Chapter 1

Concepts and Background of HRM

AN OVERVIEW

 A basic concept of management states that manager works in organizations.

 Organization has three basic components, People, Purpose, and Structure.
 HRM is the study of activities regarding people working in an organization.
 It is a managerial function that tries to match an organization’s needs to the skills
and abilities of its employees.

Let’s see what is meant by the three key terms… human, resource, and management.

• Human (Homo-sapiens – Social Animal)

• Resources (Human, Physical, Financial, Technical, Informational etc)

• Management (Function of Planning, Organizing, Leading & Controlling of

organizational resources to accomplish goals efficiently and effectively

Definition of Human Resource Management (HRM)

• HRM: the process of acquiring, training, appraising, and compensating employees, and of
attending to their labor relations, health and safety, and fairness concerns. ( Dessler, 2017)

• HRM is a strategic approach to managing employment relations which emphasizes that

people’s capabilities is critical to achieving sustained competitive advantage, this being
achieved through a distinctive set of integrated employment policies, programs and
practices.(Bratton and Gold)

• According to Edwin B Flippo, Human Resource Management is the planning, organizing,

directing and controlling of the procurement, development, compensation, integration,
maintenance and separation of human resource to the achievement or accomplishment of
individual, organizational and social objectives.

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The History/Evolution of HRM

1. Employees welfare stage: During 1900

• When welfare officers (sometimes called ‘welfare secretaries’) came into being.

• They were women and concerned only with the protection of women and girls.

Their creation was a reaction to the harshness of industrial conditions, coupled with pressures
arising from the extension of the franchise, the influence of trade unions and the labor
movement, and the campaigning of enlightened employers.

2. Personnel Administration stage: 1920-1930

• During the 1920s, jobs with the titles of ‘labor manager’ or ‘employment manager’
came into being in the engineering industry and other industries where there were
large factories, to handle absence, recruitment, dismissal and queries over bonuses
and so on.

• During the 1930s, with the economy beginning to pick up, big corporations in these
newer sectors saw value in improving employee benefits as a way of recruiting,
retaining and motivating employees.

3. Personnel Management: 1940-1960

• Personnel management as part of the drive for greater efficiency and the number of
people in the personnel function grew substantially.

• Employment management and welfare work had become integrated under the broad
term ‘personnel management’.

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4. Personnel/Human Resource Management: 1970-1980

• During the 1970s, specialisms started to develop, with reward and resourcing, for
example, being addressed as separate issues.

• Around the mid-80s, the term ‘HRM’ arrived from the USA.

• HR also appeared to emphasize employee commitment and motivation.

5. Human Resource Management: 1990

• Throughout the 1990s, economic background undergoes various drastic changes like
increase globalization, technological advance especially Internet, Web services, and
hectic rivalry.

The HRM function has turned into strategic in its importance and viewpoint emphasized on to
attract, preserve, and hold talented employees.

6. Strategic HRM: 2000

• The focus on ‘strategic fit’ and ‘strategic integration’ in the search for organizational
excellence.

• It embraces management aspects beyond the normal HRM functions and roles to take on
board all macro concerns and strategies for organizational excellence such as quality
management, organizational commitment, managing culture, organizational change and
development.

Features of HRM

• HRM is concerned with managing people at work- covers all levels of personnel
including blue collar employees and white collar employees

• It is concerned with employees both as individuals as well as group

• HRM is concerned with helping the employees to develop their potentialities & capacities
to maximum possible extent

• HRM attempts at getting the willing cooperation of people for the attainment of the
desired goals

• HRM is a continuous process

• Action & development oriented

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Scope of HRM

• Organizational planning, Development & task specification

• Staffing & Employment - Employees hiring

• Training & Development

• Compensation, wage & salary Administration

• Employees motivation & Incentive

• Employees Services & Benefits

• Employees Records

• Labor & Industrial Relation- welfare , Safety, Health

• Employees maintenance-The physical & mental health

Objectives of HRM

 Personal Objectives
o An employee does not come alone into the organization. He/she brings with
himself/herself abilities, attitude, behavior, personality etc... She/he has the objective
of enhancing his/her personal growth and seeks the organization for realization of this
personal growth.

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 On the other hand, organization needs employees for fulfillment of organization
objectives. There is an element of mutuality of interests here. Individual and
organization need each other for fulfillment of their objectives
- The satisfaction of the members of an organization through monetary & nonmonetary
devices
 Functional Objectives
The objective of HRM is to develop an effective HR function for development and
maintenance of human resource functions. HRM also has the objective of maintaining an
excellent HR culture.

This objective is to maintain the department’s contribution at a level appropriate to the

organization’s needs. Resources are wasted when HRM is either more or less sophisticated
to suit the organization’s demands. The department’s level of service must be tailored to fit
the organization it serves. Some of the supporting functions in relation to functional
objectives are appraisal, placement and assessment.

 Organizational Objectives

o HRM objective is to bring about the overall development and growth of the
organization. In other words, HRM is critical for development and growth of the
organization. How?

HRM enables the organization to acquire competent and qualified employees. It also
develops individual capabilities so as to attain organizational objectives. Besides, it ensures
that well qualified employees are retained and worked to satisfy goals of the organization.

It is not possible to think of organizational growth and development without HRM. Goals
of the organization are met by HRM - by effective motivation and excellent utilization of
employees.

HRM helps in utilizing effectively the available human resources. It also improves the
employees’ working skill and capacity. In addition, it provides healthy relationship
between different work groups so that work is effectively performed.

Thus, HRM is not an end in itself. It is only a means to assist the organization with its
primary objectives. Simply stated, the department exists to serve the rest of the
organization.

 Societal Objectives
- They relate to the satisfaction of community such as serving the customers honestly ,
promoting a high standard of living the community, bringing comfort and happiness
to the society, protecting women & children providing for aged personnel.

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 -Every organization faces the societal impact. HRM seeks to do maximum good to the
society and also tries to minimize the effects of the so-called social problems.
These social objectives are planned and needed to satisfy the ethical and social needs of the
society. HRM has the societal objective of doing well to society, complying with legal
formalities and building good industrial relations.

The failure of organizations to use their resources for the society’s benefit in ethical ways
may lead to restrictions. For example, the society may limit HR decisions through laws that
enforce reservation in hiring and laws that address discrimination, safety or other such
areas of societal concern. In this regard some of the supporting functions are legal
compliance, benefits and union-management relations.

In general, HRM provides healthy working environment through which it promotes

teamwork in the employees. It can help the organization in securing willing cooperation of
the employees for achieving goals of the enterprise and fulfilling their own social and other
psychological needs of recognition, love, affection, belongingness, esteem and self-
actualization. It also creates right attitude among the employees through effective
motivation.

Important of HRM

• The importance of the employee is acknowledged

• Create a platform for innovation within organizations

• Increase communication

• Define the performance of organizations

Key HRM Activities/Functions

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 Chapter Two

Environmental Challenges

Introduction

• The term 'environment' here refers to the "totality of all factors which influence both
the organization and human resources sub-system".

• It is desirable to know what the environment is and how it influences HR functions in

an organization.

• So, HR program in an organization does not operate in a vacuum. It is influenced by

and has influence on the external (outside the organization) and the internal (inside the
organization) environments.

The External (Macro-environmental) factors

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The external (macro-environmental) factors separately or in combination can influence the HR
function of any organization. The job of a HR manager is to balance the demands and
expectations of the external groups with the internal requirements and achieve the assigned goals
in an efficient and effective manner.

The external environment consists of such factors. Such as laws and regulations; economic
challenges; location; technological factors and labor market conditions.

1. Political-legal factors: The political and legal environment regulates employment and labor
relations while its impact is felt on human resource management as a given firm has to meet
the respective regulations including mandatory minimal wage, regulation of work time,
industrial safety specifications. One powerful, external environmental influence is
government law and regulations, which affect many organizations directly. The government
regulates and influences some aspects of personnel more directly than others.

The major areas of legislation and regulation include:

 Equal employment opportunity and human rights legislation, which directly affects
recruitment, selection, evaluation, promotion, employment planning, orientation, career
planning, training and development.
 Compensation regulation, which affects pay, hours of work, unemployment, and similar
conditions. Benefits regulation, which affects pension and retirement.
 Workers’ compensation and safety laws, which affect health and safety.
 Labor relations laws and regulations, which affect the conduct of collective bargaining.
 Privacy laws.

Therefore, laws and regulations have a direct effect in the management of HR. Legal issues
affect almost all aspects of HRM, from the initial recruitment and selection of applicants to their
discharge, retirement or lay off. In other words, there are almost no HR decisions that remain
unaffected by government rules and regulations.

2. Economic forces: An economic factor has significant impact on income conditions

determining the labor market value of an activity. There is a great amount of variation
between highly trained employees and those who are motivated by economic need even
risking under-employment in return for a salary.

Economic environment refers to all those economic forces, which have a bearing on the HR
function. The components of the economic environment are:-

 Growth strategy, Industrial production (productivity), Agriculture

 Population, National and per capita income,
 Money and capital markets,
 Suppliers, Competitors, Customers and Industrial labor

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3. Geographic location of the organization (Geographical Environment)
The location of the organization influences the kinds of people it hires and the HRM activities it
conducts. A hospital, plant, university, or government bureau located in a rural area confronts
different conditions than one located in an urban area. The geographical environment determines
the labor market and the employment options provided by a given region. Thus a region with
high unemployment requires different human resource strategies than one with a limited supply
of workers.
4. Technological changes: Technological change alters jobs, creates new skills, makes
occupations obsolete and revises what employees need to learn and to be trained to do.

Sometimes new technologies require new job designs.

For example, work teams whose members share responsibility for tasks may be more
appropriate than individual workers with separate responsibilities.

