GABORONE UNIVERSITY COLLEGE OF LAW AND PROFESSIONAL

STUDIES

BACHELOR OF COMMERCE INPURCHASING & SUPPLY CHAIN

MANAGEMENT

YEAR 2.1

MODULE BCPSCM214: HUMAN RESOURCES MANAGEMENT

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 CONTENTS
CHAPTER 1. THE NATURE AND SCOPE OF HUMAN RESOURCES
MANAGEMENT...........................................................................................................9
1.0. Human resources management.................................................................................9
1.1. Chapter Learning Outcomes.....................................................................................9
1.2. Objectives of human resources management or personnel management...............10
1.3. Functions of the human resources managers..........................................................10
1.4. Specific duties of the Human Resources Manager.................................................11
1.5. Key Differences between Personnel Management and Human Resource
Management..................................................................................................................12
1.5. Qualities of a Human Resources Manager.............................................................13
CHAPTER 2: HUMAN RESOURCES PLANNING, RECRUITMENT AND
SELECTION....................................................................................................................15
2.0. Human Resources Plan...........................................................................................15
2.1 Chapter learning outcomes......................................................................................15
2.2. Recruitment and selection of new employees....................................................20
2.6. Interviews...................................................................................................................31
Limitations of Interviews:..............................................................................................32
2.7.Tests.........................................................................................................................33
CHAPTER 3: PERFORMANCE MANAGEMENT....................................................35
3.0. Introduction.............................................................................................................35
3.1. Chapter learning outcomes.....................................................................................35
3.2. Performance Management Process.........................................................................36
3.3. Benefits of performance management....................................................................37
3.4. Performance Appraisal...........................................................................................38
3.4.1. Features of Performance Appraisal.................................................................40
3.4.2. Objectives of Performance Appraisal..............................................................40
3.4.3.Fundamental Requirements of an Effective Performance Appraisal System...40
3.5. Criteria for Assessing Performance........................................................................41
3.6. Techniques / Methods of performance appraisal....................................................42
360 degree Appraisal.....................................................................................................42
3.8. How to make appraisals more effective..................................................................51
3.9. Employee Promotion..............................................................................................51

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Elements of Promotion Policy.........................................................................................52
CHAPTER 4: TRAINING AND DEVELOPMENT....................................................54
4.0. Introduction.............................................................................................................54
4.1. Chapter learning outcomes.....................................................................................54
4.2. Objectives of Training............................................................................................55
4.3. Importance of Training...........................................................................................55
4.4. Conditions for effective implementation of training Programme...........................56
4.5. Types of Training...................................................................................................57
4.7. Training methods....................................................................................................58
4.7.1.On- the –Job Training.......................................................................................59
4.7.2. On the job training methods............................................................................60
4.7.3. Off the job training methods............................................................................62
4.8 Evaluation of a Training Program...........................................................................64
4.8.1. Need for Evaluation.........................................................................................64
4.8.2. Principles of training evaluation......................................................................64
GROUP DISCUSSION.................................................................................................64
UNIT 5: EMPLOYEE COMPENSATION AND WELFARE....................................65
5.1. Chapter Learning Outcomes...................................................................................65
On successful completion of the chapter, learners are expected to be able to:..............65
5.4. Conducting Job evaluation.................................................................................67
5.5. Principles of Job Evaluation...............................................................................67
5.6. Steps in Job Evaluation.......................................................................................67
5.7 Job Evaluation Methods/Systems........................................................................68
5.7 Person-Job Fit Theory.............................................................................................72
5.8 Salaries and Wages Administration.........................................................................72
5.8.1. Difference between Wage and Salary..............................................................72
5.1.2 Components of Remuneration..........................................................................73
5.2 Objectives of Wage and Salary Administration......................................................73
5.9 Types of wages........................................................................................................74
5.5.1 Factors influencing wage and salary.................................................................74
5.5.2 Principles Of Wage Fixation............................................................................75
5.5.3 Elements of a good wage plan..........................................................................76
5.5.4 Wage fixation – methods/ systems...................................................................76
CHAPTER 6: INTRODUCTION TO INDUSTRIAL RELATIONS.........................79

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 6.0. Introduction.............................................................................................................79
6.1 Chapter Objectives...................................................................................................79
6.2. Defining labour relations........................................................................................80
6.3 The origins of labour relations.................................................................................80
6.4.The major theories on labour relations....................................................................82
6.4.1 The unitarist approach......................................................................................82
6.4.2 The pluralist approach......................................................................................83
6.4.3 The Marxist approach.......................................................................................84
6.5 The parties to the employment relationship and their respective roles...................84
6.5.1. The Tripartite Relationship............................................................................84
6.5.2. Are the interests of employers and employees reconcilable............................86
6.6. Contract of Employment.........................................................................................87
6.6.2. Content of Employment Contract....................................................................89
6.7.Duties of Employers................................................................................................89
6.8 Duties of the Worker/ Employee.........................................................................97
6.9 Industrial Disputes...................................................................................................98
6.9.1 Causes of Industrial Dispute.............................................................................98
6.10 Types of industrial disputes...................................................................................99
6.11 Effects or Consequences of Industrial Disputes....................................................99
6.12 Methods for Prevention of Industrial Dispute.....................................................100
6.13 Collective Bargaining..........................................................................................101
6.13.1. Principles /Essentials of C.B........................................................................101
6.13. 2 Importance of Collective Bargaining...........................................................101
6.13.3 Items in Labour Agreement/ Collective Bargaining.........................................102
6.14 Grievance.............................................................................................................103
Grievance Redressal Machinery......................................................................................103
External Machinery.........................................................................................................104

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 CHAPTER 1. THE NATURE AND SCOPE OF HUMAN RESOURCES
MANAGEMENT

1.0. Human resources management

Human resource refers to the policies, practices and systems that influence employees’
behaviours, attitudes and performance. Since every organization is made up of people,
acquiring their services, developing their skills, motivating them to high levels of
performance and ensuring that they continue to maintain their commitment to the
organization are essential to achieving organizational objectives. Organizations that are
able to acquire, develop, stimulate and keep outstanding workers are both effective(able
to achieve their goals) and efficient (spending the least amount of resource necessary).

1.1. Chapter Learning Outcomes

On successful completion of the chapter the students is expected to be able to:
 Define human resources management
 Distinguish human resources management from personnel management
 Explain the functions of the human resources department in an organisation
 Asses the qualities and skills needed by human resources managers in
organisations

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1.2. Objectives of human resources management or personnel management
 Achieving maximum individual development
 Maintaining healthy working relationship
 Scientific selection of the right type and number of employee
 Achieving proper placement of employees in various positions
 Effective induction of new employees
 Providing Suitable training development
 Provide healthy work conditions
 Ensure handsome wage & fringe benefits
 Healthy industrial relations
 To do constant personnel research
Activity 1.1.

Do you think human resources management contributes anything to the achievement of

organisational objectives? Give reasons and specific examples.

1.3. Functions of the human resources managers

The operative functions of personnel management are concerned with the activities
specifically dealing with procuring, developing, compensating and maintaining an
efficient work force.
 Procurement Function: It is concerned with the obtaining of a proper kind and
number of personnel necessary to accomplish an organisation’s goals. It covers
determination of manpower requirements, their recruitment discharge and
separation.
 Development Function: It can be viewed alongside three dimensions. The first is
employee training, which emphasizes skill development and the changing

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 attitudes among workers. The second is management development which
concerns itself primarily with knowledge acquisition and the enhancement of an
executive’s conceptual ability. The third is career development which is the
continual effort to match long term individual and organisational needs.
 Compensating Function: It is concerned with securing adequate and equitable
remuneration to personnel for their contribution to the attainment of
organisational objectives. Functions related to wage surveys, establishment of job
classification, job description, merit rating etc. fall under this category.
 Integration Function: It is concerned with the attempt to effect a reasonable
reconciliation of individual, societal and organisation interests. It rests upon the
premise that significant overlapping of interests do exist in the organisation in
such programs as job enlargements, job evaluation, variable compensation plans.
On the other hand, there are certain things that the employees desire which the
organisation is reluctant to provide for e.g. individual wages, shorter hours of
work, time off with pay, etc. The personnel manager integrates the interests of the
individual employees with the policies and practices of the organisation.
 Maintenance Function: It is concerned with providing those working conditions
that employees believe are necessary in order to maintain their commitment to the
organisation.

1.4. Specific duties of the Human Resources Manager.

Specifically the duties of the personnel manager according to Cole (2008) include
 Recruitment (including designing and placing advertisements, conducting initial
interview, short listing etc.)
 Staff selection (interviewing, arranging terms of offers, etc.)
 Staff induction (procedures, programmes etc.)
 Administration of basic terms and conditions of employment (hours of work, pay
rates etc.)
 Wages and salaries administration (including staff benefits)
 Human resources planning (in close collaboration with line units)
 Maintenance of staff records (including sickness absence, holiday entitlements
etc)

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  Administration of disciplinary and grievance procedures
 Co-ordination of relations with employee representatives (including trade unions)
 Administration of redundancy and dismissal procedure
 Lob evaluation (including job analysis ) in collaboration with the line units
 Administration of welfare services

1.5. Key Differences between Personnel Management and Human Resource

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

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

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 management focuses on treating employees as valued assets, which are to be
valued, used and preserved.

1.5. Qualities of a Human Resources Manager

 Professional attributes: The human resources manager must have initiative,
resourcefulness, depth of perception, maturity in judgment and analytical ability.
Freedom from bias .He must have intellectual integrity. The personnel manager
must be thorough with labour laws.
 Intelligence: This includes skills to communicate, articulate, moderate,
understand, command over language, mental ability and tact in dealing with
people intelligently
 Educational skills: Must possess learning and teaching skills as he has to learn
and teach employees about the organizational growth, need for and mode of
development of individuals.
 Discriminating skills: Human resources management staff should have the ability
and discretion to discriminate between wrong and right and between just and
unjust and merit and demerit.
 Executing skills: Personnel manager is expected to execute the management
decisions regarding personnel issues with speed, accuracy and objectivity. He
should be able to streamline the office, set standards of performance while
coordinating, controlling and creating productive work spaces.
 Experience and Training: Previous experience is an added advantage provided the
experience was in an appropriate environment and in the same area. Training in
psychological aspects of human behaviour, labour legislation and more
specifically in personnel management and general and general management is an
additional benefit. Experience in an enterprise in some other executive capacity
can also help towards an appreciation of the general management problems and a
practical approach in tackling personnel concerns issues.

 Professional attitudes: Professional attitude is relevant, particularly in Indian

context. The personnel manager’s job, as in the case of other managers is getting
professionalized. He should have patience and understanding and the ability to

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 listen before offering advice. As mentioned earlier, he should have the
knowledge of various disciplines like technology, engineering, management,
sociology, psychology, human physiology, economics, commerce and law. He
must be able to combine social justice with a warm personal interest in people
which must be secured by an uncommon degree of common sense, compassion
and integrity
End of Chapter Exercise

What challenges are likely to be faced by an organisation which does not have a properly
functioning human resources departments?

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CHAPTER 2: HUMAN RESOURCES PLANNING, RECRUITMENT AND
SELECTION

2.0. Human Resources Plan

An organisation’s human resources plan is a strategy for acquisition, utilization and
improvement of an enterprise’s workforce’s. It relates to establishing job specification or
quantitative requirements of job, determining the number of personnel required and
developing sources of manpower. Human resource planning assists organizations to
recruit, retain, and optimize the deployment of the personnel needed to meet business
objectives and to respond to changes in the external environment. The process involves
carrying out a skills analysis of the existing workforce, carrying out manpower
forecasting, and taking action to ensure that supply meets demand. This may include the
development of training and retraining strategies.

2.1 Chapter learning outcomes

On successful completion of the chapter, the student is expected to be able to :

 Explain the purpose of human resources planning

 Discuss the steps in the human resources planning process
 Asses the short term and long term strategies to address human resources gaps in
the organisation
 Discuss the recruitment process

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2.1. Purpose of Human Resources Planning

The overall purpose of strategic human resources planning can be summarised as

 To ensure availability of adequate human resources to meet the strategic goals of

the organization.
 Ensure that the right people with the right skills are recruited and retained.
 It enables the organization to keep up with social, economic, legislative and
technological trends that impact on human resources in the sector.
 It enables the organization to remain flexible so that it can manage change if the
future is different than anticipated.

A typical human resources planning process would follow steps as depicted by the
diagram below.

Fig 2.1: The human resources planning process

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 Corporate objectives

Current and future

Demand for personnel

Assess personnel
Market demand supply Labour market

Existing Potential

Personnel estimates

Recruitment plans Training plans Promotion/succession plans

Pay/ Retirement redundancy

productivity programmes
proposals

Periodic reviews

Cole G. A (2002: 141)

(i)Corporate objectives

The mission of the organization translated into operational plans and strategies is the
major determinant of the type of skills that the organization would be in need of.
(ii)Assessing the current and future demand for labour

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Based on the organization's strategic plan, the first step in the strategic HR planning
process is to assess the current HR capacity of the organization in view of the future
requirements.

The demand for labour is determined by the market demand for the products that the
company produces. The HR manager will seek answers for the following questions in
order to assess the demand for labour in the organization

 How many staff do we have/need?

 How are they distributed?
 What is the age profile?
 How many will leave in each of the next five years?
 How many will be required in one, five, ten years?

(iii)Labour supply forecasting

The assessment of labour supply is based on analysis of two broad sources, the internal
labour market and the external labour market.

(a)The internal labour market

The knowledge, skills and abilities of the current staff need to be identified and be
analysed as to whether such skills can drive the organization towards its stated goals.
This can be done by developing a skills inventory for each employee. The skills
inventory should go beyond the skills needed for the particular position it should also be
analysed in view of the planned activities.

An employee's performance assessment form can be reviewed to determine if the person

is ready and willing to take on more responsibility. The organization also assesses all
employees’ current development plans.

Typical questions that managers need to ask when assessing the state of their internal
labour market are.

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  What categories of staff do we have?
 How many people do we have in each category?
 What skills are available amongst existing employees?
 How easy is it to transfer employees between jobs?
 How many of our employees are ready for promotion?
 Do we have any age related problems due to imbalances between experienced and
inexperienced staff?
 Are minority groups properly represented in the company?

(b)The external labour market

In assessing the external labour market, a number of factors has to be considered

including

 The demographic changes e.g. the impact of HIV AIDS on the working
population
 The influences of the trade unions
 The legal environment.
 The ability of the company itself to attract suitably qualified staff
 The availability of the relevant skills on the labour market –To breed the right
calibre of staff the company really wants, it heavily utilises on- the- job training.

Activity 2.1.

What strategies would you utilise to deal with short- term excess labour in the
organisation

(iv)Strategy formulation and implementation

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After establishing the gap between the existing skills and the required skills (in line with
the strategic plans).Strategies to bridge the gap should be formulated and implemented,
these include.

 Recruitment strategies –( medium term and long term solutions to labour

shortages )
 Training and development strategies –( medium and long term solutions to
labour shortage )
 Restructuring strategies –( long term solution for eliminating surplus labour)
Short term strategies to deal with labour shortage

 Working overtime

 Hiring temporal workers

 Expanding the job descriptions of existing staff.

 Extending hours of work

 Outsourcing

 Using agents for specified jobs

 Calling in ex -officers

Short term strategies to deal with labour surplus

 Job sharing

 Reducing hours of work for all employees

 Freezing overtime

 Freezing recruitment

 Terminating outsourcing contracts and allocates the job to existing employees

 Encouraging voluntary separation

 Encouraging people to take leaves

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2.2. Recruitment and selection of new employees.
Recruitment is the process of attracting suitably qualified candidates to apply for existing
and potential vacancies in the organisation. The recruitment process is always coupled
with the selection process which entails the use of techniques such as interviews and
assessment tests to identify the suitable candidate for the vacancy.
Activity 2.2.

