
within the workplace. By giving workers a say in management, it aims to reduce disparities in power and
control, thus promoting fairness.
 Greater Industrial Efficiency: Involving workers in the decision-making processes can lead to better
decisions, as workers often have hands-on experience and a clear understanding of the day-to-day
operations. This can enhance operational efficiency and productivity.
 Higher Level of Organizational Health and Effectiveness: Workers' participation in management can
contribute to a healthier organizational climate and increased effectiveness. It can lead to improved
morale, reduced conflict, and higher job satisfaction.

In India, the importance of WPM is recognized constitutionally under Article 43A of the Constitution, which is
part of the Directive Principles of State Policy. The article mandates the state to promote WPM by enacting
suitable legislation or other measures, emphasizing the government's role in encouraging and facilitating this
practice across industries. This constitutional backing underscores the national commitment to integrating
workers into the management structures of businesses, aiming to create more inclusive, democratic, and
effective organizational environments.

Concept of Human Resource Information System (HRIS)

A Human Resource Information System (HRIS) is a software tool designed to automate and manage a company's
core HR processes. Essentially, it functions as an intersection of human resources and information technology,
enabling better data management and more efficient HR operations. The capabilities of an HRIS are extensive,
supporting a wide range of HR functions that include but are not limited to:

 Benefits Administration: HRIS systems help manage employee benefits such as health insurance,
retirement plans, and other perks. This includes enrollment, status changes, and benefits tracking.
 Time and Attendance: These systems track employee hours, manage attendance records, and integrate
with payroll systems to ensure accurate and timely payments based on hours worked, overtime, and
holidays.
 Payroll: HRIS simplifies the payroll process by automating the calculation of wages, tax withholdings,
and deductions. It ensures compliance with tax laws and helps streamline the payment processes.
 Employee Data Management: An HRIS stores critical employee information such as personal details,
demographic data, job-related data, and compensation. This central repository facilitates easy access
and management of employee records, supporting compliance with data protection regulations.
 Other Workflows: HRIS can also support recruitment, performance management, learning and
development, and succession planning, integrating these processes into a single, unified system.

Difference between HRIS (Human Resource Information System), HXM (Human Experience Management),
HCM (Human Capital Management), and HRMS (Human Resource Management System)

System Description Focus Example

A software or online solution
Core HR
designed specifically for managing A company uses an HRIS to automate
administrative
HRIS HR activities. It primarily automates their employee time tracking and
functions and
core HR processes such as payroll, payroll processing, reducing errors and
data
benefits administration, and saving time on administration.
management.
employee data management.
 It focuses on improving the
A business implements an HXM tool to
experiences of employees within an
gather continuous feedback from
organization. HXM systems look
Employee employees on their daily job
beyond traditional HR functions to
HXM experience and experiences. It uses this data to tailor
enhance employee engagement,
engagement. development programs and benefits,
satisfaction, and productivity by using
thereby boosting job satisfaction and
feedback, analytics, and personalized
retention.
experiences.
An organization utilizes an HCM
A broader system that encompasses
system to not only handle payroll and
HRIS capabilities but also includes Entire human
benefits but also to streamline the
talent management such as capital lifecycle
HCM recruitment process, track employee
recruitment, onboarding, from hiring to
performance, and plan for future
performance management, and retirement.
leadership needs through succession
succession planning.
planning.
Often used interchangeably with Combines A company uses an HRMS to manage
HRIS, HRMS usually refers to a more administrative its core HR functions, such as payroll
integrated system that manages both HR functions and attendance, while also analyzing
HRMS
core HR functions and strategic HR with strategic these data points to strategize on
activities, including extensive management improving workforce productivity and
analytics capabilities. and reporting. reducing labor costs.
 Unit 7: Emerging Issues in Human Resources

IMPACT OF TECHNOLOGICAL DEVELOPMENT ON HRM PRACTICES

 Automation of Routine Tasks: Technological advancements have led to the automation of routine HR tasks
like data tracking and sending notifications. This shift allows HR professionals to focus more on strategic
aspects like employee satisfaction and motivation, rather than being bogged down by mundane processes.
 Enhanced Data Management and Analysis: Modern HR tools leverage big data analytics to manage large
datasets efficiently. These tools can process and analyze employee information to provide insights quickly,
facilitating better decision-making and increasing operational efficiency within HR departments.
 Improved Recruitment Processes: Technology has transformed recruitment by expanding the pool of
potential candidates and enabling more precise matching through AI and machine learning. Platforms like
LinkedIn, Stack Overflow, and social media have broadened the scope for sourcing candidates, making the
process faster and more accurate.
 Increased Transparency and Collaboration: Cloud-based HR systems enhance transparency within
organizations. They allow multiple departments to access HR-related information and collaborate more
effectively, ensuring everyone is aligned with the company’s goals and understands their colleagues' roles
and responsibilities.
 Streamlined Onboarding Experience: Technological tools such as chatbots, virtual tours, and automated
guides have transformed the onboarding process, making it more efficient and engaging for new hires. These
innovations help create a positive first impression and demonstrate the company's commitment to
supporting its employees.
 Strategic HR Management: Technology enables HR departments to better align their strategies with overall
business objectives. HR information systems contribute to strategic planning by improving internal
processes and helping achieve key performance indicators, thus driving the organization towards its
competitive goals.
 Cost Reduction and Operational Efficiency: By reducing the reliance on paper and automating various HR
functions, technology helps in cutting costs and enhancing operational efficiency. This not only improves the
bottom line but also allows HR professionals to concentrate on more value-added activities.