As far as employees are concerned the technological environment determines the desired
competences and skills while for employers it identifies software-related requirements for
maintaining connections with labor relation and taxation authorities.
5. Labor market conditions: The labor market also directly affects HRM programs.
Exchanges between employers and potential employees occur in the labor market.
Information is exchanged about opportunities, skills and requirements.
Like: - When there are more workers than jobs, employers find recruiting costs minimal.
The demographic environment indicates the size and composition of the section of the
population capable of productive work.

Impact factors related to the labor market

In the next section labor market theory concepts defining and impacting human resource
management will be described.
 From the macro-economical aspect the concept of the labor market can be defined as the
aggregate labor force supply of individuals and households as potential employees, and
the aggregate labor force demand of business organizations, enterprises, and institutions
as potential employers along with the respective correlations and the balanced or
unbalanced nature of the situation
 The labor market is the sum of exchanges between two actors of formally identical
status, the employer and the employee.

The aggregate sum of work force mobility on the labor market is called the allocation or re-
allocation of the work force. Thus the labor market is the allocation and re-allocation institution
of the work force.

The basic categories of the labor market are the following: wages, work force demand, and work
force supply. Wage is basically the price of the given work force. Wage has a significant role in

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the labor market as it determines relations between seller and buyer, which are employer and
employee respectively.

The analysis of the labor market starts with a work force supply and demand analysis as the
mutual relation between the two defines the respective balance or imbalance. The equilibrium
state of the labor market has a fundamental impact on human resource management as a firm can
freely select among candidates in case of excess supply, while in a labor market characterized by
excess demand (lack of qualified labor force) the acquisition of appropriate workers is difficult.

The contemporary status of the labor market influences salary expectations both for the employer
and employee. Factors shaping the labor market with an impact on human re-source management
include: − Population trends: the quantity and quality of the potential work force is one of the
main features of the labor market. The extent of worker supply and the respective qualifications
depend on con-temporary population trends.

Fig.2.2 Population trend in respective of workforce

The Fig.2.2 above reveals that the birth rate (fertility), the mortality rate, and the mobility or
migration figures play a significant role in shaping the work force supply. Demographic
examinations reveal that countries in the European Union experience a simultaneous aging and
decline of the population. The respective population loss can be attributed to natural causes. In
developed countries the population decline is offset or compensated by immigration. Hungary,
previously a sender country, has become a receiver and transit country by today.

− The composition of the population: the tracing of population according to age, gender, and
qualification is indispensable to effective human resource management.

6. Cultural Forces: Culture refers to the complex whole which includes knowledge, belief, art,
morals, laws, customs and other capabilities and habits acquired by an individual as a
member of a society.

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How does culture influence the HR function?

A. Culture creates the type of people who become members of an organization. Culture trains
people along particular lines, tending to put a personality stamp upon them. It is not that all
people are alike in a particular culture.

B. If the culture of the society promotes work, then tasks will be performed with interest,
dedication and pride.

C. Work ethics, achievement needs and effort-reward expectations, which are significant inputs
determining individual behavior are the results of culture. The social environment determines
employment-related customs, traditions, and motivations. i.e. certain people choose an
occupation based on traditions, and even generations can be employed at the same company.

2.2 The Internal Environment (Micro-environmental factors)

The internal environment also affects the job of a HR manager. The functional areas, structural
changes, specific cultural issues peculiar to a unit, HR systems, corporate policies and a lot of
other factors influence the way the HR function is carried out.

The HR manager has to work closely with these constituent parts, understand the internal
dynamics properly and devise ways and means to survive and progress. In addition to these, the
personnel have to grapple with the problem of workforce diversity.

Some of the internal factors include labor union, goals and policies of the organization,
organizational style, and nature of the task, work group, leadership style and experience.

1. Labor unions: A trade union (labor union) may be understood as an association of workers
formed to protect their own individual interests.
The presence of a union directly affects most aspects of HR activities. Because most of the
HR activities like recruitment, selection, training, compensation and separation - are carried
out in consultation with union leaders. The role of unions becomes pronounced when a new
wage agreement needs to be signed.

2. Organizational Goals: The goals of organizations differ within and between departments.
All departments probably have goals that include employee satisfaction, survival, and
adaptability to change. The differences arise in the importance the decision makers place on
the different goals.

For Example: -if some organizations, HRM-related goals are highly regarded by decision
makers. Thus, how much the HRM function is valued and how it is implemented is affected
by these goals.

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3. Organizational style: Some organizations for example, are likely to prefer more
formalized HRM policies, direct controls on employees; more direct job related training,
compensation policies tied to actual performance, and so on.
It seems reasonable to hypothesize that truly bureaucratic and truly participative
organizations would have different HRM policies. In these ways, the organization’s style
influences the HRM program.
4. Nature of the Task: Many experts believe that the task to be performed is one of the
most vital factors affecting HRM. They describe HRM as the effective matching of the
nature of the task with the nature of the employee performing the task.
5. Work Group: Groups play a major role in the life of an individual. Once a person joins
an organization, his or her experiences are largely influenced by a work group.

If the work group is effective and works with management, the manager’s job is easier,
and objectives are more likely to be achieved. On the other hand, if the group is working
against the manager, an effort must be made to change the group’s norms and behavior
by the use of the manager’s leadership, discipline, and reward powers, or by the transfer
of some group members.
Therefore, work groups are directly related to the success of HRM activities. Examples of
HRM activities in this regard are incentive compensation, profit sharing, and safety and
labor relations.
6. Leadership style and experience: The experience and leadership style of the operating
manager/leader directly affects HRM activities because many HRM programs must be
implemented at the work unit level. Thus, the operating manager–leader is a crucial link
in the HRM function.

Leaders must demonstrate distinctive skills, experiences, personalities and motives of

individuals. They must also facilitate the intergroup interactions that occur within work
groups. In his/her role a leader provides direction, encouragement, and authority to evoke
desired employee behavior. In addition, leaders reinforce desirable behavior so that it is
sustained and enhanced.

The leader is an important source of knowledge about the tasks, the organization, the
HRM policies, programs and goals. The experience and operating style of a leader will
influence which HRM program are communicated, implemented and effective.

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 Chapter Three
Human Resource Planning and Job Analysis

Meaning and Definition of Human Resource Planning

Introduction
The concept of human resource planning
One of the planning tasks within human resource management is the determination of the size of
a workforce required for the fulfillment of various tasks. The respective schedule is called work
force or staff size plan. The main objective of work force planning is the provision of adequately
qualified labor force in an appropriate number for the proper work area at the proper time.

The perspective or vision of an enterprise is determined by its mission statement including the
principles a given company must implement regarding its environment and staff. Human
resource planning must take the mission statement into consideration.

Human resource planning /or staff size planning aims to provide a staff with adequate number
and composition facilitating the realization of organizational objectives in a desired time frame,
quantity, and ability scale.
Definition of Human Resource Planning (HRP)
 The process of forecasting an organization’s future demand for, and supply of, the right type
of people in the right number. It facilitates the realization of the company’s objectives by
providing the right type and the right number of personnel.
HRP is accomplished through analysis of
Internal factors, such as current and expected skill needs, vacancies and departmental
expansions and reductions and
Factors in the environment, such as the labor market.
 The process through which management determines how an organization should move from
its current work force position to its desired work force position. Through planning
management strives to have the right number of people, the right kind of people, at the right
place and at the right time.
 A strategy for acquiring, utilization, improving and preservation of Human resources.

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 It is the process of forecasting an organization’s human resource needs and developing
effective action plans to fulfill those needs.
Activity
What are the reasons for HRP?
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There are three fundamental reasons for human resource planning. Such as:-
1. It allows for more effective and efficient utilization of the firm’s personnel, accurate
forecasting effort
will helps to alleviate overstaffing and understaffing problems.
2. Human resource planning enhances worker satisfaction and employee development efforts.
3. Planning allows equal employment opportunities for all compliances through planning efforts.
More effective and efficient use of human resources may result increase in productivity.
The phases of the staff or work force planning process
The staff or work force planning process includes the following phases: forecasting labor force
demand, forecasting labor force sup-ply, and action plans for the elimination of respective
discrepancies.

Fig. the phases of work force planning

Work force demand (work force need) forecasting is the ascertaining a staff size facilitating the
implementation of the organizational strategic goals in a most effective manner. Labor force
demand can be influenced by several internal factors including the applied technology, the main
features of the production process, technological developments, the prevalence of mass
production, and the respective support service activities Staff or work force forecast can be
performed with the following methodology:

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Labor force demand can take the form of:
− Supplementary needs referring to filling vacant positions
− expansionary needs in case of new work areas created to offset an inadequate staff number, in
other words increasing staff size.
Forecasting labor force supply
Following the establishment of the necessary staff size, the acquisition process for the
appropriate labor force has to be planned. The planning process has two main aspects, internal
and external labor force supply.

Fig .Sources of labor force supply

Action plan (for the elimination of discrepancies)
Labor force demand and supply are rarely balanced

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Forecasting labor force demand, Forecasting labor force supply, Discrepancies, surplus,
deficiency, end of the process,
Action plans for the elimination of discrepancies. The two forecasts can be identical or can show
two types of discrepancies surplus or deficiency. In both cases action plans have to be developed
for dealing with the problem. If there is no discrepancy, the given process can still be continued
as quality exchange can take place within the work force or staff.
Following the comparison of work force demand and supply the action plans aiming at
reconciliation or harmonization can take the form of:
− Action in case of balanced demand and supply: Although both sides appear identical,
structural or geographical differences can still occur. The respective actions could include
transfers, retraining, or quality-based staff exchange.
− Action in case of insufficient staff size: hiring, employee recall, re-hiring, re-training,
entrepreneur contracts, work force borrowing, increasing productivity, overtime, increasing part
time hours.
- Action in case of surplus staff size: hiring freeze, natural attrition, early retirement incentives,
re-training, decreasing work hours, and terminations, mass downsizing.