Suggest the reasons why your company might fail to attract suitably qualified personnel

2.2.1Factors influencing recruitment

Both internal and external factors influence the recruitment practices of an organisation.
External factors
 Government policy: The government stipulates the level of training required for
different jobs, for examples, one should have a degree qualification and be
registered by the professional body in that respective field to practice as an
Accountant, Lawyer or Medical Doctor. The government also regulated labour
practices by enacting laws in areas such as

 Maximum hours of work in different industries

 The minimum wages to be earned

 The minimum and maximum ages of employment

 Laws in respect of equal opportunity employment, avoiding discrimination of any
nature and the employment of foreigners.
 Trade unions: Trade unions are associations formed by employees to represent
themselves in negotiations with employers in respect of working conditions,
salaries and wages and any other matter of interest regarding their relationship
with their employers. Organisations usually consider Trade Unions as key

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 stakeholders who have to be consulted whenever human resources decisions are
being passed.
 Labour market conditions: If there is an undersupply of the needed skills within
the labour market, an intensive and prolonged recruitment programme will have
to be implemented
Internal factors
 Organisational policy: Organisational policy with regard to internal versus
external recruitment, employment equity, diversity etc, will influence the nature
of the organisation’s recruitment.
 The image of the organisation: An organisation with a reputation as a good
employer will not have problems in attracting suitably qualified candidates than
that which has a bad image.
 The nature of the job: Jobs which are highly ranked by the organisation will
require a comprehensive recruitment program than those which are at the lower
level of the organisation hierarchy.
2.2.2. The recruitment and selection process
The stages in the recruitment and selection process are

1. Determine the Vacancy

2. Conduct job analysis

3. Select suitable source of recruitment

4. Publishing the vacancy

5. Receiving applications and short listing

6. Conducting Interviews
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 7. Job offer

(i).Defining The Vacancy- Should we recruit?

Recruitment is likely to be necessary when either an existing employee leaves or a new
position is created. Whatever the reason, initially, there should be an assessment of
whether there really is a vacancy or whether the work could be done in some other way.
Reorganisation of work or training could solve the problem, and there is also the
possibility of overtime or internal secondment to cover the work. When a vacancy does
exist, there are a number of alternatives to undertaking the full recruitment and selection
procedure, which can be expensive and time-consuming. Once it is accepted that a
vacancy exists and needs to be filled, the first step is to define the requirements of the
job. The first stage in this is job analysis.
(ii)Job analysis
Detailed & systematic study of information relating to the operations & responsibilities of
a specific job, like the task, skills, knowledge, ability & responsibility required of the
worker. It is the procedure by which the facts with respect to each job are systematically
Discovered and noted. This exercise includes the enumeration and identification of the
duties, responsibilities, operations, conditions and organisational aspects of the particular
job. Such analysis also includes a study to determine the tasks and responsibilities, their
relationship to other jobs, the conditions under which work is performed and the personal
capability required for satisfactory performance.
The basic analysis seeks to provide information in seven major areas. They are:
1. The job identification: - Its title includes the code number of the job in companies
where each job is given a code.
2. Distinctive or significant characteristics of the job: - Its location, physical setting,
hazards and discomfort.
3. What the typical worker does: The specific operation of the tasks that makes up the
assignment, their relative timing and importance, responsibilities for others, responsibility
for property and parts.

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4. What materials and equipment the worker uses: Metals, blades, drilling machines,
gadgets, micrometer, etc.
5. How the job is performed: The nature of operations such as handling feeding,
removing, drilling, etc.
6. Required personal attributes: Experience, training, physical strength, mental capacity,
aptitudes.
7. Job relationships: Opportunity for advancement, experience required, etc.

Sources of Information for job analysis: In order to make such an analysis, normally
four sources are looked upon.
 Interviewing employees on these jobs.
 Other employees, including Supervisory staff, who know these jobs,.
 Independent observers watching employees perform their jobs
 Giving a questionnaire to the job holder or a diary to record daily activities which
will be evaluated by the superior.
Uses of Job analysis
 Recruitment, selection and placement.
 Transfer, promotion and demotion
 Training & development programmes
 Wage and salary administration
 Settlement of grievances
 Work measurement and method study
 Providing essential guidance in the establishment of production standards
 Establishing responsibility, accountability and authority
Information from job analysis is used to come up with or to modify job descriptions and
job specifications
Job Description: It is a written record of the duties responsibilities& requirements of a
specific job. We describe the job title, location, duties working conditions, hazards etc.
A Job Description should cover the following:
 Job Identification:
 Job location, Job code, Department etc
 Job Summary:

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  Job content, Authority, Responsibility, Hazards
 Relation to other jobs:
 Reporting relation with superiors, peers, subordinates etc
 Machines, tolls & equipments used
 Materials used
 Conditions of work:
 Location, working hours, Posture, Speed, Accuracy, Health Hazards, occupational
disease etc
Job specification: A standard set for personnel and designates qualities required for
acceptable performance. It is the summary of personnel characteristics required for the
person to take up a certain job
Job specification highlights the following in respect o a given job
 Educational Qualification
 Experience
 Training
 Judgment ability
 Initiative
 Physical effort
 Communication skill
 Emotional characteristic
 Unusual sensory Demands like vision, smell, hearing, tasting etc
(iii).Sources of applicants (recruitment sources)
If the vacancy is additional to the present workforce, i.e. it has occurred because of some
new or increased activity, then, the need for the new employee has been established.
However, the majority of vacancies occur as replacements for people who have left the
company, or as the final event in a chain of transfers and promotions following a
reorganisation. In these cases consideration may be given to the following points:
 It may be possible to fill the vacancy from within the company.
 It may be filled by a different kind of employee, e.g. a part-timer.
 The job and personnel specifications may need to be revised.
Internal Sources

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The advantages of filling the vacancy internally are:
 Better motivation of employees, because their capabilities are considered and
opportunities offered for promotion.
 Better utilisation of employees, because the company can make better use of their
abilities in a different job.
 It is more reliable than external recruitment, because a present employee is known
more thoroughly than an external candidate.
 A present employee is more likely to stay with the company than an external
candidate.
 Internal recruitment is quicker and cheaper than external.
Activity 2:3

Suggest the advantages and disadvantages of recruiting externally

External Sources
Many vacancies are filled from external sources; even when an internal candidate is
transferred or promoted, the final result is usually a vacancy elsewhere in the company.
External recruitment can be time-consuming, expensive and uncertain. External sources
may be divided into two classes; those which are comparatively inexpensive but offer a
limited choice (i.e. 1 to 5 below) and those which are comparatively expensive but give
the employer access to a wider range of candidates (i.e. 6 and 7 below).
 Recommendation by present employees: This is sometimes encouraged by
rewards to employees who introduce successful candidates. It gives a limited
choice, but it costs very little.
 Unsolicited: Applications are sometimes received from candidates who either call
personally at the place of work or, write letters of enquiry. This is another

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 inexpensive source, which provides a limited choice, but the candidates are of
variable quality.
 Direct links with educational establishments: Many employers maintain
connections with universities, colleges and schools.
 Trade unions: Some companies recruit employees through the appropriate trade
unions. The choice is limited, but there is some certainty that the candidate has the
skill or knowledge the job requires.
 Professional bodies: Many professional bodies have an employment service with
which their members can register, supplying details of their experience and the
kind of job they are looking for. An employer who uses this service can be sure
that all the candidates submitted to him are professionally qualified. Professional
bodies include ACCA, CIMA, CIS, B I AC, IMM, CIM, LCM, and CIPS
 Private agencies: Organisations, which are run as commercial enterprises for
supplying employers with candidates for jobs are of two main types;Office staff
employment agencies- which mainly deal with clerical, typing and office machine
operator vacancies.Senior selection agencies- which usually undertake the
complete recruitment process and the first stages of selection for managerial and
professional vacancies.
 Advertising: The most popular method of recruitment is to advertise the vacancy
and invite candidates to apply to the company. Job advertisements should aim at
procuring a small number of well-qualified candidates quickly and cheaply. An
advertisement, which produces hundreds of replies, is bad; the employer must
now face the lengthy and expensive task of sorting out a few candidates for
interview

2.5. Selection
Selection may be defined as the process of choosing individuals who have the relevant
qualifications to fill existing and projected job vacancies. Selection is only done after a
considerable number of applications have been received or after the closing date of
receiving applications

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Essentials of Selection Procedure:
 There should be an authority to select.
 Comprehensive Job Description Job specification should be available beforehand.
 There must be sufficient number of applicants from whom the employees may be
selected.
The selection process contains the following steps
Preliminary Interviews
A preliminary interview is conducted for the candidates who have responded to the
source through which we have called candidates for recruitment. The preliminary
interview is generally a process of weeding out unsuitable applicants. This is a screening
process. Preliminary interview provides the first opportunity for the candidate to know
about the company and the job and whether he is suitable or not. Normally a junior
executive in the personnel department carries it out. Sometimes the preliminary
interview, if not properly conducted, may weed out good candidates who otherwise
would have been a potential employee.
Completing the Application Form: Whatever method of recruitment is used, the
candidate should be asked to fill in an application form, firstly to ensure that no important
details are omitted, and secondly to provide information about the candidate in a logical
and uniform order. The layout of application forms varies, but most of them contain the
following headings:
 Job applied for;
 Name, address, telephone number;
 Date and place of birth, marital status, nationality;
 Education; training and qualifications;
 Medical history (e.g. any serious illnesses, whether disabled);
 Employment history (names of previous employers, description of jobs held, dates
of employment, reason for leaving);
 Any other information the candidate wishes to provide;
 A signature under the words “This information is correct to the best of my
knowledge;”
 Date on which the form is completed.

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The application form is not only the basis of selection, but the fundamental document in
an employee’s personnel record and has legal importance in the contract of employment.
Selection Method
The manager’s next step is to compare the application form with the personnel
specification, looking for attributes which show the candidates to be apparently suitable
for the job, and shortcomings which may rule out the candidate from consideration. From
this comparison, he can make a list of candidates for interview and a list of those to be
rejected. He/she will then decide what type of interview to be given – individual,
successive, or panel, and what tests to be used.
Offer of the Job
Assuming that a suitable candidate has emerged from the selection process, he must now
receive an offer. The initial offer of a job needs special care, particularly as regards the
following points:
 The wage or salary offered must not only be appropriate to the job and attractive
to the
 Candidate, but consistent with the earnings of present employees.
 The job must be named and any special conditions stated.
 The candidate must know the essential conditions of employment (e.g. hours,
holidays, bonuses and fringe benefits).
 Any provisions must be clearly stated (e.g. “subject to satisfactory references and
medical examination”).
 The next stage must be clearly defined; if the candidate asks for time for
consideration, it must be agreed when he will get in touch
Reference checking
A clear, unbiased and comprehensive description of a candidate’s abilities and behaviour
by his previous employer would be of enormous value in selection. Most application
forms include a request for the names of people from whom references may be obtained.
Some selection procedures ask candidates to provide letters of recommendation.
Two types of recommendations may be distinguished:
1. Character references: a potential source of information with respect to general
character and reputation of the applicant.

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2. Experience reference: It needs someone who is presumably willing and able to write
about the applicant’s area of work.
Two distinctive types of letters of recommendation may be needed:
1. Special letters directed to a specific employer with respect to the particular applicant;
and
2. General: “To whom it may concern”, usually provided by the applicant and offered as
evidence of his character and experience.
Most candidates are employed at the time of their application, and do not wish their
employers to known they are looking elsewhere. Because of this, a prospective employer
would be breaking a confidence if he asked for a reference before an offer of a job had
been made and accepted.
By the time an offer has been accepted, selection is over, and the reference is too late to
affect it. An offer may be made “subject to satisfactory references”, but, as most
references are received after the candidate has started work, they can only be used to
warn managers of possible faults in the candidate. Employers giving references are
usually extremely cautious; many references merely state the job title, the dates of
employment, and the reason for leaving. References are occasionally biased, giving a
good reference to hasten an employee’s departure or a poor one because of a grudge.
Medical Examinations
Every candidate should have a medical examination before the offer of a job is
confirmed. It will show whether he is physically suitable for the job and what risk there is
likely to be of sickness, absence or injury.
Medical examinations should always be given:
 When the candidate is applying for a particularly arduous job, or when he will
work alone (e.g. a security officer).
 When the job demands high standards of hygiene (e.g. catering and food
manufacture).
 When the interview or other source reveals a doubtful medical history.
 To young persons under the age of eighteen employed in a factory.
Follow Up
All selection should be validated by follow up.

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The employee himself is asked how he feels about his own progress and his immediate
superior is asked for his comments. These findings are compared with the notes taken at
the selection interview. If a follow-up is unfavourable, it is probable that selection has
been at fault; the whole process from job specification to interview is then reviewed to
see if a better choice can be made next time.

2.6. Interviews
The employment interview is the primary tool for hiring new employees. “The functions
of the employment interview are to get information, to give information and to make
friends. The employment interview should provide adequate information upon which to
take a decision to hire or not to hire the applicant or to file the application for later
consideration in case there is not an opening at the present time. The interviewer must
plan for the interview and must mentally make up his line of action with care. In other
words, he should not start the interview in a haphazard manner. He must avoid
prejudices, bias, hasty inference, halo effect, likes and dislikes. Despite all the interview
techniques, the personal observations and the impressions of the interviewer are
important in appraising the candidate and this element of subjectivity cannot be
eliminated altogether. A set of rules has been identified for the guidance of interviewers.
The following rules could be observed in order to ensure successful interviews.
 Be courteous to the candidate and let him feel at home.
 Listen attentively and patiently.
 Do not ask leading or tricky questions.
 Never argue or interrupt or change the subject abruptly.
 Ask questions in simple language which is understandable to the applicant.
 Be tactful in asking direct and personal questions.
 Keep the candidate talking and encourage him to talk.
 Try to get the relevant information.
 Respect the interests of the candidate.
 Answer the candidate’s questions.
 Do not overstate the job opportunity in the company.
 Lead the interview to its conclusion.
Types of Job Interviews

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There are many types of interview that are followed in various companies:
 Informal Interview: This is generally an oral interview with not much planning.
The employer or the manager interviews the candidate and the employer may ask
a few inconsequential questions of the candidate, like name, place and date of
birth, whether he has a job, etc. There may not be any preparation for this
interview and generally this gives an impression that this interview is for the sake
of interview. Normally this is followed for an unskilled job.
 Formal Interview: This interview is generally held on the basis of a written
request directing him to appear for the interview at an appointed time and place.
Certain structured questions are prepared and the interview takes place to elicit
the relevant information.
 Stress Interview: This type of interview is designed to test the candidate and his
conduct and behaviour by putting him under conditions of stress and strain. This
type of interview is borrowed from the military and it is very useful to test the
behaviour of individuals when they are faced with disagreeable and trying
situations.
 Group Interview: In this type of interview, all the candidates are called together in
the Employment office and a group discussion is begins. The interviewer observes
the candidates with regard to mannerisms, poise, leadership, and discussion
quality and makes his observations.
 Panel Interview: sometimes more than one interviewer holds an interview. This is
called selection board or interview board or selection committee. In this either all
the members of the committee together make observations or individually they
make their own observations and the final tally is made by taking into account the
assessment of each and every one of the committee members.

Limitations of Interviews:
Although interviews are widely used as a tool for selecting suitable candidates to fill in
vacant posts in the organisation. The following problems are usually associated with the
use of interviews.
 Halo effect: one of the most common types of interview errors is described as halo
effect. What happens is that the quality of the candidate in one aspect tends to

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 colour the entire appraisal or to make all qualities fit a sort of general impression.
For instance, a candidate who has a good appearance may be rated high on such
unrelated qualities as dependability or co-operation. On the other hand, the
outstanding weaknesses may occasion lower appraisals on several or all other
qualities.
 Stereotyping. The interviewer’s experience may have created a close association
between some particular trait and the distinctive type of personality. Whenever
the interviewer discovers that the traits are present, he tends to ascribe to the
interviewee all the other characteristics of that type.
 Subjective element attached to an interview. The prejudices, likes and dislikes,
first impression, and bias of the interviewer may cause human nature to distort the
total evaluation.