DEALING WITH WORKFORCE DIVERSITY

Managing workforce diversity refers to the practice of including people from a variety of backgrounds, experiences,
and perspectives within an organization. This includes differences in race, gender, ethnicity, age, sexuality, religion,
disability, and other attributes that individuals may bring to the workplace. The concept goes beyond just following
legal requirements to value and appreciate these differences to improve the workplace and the company's overall
performance.

Benefits of Workforce Diversity

 Enhanced Creativity and Innovation: Employees from diverse cultural, racial, and ethnic backgrounds
bring a wealth of unique perspectives and ideas. This diversity fuels creativity by introducing different
approaches to problem-solving, thereby driving innovation within the organization. The varied experiences
and worldviews of a diverse workforce can spark inspiration, leading to the development of new products,
services, or processes that might not emerge in a more homogenous environment.
 Deeper Understanding of Consumer Markets: A diverse workforce enables an organization to better mirror
the society in which it operates, which is particularly valuable for understanding the needs and behaviours
of different demographic groups. This alignment can enhance market research efforts and improve the
effectiveness of marketing strategies, as employees from varied backgrounds can offer insights into the
cultural nuances and preferences of underrepresented demographic segments.
  Alignment with Demographic Realities: As the demographic landscape of places like the United States
continues to evolve, organizations that embrace diversity can align more closely with the national makeup,
making them more relatable and appealing to a broader customer base. This cultural alignment can enhance
the brand's image and increase its relevance in a multicultural society.
 Increased Customer Satisfaction: A diverse workforce is well-equipped to interact with a similarly diverse
clientele in a more empathetic and understanding manner. When customers see themselves reflected in the
employees of a company, they often feel more understood and valued. This can lead to higher levels of
customer satisfaction and loyalty, as well as improved customer service outcomes.

Strategies for Managing Workforce Diversity

 Prioritize Effective Communication: Ensure that all important company communications, such as
policies, procedures, and safety rules, are accessible and understandable to everyone. This may involve
translating documents into different languages and using pictures, symbols, and other visual aids to
overcome language and cultural barriers.
 Treat Each Employee as an Individual: Avoid stereotyping by treating each employee based on personal
merit rather than attributing behaviours or performance to their background. This individualized approach
helps in assessing performance more fairly and fosters a culture of respect.
 Encourage Diverse Work Teams: Promote the formation of diverse work groups to facilitate mutual
understanding and respect among employees from different backgrounds. This can help dismantle
stereotypes and reduce cultural misunderstandings, enriching team dynamics.
 Base Standards on Objective Criteria: Develop and enforce uniform standards that apply equally to all
employees. This includes making all employment decisions based on clear, bias-free criteria, from hiring to
disciplinary actions.
 Promote Open-mindedness: Encourage employees to appreciate and value diverse perspectives and
backgrounds. Recognizing that different experiences and viewpoints can contribute to the organization's
goals is vital for nurturing an inclusive workplace.
 Diverse Hiring Practices: Implement hiring practices that ensure a diverse range of candidates is
considered. This includes:
o Using Diverse Interview Panels: Incorporate interviewers from various backgrounds to help reduce
unconscious bias during the hiring process.
o Training for Managers: Educate hiring managers on inclusive interviewing techniques and clearly
define what is inappropriate to ask during interviews to avoid discrimination.
o Creative Recruitment Approaches: Reach out to diverse professional groups and use various
platforms to advertise job openings. For example, targeting professional groups for women in
engineering can help increase the number of female candidates for technical roles.

WORK-LIFE BALANCE

Work-life balance is traditionally viewed as the equilibrium between

professional obligations and personal life, including time spent with
friends and family or engaging in personal interests. This perspective
posits that work and personal life are distinct and often competing areas
demanding equal portions of one's time and energy.

Benefits of Work-Life Integration:

 Synergistic Relationships: Activities and responsibilities can

complement and enhance each other, such as flexible working
hours that accommodate family life or using professional skills in
volunteer roles within the community.
  Holistic Well-being: Emphasizing an integrated approach supports overall well-being, as it acknowledges
the interconnectedness of various life aspects—professional success contributes to personal happiness,
and vice versa.
 Adaptive Flexibility: This approach promotes a more adaptable way of managing time and responsibilities,
which can be particularly beneficial in modern work environments requiring high flexibility.