HR forecasting Techniques

Techniques used to perform demand and supply forecasts fall into two broad categories:
1. Qualitative techniques
2. Quantitative techniques

1. Qualitative techniques
Qualitative forecasts are essentially educated guesses or estimates by individuals who
have some knowledge of previous HR availability’s or utilization
a. Management judgment
 This technique is very common technique of demand forecasting.
 This approach is applied by small as well as large scale organizations.
 This technique involves two types of approaches are ‘bottom-up approach’ and ‘top-down
approach’.
 Under the ‘bottom-up approach’, line managers send their departmental requirement of
human resources to top management. Top management ultimately forecasts the human
resource requirement for the overall organization on the basis of proposals of departmental
heads.
 Under ‘top-down approach’, the top management forecasts the human resource requirement
for the entire organization and various departments. This information is supplied to various

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 departmental heads for their review and approval. However, a combination of both the
approaches ‘participative Approach’ should be applied for demand forecasting. Under this
approach, top management and departmental heads meet and decide about the future
requirement. So, demand of human resource can be forecasted with unanimity under this
approach.
b. Nominal Group: A group of four or five participants is asked to present their views regarding
labor forecasts. These views are written down, with no discussion until all of the members have
advanced their positions. The group then discusses the information presented and, subsequently, a
final ballot is taken to determine its judgment.
c. Delphi Technique:
 This technique calls for a facilitator to solicit and collate Written, expert opinions on labor
forecasts.
 Experts never meet face-to-face, but rather communicate through the facilitator.
 The HR experts collect manpower needs, summarize the various responses and prepare a
report.
 This process is continued until all experts agree on estimated HR requirement.
 Similar to the nominal group technique but differs in one manner.
 The nominal group technique entails minimal action from experts only providing the
solution.
 The Delphi technique calls for a facilitator to solicit and collect expert opinions on
labor forecasts.

d. . Replacement Planning:
 Forecasting estimates are based on charting techniques, which identify current job incumbents
and relevant information about each of them.
 This information typically includes a brief assessment of performance and potential, age length
of time in current position, and overall length of service.
e. . Allocation Planning:
 This technique involves judgments about labor supply or demand by observing the movement
of employees through positions at the same organizational level.

2. Quantitative techniques
There are several quantitative methods for determining labor supply and demand
 Regression Model: Fluctuations in labor levels are projected using relevant variables, such as
sales.
 Time-Series Model: Fluctuations in labor levels are projected by isolating trend, seasonal,
cyclical, and irregular effects.
 Economic Model: Fluctuations in labor levels are projected using specified form of the
production function.
 Econometrics Models: These models are based on mathematical and statistical
techniques for estimating future demand.

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  Under these models relationship is established between the dependent variable to be
predicted (e.g. Manpower /human resources) and the independent variables (e.g.
sales, total production, workload, etc).Using these models, estimated demand of
human resources can be predicted.
5. Ratio-Trend Analysis
 Demand for manpower /human resources is also estimated on the basis of ratio of
production level and number of workers available.
 This ratio will be used to estimate demand of human resources.
6. Linear Programming Model
 Fluctuations in labor levels are analyzed using an objective function as well as organizational
and environmental constraints.
 To solve a problem through linear programming is to find the solution of an objective
function based on several constraints. Application of linear programming is wide scope,
from transportation problems, assignment problems to human resources planning.
 The most popular technique of operations research which is used for solving problems
in the short term planning.
 That is why linear programming is suitable to human resource planning as far as the
problems have only one objective.

7. Markov Model:
Fluctuations in labor levels are projected using historical transition rates.
 A dynamic forecasting model and has become a fundamental quantitative analysis
technology in human resource forecasting.
 Using this model, the HR department creates a list of employees’ skills, education,
training, work experience, qualifications, ability levels, etc.
 They maintain reports in a timely manner and regularly update the status of the
workforce to keep a check on the future talent and skill demands.
 This report allows HR leaders to fully forecast demand probability and the number of
possible internal hires and transfers, then forecast the internal supply of human resources
available within the organization.
 Transition probability matrix is developed to determine the probabilities of job
incumbents remaining in their jobs for the forecasting period.
 A transition matrix, or Markov matrix, can be used to model the internal flow of
human resources.
 These matrices simply show as probabilities the average rate of historical movement
from one job to another.
The Figure below presents a very simple transition matrix. For a line worker, for example, there
is a 20% probability of being gone in 12 months, a 0% probability of promotion to manager, a
15% probability of promotion to supervisor, and a 65% probability of being a line worker this
time next year. Such transition matrices form the bases for computer simulations of the internal
flow of people through a large organization over time.

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8. Work-study technique:
 This technique is also known as `work-load analysis`, time or motion study are used to
analysis and measure the work being done.
 It required standard time required per unit of work is decided.
 This method is applicable only repetitive and manual job.

CHOICE OF A FORECASTING TECHNIQUE

 Forecasters can choose either the qualitative or quantitative techniques. Also, they can
combine them.
 The assumption is that a pattern exists concerning the predictors of labor supply or demand.
 In choosing a forecasting technique, the following factors should be considered.
1. Organization's environment:
 Jackson and Schuler observe that organizations operating in fairly stable environments may be
able "to quantify the expected values of variables in their models, which means they can use
statistical forecasting models."
 Conversely, for firms operating in unstable environments, quantitatively based predictions are
likely to be highly tentative, since "both the variables and their expected values are difficult to
specify accurately by replying on historical data".
2. Organization size
 Stone and Fiorito suggest that larger organizations tend to use more sophisticated, quantitative
techniques than do smaller ones.
 According to them, this relationship is particularly strong among government, mining, forestry,
transportation, communications, and utilities organizations, which traditionally have had high
internal stability due to low turnover among their employees
3. Perceived uncertainty in labor markets and economy:
 In particular, "more sophisticated techniques will be discontinued if perceived uncertainty
increases to a point where techniques are no longer feasible, or if perceived uncertainty decreases
to a point where techniques are no longer needed" (Stone and Fiorito, ; Rowland and Summers).
4. Competition.
Organizations in industries that are regulated, operate within predictable product markets, and acquire
resource slack tend to use similar forecasting techniques ( Doeringer et al., Fiorito et al., ; Moore and
Reichert, ; Vatter ).
In sum, these factors suggest that different types of organizations must approach it differently

Importance of Human Resource planning

Importance of human resources planning specially to large organization includes the following:
1. Improves the utilization of human resources
2. Effectively match personnel activities and future organizational objectives
3. Alternative economies in hiring new workers

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4. Expand the human resource management information base to assist other personnel activities
and other organizational units
5. Make major and successful demand and local labor market
6. Coordinate different human resources management programs such as affirmative action plans
and hiring needs.
Steps [procedures] in Human resource Planning
Human resource planning process can be summarizing in the following ways:

Factors Affecting Human Resource planning

It is clear that HRP is developed on the basis of the organization’s strategic plan which is
prepared after a detail examination (analysis) of external and internal environments. Therefore,
since HRP is one of the reduced aspects of strategic plan, it is affected by various factors. The
more important of them are:
1. Type and strategy of the organization:The strategic plan
 decides the strategy to be followed:- Reactive or proactive strategy
 determine the breadth of HRP- a narrow focus or broad focus approach
 decides the formality of the plan (is a plan formal or informal)
 decides on flexibility- (flexible or inflexible plan)
2. Organizational Growth cycles and planning: Organizations can be at embryonic stage,
growth stage, maturity stage or declining stage. Thus,
Embryonic stage – there may not be Human Resource Planning
Growth stage – forecasting of employees and internal development of people can be essential
Decline stage- planning focus on layoff, refreshment and retirement
3. Environmental Uncertainties: Both external and internal factors are not stable

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4. Time Horizon: Plans can be short term or long term. For example, a plan for computer
related organization can be short term but plans for universities can be long term. This is due
to the stability of circumstances in each institution.
5. Type and Quality of information: Organization operate in stable environment are in a
better position to obtain comprehensive, timely and accurate information. ?
6. Nature of the job: It is necessary to anticipate vacancies, as far in ad have as possible, to
find out suitable individual.
Group discussion points
How the above listed conditions affect human resource planning?
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What is job analysis?

Job Analysis Terminologies

Human Resource: It is total knowledge, skills, creative abilities, talents, aptitudes of

organization’s work force.
Job is a work which may consists of a group of positions or even one position, for carrying out
the tasks pertaining to the job. It comprises of work, method, organization and personnel content.
It is collection of tasks that can be performed by employees; It may include many positions
similar in nature. It may include many positions with definite title.
Position: It is Collection of tasks and responsibilities regularly assigned to one person.
Tasks: A coordinated and aggregated series of work elements used to produce an output-service
or product.
Job Analysis: Is the process of defining a job in terms of jobs or tasks or and behaviors. It is a
system by which pertinent information is obtained about the job.
Job Design: Is division of total task to be performed into the manageable and efficient units-
positions, depts., and divisions and then provide proper integration (horizontal or vertical in the
organizational structure.)
Job Family: It is group of two or more jobs that either call for similar worker characteristics or
contain parallel work tasks as determined by job analysis
Duty፡ It is an obligation for a worker to do a job as part of a legal or moral reason. It specifies
the different tasks needed to be performed as part of a job. For instance, issuing reservation

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forms, collecting the filled-in forms together with the money, booking reservations, and
tendering the reserved tickets along with the balance money are the duties of a reservation clerk.
Occupation ፡ it is something that engages the time, thought and attention of an employee. It
refers to the common categories of jobs. These jobs are usually similar in nature with common
job features.
Career፡ It broadly refers to an employee’s progression in his or her work life. It indicates the
Definitions of Job Analysis
 A systematic procedure for gathering, analyzing and documenting information about
particular jobs.
 The corner stone of HRM, because the information it collects serves so many HRM
functions.
 Involves developing a detailed description of the tasks involved in the job, and ascertaining
the knowledge, skills, and abilities necessary for an employee successfully perform the job.
The process of job analysis provides the following information:
Work activities: exactly what is being done and achieved including processes and procedures
used Job context: this specifies the working conditions, including physical setting, supervision,
and work schedule, incentives, and motivations, social environment of workplace, job hazards or
any other discomforts.
Performance expected: this may be expected output in quantity or quality.
 This performance may also be measured in terms of error analysis as to the percentage of
errors (as in typing, for example), work standards, time required to complete each unit of
the job, knowledge used or services performed
Required personal attribute : This involves required educational background, skills, training,
experiences, physical strength coordination or dexterity, aptitude, any other attributes required
for the job.
The outcome (categories) of job analysis
a) Job description Job
Description basically indicates the task, duties, and responsibilities of job, it specifies in a
written form of what is done, where it is done, and briefly, how it is done.
Job description describes the job and not the employee. It is prepared for job, irrespective of
who is placed on it.