2.7.Tests
There are various types of tests that are used to find out accurate information about the
candidate and find out his suitability to the vacancy. These tests can only supplement
selection techniques and they cannot substitute for the other techniques.. These tests are
not infallible and they depend upon correct construction and interpretation. There are
different types of tests which are being practised.
 Aptitude Tests: These aptitude tests measure the applicants’ capacity and his
potential for development. These aptitude tests focus on particular types of talent,
such as learning, reasoning and mechanical and musical aptitude.
 Intelligence Tests: These tests apprise one or more of several types of mental
ability (the key factor) including verbal, quantitative, l and reasoning aptitudes.
These are the best known and most widely used aptitude tests.
 Achievement Tests: These are probably the most familiar types of tests which are
used to determine class standing in the schoolroom as well as admission to many
colleges and universities. They measure what the applicant can do. Thus, a typing
test provides material to be typed and notes the time taken and errors made.
Similar tests are given for shorthand and in operating calculators and dictating
machines and simple mechanical equipment. The candidate is given an

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 opportunity to work on these apparatus and his ability and skill is measured.
Trade tests are also a type of achievement test.
 Personality Tests: These tests are very difficult to evaluate. They propose to
probe deeply to discover clues to an individual’s value system, their emotional
reactions and maturity, and what is sometimes described as his characteristic
move. The individual is asked to interpret real or picture behaviour, thus
projecting his personality for examination and interpretation. Personality testing is
sometimes described as a clerical method, in part because it contrasts with
actuarial analysis, in terms of group distribution and norms.
Criticisms of tests are:
 Tests are not reliable;
 They can easily be faked;
 They invade the privacy of the individual tested;
 They are unfair to culturally handicapped group;
 They are subterfuges used by the managers to obscure real reasons for rejections.
In spite of these criticisms, tests are widely used in many companies. The general theory
behind testing in selection is that human behaviour can be forecast by sampling attests create
a situation to which the applicant reacts; reactions are regarded as useful clues to his likely
behaviour in the work for which he is applying.

End of chapter exercise 2.4.

Design a job application form to be used by your organisation. Check whether your form
captures all the necessary information required from a job candidate.

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 CHAPTER 3: PERFORMANCE MANAGEMENT

3.0. Introduction

Performance Management (PM) is a forward looking process, taking frequent measures

as work occurs and responding to small steps forward (many mini-measures (goals) with
as much dedication as to final goals achieved). PM is a leading indicator of performance
because it drives a system or organization toward desired future goals and provides solid
management of the entire system. Performance Management is often confused with
performance appraisal, the latter only forming the final part of the performance
management cycle. Performance appraisal is a backwards looking process of
performance, measuring what happened in the past. A key aspect of performance
management is performance measurement. Whatever the process being driven with
performance management, clear and concise measures are required in order to properly
define the desired goals.

3.1. Chapter learning outcomes

After studying this chapter the student is expected to be able to:

 Define performance management

 Explain the purpose of performance management

 Discuss the performance management steps

 Analyses the various performance management techniques

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3.2. Performance Management Process

Well designed PM processes will teach managers and supervisors—all leaders—how to

bring out the best in people, including themselves, through a set of clear steps that appear
easy on the surface, but do require a grounding in the principles of learning. Those steps
are

Step 1: Planning
 It occurs before the performance of the employee is the manager discusses the
expectations with the employee
 The key result areas are highlighted
 The key competencies necessary are highlighted
 The manager identifies areas were employee may need support
 An employee may need to be developed in certain aspects that will be relevant for
the carrying out of the tasks.
 The manager explains the appraisal method that shall be used
Step 2.Managimg Performance
 Managers plan how they will work with employees .,organise and establish
control measures that shall be used in the performance management system
 There should be flexible and continuous discussion between managers and
employees
 Employees should be kept informed on any changes in strategy
Step 3: Reviewing Performance
 Performance appraisal is done
 performance appraisal should not be isolated from performance management

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  match employee achievements and the organisation ‘s objectives
 asses competencies ,skill and experience to see how were applied in the job
 Review the day to day effectiveness of the employee.
 Employee performance can be scaled as exceptional performance, high
performance, effective performance and underperformance
Step 4 .Give feedback performances feed back
Give the employee feedback on performance .The provision of performance feedback to
employees serves two main purposes
(i) Ensure employee work improvement
 Performance feedback highlights any shortcomings on both the organisation and
the employees
 Constructive feedback enables employees to establish areas where they need to
improve.
 Performance feedback enables the employee and the manager to come up with
plans on persona development of the employee.
(ii) Motivation for continued excellence
 Those performing well need something to motivate them
 Acknowledge the goals that has been reached
 The employee can be given more challenging work to maintain satisfaction
 Excellent performance can be rewarded
Step 5: Rewarding performance
 It is crucial to reward performance that is why it is important to distinguish
between high performers and low performers
 The reward should tally with the employee’s performance
 The reward should not be too low or too high.

3.3. Benefits of performance management

Managing employee or system performance facilitates the effective delivery of strategic

and operational goals. There is a clear and immediate correlation between using
performance management programs and improved business and organizational results.
Performance management may deliver a significant return on investment through a range

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of direct and indirect sales benefits, operational efficiency benefits and by unlocking the
latent potential in every employees work day i.e. the time they spend not actually doing
their job. Benefits may include:

Direct financial gains

 Grow of sales
 Reduced costs
 Avoidance of project overruns
 Aligns the organization directly behind the CEO's goals
 Decreases the time it takes to create strategic or operational changes by
communicating the changes through a new set of goals

Motivated workforce

 Optimizes incentive plans to specific goals for over achievement, not just business
as usual
 Improves employee engagement because everyone understands how they are
directly contributing to the organizations high level goals
 Create transparency in achievement of goals
 High confidence in bonus payment process
 Professional development programs are better aligned directly to achieving
business level goals

Improved management control

 Flexible, responsive to management needs

 Displays data relationships
 Helps audit / comply with legislative requirements
 Simplifies communication of strategic goals scenario planning
 Provides well documented and communicated process documentation

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3.4. Performance Appraisal

It is a systematic, periodic and impartial rating of an employee’s excellence in matters

pertaining to present job and the potentialities for a job.

How performance appraisal differs from performance management

The differences between performance management and performance appraisal can be

summarized as follows

Performance appraisal Performance management

 Is a segregated process,  Is an integrating process-integrating

where outcome relates to a corporate, functional, team and individual
single employee who is objectives and linked more closely with
being appraised? other aspect of HR management

 concerned with individual  concerned with the total performance of the

performance organization and how individual team
results contribute to that performance

 treated as an administrative  Viewed as a normal process of

activity imposed by the HR management
department

 Viewed as something  Involves all members of the organization as

handed down by superiors partners in the process
to subordinates

 Is a process that relies on  Is a continuous process of checking

periodic formal reviews  alignment of performance
 with the goals process

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Performance appraisal is but only one part of the bigger process of performance management.
So, the short answer is that performance appraisal (annual review, employee review) fits under
performance management.

What's critical to understand is that performance appraisal, on its own, doesn't result in great
gains in performance or productivity. In fact, it's probably the least important part of the larger
performance management enterprise.

3.4.1. Features of Performance Appraisal

 It provides systematic judgement to back up salary increases, transfer, promotion
& demotions.

 It is used as a base for coaching & counselling the individuals by the superior.
 It provides adequate feedback to each employee for his/her performance.
 It attempts to identify the deficiency & efficiency of employees.

3.4.2. Objectives of Performance Appraisal

1. Administrative purposes:
 Promotions: A well designed PA program can help management identify people
who deserve promotion
 Transfer: PA forms a strong base for determining employee transfer.
 Demotion & Termination: PA provides proof enough to justify the stand of
management in case of demotion or termination.
 Salary Administration: Rewards based on employees’ performance.
 Personnel Research: PA helps in formulation of new theories on personnel
research.
2. Development Purposes:
 PA helps in identifying one’s deficiencies & shortcomings.
 Helps in one’s efficiencies & potentialities.
 PA feedback helps in developing professional proficiency.
 PA creates a healthy spirit of competitiveness among employees.
3. Strategic Purposes

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  To determine whether employee performance is aligned to the goals of the
organisation

3.4.3.Fundamental Requirements of an Effective Performance Appraisal System

Specific Requirements for an Appraisal System as a Criterion for judging the work
performance of individuals are relevance, reliability, discriminability or sensitivity,
freedom from contamination, practicality, acceptability and legal compliance.
 Relevance: What is really important for success in the job and the
organisation .the appraisal system should be related to the objectives of the
job and the organisation .To ensure relevance
 There should be a clear link between the performance
standards of all the jobs and the organisational goals.
 Establish clear links between the critical elements of each job.
 Ensure regular review of job descriptions
 Reliability: The evaluations and ratings must be reliable .the people who do
the rating must be competent and free from bias.
 Discriminability /Sensitivity: The system should be able to distinguish
between poor and good performance. It should not provide similar ratings for
different performance levels. If the system is not sensitive enough to
discriminate between bad and good performance, the results cannot be used
for administrative and developmental purposes.
 Freedom from contamination: The system should measure the performance
of an employee without contamination by factors that are outside the
employee’s control for example material shortage, inappropriate equipment.
 Practicality :The appraisal system should be easy to apply ,should be use
friendly to be understood by both managers and subordinates .It should be
manageable in terms of amount of administration (time and paper work) .
 Acceptability: The system should obtain a positive attitude from both the
management and the subordinate’s .It should involve end users when being
developed. They must feel ownership of the appraisal system.

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  Legal compliance: The performance appraisal system should be tested for
compliance with the requirements of the relevant labour legislation for
example it should be checked for compliance with Employment Equity Act.
3.5. Criteria for Assessing Performance
 Quality: Degree of perfection.
 Quantity: Amount produced in terms of number of units, money, etc.
 Timeliness: Punctuality in completing the work.
 Cost Effectiveness: Optimization of resources
 Need For Supervision: Degree to which a job performer can carry out a job
function without supervisory assistance.
 Interpersonal Impact: The employee’s contribution for cultivating a positive
organizational climate.
 Training: Need for training for improving his skills & knowledge.
Who appraise an employee?
 Supervisors
 peers
 Subordinates
 Employees themselves
 Users of services
 f. Consultants.


3.6. Techniques / Methods of performance appraisal.

360 degree Appraisal.

Examples of companies which apply 360 degree appraisal system are Ponds, General
Electric, Hp, and Colgate- Palmolive. 360-degree feedback system implementation
follows the stages below
(i) Define objectives
-Define what 360-degree feedback is expected to achieve.
-Spell out the extent to which it is concerned with personal development.
-The extent to which it is concerned with appraisal or pay.
(ii) Decide on the areas of work and behaviour on which feedback will be given.
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 -List of headings for development
-An existing competency model which fits the culture values and type of work
carried out in the organization
(iii) Decide on the methodology to be used in giving feedback.
-Decide on the stakeholder to provide feedback about employee performance
-Whether or not feedback should be anonymous.
-Whether to we interview, questionnaire (etc)
(iv) Plan the initial implementation program.
-Pilot the process at top level-communicate pilot program to those involved about
360-degree feedback.
-spell out benefits as far as possible.
-train people in giving and receiving feedback.
-analyze reaction of those taking part in pilot scheme.
(v) Implement the full program
-briefing meetings
-communication
-training
-support from HR and possible external consultants
(vi) Monitor and evaluate
-maintain a close watch on the initial implementation of feedback.
-monitoring should continue
-it requires a lot of effort
Advantages of 360 Degree Appraisal System
 Broad perspective of individuals- Individuals get a broader perspective of how
they are perceived by others since the feedback comes from a variety of
stakeholders including customers, workmates and subordinates.
 Realistic Feedback for senior Managers- Senior managers get more realistic
feedback about their performance from various stakeholders such as their
colleagues, subordinates and customers.
 Encourages open feedback- Each stakeholder can evaluate the employee and
constructive criticism can be realized.

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  Reinforces employees desired competencies- It results in a customer focused
organization, it reinforces the desired competencies of employees of the
organization by involving customers in the feedback process.
 Valid perception of feedback- The perception of feedback becomes more valid
and objective leading to acceptance of results and adoption of recommendation
Draw backs of 360-degree feedback system
(1) Dishonest feedback can be received from respondents
(2) Pressure of giving feedback
Unstructured Appraisal
Appraiser writes his impression about employees performance in the form of Annual
Confidential Report [ACR].Employees may be appraised on
 Sense of responsibility
 Sense of involvement
 Sense of co-operation
 Sense of judgement
 Sense of initiative
 Sense of regularity
 Punctuality.
This appraisal technique is highly subjective, simple in operation. Popular in public
sector.
Comparison methods

Straight Ranking Method

Oldest and simplest method. Employee is compared with others and is placed in straight
rank from highest to lowest based on overall performance. Best is given first rank and
higher is the rank, better is the chance for promotion. Certain factors are considered for
rating and a scale is designed by the rater for each factor. A scale for each man is also
created for each selected factor. Each employee is compared with respect to one factor at
a time. Used in job evaluation. The factors generally used are

 Sense of responsibility
 Sense of initiative

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  Sense of dependability
 Sense of judgement
Grading
Certain grades are defined and established in advance. Actual performance of each
employee is then compared and employee is allocated the grade, which is deserved by
him. Grades will range from outstanding , satisfactory , unsatisfactory or excellent ,good
,average ,bad

Graphic Scale/Graphic Rating

Characteristics of employee[initiative, ability to learn]and contribution of

employee[quality and quantity of output, responsibility assumed etc.] are rated. A line is
drawn for each factor to be evaluated. Different classes are mentioned at intervals on the
line. Numerical values are assigned to each quality on scale and employees are classified
on the scale.

Forced Choice Description Method

This method attempts to reduce/correct a rater’s tendency to give consistently high o low
rating to all employees. Calls for objective reporting. Here the rating elements are sets of
4 phrases,2 of which are positive and 2 negative, relating to job proficiency and personal
qualification. Rater is asked to indicate which of the 4 phrases is most and least
descriptive of the employee.

Forced Distribution Method

Minimizes raters bias. The rater is forced to fit the employees in pre determined range of
scale.5 point rating scale is used without any descriptive statements. Employees are
placed between extremes of ‘good’ and ‘bad’job performance.Example-
1.outstanding(10%) 2.above average(20%) 3. Average(40%) 4.fair (20%) 5.
Unsatisfactory (10%) .Employees are rated for promotability based on 3 point rating
scale.

1.very likely promotional material

2. may or may not be promotional material

3.very unlikely to be promoted

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 Advantages:

 universality of application
 Reduced bias.
Critical Incident Method

Developed by armed force in U.S. during world war 2. It measures worker’s performance
in terms of ‘events’ that occur in the performance of appraises’ job. These event, either
good or bad are critical incidents. They are recorded under categories of Type of job,
employee learning ability, responsibility, initiative etc. Feedback is given about the
incidents during performance review session, The collected incidents are ranked in order
of frequency & importance. Advantage:

Reduces “Recency Effect”(giving maximum importance to the latest happening)

Disadvantages:

 Negative incidents are more noticeable.

 Very close supervision is required.

Examples of Critical Incidents:

 When a clerk designs the Internal Material Requisition Form.
 How a salesman treats a customer in a given incident.
 Preparing a purchase order.
Check List Method / Questionnaire Method
A series of questions are prepared about the employee & his behaviour. The rater then checks to
indicates if the answer to a question about an employee is positive or negative. The value of each
question may be weighed equally or certain questions may be weighed more heavily than others.
Examples: .Does the employee know the job? (Y/N),Is he regular on his job? (Y/N),.Does he take
initiative? (Y/N)
Demerits:
 Bias of the rater.
 Preparation of checklist is time-consuming.
Group Appraisal Method:
Employees are rated by an appraisal group consisting of their supervisor & 3 or 4 other
supervisors who have knowledge of performance of employee. The group discusses the

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employees performance in the light of job requirement. If the common opinion goes in favour of
a particular employee, then he is recognized & considered for reward.