EMPLOYEE EMPOWERMENT

Employee empowerment is characterized by the strategies through which organizations grant their employees a
measure of autonomy and control over their daily operations. This concept encompasses enabling employees to
participate in process improvement, contribute to the creation and management of new systems and strategies, and
oversee smaller departments with minimal supervision from senior management.

A fundamental aspect of employee empowerment involves equipping employees with the necessary resources to
make significant decisions and supporting them to ensure these decisions are effective. When effectively
implemented, employee empowerment leads to increased productivity, enhanced quality of work, and an improved
overall work life for employees.

Employee empowerment can manifest differently across organizations, influenced significantly by an organization's
culture and the design of its work processes. At its core, empowerment is rooted in job enlargement and job
enrichment principles, which fundamentally alter a role's nature and responsibilities.

 Job Enlargement: This form of empowerment involves the horizontal expansion of job duties. It broadens
the scope of an employee's job to include a more comprehensive array of tasks, generally on the same level
of complexity. This strategy aims to make work more varied and interesting by expanding the number of tasks
an employee is responsible for.
 Job Enrichment: Unlike job enlargement, job enrichment involves a vertical expansion of job
responsibilities, providing employees greater authority and deeper involvement in their work. This approach
increases the depth of the job by adding tasks that are typically performed at higher levels of the organization,
often including decision-making capacities.

DOWNSIZING

Downsizing means permanently reducing a company’s workforce by removing unproductive employees or

eliminating entire divisions. This practice is commonly employed by organizations, particularly during economic
recessions or when businesses are underperforming. The primary motivation behind downsizing is to reduce
expenses quickly; removing jobs is often the most direct path to achieve this. Additionally, downsizing specific
stores, branches, or divisions can release assets that may be sold as part of a broader corporate restructuring effort.

Consequences of Downsizing

 Increased Risk of Bankruptcy: Evidence suggests that downsizing may elevate the risk of bankruptcy.
Reducing staff can lead to decreased productivity, lower customer satisfaction, and diminished employee
morale, regardless of a firm's prior financial health.
 Loss of Institutional Knowledge: Downsizing often results in the departure of employees who hold valuable
institutional knowledge. This loss can stifle innovation and impair the organization's ability to adapt to new
challenges or market conditions.
 Increased Workload and Stress: The employees who remain after a downsizing must often take on larger
workloads, leading to increased stress and burnout. This heightened pressure can leave little time for skill
development, potentially negating any gains in productivity that were anticipated from the downsizing.
  Deterioration of Trust and Engagement: Downsizing can erode trust in management and decrease
employee engagement and loyalty. A workforce that feels insecure about job stability is less likely to be
committed and motivated, which can further impact organizational performance.
 Exploring Alternatives to Layoffs: Many companies are cautious about implementing drastic downsizing
measures, considering these severe long-term consequences. Alternatives such as reducing work hours,
instituting unpaid leave, offering early retirement incentives, or subsidizing education for skill enhancement
are considered. These strategies can help maintain employee morale and engagement during tough
economic times.

VOLUNTARY RETIREMENT SCHEME

Voluntary Retirement Scheme (VRS) is an organizational strategy for reducing workforce numbers in a non-
compulsory and mutually agreeable manner. Often referred to as a "golden handshake," this scheme is typically
utilized by both private and public sector enterprises as a dignified method to decrease staff levels without resorting
to forced layoffs.

Features of Voluntary Retirement Scheme:

 Employee Eligibility: Under VRS, the option to retire early is given primarily to employees who are generally
in their 40s or 50s, well before the traditional retirement age of 60 years. To be eligible for VRS, employees
must have served the organization for at least 10 years and be over 40.
 Employee Choice: One of VRS's fundamental principles is that the decision to opt for early retirement rests
entirely with the employee, distinguishing it significantly from involuntary termination or layoffs. This ensures
that the process is voluntary and initiated by the employee, making it a more amicable separation method.
 Regulatory Framework: The Voluntary Retirement Scheme is governed by specific regulations under the
Industrial Disputes Act of 1947 to prevent misuse and protect the interests of the employees. These
regulations mandate that all organizations implementing VRS adhere to stipulated guidelines, ensuring
fairness and transparency in the process.
 Benefits to the Employee: Typically, VRS packages offer several benefits to departing employees, including
lump-sum payments, continuation of specific benefits for a specified period, or other financial
compensations. These incentives are designed to make the option of early retirement more attractive and to
provide financial security during the transition period from employment to retirement.
 Organizational Advantages: For organizations, VRS serves as a strategic tool to gracefully reduce workforce
size, which can be crucial during financial downturns, restructuring, or when technological advancements
reduce the need for a large workforce. Implementing VRS can also lead to cost savings in terms of salaries
and benefits for the company.