22
Job description provides both organizational information (location in structure authority, etc.)
and functional information (what the work is).
Job description is a systematic, organized and written statement of “what, when, where, how and
why,” and is a tangible outcome of job analysis. It also describes the work to be performing, the
responsibilities and duties involve and conditions under which the work is performing.
Activity
Explain the concept of work area analysis/evaluation?
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Work area evaluation is a process ascertaining the relative weight or importance of the work
areas found within an organization.

During work area analysis the various work areas are compared according to their importance
and ranked according to their ability of contributing to the realization of organizational goals.
Based upon the respective work area allocation categories can be established in order to
guarantee the internal homogeneity of the categories, that is work areas of similar value would be
placed within one group. At the same time attention must be paid to the separation of work areas
allocated into different groups.
The goal of job description:
The recording and systematization of separable and repeated activities within a given
work area
Establishing clear boundaries between the given work areas
The recording of the conditions and main characteristics of the work performance

23
Fig. Participants in the job description preparation process, and the respective influencing factors
Activity
When should job descriptions be prepared?
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Job description prepared when:-
- In case of the elaboration of a new work area
- Before starting new job operations and tasks (expansion and enhancement) the job descriptions
have to be updated.
Job description generally contains the following data:
1. Job identification: it includes job title, code number of the job (if any), the department or
divisions to which the job belongs etc.
2. Job Summary: it is a brief summary, in one or two sentences, explaining the contents of the
job, its hazards or any other specific aspects.

24
3. Duties performed: it is a comprehensive listing of the duties together with the importance of
each duty and the percentage of time devoted to each major duty included and any other
additional responsibilities like custody of money, training of subordinates etc.
4. Supervision: if supervision is required, then it gives the number of persons to be supervised
along with their job titles and the extent of supervision involved and whether it is general
supervision or close supervision
5. Machines, tools, and equipments used: this will include the type of machinery handled and
the type of raw materials used.
6. Working conditions: it gives as the working environment in which the jobholder must work.
Here are listed any special working conditions in terms of cold, heat, noise levels, and any other
hazard that might pose a risk to life and the probability of such hazard occurring.
b) Job Specification
It is the analysis of what kind of trait and experiences needed to perform the job. It describes
the individual traits and characteristics required to perform the job well. Job specification
translates the job description into terms of the human qualification, which is required for a
successful performance of a job. It is intended to serve as a guide in hiring and evaluation.
Job specification is relates to
a) Physical characteristics: which include health, strength, endurance, age-range/ body size,
height, vision, voice, etc?
b) Psychological characteristics or special aptitudes: this includes such qualities as mental
dexterity, aptitude, judgment, resourcefulness, analytical ability, mental concentration and
alertness.
c) Personal traits of temperament: Such as personal appearance, good and pleasing manners,
emotional stability, aggressiveness, or submissiveness, extroversion or introversion etc
d) Responsibilities: which include supervision of others, responsibility for production, process
and equipment: responsibility for the safety of others. e) Other features of a demographic nature:
these are age, sex, education, and experience and language ability.
Steps in Job Analysis
Job analysis is performed in three conditions
1. When the organization is established / instituted;
2. When new jobs are created; and

25
3. When jobs are changed significantly as a result of new technology, methods, procedures or
systems.
In general, job analysis involves the following steps
Step 1 .Identify how information will be used
Identify the use to which the information will be put, since this will determine the types of data
you collect and how you collect them.
Some data collection techniques like interviewing the employee and asking what the job entails
and what his responsibilities are - are good for writing job descriptions and selecting employees
for the job.
Step 2.Review background information
Review relevant background information such as organization charts, process charts, and job
descriptions.
The chart should identify the title of each position and, by means of its interconnecting lines,
show who reports to whom and with who the job incumbent is expected to communicate.
Step 3 .Select representative positions to be analyzed
This is done when many similar jobs are to be analyzed and it is too time-consuming to analyze
each and every job in the organization.
In other words, a representative sample of jobs needs to be selected since it is usually too costly
and time consuming to analyze every job.
Step 4 .Collect data to analyze job
This step involves the use of acceptable job analysis techniques. The techniques are used to
collect data on the characteristics of the job, the required behaviors, working conditions, and the
employee characteristics needed to perform the job
Step 5 . Review information with incumbent
The job analysis information should be verified with the worker performing the job and with his
or her immediate supervisor. This will help to confirm that the information is factually correct
and complete. This "review" step can also help gain the employee's acceptance of the job
analysis data and conclusions by giving that person a chance to review and modify description of
his or her job activities.

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Step 6 .Develop Job Description/Job Specification
Develop a job description and job specification. A job description and a job specification are
usually two concrete products of the job analysis.
Job description is a written statement that describes the activities and responsibilities of the job,
as well as important features of the job such as working conditions and safety hazards.
Job specification summarizes the personal qualities, skills, and background required for getting
the job done; it may be either a separate document or on the same document as the job
description.
Methods of Collecting Job Analysis Information
Information about job analysis can be gathered in several ways. The major methods of data
collection for job analysis are:
a. Observation: This method involves the observation of a number of jobholders how they
perform their jobs and simultaneously recording the observations systematically. A narrative
form or a checklist may be use for recording the observations.
b. Questionnaires:
It is an effective way to collect a large amount of information in a short period.
Because of the lack of face- to- face contact between the analyst and respondent to
questionnaires, the analysts are advised to take a maximum care in designing the questionnaires.
It includes specific questions about the job, job requirements, working conditions and
equipments.
c. Interview:These methods overcome the problems of observation method. Under this
method, the individual who collects job information interviews the incumbents and his
supervisor. This method gives an opportunity to record both mental and physical activities.
An advantage of this method is that jobholder will made an active participant in the
information gathering process. Sometimes the jobholder might give an exaggerated picture of
his job.
Another major advantage of this method is that the job incumbent can ask questions with the job
analyst and the interview serves as an opportunity for the analyst to explain how the job analysis
knowledge and information will be used.. This method is time consuming and costly than other
methods.

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Importance of Job Analysis Information
Job Analysis provides answer to questions such as:
How can be a job designed or structured so that employee performance can be enhanced?
What kind of Person (Traits and experience) is best suited for the job?
How much time will take to complete important tasks.
Which kind of behavior will need to perform the job?
Which tasks are grouped together and to consider a job? Etc.
Job analysis provides information for many HR activities:
Human resource planning: The number and the type of personnel are determined by the jobs
that need to be staffed.
Recruitment and Selection: Job analysis provides information about what the job entails and
what human characteristics are required to carry out these activities. Such job description and job
specification information is used to decide what sort of people to recruit and hire. To carry out a
selection process, you need to know the tasks to be performed and the qualifications
requirements to perform the work satisfactorily.
Job evaluation: The relative worth of each job is determined on the basis of job descriptions
and job specification.
Compensation: Job analysis information is also essential for estimating the value of and
appropriate compensation for each job. This is so because compensation (such as salary and
bonus) usually depends on the job's required skill and education level, safety hazards, degree of
responsibility and so on-all factors that are assessed through job analysis. Job analysis provides
the information determining the relative worth of each job so that each job can be classified.
Thus, job evaluation helps determine wage and salary grades for all jobs.
Ensure Complete Assignment of Duties: Job analysis is also useful for ensuring that all the
duties that have to be done are in fact assigned to particular positions.
Training: Job analysis information is also used for designing training and development
programs because the analysis and resulting job description show the skills-and therefore
training-that are required.
Performance Appraisal: A performance appraisal compares each employee's actual
performance with his or her performance standards. It is often through job analysis that experts
determine the standards to be achieved and the specific activities to be performed. Job analysis

28
provides standards for performance in relation to which actual performance of an employee is
compared and assessed.
Safety and Health: In job analysis, it is possible to identify hazardous conditions and unhealthy
environmental factors (such as heat, noise, fumes, and dust).
Discovering unassigned duties: Job analysis can also help reveal unassigned duties.
Potential Problems with Job Analysis: While carrying out the job analysis, managers must take
note of certain strong behavioral responses from the employees. Employees may not always like
the idea of someone taking a hard look at their jobs. Thus, frequently encountered problems
associated with the job analysis are the following:
A. Employee fears: Most employees’ fear that job analysis efforts may put them in a 'Straight
Jacket', limiting their initiative and inability. Another reason for the negative attitude is the
feeling that "as long as someone does not know precisely what I am supposed to be doing,
then I am safe".
B. Resistance to change: When jobs change in tune with changes in technology, there is an
urgent need to revise job descriptions and job specifications-to make them more meaningful.
This would have a significant impact on the safe and secure job worlds, employees used to
live comfortably. Employees resist such changes because when jobs are redefined, they may
have to handle difficult tasks and shoulder painful responsibilities. To ward off such threats,
managers must involve employees in the revision process, stating the reasons for
incorporating latest changes clearly.
C. Overemphasis on current employees: Job analysis efforts should not place heavy emphasis
on what the employees are currently doing. Some employees may be gifted with unique
capabilities and given a chance they may expand the scope of the job and assume more
responsibilities. The company may have difficulty in finding someone like that person if he
or she were to leave the company. Therefore, "the job description and job specifications
should not be merely a description of what the person currently filling the job does".
D. Management’ Straight Jacket: Job analysis efforts may put managers in a ‘straight jacket',
limiting their freedom to adapt to changing needs from time to time. To avoid this, they may
even refuse to appropriately describe what an employee is supposed to do in the company.