Advantages:
 It’s a simple method.
 Personal bias is reduced.

Field Review Method:

Line supervisors are interviewed by an expert from the personnel dept to evaluate their
respective subordinate . The expert questions the superior to obtain all the pertinent information
on each employee & takes down the ratings. Supervisor is required to give his opinion about the
progress of his subordinates, level of performance of each subordinate, outstanding ability,
promotability, etc.

Advantages:
 Useful for larger organizations.
 Relieves the supervisor of the need of appraisal forms

Management By Objectives (M.B.O) Or Appraisal By Results.

Evolved by Peter Drucker. Here, superior & subordinate managers of an organization jointly
identify its goals, define each individual’s major area of responsibility in terms of result expected
out of him & use these measures as guides for operating the unit & assessing the contribution of
each of its members.

Steps in M.B.O.

1.Job Review & Agreement: Employees and superior review the job description and key
activities (KRA’s): Key Result Areas) that comprises the employees job.
2. Development of performance standards: Mutually agreed upon standards of
performance are developed. Ex: - quota of selling 5 cars per month for a salesman.
3. Guided Objective Setting: Objectives /strategies for achieving the standards are
established by the employee in conjunction with his superior. Check points are
established for evaluation of progress and ways of measuring progress are selected.

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 4. Continuous Performance Discussion: Initially monthly reviews and later quarterly
reviews are conducted. The objectives can be mutually modified.
5. Frequent Feedback: Specific, relevant and timely feedback from superior motivates
employees to achieve the set targets.
6.Action Based On Evaluation:Those who achieved target- recognition, appreciation
regarded with promotion or special increments. Those who did not achieve target-
warning, stoppage of annual increments, promotion etc.

Advantages
 MBO helps in increasing employee motivation.
 Reduces role ambiguity.
 MBO identifies problems in performance better and early.
 Improves communication between employees and superiors

Disadvantages
 Takes a great deal of time and energy.
 Not suitable for blue collared workers, as they do not understand it.
Assessment Centre Method:
Used to measure interpersonal skills & other aspects such as organizing & planning,
coping with stress, communicating with others.
Many evaluators join together to judge the importance of their employees in several
situations with a variety of criteria. Assessment is done with the help of a written test,
interview & situational exercises. Efficiency of an employee is assessed theoretically &
practically. Employees are classified in different categories like more than acceptable,
less than acceptable & unacceptable.

Human Asset Accounting Method:

Deals with cost and contribution of HR to organization.Based on the principle that human
resources like other resources are assets of an organization. When well-trained personnel
leave a firm, it reduces the worth of human resources & when such employees join a
firm, it increases human value. When there is distrust, ill will & conflict in an

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 organization, it is devalued. On the other hand, if there is complete teamwork, high
morale, industrial peace & harmony, the organization is highly valued.
Self Evaluation Method
The way in which an individual evaluates himself. Self analysis of knowing one’s efficiencies
and deficiencies.
1.Where am I ?

2.Where I should be?

3.What have I done?

4.What can I do?

For an objective self evaluation , egoism, pride, self evaluation and inferiority complex should be
set aside It reveals one’s qualities and deficiencies..

Behaviourally Anchored Rating Sale [Bars]

Assess an employee’s behaviour, rather than other characteristics. Latest development in
performance appraisal ..It is a combination of rating scale and critical incident technique.

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5 Steps of Bars
 Generate Critical Incidents: Persons with knowledge of the job [job Holder/supervisor]
are asked to describe specific illustrations/events, of effective performance behaviour.
 Develop Performance Dimensions: Cluster incidents into smaller sets[5-10] of
performance dimension. Each cluster/dimension is then defined.
 Reallocate Incidents: Another group of participants who are knowledgeable about the job
is instructed to retranslate or reclassify critical incidents generated. They are given a job
dimension and told to assign each critical incident to the dimension that it best describes.
At least 75% agreement among the members are required on each dimension.
 Assigning Scale Value To The Incidents: Each incident is then rated on a one to nine scale
with respect to how well it represents performance in the correct dimension the 2nd group
generally gives scale values.
 Producing Final Instrument: A subset of incidents (6-7 per cluster) are used as
behavioural anchors for performance direction. The final bars instrument consists of a
series of vertical scales. one for each dimension, anchored or measure by the particular
incident.
Advantages
1.This system differentiates among performance, Behaviour and results.

2.Provides basis for employees overall development.

3.Reduces bias due to halo effect, central tendency etc.
3.7.Factors affecting objective of evaluation/ problems of appraisal
 Halo effect/ Horns effect: Halo effect occurs when a manager rates an employee
high on all job criteria because of performance in one area. A halo effect arises
when traits are unfamiliar, ill-defined and involves personal relations. Ex. A
punctual employee, gaining high rating in all other areas of work, including
quality and quantity of output. Horns effect is the opposite, where one
characteristic may lead to an overall low rating.
 To alleviate halo effect:-
 Restructure the questions by requiring the evaluator to consider
each question independently.

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  Having the evaluator rate all questions on each dimension before
going to next dimension.
 Contrast error:Tendency of people to rate employees relative to others rather than
against performance standards. Ex. A mediocre performer among a group of poor
performance may be rated as excellent because of the contrast effect.
 Leniency/ strictness/ contrast error:Too liberal a rating gives consistently a high
value to all the employees. (Positive leniency error). Too strict a rating gives
consistently low values. These errors arise due to varying standard of performance
used by different rators and due to different interpretation of performance.
Holding meeting for rators so that they may understand what is required of them
in rating can reduce bias.
 Central tendency problem: Most common error. It assigns average rating to all the
employees with a view to avoiding commitment, when the rator is in doubt, has
inadequate information or lack of knowledge of the behaviour of employee. Rator
does not rate at extreme ends of scale. (Central tendency). Such a tendency
seriously distorts the evaluation, making them most useless for promotion, salary
or counselling.
 Similarity error: This type of error occurs when the evaluator rates other people
in the same way he perceives himself. Ex. An aggressive evaluator may evaluate
others by looking for aggressiveness. Those who show this characteristic maybe
benefited while others may suffer.
 Recency effect: The raters generally remember the recent actions of the employee
at the time of rating and rate them on the basis of these recent actions, rather than
on the whole activities.
 Personal prejudice:If the rotor dislikes any employee or any group, he may rate
them at the lower end, which may distort the rating purpose and affect career of
the employee.
 Sampling error:If the rater has seen only a small sample of a person work, there
will be sampling error. Ex. Assume 95% of an employee’s work has been
satisfactory, but the boss saw only 5% that had error. If he rates the employee as
poor, it is called sampling error

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  Different perception: Rater’s soft corner for the opposite sex, caste, religion etc.
 Stereotyping: Generalized a person’s behaviour based on the group
characteristics.

3.8. How to make appraisals more effective

 Create an atmosphere of confidence and trust.
 Performance appraisal should be simple and easy to operate.
 Performance appraisal should be uniform in nature, fair, just and equitable.
 Practice bench marking – a process of gauging the internal practices and activities
within a firm to an external reference or standards. Ex. Ford motor company
benchmarked its accounts payable function against Mazda Motors Corporation.
 Should provide access for employees to review appraisal results.
 Should provide written instruction and training for the raters.
 Establish a system to detect potentially discriminatory effects.
 Appraisal criteria should be objective rather than subjective.
 Criteria for PA should be communicated to the employee.
 Appraisal plan should be devised in consultation with the subordinates.

3.9. Employee Promotion

Promotion is the development of an employee to a better job, in terms of responsibility,
more prestige, status, position and especially higher rate of salary.
Objectives of Promotion:
 To recognize employee’s performance and reward him for his work.
 To put worker in a position where he will be of greater value to the company.
 To promote job satisfaction among the employees.
 To boost morale of people.
 To attract suitable and competent workers for the organization.
 To retain good employees.
Types of Promotion:
 Dry Promotion: Employee is given higher status and position without any extra
financial benefits and facilities .Only the designation is changed.

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  Multiple chain Promotion: Systematic linking of one position with several others.
An officer is given charge of different assignments departments, sections and
branches. It is done according to one’s specialization, calibre and experience.
 Out Promotion: Happens when a person does not find enough opportunities
within the organization and has to leave the organization to join at higher position
in some other enterprise.  BRAIN DRAIN.
 Upward/Vertical Promotion: given to employees to recognize seniority, merit,
loyalty, etc.  jump to a higher and better position having better status, grade,
salary, authority, etc.
Elements of Promotion Policy
 Promotion policy statement: choosing/deciding source of recruitment, deciding
whether to revise the pay, etc.
 Decides the basis of promotion: performance appraisal, confidential report, etc.
 Chalk out promotion channels: promotional charts, opportunity charts etc.
 Prepare employees for advancement: by training, job rotation etc communicate
the policy: a manual, set of standing orders referring personnel and services
records of employees.
Bases or criteria for Promotion:
 Seniority: Length of recognized service of an employee in an organization. There
is no due for consideration. For merit. Ex: Merit: Government departments and
public sector.
 Merit: One’s own ability, knowledge, calibre and thorough understanding of the
job. Seniority is not considered. Encourages employees to improve efficiency.
Promotion by Job Performance and analysing the potential by oral and written
test.
Demotion:
Lowering down the status, salary and responsibilities of an employee.
Causes Of Demotion:
 Merging of different departments.
 Inadequate job performance, attitude and capability.
 Change in technology.

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  As a disciplinary action.
Transfer:
Lateral shift causing movement of individuals from one position to another without
involving any marked change in duties, skills needed, responsibilities, or compensation.
Purpose of Transfer:
 To meet the needs of the organization due to change in quantity of production,
organization structure, etc.
 To meet an employee’s own request: dislike of fellow workers, shift to home
town etc.
 To utilize properly the services of an employee in a better way.
 To increase the versatility of the employee, Job Enrichment. Gives the
opportunity for developing varied skills.
 Plant Transfer: To adjust work force of one plant with that of another, when one is
closed down.
 Shift transfer: Ex: Morning Transfer to Night Transfer.
 Punishment Transfer: As apart of disciplinary action, transfer to a remote area.
 To avoid Job Politics, Eg: Senior Administrative services of the government.
Types of Transfer:
 Production Transfer: Transfer caused due to changes in production.
 Replacement Transfer: Due to replacement of a long standing employee in order
to avoid retrenchment.
 Rotation Transfer: Transfer initiated to increase the versatility of employees.
 Shift Transfer: Transfer of an employee from one shift to another.
 Remedial Transfer: Transfers initiated to correct the wrong placement.

CHAPTER 4: TRAINING AND DEVELOPMENT

4.0. Introduction
Training refers to a systematic setup where employees are instructed, and taught matters
of technical knowledge related to their jobs. It focuses on teaching employees how to use

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machines or how to do specific tasks to increase efficiency. Whereas development refers
to the overall holistic and educational growth and maturity of people in managerial
positions .the process of development is in relation to insights, attitudes, and adaptability,
leadership and human relations. Thus, Training and development is any attempt to
improve current or future performance of employee by increasing an employee’s ability
to perform through learning, usually by changing the employee’s attitude or increasing
his or her skills and knowledge.

4.1. Chapter learning outcomes

On completion of the chapter, the student is expected to be able to:
 Define training
 Distinguish training from development
 Explain the steps in the training process
 Discuss importance of evaluating training programmes

4.2. Objectives of Training

The objectives of training are as follows:
 To increase the knowledge of workers in doing specific jobs.
 To impart new skills among the workers systematically so that they learn
quickly.

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  To bring about change in the attitudes of the workers towards fellow workers,
supervisor, and the organization.
 To improve the overall performance of the organization.
 To make the workers handle materials, machines and equipment efficiently
and thus to check wastage of time and resources.
 To reduce the number of accidents by providing safety training to workers.
 To prepare workers for the higher jobs

4.3. Importance of Training

Modern organizations arrange for the training of their human resources to achieve the
following benefits:
 Quick learning: Training helps to reduce the learning time to reach the acceptable
level of performance. The employees need not learn by observing others and
waste time if the formal training programme exists in the organization. The
qualified instructors will help the new employees to acquire the skills and
knowledge to do jobs quickly.
 Higher productivity: Training increases the skill of the new employees in the
performance of a particular job. An increase in skill usually helps in increase in
both quantity and quality of output .Training is also of great help to the existing
employees.it helps them to increase their level of performance on their present job
assignment and prepares them for future assignment.
 Standardization of procedures: With the help of training, the best available
methods of performing the work can be standardized and taught to all employees.
Standardization will make high level of performance rule rather than exception.
 Less supervision: If the employees are given adequate training, the need of
supervision will be lessened. Training does not eliminate the need of supervision,
but it reduces the need of detailed and constant supervision.
 Economical operations: Trained personnel will be able to make better and
economical use of materials and equipment .wastage will be also low .In addition,
the rate of accidents and damage to machinery and equipment will be kept to the
minimum by the trained employees .these will lead to lower cost of production
per unit.

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  Higher morale: The morale of employees is increased if they are given proper
training. A good training programme will mold employee’s attitudes towards
organizational activities and generate better cooperation and greater loyalty.
 Preparation of future managers: When totally new skills are required by an
organization, it must face great difficulties in the selection process .Training can
be used in spotting out promised men and preparing them for promotion.

4.4. Conditions for effective implementation of training Programme

A sound training programme must possess the following characteristics
 Training programme should be designed to achieve the predetermined
objectives, goals and needs of the organisation. It should be less expensive.
 Training programme should be leopardess for all, in the organization and not
for a particular group.
 Training programme should pre-planned and well organized taking in view,
the objectives of training programme. For this purpose, the whole task should
be divided in various sub-activities an sub-activities should be arranged in a
systematic order.
 Training programme should be designed according to size, nature and
financial position of the concern. A small-scale enterprise cannot afford much
to the training programme.
 Training programme must be flexible enough.
 The programme must be conducted by senior and experienced officer of the
concern. In large scale enterprises, training is conducted by the training
director who overseas the training section under personnel department. Such
training director is well trained and experienced in the art training.
 Theoretical and practical aspects of training must be given due considerations
while preparing a training programme.
 It should be designed in such a fashion as to incorporate the recent trends
developed in the industrial field. Psychological research may guide the
conducting of a programme. The main purpose of the training programme
should be to enable the employee to pick-up the work as soon as he completes
the training.

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  Training programme should be designed taking in view the interests of both
employer and the employees. Their group interests should not be suffered.
 It is not essential to follow a single method of training for all employees. The
purpose of training is to develop the men and not the methods, therefore, more
than one method maybe followed side by side for different groups.
 The main purpose of the training programme should be to motivate the
workers to learn something to improve is job performance and therefore, a
reward must be to be expected at the concussions of the learning process such
as promotion or a better job. The above characteristics must be developed in
designing a sound training programme

4.5. Types of Training

The types of training programmes are as follows:
 Induction or orientation training: Induction is concerned with introducing or
orienting a new employee to the organization and its procedures, rules and
regulations. When a new employee reports to work, he must be helped to get
acquainted with the work environment and fellow employees.it is very short
informative training given after recruitment .It creates a feeling of
involvement in the minds of newly appointed employees.

 Job training: Job training relates to specific job which the worker must handle
.It gives information about machines, process of production, instructions to be
followed, methods to be used and so on. It develops skills and confidence
among the workers and enables them to perform the job efficiently. Job
training is the most common of formal in plant training programmes. It is
necessary for the new employees to acquaint them with the jobs they are
expected to perform.
 Refresher training or retraining: The refresher training is meant for the old
employees of the enterprises. The basic purpose of refresher training is to
acquaint the existing workforce with the latest methods of performing their

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 jobs and improve their efficiency further. Retraining programmes are designed
to avoid personnel obsolescence.
 Internship training: Under this method, the educational or vocational institute
enters arrangement with an industrial enterprise for providing practical
knowledge, to its students. Internship training is usually meant for such
vocations where advanced theoretical knowledge is to be backed up by
practical experience on the job. For example. Engineering students are sent to
big industrial enterprise for gaining practical work experience and medical
students are sent to big hospitals to get practical knowledge

Individual research activity & class Presentation

Botswana promotes upskilling of employees through funding work based training.