29
E. Top management support is missing: Top management should at least make it clear to all
employees that their full and honest participation is extremely important to the process.
Unfortunately, this message is often not communicated.
F. Only a single means and source are used for gathering data: There are many proven
methods for gathering job data. All too often combination of methods might provide better
job data. However, people use single method in collecting the data.
G. The supervisor and jobholder do not participate in the design of the job analysis
exercise: Too many analyses are planned and implemented by one person who assumes
exclusive responsibility for the project..
H. No training or motivations for jobholders: Job incumbents are potentially a great source
of information about the job. Unfortunately, they are seldom trained or prepared to generate
quality data for a job analysis. Without proper training and preparation, employees may
submit distorted data – either intentionally or not.
I. Employees are not given sufficient time to complete the analysis: Usually a job analysis is
conducted as if it was a crash program and employees are not given sufficient time to do a
thorough job analysis.

Chapter Four
Recruitment

4.1 Recruitment
What is recruitment?
Recruitment is the process of attracting applicants who may comply with the criteria of a
position to be filling an organization.
Recruitment is the process of attracting and discovering potential applicants for actual or
anticipated organizational vacancies.
According to Werther and Davis definition “Recruitment is the process of finding and attracting
capable applicants for employment. The process begins when new recruits are sought and ends
when their applications are submitted.

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4.2 Purpose of Recruitment
The purpose of recruitment is to invite in a relatively effective manner a pool of job applicants
who are potentially qualified to do a particular job.
Purposes or Uses for proper recruitment
a) Greater productivity: when the recruitment is scientific, productivity increase
b) Better moral: When the recruitment is proper, the morale of the work force will be high.
c) Better public image: when an organization employs a scientific method, it can get better
reputation from the public.
d) Lower turnover: when the recruitment is proper, there will be better job adjustments, and
then labor turnover will be lower.
4.3. Factors governing /Influencing Recruitment

Different factors in internal or external environment can influence the effectiveness of recruiting
process in negative manner and can become hurdles in recruiting process.

They mainly include:

I. Image of the Organization: If employees believe that their employer deals with them fairly,
the positive word-of-mouth support they provide is of great value to the firm. It assists in
establishing credibility with prospective employees.

Image of the organization is mainly assessed by its performance, salary, benefits provided by it
potential opportunities to excel and respect etc. If all these factors are good enough than the
image of the organization will be positive in the market that will help the organization to have
reasonable number of applicants ready to apply for then given job openings, But if the salary
benefits provided by the organizations are not compatible with the market there are no potential
opportunities for the career development and to excel in future than these factors will be
contributing towards negative image of the organization. This bad image is hurdle in acquiring
good number of applicants through recruitment process specially if any firm is having business
in the declining industry and management is least bothered about the welfare and wellbeing of
the employees.

II. Attractiveness of the job: Attractiveness of the job mainly depends upon its contribution
towards achievement of organizations objectives, challenging assignments, its contribution in the
career development of the job holder.

Secondly the benefits and salary associated to particular job also plays important role in defining
the importance of the job.

31
Therefore jobs having challenging assignments, career oriented in nature and having good
remuneration package can attract best applicants from the labor force available in the market or
vice versa.

III. Government Influence: The recruitment process is influenced by the laws provided by the
government. Organizations to be more successful are required to work according to these laws.

IV. Labor Market Influence: The recruitment process is influenced by labor market conditions.
When the economy is growing rapidly and unemployment levels are very low, recruiting is
extremely difficult. However, when the economy is stagnant and unemployment levels are high,
organizations can obtain large applicant pool with very little effort.

V. Recruiting Costs: Companies use to bear very high costs while performing the recruitment
process especially when the recruitment is external. Therefore organizations can perform this
function only and only if they are having sufficient resources to perform the recruitment process.

VI. Global Issues: Whenever staffing function is performed at the international level or across
the national boundaries beside internal environment of organization polices of the host country
regarding employment also influence the recruitment process. They can include basic labor laws
regarding quality of work life Equal Employment Opportunities ( EEO), remuneration packages,
etc.

4.4. The Recruitment Process

Recruitment process is concerned with the identification of possible sources of human resource
supply and tapping those sources. It is a “positive” and “continuing” function, which aims at
constantly increasing the selection ratio i.e., the number of applicants per job opening, so as to
permit adequate selection of a capable and productive work group.

In the total process of acquiring and placing human resources in the organization, recruitment
falls in between different sub processes as shown in figure given below.

The place of recruitment at HRM process

Recruitment Policies and Procedures One of the first steps in planning for the recruitment of
employees into the organization is to establish proper policies and procedures. A recruitment
policy indicates the organizations' code of conduct in this area of activity. A typical policy

32
statement for recruitment may include many relevant issues. In its recruitment activities, the
company will:
 Advertise all vacancies internally and/or externally
 respond to every job applicant without any delay
 Inform job applicants the basic details and job conditions of every job advertised,
 Process all applications with efficiency and courtesy,
 Seek candidates on the basis of their qualifications,
 Aim to ensure that every person invited for interview will be given a fair and thorough
hearing
 Not discriminate unfairly against potential applicants on the basis of sex, race, religion, caste,
etc.;
 Not knowingly make any false or exaggerated claims in its recruitment literature or job
advertisements.

Once the recruitment policy is made explicit, the company can evolve a detailed procedure to
make the whole exercise systematic. Such a systematic approach will enable people within (or
outside) the organization to follow a predictable path. The recruitment procedures should,
however, be flexible enough to permit personnel department to respond quickly to demands
made on them by various departments and by potential candidates.

Recruitment, it should be remembered, is a marketing activity as well as a public relations

exercise. When recruiting people, organizations are going out into their external environment and
competing with others for suitable candidates. Such activities, therefore, should be conducted in
a manner that sustains or enhances the prestige and public image of the organization concerned.
Fair and objective recruitment policies and standards would add to the image of the organization
in the long run.
4.5. Choice of Source of Recruitment
Basically organizations are available by the two main sources of recruitment which are:
I. External Recruitment.
II. Internal Recruitment.
Vacancies in upper level management can be filled either by hiring people from outside the
organization or by promoting lower level managers.

33
I. Internal Recruiting Sources: When job vacancies exist, the first place that an organization
should look for placement is within itself. An organization’s present employees generally feel
that they deserve opportunities to be promoted to higher level positions because of their service
and commitment to organization. More over organizations have opportunities to examine the
track records of its present employees and to estimate which of them would be successful. Also
recruiting among present employees is less expensive than recruiting from outside the
Organization.

The major forms of the internal recruiting include:

a. Promotion from within.
b. Job posting.
c. Contacts and referrals

a. Promotion from within: Promoting entry level employees to more responsible positions is
one of the best ways to fill job vacancies and important reason why company should have a
human resource planning system. An organization that has human resource planning system uses
succession plans and replacement charts to identify and prepare individuals for upper level
positions. Skills inventories are useful in identifying individuals who have the potential for
advancement, and individual’s desire to be promoted can be assessed in the performance
appraisal review. A promotion from within policy is intrinsic to career development and human
resource planning. A promotion from within policy can stimulate great motivation among
employee, and this motivation is often accompanied by a general improvement in the employee
morale.
b. Job posting: An organization can also use the policy of job posting as a internal recruitment
source. In the job posting system the organization notifies its present employees about job
openings through the use of bulletin boards, company publications, or personal letters.
c. Contacts and Referrals: Many firms have found that their employees can assist in the
recruitment process. Employees may actively solicit applications from their friends and
associates.
Before going outside to recruit employees, many organizations ask present employees to
encourage friends or relatives to apply for the job openings.

Contacts and referrals from the present employees are valuable sources of recruits. Employee
referrals are relatively inexpensive and usually produce quick responses.
However some organizations are concerned about problems that result from hiring friends of
employees
For example, the practice of hiring friends and relatives favoritisms, cliques etc.
Advantages of Internal Recruitment:
 Provides greater motivation for good performance.
 Provides greater opportunities for present employees
 Provides better opportunity to assess abilities

34
  Improves morale and organizational loyalty
 Enables employees to perform the new job with little lost time
Disadvantages of Internal Recruitment:
 Creates a narrowing thinking and stale ideas
 Creates pressures to compete
 Creates homogeneous workforce
 Chances to miss good outside talent Requires strong management development programs
specially to train for technology.
II. External Recruiting Sources:
A broad variety of methods are available for external recruiting. An organization should
carefully assess the kinds of positions it wants to fill and select the recruiting methods that are
likely to produce the best results.

EXTERNAL SOURCES OF RECRUITMENT

There are some employee needs that a firm must fill through external recruitment. Among them
are: filling entry-level jobs, acquiring skills not possessed by current employees, and obtaining
employees with different backgrounds to provide new ideas.
a. High Schools and Vocational Schools: Organizations concerned with recruiting clerical and
entry-level operative employees often depend on high schools and vocational schools.
b. Community Colleges: A number of community colleges are sensitive to the specific
employment needs in their local labor market and graduate highly sought-after students with
marketable skills.
c. Colleges and Universities
 Colleges and universities represent a major source of recruitment for many organizations.
Potential professional, technical, and management employees are typically found in these
institutions.
 Different institutes use to publish booklets having information about the graduates that
can be communicated to organization who are in search of applicants.
d. Competitors and other Firms: Competitors and other firms in the industry or geographic
area may be the most important source of recruits for positions in which recent experience is
highly desired.
e. Unemployed: Individuals, who are unemployed, regardless of the reason, often provide a
valuable source of recruitment.
f. Older Individuals: Older workers, including those retired, may also comprise a valuable
source of employees.
g. Military Personnel: Using this source may make sense to many employers because these
individuals typically have a proven work history, and are flexible, motivated, and drug free.
h. Self-Employed Workers: These individuals may provide a source of applicants to fill any
number of jobs requiring technical, professional, administrative, or entrepreneurial expertise.

35
III. EXTERNAL RECRUITMENT METHODS
Recruitment methods are the specific means through which potential employees are attracted to
the firm.
a. Advertising: A way of communicating the employment needs within the firm to the public
through media such as radio, newspaper, television, industry publications, and the Internet.
Sometimes organizations can perform the recruitment function through blind advertisements in
blind advertisements no identification about the company is provided to applicants. Companies
can use blind advertisements for many reasons e.g.
• Company wants to keep the recruitment in low profile so that lesser number of applicants
should apply in order to discourage the irrelevant people.
• Due to bad reputation or image of the organization
• Advertisement is made just for the purpose of test marketing for example just to have
knowledge about the supply of applicants in labor market etc.
b. Employment Agencies: An organization that helps firms recruits employees and, at the same
time, aids individuals in their attempt to locate jobs.
There are two types of the employment agencies i.e.
• Public Employment Agencies.
• Private Employment Agencies
Both of these sources provide coordination between the organizations and applicants who
are searching for jobs, for this service they use to charge a fee .Employment agencies are able to
tailor their services to the specific needs of the clients For example some agencies Specialize in a
particular employment areas, such as engineering, human resource or Computer programming,
etc.
c. Recruiters: The most common use of recruiters is with technical and vocational schools,
community colleges, colleges, and universities.
d. Special Events: It is a recruiting method that involves an effort on the part of a single
employer or group of employers to attract a large number of applicants for interviews.
e. Internships: A special form of recruiting that involves placing a student in a temporary job.
There is no obligation on the part of the company to permanently hire the student and no
obligation on the part of the student to accept a permanent position with the firm.

Hiring college students to work as student interns is typically viewed as training activity rather
than as a recruiting activity. However, organizations that sponsor internship programs have
found that such programs represent an excellent means of recruiting outstanding employees.
f. Executive Search Firms
Executive search firms sometimes called HEAD HUNTERS are specialized form of private
employment agencies that place top level executives and experienced professionals. These are
the organizations that seek the most-qualified executive available for a specific position and are
generally retained by the company needing a specific type of individual.
g. Professional Associations: Associations in many business professions such as finance,
marketing, information technology, and human resources provide recruitment and placement
36
services for their members. Professional associations and trade organizations provide a valuable
service in bringing together professional and professional job openings. Most professional
organizations have newsletters, annual meetings and trade publications that advertise job
openings. The annual meetings of these organizations are good occasion for professionals to
learn about available job openings and for employers to interview potential applicants.
h. Unsolicited Walk-In Applicants: If an organization has the reputation of being a good place
to work, it may be able to attract good prospective employees without extensive recruitment
efforts.
i. Open Houses: Firms pair potential hires and managers in a warm, causal environment that
encourages on-the-spot job offers.
j. Event Recruiting: Attend the events that the people you are seeking go to.
k. Virtual Job Fairs: Individuals meet recruiters face-to-face in interviews conducted over
special computers that have lenses that transmit head-and-shoulder images of both parties.
l. Cyber Recruiting: Organizations can also use web sites and internet sources to recruit people
application submission test and interview and other recruitment and selection activities can be
performed online.
Advantages of External Recruitment:
 Provides new ideas and new insights
 Provides greater diversity and helps achieve EEO goals by making affirmative action easy
 Provides opportunities to handle rapid growth if the organization
 Opportunities to get people with up-to-date knowledge education and training
Disadvantages of External Recruitment:
 It is more expensive and time consuming
 Destroys incentives of present employees to strive for promotion
 More chances to commit hiring mistakes due to difficult applicant assessment that will lead
to wastage of resources.

C. ALTERNATIVES TO RECRUITMENT
When an organization decides to add personnel to its staff, it makes a significant financial
investment. Recruitment and selection costs are high, especially for professionals, technical and
managerial employees.
Therefore before an organization decides to recruit new employees, it ought to consider the
feasibility of other alternatives.
I. Outsourcing: Out sourcing is the process of transferring responsibility for an area of service
and its objectives to an external service provider instead of internal employee.
II. Contingent Workers: It is also known as part-timers, temporaries, and independent
contractors, comprise the fastest-growing segment of the economy.

III. Professional Employer Organization (Employee Leasing)

37
Using this approach, a firm terminates some or most of its employees. A leasing company then
hires them, usually at the same salary, and leases them back to the former employer, who
becomes the client.
IV. Overtime: Perhaps the most commonly used method of meeting short-term fluctuations in
work volume is through the use of overtime.
D. Recruitment - An applicant perspective:
• Applicant should be provided with necessary information regarding organization job,
remuneration package etc.
• If rejection is to be communicated it should be done with tactics.

Evaluating the Recruitment Process

Recruitment process can be evaluated by the following factors:
 Quantity of the Applicants
 Quality of the Applicants
Quantity of the Applicants
Recruitment process can be evaluated by the number of applicants who have applied for the job
greater the number of applications greater will be the chance to select best people from available
pool.
Quality of the Applicants: Effectiveness of recruitment can be estimated by the quality of the
applicants. Quality can be assessed by the education, skills, capabilities and competencies of the
applicants.
Chapter Five
Selection, Induction/Orientation and Placement
Introduction
Once the applicant pool is prepared, the next step for the HR department is to implement the
predetermined selection process in order to select the best candidate for the job. The aim of this
process is to finally end up with candidates best suited for the vacant jobs. The organization must
be able to distinguish the applicants who are most likely to perform well as employees from the
others who are less suitable.

Of late, the hirers are attempting to measure even the candidate’s mental make-up and personal
values to decide how closely they match those of the organization. Obviously, selecting the most
suitable candidate for a job is never an easy task for an organization, but it becomes all the more
difficult when the organization has to screen candidates to fill vacancies that are critical to the
organization. This is because any faulty decision in the selection of employees can have a far-
reaching impact on performance and future of the organization.

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5.1. Employee Selection
The objective of selection process is to determine whether an applicant meets the qualification
for a specific job and to choose the applicant who is most likely to perform well in that job. Or
Selection process comes after recruitment, selection can be explained in terms of either choosing
the fit candidates, or rejecting the unfit candidates, or a combination of both. In other word,
Candidates are screened by the application of these tools qualified applicants go on to the next
handle, while the unqualified are eliminated. Thus , an effective selection is a non-random
process because those selected have need chosen on the basis of assumption that they are more
likely to be better; employees that those who have been rejected.
Goals of Selection
 To maximize Person/Job/Organizational fit
 Select the best person for the job
 To maximum performance, efficiency, effectiveness, profit.
Selection method standards
1. Reliability: Free from random error, stability or consistency
2. Validity: It is the degree to which a predictor or criterion measures what it purports to
measure
3. Utility: ways to measure value added by selection tool
4. Legality: All selection methods must match to existing laws and legal precedents
5.1.1 Selection Criteria
Selection decisions are usually based on how an applicant is rated in terms of the likelihood
of success on the job. The key job dimensions identified in job analysis and job description
provide the basis for determining relevant criteria. The educational qualifications, technical
skills and achievements are used frequently as the basis for selection.
Categories of criteria
Education:
 Educational accomplishment is a common, cost effective way to screen for these abilities.
 To be legal, educational standards must be related to successful performance of the job
 Do not set standards higher than required by the job

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Experience:
 Many believe that past performance on a similar job is the best indicator of future
performance
 Employers also consider experience a good indicator of ability and work-related attitudes
Physical characteristics:
 Employers were more likely to hire and pay better wages to taller men
 Flight attendants and receptionists were hired on the basis of beauty
 Such practices discriminated against ethnic groups, women, and the handicapped
Other personal characteristics:
 Some employers prefer married employees because they are assumed to be “stable” and
have a lower turnover rate
 Other employers prefer single employees, who may be more open to a transfer or lengthy
overseas assignment

5.1.2 The Selection Process

Preliminary requirements for successful selection process:
 Someone should have authority to select.
 There must be some standard that prospective employee may be compare, i.e. thereshould
be available, before hand, a comprehensive job description and job satisfaction are
developed by job analysis.
 There must be a sufficient number of applicants from whom the required number of
employees may be selected
The standard selection process has the following steps.
1. Screening of Applications : Prospective employees have to fill up some sort of application
forms while applying. These forms have variety of information about the applicants like his
personal bio-data, achievements, experience etc. This information’s are used to screen the
applicants who are found to be qualified for the consideration of employments. Based on the
screening of applications, only those candidates are called for further process of selection,
which is found to be suitable to meet the job standards of the organization.
2. Selection Tests: Selection tests are organized by the organizations to know more about the
candidates or to reject the candidates who cannot be called for interview, etc. Selection tests

40
 provide information about the attitude, interest, and personality of the candidate, which
cannot be known by application forms. These selection tests have different objectives and
measure different attributes. These tests may be classified as follows: -
i. Achievement Test : It is also called performance test or trade test. Achievement is
concerned with what one has accomplished. The achievement tests are conducted to
measure how well the candidates know the things. Trade tests are designed to measure an
applicant’s knowledge of a specific trade and to measure what the applicant can do
currently. For example, a typing test may measure the typing performance of a typist in
terms of speed, accuracy and efficiency.
ii. Intelligence Test: Intelligence test tries to measure the level of intelligence of a
candidate. This test generally includes verbal comprehension, word fluency, memory, and
inductive, reasoning, number facility. Intelligence test is designed on the basis of age
groups. Thus, each age group has different intelligence tests. The basic idea behind
intelligence test is to made available people with higher intelligence to the organization,
because intelligent employees learn faster than dull employees.
iii. Personality Test: dimensions of personality such as interpersonal competence,
dominance-submission, and extroversion. Introversion, self-confidence, leadership
ability, patience, ambition are measured through personality tests. The personality test is
conducted to predict performance success for jobs that require dealing with people, or
jobs that are essentially supervisory or managerial in character.
iv. Aptitude Test : These tests are designed to assess the special aptitudes of the applicants
such as clerical aptitude, mechanical aptitude, mathematical aptitude manual dexterity,
abilities and skills. These tests used when the vacancy in question requires the possession
of a high degree of one or more particular aptitudes for adequate job performance.
v. Interest Test: interest test is conducted to discover a person’s area of interest and to
identify the kind of jobs that will satisfy him. It is assumed that a person who is interested
in a job can do much better than the person who is not interested. Interest test generally
measures interest in outdoor activities, mechanical, scientific, artistic, literary, musical,
social service etc.