Carry out a research and present to the class how the funding of work based training
in Botswana is undertaken

4.7. Training methods

Training methods can be broadly categorized under On- the- Job- training methods and
Off- The- Job -training methods

4.7.1.On- the –Job Training

On-the job training is an important way in which people acquire relevant knowledge
and skills at work. Here it is important to make the distinction between training and
learning – this is critical to the effective design and delivery of training in
organizations. In our Training to learning Change Agenda, the terms were defined as
follows:
 Training is an instructor-led, content-based intervention, leading to desired
changes in behaviour.

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  Learning is a self-directed, work-based process, leading to increased adaptive
potential - for fuller details see our Helping people learn web area.

OJT is a well-established and well-used intervention designed to enhance individual

skills and capabilities with the characteristics of:
 Being delivered on a one-to-one basis and taking place at the trainee’s place
of work requiring time to take place, including potential periods when there is
little or no useful output of products or services
 Being specified, planned and structured activity. OJT used to be colloquially
called ‘sitting next to nellie’ – learning through watching and observing
someone with more experience performing a task.

4.7.1.1. The Advantages of using OJT

 Training can be delivered at the optimum time: for example, immediately
before a job is to be performed ‘for real’ in the workplace.
 The trainee will have opportunities to practice immediately.
 The trainee will have immediate feedback.
 Training is delivered by colleagues and can go some way to integrate the
trainee into the team.

4.7.1.2. The Disadvantages of using OJT

 There is a tendency to fit OJT in when it is convenient for office routine
rather than at the optimum time for learning.
 The training may be given piecemeal and not properly planned, and the
trainee gains a fragmented picture of the organisation.
 Too much training can be delivered in one session leading to ‘information
overload’ and trainee fatigue.
 The trainer may not have sufficient knowledge of the process or expertise in
instructional techniques (a ‘train the trainer’ course may be appropriate).
 If immediate practice is not accompanied by feedback the trainee can feel
abandoned after the initial experience.

4.7.2. On the job training methods

Following are the On-The-Job methods :
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 Apprenticeship programs: Apprenticeship programs place the trainee under
the guidance of well-trained personnel. These programs are designed to
obtain skills and knowledge of higher levels. Such programs are necessary
for people entering skilled jobs, like, plumbers, electricians, etc. These
apprentices are trainees who enter these programs and invest some time
working under the guidance of a professional or a trainer. The trainees are
required to spend a specified time here where both fast and slow learners are
trained together. The slow learners may be provided with additional training.
 Coaching: In this method, the trainer who is known as the coach guides and
instructs the trainee. The coach or the trainer sets the required goals with a
mutual discussion, advises on how to achieve those goals, analyses the
trainees’ progress from time to time, and suggests changes necessary in the
attitude and performance. The trainee works under the senior manager and
the manager takes full responsibility for the employees’ training. The
training is done to take the place of the senior manager so that he can be
freed from some of his duties. This is also a chance for the trainee to learn
about his job and the working of the organization.
 Internship Training: Internship training is a cooperation of educational
institutions and business firms. These trainings are generally a joint
program. The candidates who are selected continue to pursue their studies
regularly and also work in a factory or office to gain the practical knowledge
and skills required for a job.
 Job Rotation: Job rotation involves shifting trainees from one job to another
or from one department to another. This allows the trainee to gain a better
understanding of the working of the organization and all its parts. The
rotation enables the trainee to indulge in all kinds of operations from
different departments, and also allows them to enhance their knowledge and
skills. This is also beneficial for the trainees, as they get to interact with
other employees, which creates cooperation among different departments.
Such training of employees makes it easier for the organization at the time of
promotions, replacements, or transfers.

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4.7.2.1. Advantages of off the job training methods
 Effectiveness: Off the job training is well organized and conducted by experts and
specialists which makes the training program more effective.
 High Productivity: It is conducted outside the organization or workstation and
trainees are not involved in the production process. Only trained and skilled
workers are placed at the workplace. So, productivity will be higher.
 Minimize Errors: Under this method, newly appointed employees are trained
outside the production area and skilled and trained manpower perform the job. So,
it lowers the production errors.
 Economical: In this method, many employees can be participated, and orientation
can be provided at a time. It helps to reduce training costs. So, it is a cost-
effective method.
 No Disturbance: Trainees are not allowed to work in the actual workplace. So,
production process will not be disturbed, and existing employees can do their jobs
smoothly.
4.7.2.2. Disadvantages of off the job training methods
 More Expensive: This method of training may be very expensive due to extra
space, accommodation and transportation costs and experts' fees etc.
 Less Effective: Off the job training is less effective than on the job training method
because it is conducted outside the working environment. Employees need extra
induction training to handle their job.
 Dissatisfaction: Training is conducted artificially outside the workplace. So,
employees cannot learn properly in this training method. Dissatisfaction may arise
among the employees.
 No Production: Trainees cannot take part in the production process. So, potential
output and time is lost in this method of training.

4.7.3. Off the job training methods

 Lecture Method: Under this method trainees are educated about concepts,
theories, principles and application of knowledge in any area. Trainer may be
generally drawn from Colleges, Universities, Consultancies, Institutions,

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 Manufacturing concern, Union etc., They impart training effectively by their
oratorical skill, knowledge and practical knowledge using audio visual tools.
 Case Study Method: Trainees are described a situation which stimulate their
interest to find solution. They have to use their theoretical knowledge and
practical knowledge to find solution to the problem presented. There is no single
solution to the problem. It may vary depending upon viewpoints of trainees. In
short, the purpose of case study method is, to make trainee apply their knowledge.
 Role Play Method; Under this method trainees are explained the situation and
assigned roles. They must act out the roles assigned to them without any
rehearsal. There are no pre-prepared dialogues. Thus, they must assume role and
play the role without any preparation. For example, the role of customer and
salesman, management and union leader, foreman and worker etc. may be played
in the training arrangements. The moderator after observing the role played gives
his views to the role players.
 Seminar/Conference method: This method enables the trainees to listen to the
lectures / talk delivered on specific topics and provides opportunities to
participate, to interact with the speaker and get their doubts clarified or select
participants may be allowed to present papers with the audio-visual aids as
delegates. They share their rich experience at the seminar through their papers.
Thus participants can widen and deepen their knowledge by their active
participation at the conference. e.g., Doctors conference, Salesman Conference
etc. This is one of the oldest methods, but still a favorite training method.
 Field Trip Method: A field trip or field work or training in the field is a journey
undertake by a group of employees/ trainees to a place away from their actual
work site. In other words, trainees are taken to actual workplace/ site/facility to
gain exposure and knowledge. They are explained the process of work by
supervisor/ manager of the facility visited by the partisans. They are free to clarity
their doubts from the organization experts. This method helps the trainees to
strengthen their theoretical knowledge obtained in a classroom environment by
practical exposure.

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  E-learning Method: E learning is the use of technological process to access of a
traditional classroom or office. E learning is also often referred to us online
learning or web-based training. E learning training courses can save lakhs and
lakhs of rupees to an organization as they no longer must pay for over time or
costly seminar to improve employees’ skills. Under this type of web-based
training is anywhere and anytime information can pass over the internet.
 Demonstration Training Method: This method is a visual display of how
something works or how to do something. Demonstration involves showing by
reason or proof explaining or making clear by use of examples or experiments. As
an example, trainer shows the trainees how to perform or how to do the task of the
job.
 Programmed Instruction method: Under this method, the subject matter to be
learnt is presented in a series of units. These units are arranged from simple to
complex level. It consists of three parts: Presenting facts, new knowledge and
Question and Answer. Trainee must read the unit understand the concept and take
part in self-evaluation exercise. The system provides feedback on the accuracy of
response given by trainee. On the successful completion of each unit, he/she will
go to subsequent level. If they forget, they should go back to original information.
If they do not forget the information they are allowed to go to the next step for
learning. Programmed instructions is made available in printed form i.e books,
table, interactive video and other formats. Besides there are number of other
advanced methods of training of the employees which will be taught to students in
their higher studies

4.8 Evaluation of a Training Program

It is an attempt to obtain information on the effects of training performance & to assess
the value of training in the light of that information. It leads to controlling & correcting
training programs. It is also done to know the effectiveness of the training program

4.8.1. Need for Evaluation

 To determine if training has accomplished specific objectives.
 To ensure change in capabilities are due to training programs

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 To determine the cost effectiveness.
 To explain training failures if any.
 To assess overall benefits to the organization.

4.8.2. Principles of training evaluation

 Evaluator must be clear about goals and purposes of evaluation.
 Evaluation must be continuous.
 Evaluation must be specific.
 Evaluation must be based on objective methods and standards.

GROUP DISCUSSION

How much do companies invest in training? Divide the students in groups of five and
give them the task of choosing any company of their choice within Botswana and
research the companies training needs and methods of training and development. The
group will then present their findings to the whole class.

UNIT 5: EMPLOYEE COMPENSATION AND WELFARE

5.0 Introduction

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Compensation and reward systems have a wide-ranging impact on organisations, and that
their impact is greatly affected by their design and by the organisational context in which
they operate. Thus, to understand pay systems in organisations, it is necessary to focus on
the characteristics of both the organisation and the pay system. Compensation may
directly influence key outcomes like job satisfaction, attraction, retention, performance,
skill acquisition, cooperation, and flexibility. This chapter discuss the determinates of an
organisation’s compensation and reward policy, the different methods of employee
compensation and reward.

5.1. Chapter Learning Outcomes

On successful completion of the chapter, learners are expected to be able to:

 Distinguish wages from salary

 Methods of calculating employee’s wages

 Monitory and non-monitory Employees benefits

 The components of employee compensation

5.2 The strategic role of the compensations function

The compensation function contributes to the organisational effectiveness in four basic
ways:

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 Compensation can serve to attract qualified applicants to the organisation. Other
things being equal, an organisation offering a higher level of pay can attract a larger
number of qualified applicants than its competing units.
 Compensation helps to retain competent employees in the organisation. Although
retaining competent workers is contingent on many factors, compensation policies
help by maintaining a fair internal pay structure and by providing attractive benefits.
Turnover is thus reduced, along with costs associated with recruiting, selecting, and
training replacements.
 Compensation serves as an incentive to motivate employees to put forth their best
efforts. Manufacturing and sales organizations, for example, use monetary incentives
to attain higher levels of production or sales without hiring additional employees.
When employees put forth their best efforts, average productivity of labour increases.
With increased productivity, fewer employees are needed to achieve the same level of
output. Thus, labour costs are reduced and organisational profitability is increased.
 Minimizing the costs of compensation can also contribute to organisational
effectiveness since compensation is a significant cost for most employers.
5.3 The compensation policy
The aim of compensation statement is to set down the company’s policy with regard to
salary. It is the responsibility of all concerned to implement the compensation policies
and to explain the same fully to their subordinates. The compensation policy should aim:
 To recognize the value of all jobs in relation to each other within the
company.
 To take account of wage rates paid by companies of similar size, product
and philosophy.
 To ensure stable earnings.
 To enable individuals to reach their full earning potential as far as is
reasonably practicable.
 To ensure employees‟ share in the company‟s prosperity as a result of
increasing efficiency.

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5.4. Conducting Job evaluation
Job evaluation is the systematic and orderly process of determining the worth of the job
in relation to the other jobs. It is the quantitative measurement of relative job worth. It
ranks all the jobs in an organization and places them in hierarchy that will reflect the
relative worth of each.
Purpose of Job Evaluation
 To gather data relating to job description, job specification and employee
specification of various jobs in an organization.
 To compare the duties, responsibilities and demands of a job with that of other jobs.
 To determine the hierarchy and places of various jobs in an organization.
 To determine ranks and grades of various jobs.
 To ensure fair and equitable wages on the basis of relative worth or value of the jobs.
 To minimize wage discrimination based on sex, age, caste, religion etc.

5.5. Principles of Job Evaluation

 Rate the job, not the employee.

 The elements selected for the rating should be easily understood.

 Employees concerned and the supervisors should be educated and convinced about
the program.

 Supervisors should be encouraged in participating in the rating.

 Discussions with foremen and employees should be restricted to assigning point

values and not on money values to the points.

5.6. Steps in Job Evaluation

 Prepare job description: This gives the job requirements needed for the successful
performance of the job.
 Analyse the human qualities to perform the job efficiently through job specification.
 Select and prepare job evaluation plan: The job is broken down into component parts
i.e. it should involve the selection of factors, elements needed for performance of all
the jobs, for which money is paid, determining their value and preparing written
instruction for evaluation.

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 Classify the job: This requires grouping or arranging jobs in a correct sequence in
terms of value to the firm, relating them to the money terms in order to ascertain their
relative value.
 5. Implement l the program: This involves explaining the concept to the employees
and putting it into operation.
 6. Maintain the program: Updating of new jobs according to changing conditions.
 Compensable factors are basic factors of each job e.g. skills, efforts, responsibility,
working conditions, which determine the definition of job content. The job content
helps in determining the compensation paid for each job.(According to ‘equal pay for
equal work’ act USA)

Advantages of job evaluation

 To remove inequalities in existing wage structure.

 Helps in fitting new jobs into existing wage structure.

 Helps in removing grievances arising out of relative wages.

 Establishes a clear basis for negotiation.

 Simplifies wage administration.

 Information collected for job analysis can be used for improvement of selection
transfer and promotion.

5.7 Job Evaluation Methods/Systems

Non-quantitate methods
a) Ranking method
Widely used in small organizations. Simplest and easiest technique. The evaluator
compares one job with other jobs based on duties; responsibilities and demands made by
the jobs on the job incumbent and the degree of importance of the job and rank all the
jobs from most important to least important. The job is considered as a whole, not in
terms of components.
Steps in ranking
i) Preparation of job description

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 ii) Selection of raters. (Outsource – consultants)

iii) Selection of rates and key jobs. (10-20 bench mark jobs which include all the
departments) then other jobs are roughly compared with the key jobs to
establish rough rating.

iv) Ranking of all the jobs. Therefore, each job is compared with other similar
jobs to establish its rank.

v) Preparation of job classification from the rating. The total ranking is divided
into an appropriate number of groups or classes, (8-12). All the jobs in a
single class will have same wage.

Advantages
 Simplest, quickest and least costly
 2.Useful as first step of job evaluation

b) Job grading/job classification

A committee first establishes a number of predetermined grades or classification and then
the various jobs are assigned within each grade or class. Different grades will have
different pay levels. Grade is based on job information, which is obtained from job
description and specification. Popularly used in government departments.
Steps in grading
 Preparation of job descriptions.

 Preparation of grade description, so that different levels or grades of jobs may be

identified.

 Selection of grades and key jobs, (10-20). Jobs which include major departments.

 Grading the key jobs and identifying their relation to each other.

 Classification of all jobs based on grade definition. All jobs in same grade receive
same wage or rates. Ex. Clerks in one grade, junior officers in higher grade.

Advantages
 Simple to operate and understand.

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 Fully describe job classes makes it easier for people to understand ranking.

 Job classification makes pay administration easier.

*Grade is a group of different jobs of similar skill requirement. Ex. Financial a/c, cost
a/c, works a/c.
A class is the subdivision of a given occupation. Ex. Assistant financial a/c, financial a/c,
senior financial a/c, chief financial a/c etc.
2.Quantative methods
a) Points rating method
Most widely used type of job evaluation. Introduced by Merrill. R. Lott. Analytical
method, where jobs are broken into compensable factors. Each component is assigned a
numerical value. Degree to which each of these compensable factors present in each job
is determined. Number point is assigned for each degree of each factor. The total point
values assigned to each factor gives the total point values for each job which can be
compared.
Steps
 Jobs, which require similar activities and worker characteristics, are clustered
together.