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The different tests are used for different purposes. Each of them has the usefulness and
limitations in specified areas. Therefore, a combination of tests should be used for selection
purpose. These tests should also be related with the nature of posts to be
3. Interview: Selection tests are normally followed by personal interview of the candidates.
Interview is selection technique that enables the interviewer to view the total individual. It
consists of interaction between interviewer and applicant. This is the way of finding out
overall suitability of candidates for the job. Interview also provides opportunity to give
relevant information about the organization to the candidates.
4. Checking of References: References are intended to investigate the candidate’s background
and can be obtained from the following sources-school and college officials, previous
employer or other persons of prominence who may be aware of the candidate’s behavior and
ability. Through references more information about the candidates can be solicited to select
the right type of a person for a job.
5. Medical Examination: medical examination is carried out to ascertain the physical standard
and fitness of prospective employees. The medical examination is designed to match the
applicant’s physical capabilities to job requirements.
Medical examination also serves the following purposes.
(a) To reject those whose physical qualification are insufficient to meet the requirements of the
work they are being considered for.
(b) To obtain the record of the physical condition of the person at the time of hiring.
(c) To prevent the employment of those with communicable disease.
6. Approval by Appropriate Authority: on the basis of the above steps, suitable candidates are
recommended for selection by the selection committee or personal department. Organizations
may designate the various authorities for approval of final selection of candidates for different
categories of candidates. For top level managers, Board of Directors may be approving authority,
for lower levels, functional heads concerned may be approving authority. When the approval is
received, the candidates are informed about their selection and asked to report for duty.
7. Placement: After the completion of all formalities, the candidates are placed on their jobs
initially on probation basis.

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5.1.3 Factors Governing Selection
The main factor affecting the selection process was government laws and regulations (legal
consideration). Organizations and their managers should be aware of the legal environment in
which they are operating, and hence the legal issues.
Among these, the following discriminatory elements should be noted.
a. Gender issues: Using criteria for final screening points and decisions that reflect or are
based on gender is unpleasant and is not legal unless for specific jobs which require men or
women only. Therefore, an organization and its manager should be aware of this and be
adjusted to it.
b. Race and National Origin: Selection decision practiced by using discrimination in race and
national origin is also unpleasant and illegal. Due to this regard selection decisions should be
made without regard of these factors.
c. Physical handicap and physical Requirement: Specification of requirements that restrict
physical handicap and/ or physical requirement should be used only when the requirements
are necessary for performing that particular job; discriminating individuals based on their
physical conditions should not be requested in the selection process.
d. Religion: A selection decision, made on discrimination of religion, is illegal unless, the
organization is working for its own religious sake. In public sector organizations like in
Ethiopian civil service system and in any private business company, selection decisions
based on religious belief is unacceptable.
e. Speed of Decision Making : The speed of decision making matters in the selection decision
process. The time available to make the selection decision can have a major effect on the
selection process. For some jobs the requirement for selection decision is not within shorter
time. The speed of decision making should be taken within shorter time, which in turn can
have implication on the selection process.
Activity: - If the selection ratio is low is it possible to predict quality of selection from this
result why and why not?
5.2. Orientation [Induction]
Induction can defined as a process of introducing the employee to the organization and the work
process.

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Orientation (Induction) is ‘fusion’ process’ by which the individual identifies himself with the
organization and tries to achieve his/her goal with the goal of the organization.
It is also essential to create a more suitable working place for the new employee before he joins
his job
Content of Induction
1. Organizational issues Like: - Company history, Name, vision, Mission etc.
2. Employee benefits Like: -Pay Scales, insurance, medical, recreation etc…
3. Introduction Like: -To supervisors, to co-workers, to trainers, to employee…
4. Job Duties Like: - Job location, Job tasks, job safety needs, job objective, relationship with
others etc…

5.2.1 Purpose of Orientation

A planned induction offers the following benefits:
 It creates favorable attitudes in the minds of the employee and this improves the moral and
performance of the employees. It aids learning; it saves time, and trouble.
 It gives accurate information to the employee about the organization and the job.
 It reduces the rate of employee’s turnover: as many new employees can be introverts,
they may find it difficult to seek knowledge and acquaintance on.
In general, induction serves the following purposes:
a. Removes fears: A newcomer steps into an organization as a stranger. He is new to the
people, workplace and work environment. He is not very sure about what he is supposed to
do. Induction helps a new employee overcome such fears and perform better on the job.
It assists him in knowing more about:
 The job, its content, policies, rules and regulations.
 The people with whom he is supposed to interact.
 The terms and conditions of employment.
b. Creates a good impression: Another purpose of induction is to make the newcomer feel at
home and develop a sense of pride in the organization.
Induction helps him to:
 Adjust and adapt to new demands of the job.
 Get along with people

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  Get off to a good start
Through induction, a new recruit is able to see more clearly as to what he is supposed to do, how
good the colleagues are, how important is the job, etc. He/she poses questions and seeks
clarifications on issues relating to his/her job. Induction is a positive step, in the sense; it leaves a
good impression about the company and the people working there in the minds of new recruits.
They begin to take pride in their work and are more committed to their jobs.
c. Act as a valuable source of information:
Induction serves as a valuable source of information to new recruits. It classifies many things
through employee manuals/handbook. Informal discussions with colleagues may also clear the
fog surrounding certain issues. The basic purpose of induction is to communicate specific job
requirements to the employee, put him at ease and make him feel confident about his abilities.
Some of the benefits of good employee orientation include the following: Strong loyalty to the
organization; Greater commitment to organizational values and goals; Low absenteeism; higher
job satisfaction and Reduction in turnover.
Generally induction or orientation has the following purpose:-
 Allowing the newly employed individual to adjust to the organization
 To provide information about the tasks and performance expected.
 To create a favorable impression on new employees
5.2.2 Levels (steps) of Orientation
The HR department may initiate the following steps while organizing the induction program:
 Welcome to the organization
 Explain about the company.
 Show the location, department where the new recruit will work. .
 Give the company's manual to the new recruit.
 Provide details about various work groups and the extent of unionism within the
company. Give details about pay, benefits, holidays, leave, etc.
 Emphasize the importance of attendance or punctuality.
 Explain about future training opportunities and career prospects.
 Clarify doubts, by encouraging the employee to come out with questions.
 Take the employee on a guided tour of buildings, facilities, etc.
 Hand him over to his supervisor.

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 Chapter Six
Training and Development
Introduction
Before a given program is designed and delivered the respective goals (training, development)
have to be decided. Should the organization strive for the development of the knowledge, skills,
or competences of the employees, or rather focus on training programs?
 The goal of the training process is to enable employees with lower position and skill level
to perform better in their present jobs.
 Developmental programs considering future organizational objectives aim at the increasing
and improvement of the skills of managers and expert professionals.
Development as a future oriented and strategic objective motivated process promotes adaptation
and in some cases establishes the foundation of promotions.

Once we have spent the time to recruit/hire new employees, we want to make sure they not only
are trained to do the job but also continue to grow and develop new skills in their jobs. This
results in higher productivity for the organization. Training is also a key component in employee
motivation. Employees who feel they are developing their skills tend to be happier in their job.
This results in increasing employee retention (low turnover rate).

Training is increasing the knowledge and skills of an employee in order to maintain or improve
current job performance. Training bridges the gap between job requirements and employees
current/present performance.
6.1. Training and Development Defined

Training : the process of teaching new or current employees the basic skills they need to
perform their jobs.

Training is:
 A short-term educational process’
 Systematic and procedural
 Learn technical knowledge or personal skills

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  Continuous
Examples of Training Programs
Job skills training, E.g. How to run a particular computer program
Training on communication
Team building activities
Policy and legal training E.g. Ethics training

Training and development can take a variety of forms.

Below is a flavor of some different training and development activities:
- Induction training : undertaken when a new employee joins an organization. It is partly
an information giving exercise (explaining how the firm is organized and who works for
whom) but it is also part of the socialization process, so that new staff begins to learn the
rules and understand ‘how we do things around here’. In other words people begin to learn
the culture of an organization. The lack of induction training can encourage employees to
leave their new job in the first few weeks.