 Selecting and defining compensable factors. e.g. . Skill – education, training,

mental dexterity etc. Effort – physical demand, visual effort, alertness etc.
Responsibility – for preventing monetary loss, machines, materials etc.

 Break down each factor into degrees or levels and assign point value to each
degree or level. The total value of all levels together is 100%

 Determination of relative values to assign to each factor. For each job, some
factors are more important than others. e.g. For executive ‘mental requirements’
carry more weight than physical requirement.

 Assign money value to points. Points are added to give total value of job. It is
then translated into money terms.

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Advantages
 Gives a numerical basis for wage differential.

 Endurance of the system

 More systematic and objective

 Prejudice and basis are reduced.

b) Factor comparison method. Combination of point rating and ranking. It defines

which jobs have more of certain compensable factors. Each job is ranked several times,
once for each compensable factor selected.
Steps
 Developing job description and specification.
 Selecting a number of key jobs, which may be divisible into sub factors.
 Ranking key jobs. Sub factors of each job must be given relative ranks based on
individual contribution to total job.
 Valuing sub factors of each key job. (Factor evaluation, money worth of each sub
factor of the key job is ascertained to know the total money value of each job)
 Integrating money value with ranking of factors
 Comparing all the jobs, (factor by factor) of the same grade or level with the related
key job and establish monetary values for the sub factors.

Advantages
 More reliable and valid
 Assign money value fairly
 Used for evaluating white collared professional.

Difference between job evaluation and merit rating/performance appraisal

Job evaluation Merit rating
 Physical effort Quality of work

 Mental effort Quantity of work

 Physical proficiency Degree of responsibility

 Work conditions Degree of initiative

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 Degree of specialization Degree of dependability

 Extent of academic qualification Capacities and capabilities

 Nature of challenges Degree of judgment and effort

5.7 Person-Job Fit Theory

Personality-job fit theory revolves around the idea that every organization and individual
has specific personality traits. The closer the traits between the person and the company
match, the higher the chance of workplace productivity and satisfaction. The best
personality fit will also decrease job turnover and stress, absenteeism, and poor job
satisfaction. Personality-job fit theory or person-environment (P-E) fit is a match
between a worker's abilities, needs, and values and organizational demands, rewards, and
values.

5.8 Salaries and Wages Administration

 Wage: Remuneration paid by the employer for the services of hourly, daily weekly
and fortnightly employees. (Production and maintenance/ blue collared employees).
 Salary: Remuneration paid to the clerical and managerial personnel employed on
monthly or annual basis.
 Earning: Total amount of remuneration received by an employee during a given
period. It includes salary (basic), dearness allowance; house rent allowance, city
compensation allowance etc.

5.8.1. Difference between Wage and Salary

Wage Salary
1. Direct expenses Indirect expenses
2. Included in trading account Included in P&L account
3. Wages are part of prime cost Salaries are overheads
4. Paid to manual labour Paid to administration and clerical staff
5. Paid according to hours of output Paid on monthly basis

5.1.2 Components of Remuneration

1.Wage/salary

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2.Dearness allowance: Remuneration paid by the company to compensate for increased
cost of living
3. Incentives/ payment by result: Remuneration paid in addition to wage and salary,
depending on productivity, sales,
Profit, cost reduction efforts etc.
a) Individual incentives
b) Group incentives.
4. Fringe benefits
Supplements the salary. Includes employee benefits like provident fund, gratuity,
Medical care, accident relief, health insurance, canteen, uniform, recreation etc.
5. Allowances
Allowance for executives. Includes company car, club membership, paid holidays,
Furnished house, stock option schemes etc.
6.Non-monetary benefits
Challenging job responsibilities, recognition of merit, growth prospects, job sharing,
Flexitime etc.

5.2 Objectives of Wage and Salary Administration

 To acquire qualified and competent personnel.
 To retain present employees.
 To secure internal and external equity.
 To ensure desired behaviour like loyalty, accepting change etc.
 To comply with wage legislations.
 To provide flexibility for individuals
 To recognize individuals and teams performance

5.9 Types of wages

 Minimum wage: The wage, which must be provided not only for bare sustenance of
life, but also for preservation of efficiency of workers. For which minimum wages
should be provide some measure of education, medical requirements and amenities. It
represents the level of wages below which wages are not allowed to develop. It sets a
reasonable ‘minimum standard of living’ from the viewpoint of health, efficiency,

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 and wellbeing of the worker. Every company must pay minimum wage, irrespective
of its capacity to pay.
 Living wage: It is the wage, which should enable the earner to provide for himself and
his family not only the bare essentials of food, clothing and shelter, but a measure of
frugal comfort, including education for his children, protection against ill health,
requirements of essential social needs and a measure of insurance against the more
important misfortune, including old age. It represents the highest level of wage and it
includes all amenities, which a citizen living in a modern civilized society is entitled
to get. It is determined, keeping in mind, the national income and capacity of the
industry to pay.
 Fair wages: Wage that is above minimum wage and below living wage is fair wage.
The lower limit of fair wage is the minimum wage and the upper limit of fair wage is
set by the capacity of the industry to pay. These are wages received by workers
performing work of equal skill, difficulty or unpleasantness. Between the two limits
of fair wages, the actual wage depends upon consideration of factors such as
productivity of labour, prevailing rates of wages in same or neighbouring localities,
level of national income and its distribution, place of industry in the economy of the
country.
 Real wages: It is the amount of money arrived at after discounting the nominal
wage/ money wage (wage paid in monetary terms) by the living cost. It represents the
purchasing power of money cost. Real wages reflect an adjustment to the changes in
price level/ price index. It increases when economy prospers.

5.5.1 Factors influencing wage and salary

 Supply and demand of labour - Scarce supply of skill will lead to higher wage
pay.
 Cost of living - When the cost of living index increases, unions demand increased
pay. Increasing the percentage of dearness allowance compensates this.
 Bargaining capacity of the employer and employee - Stronger and more powerful
trade unions seek and get higher wages. Well-organized employer resist wage
hike.

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  Capacity of the organization to pay - Profitable companies pay more; marginal
firms and non-profit organizations pay relatively low wages.
 Productivity - Theoretically, it is a good compensation criterion
 Nature of the job - Risk involved in the job, dangerous and noisy environment in
which the worker is compelled to work deserve better compensation.
 Length of service – Longer service, better is the pay
 Skill requirements – Better skill, better pay
 Wage level prevailing in the industry – Equal pay for equal work
 Prevailing wages in that region – Price levels and living conditions in the same
region are the same for all the workers. So the workers will demand wages on par
with the wages prevailing in the region.
 Psychological and sociological factors – Wage level for comparing the status and
success in life.
 Job requirements – based on difficulty of the job, accountability, decision-
making, and problem solving etc. salary will vary.

 Legal requirements – Wage should comply with various enactments of the

government like minimum wages act, payment of bonus act etc.

5.5.2 Principles Of Wage Fixation

 There should be definite plan to ensure that differences in pay for jobs are based upon
variation in job requirement like skill, effort, and responsibilities.
 General level of wage should be reasonably in line with that of prevailing labor
market.
 The plan should distinguish between job and employee.
 Equal work for equal pay.
 An equitable practice should be adopted for recognition of individual differences. Ex
wage incentive plan
 There should be a clearly established procedure for hearing and adjusting wage
complaints.
 Employees and trade unions should be informed about the procedure used to establish
wage rates.

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 Wage should be enough to ensure reasonable standards of living for workers and
family.
 Wage and salary structure should be flexible for meeting contingency requirement.
 Prompt and correct payment should be ensured
 For revision of wages, a wages committee is preferred.

5.5.3 Elements of a good wage plan

 1.The employees should easily understand it.
 It should be capable of easy computation.
 It should be capable of effectively motivating the employees.
 It should provide for remuneration to employees as soon as possible after the report
has been made.
 It should be relatively stable rather than frequently varying.

5.5.4 Wage fixation – methods/ systems

i. Time wage system
Oldest and most common. Workers are paid according to the work done during a certain
period of time, at the rate of an amount per hour, per day, per week, fortnight or any fixed
amount of time. Production worker is not taken into consideration in fixing the wages. He
isWage
paid at= the
no of days/hours
settled rate as worked*rate per hour
soon as the time or is spent.
contract
day

Wage = no of days/hour worked*rate per day or hour.

Suitable for jobs where quality of work is more important than quantity, work cannot be
measured in terms of units.

Advantages
 Simplicity
 Quality of work – as there is no time limit for execution of the job, workmen are not
in a hurry to finish the job, thereby improving quality.
 Economy of cost – due to reduced defective production.
 4. Favoured by organized labor, for it makes for solidarity among the workers of a
particular class.

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 5. Does not necessitate standardization as the payment is made according to time
taken by the workers.
 6. As it provides regular and stable income for the workers, he can adjust is budget
accordingly.

Demerits
 Dissatisfaction among laborers, as efficient and inefficient people gets equal wages.
 Diminishing production, as workers do the job leisurely, as there is no time
constraint.
 Need for more supervision.
 As no record of an individual workers output is maintained, it becomes difficult for
the employer to determine his relative efficiency for the purpose of promotion.
ii. Piece rate system/ payment by result
Workers are paid according to the amount of work done or the number of units
completed, the rate of each unit bring settled in to do the task. A worker, working in
given conditions and with given proportion to his physical output, which can be
expressed in terms of units such as per meter, per piece, per k.g.

Wage = no of units produced* rate per unit

Earning = N*R
N = no of units produced
R = rate per unit

Merits
 It stimulates increased production.
 Satisfies an industrious and efficient worker, as there is reward for the effort.
 Easy to compute cost per unit, they’re by making computation easy for tender.
 Quantum of idle time is minimized, as they workers will not be paid for idle time.
 Stimulates creativity among employees to find out improved methods.

Demerits
 Increased wastage of resources.

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 Continued use of machinery could lead to break down of machinery.
 Fixation of piece rate is not scientific, so not favored by employees.
 Poor quality output due to hasty production.
 Can generate rivalry among the workers, which can hamper the solidarity of trade
union.

GROUP DISCUSSION.

An engineer at MASCOM is paid differently from an engineer at ORANGE Botswana

Why is it that organisations in the same industry pay their employees differently even if
they do similar jobs

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 CHAPTER 6: INTRODUCTION TO INDUSTRIAL RELATIONS

6.0. Introduction
The relations between employers and employees has always been characterised by
conflicts and struggles. Class struggle is the conflict that exist between the employers and
employees regarding the sharing of resources and output from the production process
Not only do workers, through their trade unions play a key role in the redistribution of
wealth through collective bargaining over wages, but they are instrumental in the broader
socio-political struggle to transform society

6.1 Chapter Objectives

After studying this chapter, the student is expected to be able to:
 Define Labour Relations
 Discuss the role of the government in industrial relations,
 Explain role of employers and the employer organizations,
 Analyse the demands and influences of Employees and trade unions
 Discuss the major theories of labour relations

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6.2. Defining labour relations
Labour relations are a multifaceted, intricate and complex discipline that is characterised
by a number of salient futures (Venter, et al., 2009:4):
 Labour relations are all about dynamic interactions and occur within a particular
social, economic and political framework.

 Labour relationships must be contextualised within an environment.

 The labour relationship is a human relationship.

Labour relations may be described as a complex system of individual and collective
actions as well as formal and informal relationships that exits between the state,
employers, employees and related institutions concerning all aspects of the employment
relationship (Cronje, et al. 2004:238).
According to Budd (2010), labour relations are the study and practice of managing
unionised employment situations. In academia, labour relations is frequently a subarea
within industrial relations, though scholars from many disciplines, including economics,
sociology, history, law, and political science, also study labour unions and labour
movements. In practice, labour relations is frequently a subarea within human resource
management. Courses in labour relations typically cover labour history, labour law, union
organising, collective bargaining, contract administration, and important contemporary
topics.
We can then summarise that labour relations can refer broadly to any dealings between
management and workers about employment conditions. Most commonly, however,
labour relations refer to dealings between management and a workforce that is already
unionised, or has the potential to become unionised.

6.3 The origins of labour relations

Labour relations is a product of Industrial relations, which has its roots in the industrial
revolution which created the modern employment relationship by spawning free labour
markets and large-scale industrial organisations with thousands of wage workers
(Kaufmann, 2004). As society wrestled with these massive economic and social changes,
labour problems arose. Low wages, long working hours, monotonous and dangerous

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work, and abusive supervisory practices led to high employee labour turnover, violent
strikes, and the threat of social instability.

The Industrial Revolution or the Factory System occurred from the 18th to the 19th
century where major changes in agriculture, manufacturing, mining, and transport had a
profound effect on the socioeconomic and cultural conditions starting in the United
Kingdom, and then subsequently spreading throughout Europe, North America, and
eventually the world. The onset of the Industrial Revolution marked a major turning point
in human history; almost every aspect of daily life was eventually influenced in some
way.
The causes of the Industrial Revolution were complicated and remain a topic for debate,
with some historians believing the Revolution was an outgrowth of social and
institutional changes brought by the end of feudalism in Britain after the English Civil
War in the 17th century. According to Berlanstein (1992), some of these causes could be:
 The percentage of children who lived past infancy rose significantly, leading to a
larger workforce.

 The Enclosure movement and the British Agricultural Revolution made food
production more efficient and less labour-intensive, forcing the surplus population
who could no longer find employment in agriculture into cottage industry, for
example weaving, and in the longer term into the cities and the newly developed
factories...

 The colonial expansion of the 17th century with the accompanying development
of international trade, creation of financial markets and accumulation of capital
are also cited as factors, as is the scientific of the 17th century.

Some consequences of this era are that workers have been exploited and did not benefit
in the output of their labour. Impact and consequences of the Factory System were the
feeling of dehumanisation of workers. Workers found a new identity within the newly
emerging working class and began to organise themselves in supportive groups to voice

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their dissatisfaction of treatment from employers and management. This become the era
of collective bargaining.
Workers' groups have been around since the Middle Ages, in the form of professional
guilds for blacksmiths, carpenters, etc. These guilds established wage, product,
apprenticeship, and competition standards - many of which still exist today.
Workers began to agitate for more rights in their places of employment. Many skilled
trades started using their skills as bargaining tools to force their employers to meet their
workplace needs. Other workers relied on sheer numbers, creating general strikes to
protest poor working conditions. Several labour pioneers started to establish a collective
bargaining system so that labour negotiations could run more smoothly.
In organised labour/industrial relations, collective bargaining involves workers
organising together (usually in unions) to meet, discuss, and negotiate upon the work
conditions with their employers. Such bargaining normally results in a written contract
setting forth the wages, hours, and other conditions which the parties agree on for a
stipulated period.

6.4.The major theories on labour relations

6.4.1 The unitarist approach

This approach upholds that the organisation is a cohesive, unified unit comprising a
common set of values and goals subscribed to by all members. Authoritative management
styles are accepted as legitimate and the managerial prerogative is therefore rarely
challenged.
In unitarism, the organisation is perceived as an integrated and harmonious system,
viewed as one happy family. A core assumption of unitary approach is that management
and staff, and all members of the Labour Relations organisation share the same
objectives, interests and purposes; thus working together, hand-in-hand, towards the
shared mutual goals. Furthermore, unitarism has a paternalistic approach where it
demands loyalty of all employees. Trade unions are deemed as unnecessary and conflict
is perceived as disruptive.
From employee point of view, unitary approach means that:

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  Working practices should be flexible. Individuals should be business process
improvement oriented, multi-skilled and ready to tackle with efficiency whatever
tasks are required.

 If a union is recognised, its role is that of a further means of communication

between groups of staff and the company.

 The emphasis is on good relationships and sound terms and conditions of

employment.

 Employee participation in workplace decisions is enabled. This helps in

empowering individuals in their roles and emphasizes team work, innovation,
creativity, discretion in problem-solving, quality and improvement groups etc.

 Employees should feel that the skills and expertise of managers supports their
endeavours.
From employer point of view, unitary approach means that:
 Staffing policies should try to unify effort, inspire and motivate employees.

 The organisation's wider objectives should be properly communicated and

discussed with staff.

 Reward systems should be so designed as to foster to secure loyalty and

commitment.

 Line managers should take ownership of their team/staffing responsibilities.

 Staff-management conflicts - from the perspective of the unitary framework - are

seen as arising from lack of information, inadequate presentation of management's
policies.

 The personal objectives of every individual employed in the business should be

discussed with them and integrated with the organisation’s needs.

6.4.2 The pluralist approach

In pluralism the organisation is perceived as being made up of powerful and divergent
sub-groups, each with its own legitimate loyalties and with their own set of objectives

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and leaders. In particular, the two predominant sub-groups in the pluralistic perspective
are the management and trade unions. Consequently, the role of management would lean
less towards enforcing and controlling and more toward persuasion and co-ordination.
Trade unions are deemed as legitimate representatives of employees, conflict is dealt with
by collective bargaining and is viewed not necessarily as a bad thing and, if managed, it
could in fact be channeled towards evolution and positive change.

6.4.3 The Marxist approach

In contrast with pluralism, Marxism promotes:
 Organisations are all about wealth creation for the few – capitalism.

 Productive capacity and the fruits thereof must be owned and shared among the
people.

 Overthrow capitalism through social revolution should maintain.

 Trade unions are vehicles for fundamental societal change.

6.5 The parties to the employment relationship and their respective roles
The three parties who play an active role in labour relations, as we read above are the:
• state
• employer
• employee

6.5.1. The Tripartite Relationship

Labour relations are an all-encompassing term used to describe the dynamic complexities
of the various relationships between parties to the employment relationship. Primary
relationships are between individual employees and employers, or collectives and
individuals, or one collective body and another. The state, as a secondary role player, has
the role to create by legislation, a theoretical and practical framework, by means of which
the primary role players are regulated and governed.
Figure 6.1.The Tripartite Relationship in Labour Relations

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The tripartite relationship. Basically employees in managerial positions represent the
interests of the owners of business in the workplace. In the private sector this essentially
means safeguarding and improving the profitability of business. A trade union, on the other
hand, is a continuous, permanent organisation created by workers to protect their rights
themselves at work, to improve their working conditions through collective bargaining, to
better their quality of life, and to provide means of expressing their views on issues in society
 These three parties are known as a tripartite system. Figure 1.1and Table 1.1
illustrates the power, conflict and trust between them. The employers’ and
employees’ interests are generally common in that both try to achieve their goals
through the workplace. These goals are always interdependent because they
depend on the prosperity and continued existence of the workplace.
 The employers in other words want profit, while the employees are concerned
about wages and the government’s main objective is increased state revenue.
 The main objective for the worker was his wage, but as an individual he found
himself powerless against the owner or industrialist when it came to the
improvement of his earnings. It was difficult and even impossible to obtain an
increase in wages. In due course, the individual worker realised that other workers
had the same types of needs, and these common needs provided the basis for
workers to unite. Their large numbers gave them a power base and they could
comfort the owner with demands for the improvement of their wages and

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 conditions of service. Refusal by the owner could result in all workers stopping
work and the owner would run the risk of substantial financial loss before being
able to appoint and train new workers for the various jobs. Trade unions therefore
operate from a premise that unity is strength.
 Thus the first trade union came into being to regulate conditions of service.
 Gradually, the owner also came to realise that he would have to protect his own
interests by associating with other owners and to decide collectively on
comparable conditions of service for workers. Failing this, some owners would
draw all the skilled workers while other industries would experience shortages of
such skilled workers. In this way employers’ organisations were created.
 With the development of a united group of workers (a union) on the one hand, and
a united group of employers (employers’ organisations) on the other, the basis of
labour relations was established.
 The way in which the two parties commenced their joint regulation of wages and
conditions of service, was through negotiation, a concept which ultimately
became known as collective bargaining due to the collectivize (group of people)
organised by both employees and employers.
 In the meanwhile, a third party participant in this process began to make its
presence felt, initially in the background, but becoming increasingly involved.
This was the State. Eventually the role of the State changed to that of a neutral
arbitrator who merely laid down the broad rules for Labour Relations and saw to
it that the parties obeyed these rules.

6.5.2. Are the interests of employers and employees reconcilable

During the course of time various schools of thought have been established concerning
the struggle between employer and employee. Two main streams can be identified,
namely that which postulates that the interests are irreconcilable and that which
postulates that they are reconcilable. The reconcilability philosophy is embodied in the
labour relations situation, as we know it. In other words, we believe that management and
workers are able to resolve their conflicting interests and attain their individual goals
peaceably.

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The irreconcilable philosophy of Karl Marx stems mainly from the fact that there will
always be a conflict between owner and worker, since the owner appropriates all the
profits and exploits the worker, who is inadequately remunerated and ultimately revolts
against these circumstances to gain possession of the means of production.
Few ‘pure’ views exist in this regard and many systems are placed on a continuum
between reconcilable and irreconcilable. An example of reconcilable philosophy is when
workers realise, however, that they deserve a fair share of profits and that management
also has the workers’ interests at heart. The result is greater contentment in the labour
market. The following points should be borne in mind:
• The principles underlying the free organisation of workers and employers are pure
democratic principles.
• Recent history has shown the trade unions as independent organisations, can only
attain their objectives in a democratic political order. For example: It is
commonly accepted that a labour relations system is necessary in a democratic
country to reconcile the tension (or conflict) that exists between employer
(management) and employees.
It is acknowledged that this tension exists mainly in two areas. These threats relate to the
divergent aims of management and workers. The two theoretically distinguishable areas
are: Labour Relations
• The tension between labour and capital, alternatively between the profit motive
and higher wages, grouped together under the single concept of distribution of
income.

• The tension between management and the worker, which relates to the work
situation in which the hierarchy of command gives rise to tension – one individual
issues instructions while the other must execute these instructions productively in
accordance with predetermined rules or implied requirements.

6.6. Contract of Employment

A contract of employment comes into existence when, the employee enters into an
agreement with another, the employer to render personal services to and under the
control of the employer in return for remuneration.

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When you start working for someone, be it an individual or a company, you
automatically enter into an employment contract. As an employee, it is essential you are
familiar with the terms and conditions you have agreed to, and what implications these
have. If you do then encounter a dispute with your employer, you can be confident of
your legal position.

A contract of employment is an agreement between an employer and employee. This may

either be a written, verbal or an implied understanding. Either way, the contract is
intended to set out the particular terms of the rights, responsibilities and duties of both
employer and employee. This contract is the same with any other contract at common
law and general formalities you learnt in your law of contract must be complied
with i.e legal capacity, lawfulness, performance and certainty.

You enter into a contract as soon as commence work. The very fact you have started your
job is enough to indicate that you agree with the terms of employment, even if you are
not certain what these are. You are then bound to your employment contract until it
comes to an end, either because you have been given notice, or because you and your
employer have agreed to change the terms.

6.6.1.Terms of an Employment Contract.

The terms of an employment contract will differ in every case, and will be particularly
dependent on whether you are working under a fixed term contract, part-time contract, in
continuous employment or have flexible hours. However, if you do request a written
document of your contract - known as a 'principal statement' - then this should at the very
least contain:-

 The legal name of both employer and employee;

 The employee's job title, with a brief description of duties;
 The date employment commenced;
 Details of pay, how this has been calculated and when it is to be paid;
 Any entitlements - such as holiday leave and sick pay;
 The address of the place of work.

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6.6.2. Content of Employment Contract
Content is agreed by the parties however there are certain mandatory requirements
which any contract of employment must comply. The employer is obliged to reduce
the agreement into writing specifically the following:-

 The name of employee and designation and nature of the appointment.

 The date on which the appointment takes effect.
 The grade to which the person is appointed.
 Basic remuneration and the scale of remuneration.
 Whether remuneration is paid weekly, fortnightly or monthly.
 Cost-of-Living allowance, if any, and other allowances, if any.
 The period of probation or trial, if any, and the conditions governing such period
of probation or trail.
 Circumstances under which the appointment may be terminated during such pro-
bation or trial.
 Conditions governing the employment.
 Circumstances and conditions under which the employment may be terminated.

 Normal hours of work.

 . Number of weekly holidays, annual holidays, casual and privilege leave, which
such person is entitled to.
 Overtime rate payable.
 . Provision of medical aid, if any, by the employer.
 . The provision of and the conditions governing and provident fund, pension
scheme or gratuity scheme applicable to the employment.

6.7.Duties of Employers

Duty to provide work

Under common law, the employer is not under an obligation to provide work. Whether he
has provided work or not the obligation to pay remunerations remains but statute holds
that he should provide work.

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Exceptions – where an employee is paid on commission it will be fair and reasonable to
provide such an employee with work otherwise the whole purpose for paying on
commission will be defeated. See; Turner v Goldsmith [1891] 1 QB 544.
-where the failure to provide the employee with work amounts to lowering
the employee in his professional status and esteem then the employer is obliged to
provide work.
In terms of Section 16(1) of the Act, an employer shall provide work for his employees
and subsection 2 states that the employee should be paid even if they is no work given.

Duty to Respect Workers Right to Membership of TUs/ WC

Provided for in Section 4 of the Employment Act which gives employees the right to take
part in the formation, become member of and participate in the activities of a TU or WC.
“Yellow day” contracts that require an employee or prospective employee to give up
membership of a TU or WC in return for an offer of employment are void and unlawful.
Inversely this duty is the right of employees to membership of TUs or WCs and also
involves the employers duty to respect the workers right to democracy in the
workplace including eth right of access of TUs to workers or any interference with
workers committees.

(1) An infringement by the employer of this right constitutes an unfair labour practice
and an aggrieved employee may apply to the Ministry of Labour for an order directing
the employer to cease the infringement in question. An employee may also seek
damages resulting from the infringement. However remedies will be dealt with at length
when we do the next chapter of Remedies.

(2)Duty to Refrain From Forced Labour

Section 4A provides that no person shall be required to perform forced labour. See ILO
conventions ratified by Botswana especially Forced Labour Convention,1930 and the
Abolition of Forced Labour Convention 1957.

3) Duty to refrain from unlawful discrimination

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-An employer has a fundamental duty not to discriminate against employees or
prospective employee (here the Act protects job applicants) in regards to grounds
specified in in the Act i.e.Race , tribe place of origin, political opinion, colour, creed,
gender, pregnancy, HIV/AIDS status or any disability defined in Disabled Persons Act.
(a) discrimination on basis of sex was replaced with “gender and pregnancy” Gender
discrimination refers to the totality of discrimination which one suffers as a result of
biological and social factors.
(b) gender also- recognizes the different and legitimate needs of women arising out
of their biological and social differences and does not only restricts equality to equal
treatment with men.
(c ) college requirements forcing expulsion of pregnant students gvt colleges were
held as unlawful discrimination and contra bonos mores
(d) Dismissal of an employee on notice during maternity leave has been held to be
unlawful discrimination
1. discrimination against disabled persons in employment was prohibited
2. the new Act outlawed discrimination against an employee or prospective
employee on grounds of inter alia HIV/AIDS status
3. the Act also provides that no employer should neglect to pay equal
remuneration to male and female employees for work of equal value.
An infringement by the employer of these rights is an unfair labour practice and also a
criminal offence Section 5 (4) various remedies are provided for.
A discriminatory practice can thus be said to arise where there is:-
(a) More or less favourable treatment of one person versus another.
(b) That treatment is wholly or mainly attributable to race, tribe, place of origin, colour,
creed or gender of the person concerned. The Act in S 5 (7) allows certain defences to a
charge of discrimination and disqualifies others. There are situations when
discrimination is permissible
4) Duty to Adhere to Fundamental Fair Labour Standards
The Act provides protection of the employees right to fair labour standards and this
owes its origins to ILO conventions. One of the purposes of the Labour Act is to

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promote these fair labour standards. S 6 provides the following fundamental fair labour
practices which eth employer must adhere to:-

 Duty to adhere to prescribed maximum working hours: Contractual freedom of

the parties to contract on any hours they want has been modified. The Act does
not provide the maximum hours to be worked and these are specifically provided
for in (BAs and Regulations by the Minister. However it is important to note the
following:- may provide for payment of such overtime depending with
industry.
 Duty to comply with prescribed conditions of employment: Requirement of the
employer to receive the employee into service in terms of the employment
contract, CBAs and any relevant regulations. Employees should be given just and
favourable working conditions consistent with inherent human dignity.The duty
is a modification of the common law duty of the employer to provide worker or
receive the employee into its service in terms of the contract. Under common
law the employer is not required to provide actual work but to pay the due
remuneration.
 Duty to provide safe and healthy working conditions:This duty is also available
under common law and the one that appears in the Act is a codification of the
common law position and international labour standards provided for by ILO.
The Employment Act also authorizes employees to go on strike without heed
to formalities in order to redress an immediate occupational hazard. harmful
child labour and employment of any person under the age of eighteen years to
perform any work which is likely to jeopardize that person’s health, safety or
morals is also criminalized by the Act. CBSs provide a further comprehensive
framework of this duty.
 Every employer must ensure safety and safe working environment for his
employees. The employer must provide the employees with safety clothes such as
gloves, overalls, gumboots and helmets if they work in the construction industry
or factories where they can be exposed to some dangerous chemicals. The
Factories Act comes in handy in such cases to regulate this environment.

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  Duty of Equal protection of the law: Derived from international labour standards
and the constitution.

(5) Duty to pay the prescribed remuneration

This again is a codification of the common law duty of the employer to pay an employee
her/his wages.
Wages may be set in terms of minimum wage. The act requires that the particulars of
remuneration, benefits and bonuses be reduced into writing (pay slips). Deductions as
disciplinary measures may only be permissible if compelled by law.
On termination of employment contract for whatever case the employer is obliged
under the Act to pay the employee the wages and benefits due to him or her up to
the time of such termination including any outstaying vacation and notice period,
medical aid, social security and any pension entitlements. Such remuneration must be
paid as soon as reasonably practicable after such termination i.e normal interval period
of payment of any wages. It is an offence to withhold or unreasonably delay
payment of wages and benefits at termination

Rest periods
(1) Every employee shall be granted by the employer in every period of seven
Consecutive days a rest period comprising at least 24 consecutive hours, which period
shall ordinarily be or include a Sunday:
Provided that, where the employee is engaged on shift work, he shall be granted a rest
period comprising any period of 30 consecutive hours.
(2) Notwithstanding subsection (1), the Commissioner may, in writing or orally, exempt
any employer from the provisions of that subsection, for such period and subject to such
conditions as he may think fit and as are reasonable, having regard to the welfare of the
employees concerned, in the particular circumstances.
(3) Where the rest periods of an employee are or include days other than a Sunday, the
employer shall prepare or cause to be prepared a roster in respect of every month
specifying the employee's rest periods within that month and shall display the roster in a

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conspicuous place readily accessible to the employee not less than seven days
immediately before the commencement of the month in question.
(4) Any employer who contravenes this section shall be guilty of an offence and liable to
the penalties prescribed by section 151(b).
Payment for work during rest period
Any employee who works during a rest period, either by agreement with the employer or
on being required to do so under section 95, shall be paid at least double the wages he
would have been paid had the period been an ordinary working period, or at his option be
granted a day or days off, as the case may be, in lieu thereof.

Hours of work
(1) Except as hereinafter provided, an employee shall not be required under his contract
of employment to work-
(a) More than five consecutive hours without a period of rest which shall not be less than
30 minutes; or
(b) more than an ordinary working period of eight hours in any one day or more than 48
hours in any one week

Leave days
Every employer shall grant to every employee employed by him leave with basic pay at
the rate of not less than 1, 25 days per month.
(3) Of the 15 working days' leave earned in respect of any period of 12 months not less
than eight working days shall be taken no later than six months immediately after the end
of the period in respect of which the leave was earned.
(4) Any balance of leave not taken in accordance with subsection (3) may be
accumulated, year by year; but such leave shall not be accumulated for longer than three
years immediately after the end of the period in respect of which leave was first
accumulated, and at the end of that three years' period all the accumulated leave together
with all the leave earned in respect of the immediately preceding period of 12 months
shall be taken.

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(5) The leave for which this section makes provision shall be in addition to any public
holiday or weekly rest period in respect of which, by agreement or custom, the employee
is not required to work under his contract of employment and any period during which
the employee is absent from work owing to illness.
(6) Where a contract of employment is terminated by either party to the contract, the
employer shall pay to the employee his basic pay-
(a) in respect of any period of leave accumulated under subsection (4) or which has
otherwise accrued to him but has not been granted before the termination of the contract
of employment; and
(b) At the rate of 1,25 days in respect of every month or part of a month of continuous
employment after he last became entitled to leave under subsection (2).

Public holidays
Each of the public holidays specified in the Second Schedule shall be a paid public
holiday for the purposes of this section:
Provided that, within the mining industry alone, paid public holidays for the purposes of
this section shall be those public holidays customarily recognized by the industry as paid
public holidays.
(2) Where a paid public holiday falls on a rest day the day next following the rest day
which is not itself a rest day shall be deemed, for the purposes of this section, to be a paid
public holiday.
(3) Any employee who works on a paid public holiday or on a day observed as a public
holiday by virtue of the provisions of subsection (2) shall-
(a) be paid at least double the wages he would have been paid had the day been an
ordinary working day; or
(b) be granted a paid day off in lieu of that day within 10 days immediately thereafter.
(4) Subject to subsection (3), the employer shall pay to the employee his basic pay in
respect of every paid public holiday.

Paid sick leave

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(1) Any employee shall, after medical examination at the expense of the employer by a
medical officer nominated by the employer, or after medical examination at the expense
of the employee by a medical officer nominated by the employee, be entitled to such sick
leave as the medical officer concerned recommends, and shall be entitled to be paid his
basic pay for at least 14 days of such sick leave in any one year of continuous
employment.
(2) Any employee who absents himself from his place of employment on the grounds of
sickness shall-
(a) inform his employer of his absence as soon as it is reasonably practicable to do so;
and
b) where he is absent from his place of employment for 24 hours or more, provide his
employer, upon his return to his place of employment, with a certificate signed by a
medical officer or with other evidence to the employer's satisfaction accounting for the
entire period of absence.
(3) The employer shall pay to the employee his current basic pay for every day of paid
sick leave granted under this section.

Maternity leave
(1) A female employee shall give notice to her employer of her confinement by
delivering to him a written certificate signed by a medical officer or a registered nurse
and midwife certifying his opinion that the employee's confinement will probably take
place within six weeks immediately after the date of the certificate.
(2) On receipt of the notice under subsection (1), the employer shall immediately permit
the female employee in question to absent herself from work until her confinement and
thereafter he shall not permit or require her to return to work until the expiry of six weeks
immediately after her confinement.
(3) Within 21 days immediately after her confinement, a female employee shall inform
her employer of the date of the confinement by delivering to him a written certificate
signed by a medical officer or a registered nurse and midwife certifying that date.
(4) Notwithstanding subsection (2), where a female employee delivers to her employer a
written certificate signed by a medical officer or a registered nurse and midwife

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certifying his opinion that the employee is suffering from an illness arising out of her
confinement and is consequently unfit to return to work, the employer shall not permit or
require her to return to work until the expiry of eight weeks immediately after her
confinement.

(5) The employer shall pay every female employee whilst she is absent from work in
pursuance of subsection (2) or (4) an allowance of not less than 25 percent of the basic
pay she would otherwise have been entitled to receive or 50t for each day of absence,
whichever is the greater, and this subsection shall apply notwithstanding the provision of
any law for the time being in force relating to the determination and payment of a
minimum wage:

(6) When giving notice in accordance with subsection (1) or delivering the certificate to
her employer in accordance with subsection (3), a female employee may in writing
nominate another person to whom her maternity allowance shall be paid on her behalf
and any subsequent payment of the maternity allowance to that person shall be deemed,
for the purposes of this Act, to have been made to the female employee entitled to the
allowance

6.8 Duties of the Worker/ Employee

These duties arise from common law and statute though in the Labour Act they are not
clearly stated as duties of the employer.
These may be explained in the contract of employment, but the law also says that there
are certain obligations and duties owed by an employee to their employer, even if the
contract does not mention them. These include:
1. To do what a reasonable employee would do in any situation.
2. Duty to be honest.
3. Not to disrupt business, for example, taking part in industrial action.
4. Disclose wrongdoing (does not include "spent" convictions). But, the employee must
disclose wrongdoing by other employees, even if this will incriminate them.
5. Carry out and follow orders of the employer, (as long as they are legal).
6. Not to disclose the employer's confidential information.

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7. Work with reasonable care and skill.
8. Look after the employer's property if using it.
9. Not to compete in business against the employer while still working for them as an
employee.
10. Not to take bribes.
11. Be prepared to change when the job changes, for example, if computers or other
machinery are introduced to help the employee do their job.
12. Give any inventions to employer if these are developed by the employee during their
employment.

6.9 Industrial Disputes

Industrial Dispute means any dispute or difference between employers and employers or
between employers and workmen or between workmen & workmen, which is connected
with the employment or non-employment or terms of employment or with the conditions
of labour of any person”.

6.9.1 Causes of Industrial Dispute.

 Economic Causes
 Managerial Causes
 Political Causes
 Other Causes
 Economic Causes:-
 Low Wages
 Dearness Allowance & Bonus
 Heavy Industrial Profit
 Working Hours
 Poor working conditions
 Pre- supposition of economic loss, leading to forcible exit of employees
 Demand for extra fringe benefits.
 Managerial Causes:-
a. Non recognition of labour union
b. Defective recruitment & workers development policy. Contract System

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 c. Forced leave & discharge
d. Breach of collective bargaining settlement
e. Inefficient & defective leadership.

 Political Causes:-
a. Influence by politicians
b. Strikes against Government
 Miscellaneous:-
a. Sympathetic strikes.

6.10 Types of industrial disputes

 Strikes
Temporary cessation of work by a group of employees in order to express grievances or
to enforce a demand concerning changes in work conditions.
 Primary strikes: Against the employer against whom the dispute exists.
 Stay away: workmen stay away from the work place. They organize rallies&
demonstrations.
 Stay in/ Sit down: Workmen come for work, stay at the work place, but do not work.
 Tools Down/ Pen Down: the strikers lay down their tools, pens etc.
 Token / Protest Strike: Strike of very short duration. Signals the danger ahead.
Lightening or Cat- call strike: Strikers strike the work without any prior or with a
short notice.
 Work to rule: Workers undertake the work strictly according to rule.
 Picketing: Patrolling of the workmen in front of the premises of the employer.
 Boycott: Aims at disrupting the normal functioning of the enterprise.
 Gherao: Physical blockage of the target, by encirclement, intended to block the
regress & ingress of employer to & from the workplace.
 Hunger strike: Either by the leaders of the union or selected workers for a limited
period or up to the period of settlement of disputes.
 Secondary/ Sympathetic strike: Done against a third party, not against the direct
employer.

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 Lock out: Action of an employer in temporarily closing down or shutting down his
undertaking or refusing to provide his employees with work, with an intention of
forcing them either to accept demands made by them on him.

6.11 Effects or Consequences of Industrial Disputes

Positive effects: -
 Increased team spirit & unity among workers
 Improved working conditions & wages
 Better growth of trade union
 New labour laws, protecting the labourers are enacted by the government.
 Better code of conduct among the industrialists.
Negative Effects: -
 Losses incurred by the workers: -
 Loss of wages for the dispute period,
 Loss of career progress in future
 Loss Incurred by the Industrialist: -Loss of production, less profit, expensive efforts
to end the strike
 Loss incurred by the Consumers: - Non availability of goods in time, increased cost
of goods, prevalence of black markets
 Reduced National Income:-Due to shortage of production revenue
 Strained Labour Management Relations
 Change in Attitude of Employees: They get their demands fulfilled always by dispute

6.12 Methods for Prevention of Industrial Dispute

 Workers Committee: - Refer WPM
 Standing orders: - Rules and Regulations governing the conditions of employment of
workers, for satisfactory handling of various matters related to work, in the areas of
recruitment, discharge, disciplinary action, holidays etc.
 Wage Board: - Implemented by the government for each industry. The Board
examines the basic wage structure & suggest suitable changes & wage rates to be paid
for the workers.
 Voluntary Discipline Code: - From both the parties.

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 Collective Bargaining: -Process of negotiating a labour agreement including the use
of economic pressure by both the parties.
 Economic pressure from labour’s side: - Strikes, boycotts, gherao etc. from
Management
side: - Lock out, plant closure, replacement of strikers. Each side will have 4 – 6
representatives at the negotiating table. Chief negotiator for management side will be VP.
For trade union, it will be Local Union President.

6.13 Collective Bargaining

 It is a group action
 It has fluidity & ample scope for compromise
 It is a mutual give and take process
 It is a continuous process
 It is industrial democracy at work
 It is not a competitive process, but a complimentary one, as each party needs
something that the other has.

6.13.1. Principles /Essentials of C.B.

 There should be mutual confidence & good faith
 There should be honest, able & responsible leadership.
 Both the parties should be highly flexible in approach.
 Both the parties should meticulously observe and abide by all the national & state
laws.
 There should be enough bargaining power to enforce the terms of the agreement.
[ Bargaining Power:- the power of labour & management to achieve their goals
through economic, social or political influence.]

6.13. 2 Importance of Collective Bargaining

For Workers:-
 Protects Economic & Non economic interests of the workers.
 Better Employment Opportunities.
 Provides job security
 Avoids misconduct of the management

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 Boosts the morale & self confidence
 Brings in democracy
 Legal binding on employer
 Better emphasis on employee suggestions
For Management
 Maximum Utilization of HR
 Improved IR
 Reduces Strikes
 Enhances Goodwill
 Maximum Efficiency
Government
 Easy Implementation of Law
 Peaceful Settlement of Dispute

6.13.3 Items in Labour Agreement/ Collective Bargaining

Typical clauses will cover:
 Wage & Salary structure
 Vacations & Leave Rules
 Overtime & Shift wage rates
 Wage incentives
 Lay off & retrenchment terms
 Promotion, Demotion, Transfer terms.
 Union Security
 Safety & Health Facilities
 Schemes of Bonus
 Discipline & Disciplinary actions
 Workers participation in management.
Progressive Clauses
 Performance evaluation
 Elder Care Leave
 Flexi benefits
 Protection against hazards of technology equipment.

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 Grievance procedures
 No strike/ No lockout clause
 Safety procedure
 Severance of pay
 Seniority
 Pensions & benefits
 Out sourcing
 Limitations against Electronic monitoring
 Arbitration clause

6.14 Grievance
A complaint of one or more workers in respect of wages, allowances conditions of work,
interpretation of service stipulations, covering areas of overtime, leave transfer,
promotion seniority, job assignment, & termination of service”. [ILO]
Types of Grievances
Employee’s Perspective
 Concerning Wages
 Demand for individual adjustments
 Complaints of incentives
 Mistakes in calculation of wages
 Concerning supervision
 Complaints about discipline
 On individual advancement
 General working conditions
 Collective bargaining
Managements Perspective: -
 Indiscipline
 Go slow tactics
 Breach of terms
 4.Questionable methods of trade union.
A grievance procedure is essential because it brings uniformity in handling of grievances.

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Grievance Redressal Machinery
Open Door Policy:- The management asserts that no employee is prevented from going
directly & meeting the head of the firm
Principles of grievance redressal:
 Grievance should be settled at the lowest level
 He may appeal to the next person in the echelon of Management, in case he does not
get satisfaction from his immediate superior. [ 72 Hrs Lead Time]
 Grievance should be dealt quickly
 If the grievance is against any instruction issued by the superior, the instruction could
be carried out before the grievance can be considered.
 While the grievance is being investigated, both the parties should not do anything
which may prejudice the case.
External Machinery
 Mediation; An outsider assists the parties in their negotiation. It takes place with the
consent of both the parties. The mediator performs the messenger’s job for both the
parties & he neither imposes his will nor his judgement upon them. The main aim of
mediation is the settlement of disputes by bringing out a voluntary agreement.
 Mediation could be by
 An eminent outsider
 Non-Government Board
 3.Semi Government Board
 Conciliation: Process by which representative of both the workers & employers are
brought together before a third party, with a view to persuading them to arrive at
some settlement. It is an extension of collective bargaining with third party assistance.
The task of conciliator is to offer advice & make suggestions to the parties he is given
wide discretion for settlement. The conciliator tries to bridge the gulf between parties,
he advances possible lines of solution for consideration by the disputants. He
persuades both the parties to take a fresh look at the whole issue .When conciliator
fails to resolve the disputes, government can appoint a Board of Reconciliation. It is
an adhoc tripartite body with powers of civil court consists of a Chairman & 2 – 4
members nominated in equal numbers by parties of the dispute.

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 Court Enquiry; In case the conciliation proceedings fail to resolve a dispute, a court
of enquiry is conducted by the Government to investigate the dispute & submit the
report within six months. It is merely a fact finding body & it’s findings are not a
binding on the parties of dispute
 There will be a Chairman and 1 or 2 members
 Voluntary Arbitration; When conciliation proceedings fail to settle the dispute, the
conciliatory officer may persuade the conflicting parties to voluntarily refer the
dispute to a third party, known as an arbitrator, appointed by the parties themselves.
The arbitrator listens to both the parties & delivers a judgment on the dispute. He
does not enjoy judicial power. He submits his judgment on the dispute to the
government. Thereafter the Government publishes the award within 30 days of
submission. The award becomes enforceable after 30 days of its publication
 Compulsory Arbitration / Adjudication ;Ultimate remedy for the settlement of
disputes in India, here the parties are required to arbitrate without willingness on their
part.It consists of settling of disputes through the intervention of a third party
appointed by the government. An industrial dispute can be referred to adjudication by
the mutual consent of the disputing parties. The government can also refer a dispute
for adjudication without the consent of the parties.
The Industrial Dispute Act, 1947, provides a three tier adjudication machinery-
 Labour Courts
 Industrial Tribunal
 National Tribunal
Labour Courts
Consists of one independent person, who, is a judge of high court.
Labour courts deal with disputes relating to legality of an order, application &
interpretation of standing orders, discharge and dismissal of workers.
Industrial Tribunal
1. This is a one man adhoc body [Presiding officer], appointed by the Government. It has
a wider jurisdiction than a labour court. 2. Assessors are appointed to advise the presiding
officer.
Industrial Tribunal can adjudicate on the following matters:

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Wages including period & mode of payment, compensatory and other allowances, hours
of work & rests periods etc.
National Tribunal
One man adjudicatory body to be appointed by the Central Government, to deal with
disputes of national importance in such a way that industrial establishment situated in
more than one State are likely to be interested in or affected by such disputes.

References

Dessler, G. Fundamentals of Human Resource Management (4th Edition, Pearson)

Kramar, R, Bartram, T, De Cieri, H, Noe, R, Hollenbeck, J, Gerhard, B & Wright, P

2014, Human Resource Management, 5th Edition, McGraw Hill, Australia

M. Finnemore (2013) Introduction to Labour Relations in South Africa 10th edition

Butterworth LexisNexis

Sonia Bendix (2001) Industrial Relations in South Africa -Juta and Company Ltd,

GJ de J Cronje, GS du Toit, MDC, Motlatla and A de K Marais.( 2005). Introduction to

business management 6th Edition, Oxford University Press Southern Africa

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