47
 – Job Training: It is given to increase the knowledge and skills of an employee for
improving performance.
- Remedial skills training: this occurs to fill ‘skill gaps’ when an employee or group of
employees lack the skills necessary to perform their current job task effectively. It is
especially important as the pace of technological change is increasing. It would be pointless
to invest in new machinery and software if the existing workforce could not use it.
– Safety Training: Given to minimize accidents and damage.
– Promotional Training: Given for the existing employees to enable them to perform
higher level jobs.
– Refresher Training: Training given for employees in the use of new methods and
techniques, up-t-date knowledge and skills of existing employees
- Developmental training: this concerns the acquisition of competencies (skills, knowledge
and attitudes) that the company will find necessary in the future. This type of training is
designed to meet long-term corporate needs rather than providing training in specific skills
required currently. Developmental training also refers to the preparation given to employees
for promotion or for managerial succession, in which case it is called management
development and is often linked to Talent Management schemes.
6.2. Reasons for Training and Development
Training needs can arise from the following reasons:
1. Match employee performance/specifications-with-job-requirements-and organizational needs
2. Organizational changes and complexity Risers
3. Technological advances
4. Job changes
Other reasons can be
a) To improve productivity or quality
b) To improve health and safety
c) To improve organizational culture
The need for training is emphases by the following factors:
Increased productivity: adequate training increases needed skills which build up confidence
and satisfaction
Improvement in employee morale: training improves skills which build up confidence and
satisfaction

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Availability for future personnel needs of the organization. Good training programs develop
the employees and prepare them for future managerial and executive position.
Improvement in health and safety: proper training can help prevent industrial accidents and
create a safer work environment.
Reduced supervision: a trained employee supervisees himself; he accept responsibility and
experience more freedom and autonomy and less supervision
Personal growth: the training program give the participants a wider awareness, a sense of self-
satisfaction and fulfillment, an alighted philosophy and value system that are the apex of the
personal growth
Organizational stability: training and development program foster the initiative and creativity
of employees which increases a sense of belonging, this preventing a labor obsolescence.

What are the major stages involved in designing a training program?

1. Determining training needs
The first stage in developing any training program is to identify the skills deficiencies that
exist within the company and determine which employees need to undergo training. This
stage is the foundation of the whole process. Unless training needs are properly assessed, the
training program introduced may be quite different from what is actually needed.

Companies therefore need to understand the training cycle, which begins with a systematic
training needs analysis. Most studies of training look at a systematic approach to training.
These days it is recognized that not all learning is as the result of training and people learn
while they are working on the job.
A systematic approach to learning and training is to:-
 Identify learning needed
 Design appropriate learning opportunity
 Enable learner to undertake the opportunity
 Evaluate if learning has taken place

How to determine the training needs?

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Managers can use four procedures to determine the training needs of individuals in their
organization. These are:
 Performance appraisal
 Analysis of job requirements
 Organizational analysis
 Employee survey
There are three types of training input. These are
 Skills
– Simple, mechanical skills
– Complex, administrative skills
– Communication skills
 Attitudes
– Build favorable attitude of employee towards organization
 Knowledge
– About job, factory, organization
– Specific knowledge, for example; relating to quality and standards of products
2. Organizational analysis
5.1.2 Objectives of Management Development
 To ensure that managers at all levels of the organization are able to perform their jobs
effectively.
 To avoid managerial obsolescence: if the management does not keep pace with new
methods and processes and fails to adapt changes, then it will become obsolete and in
effective.
 To provide for managerial promotion in upper level ranks- each promoted position
requires a new set of skills and abilities and management development techniques prepare the
managers for these new responsibilities
 To provide opportunity for managers: to seek new challenges and new venues for
personal growth and internal satisfaction.

6.3. Types of Training

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A) On-The-job Training: In such type of training, the employee is placed in the real work and
shown the work by as experienced employee or supervisor. It makes employees appeal to be
immediately productive.

‘On-the-job’ training can be highly effective, and it is argued that staff learns and retain more of
the knowledge imparted by performing the actual process at the place of work. However,
problems emerge if the trainer has not been trained themselves in training methods. Additionally,
there is the risk that bad or even dangerous working practices can be passed on.
A highly effective and popular and system approach to On the Job training is job instruction
training (JIT).
Some of on the job training are

I. Coaching: Trainees placed under particular supervisor and the supervisor provide
guidance and counseling to trainees
II. Progression: path of promotion are outlined through succession levels of the
organization
III. Job rotation: performing jobs of many different types or movement trainee from one
job to an order
IV. Temporary Assignments: Assigning an employee on job to work for sometime
V. Internship: provide actual experience that is based on theories taught
VI. Committee assignment and task forces: group of trainees are given and asked to
some an actual organizational problem
B) Off-The-Job Training: It is training given to employees when they are on the vacation. The
training can undertake in organization classrooms, vocational schools, and elsewhere.... It could
be class lecture, visual reality system.
‘Off the job’ training is important in terms of theoretical study or in terms of introducing
employees to new and innovative ideas. Problems arise, however, when those ideas do not
appear to relate to the work situation.
Some of the off the job training methods are:

I. Vestibule Training: Actual work conditions are simulated in a classroom. It is highly

active from and learning except it is experience and time consuming to prepare. Eg armed
force , airlines etc
II. Role playing: Trainees play a role of certain character like foreman , manager, receptionist,
salesperson etc
III. Lecture Method: Training give in the form of talk to large groups. It is simple, direct, save
time and appropriate for any type of training. However, it doesn’t provide effective transfer
of training and no exchange of idea and is also boring.

51
 IV. Conference or group discussion: Trainees pose ideas, examine, share facts, ideas and
data and then draw conclusions.
V. Case Study: Trainees examine history of an event or relevant details. It helps to sharpen
trainees’ analysis and judgment abilities.
VI. Demonstration: this is showing by doing and is used in training various skills and musical
skills.

In summary, ‘on the job training’ is any activity designed to teach new skills or knowledge that
takes place while the worker is in their normal place of work.
6.4. The Training and Development Process

Effective training and development program follows the following process:

1. Discover (analyze) the training needs: training needs can be identified by assessing the
current and future business conditions and by matching with the skills and resources available
and evaluation of the performance employees.
2. Design a training or development program system: that learners and trainers can implement
to meet the learning goals. Like: -identify objectives, needed facilities, necessary funding, course
content etc…
3. Develop a training package of resources and materials: like: - developing audiovisuals,
graphics, manuals, etc…
4. Implement the training package: -including delivering the training, support group feedback,
clarifying training materials, administrating test and conduct the final evaluation
5. Evaluating the effectiveness of the training program and follow-up: The effectiveness of
the program can be appraised by written and oral tests, by observing the trainees when put on
jobs independently and comparing the results after the training program were initiated.
There are levels at which training program evaluation can take place.

Reactions: Checking how much useful, enjoyable of training sessions, training materials etc.

Learning: It is measuring what the trainee learned, new knowledge, skill and ability from the
training

Job behavior: Measure the extent to which trainees have applied their learning on the job. It
refers to the amount of transfer from the training to the job. If it is on the job, there is little
transfer to the job.

Organization: It is attempt to measure the effect of changes in the behavior of trainees on the
functioning of the organization in which they are employed.

52
 Ultimate Value: This is measure of organizations benefits as a whole from the training in
terms of profitability, survival or growth.

6.5. Management Development

Any attempt to improve current or future management performance by imparting knowledge,

changing attitudes, or increasing skills.

Management development is a long-term process by which the managers’ conceptual knowledge

and competencies are developed to make them more suitable for the present and future
responsibilities.

The goals of management development

(i) Accomplishing the corporate goals of the organization,

(ii) Ensuring internal consistency in the organizational philosophy,
(iii) Helping the process of better integration of various human resources activities, and
(iv) Promoting transparent, dynamic and democratic management practices.

The steps in a management development process

(1) Assessing the company’s strategic needs

(2) Evaluating the skills and competencies of managers

(3) Evolving strategies for the development of managers

The methods of management development

Mentoring: Mentoring refers to the teaching by an intelligent and trusted guide and advisor.
In recent times, it has emerged as an important technique to develop future managers. It is a
one-to-one teaching–learning process. Mentors are usually the role model for trainee

53
managers. Mentoring, as a concept, aims at enhancing the personal and professional
competencies of trainees through the process of advising and coaching. It concentrates on
those skills that help the recipients to work to their highest potential and achieve career
advancement.

Business Games: People have a natural desire and involvement in games. This method
makes use of business games to create an interesting environment for the trainees to learn
their business lessons. The primary goal of business games is to ensure the involvement of
the trainees in the learning process. In the business games technique, the trainees form teams
and assume managerial roles in two or more imaginary but rival companies

Coaching: coaching refers to teaching and supervising someone. In the coaching method,
senior managers are made responsible for coaching and developing the trainees who work
directly under them.

Behavior Modeling: Under this method, the managers learn by imitating the behavior
(called a model) of others. The behavior model lets the trainees learn the right way of
approaching and behaving in different situations. It is considered to be an ideal method for
acquiring relevant skills and knowledge from others.

In-basket Training: In-basket refers to a wood or metal container placed on the managers’
desk to hold their incoming material. In-basket training is a development technique which
educates the trainees about the need for and techniques of prioritizing the situations that
await their responses. It helps the managers in prioritizing the numerous business papers,
reports, emails and telephone messages before acting on them.

Action Learning : It is a development technique that allows trainee managers to work on the
problems of some other departments and not on those of their own department. On a full-time
basis, a group of trainees analyze the real-world problems of a department and make
recommendations. The basic idea behind this technique is to help the managers widen their
spheres of knowledge and get expertise in different fields.

University-based Programmes: In this method, managers seek to develop knowledge by

joining the programmes offered by the universities, colleges and centre of excellence.

Executive Coaches : Executive coaching is gaining acceptance as an important management

development technique necessary for training managers, who will be the future
organizational leaders. It is a programme of one-to-one collaboration between a certified
external coach and a manager. Through executive coaching, the manager improves his
leadership skills, gains new perspectives and reaches maximum potential.

In-house Development Centre: In-house development centre are also known as corporate
universities. It is an emerging management development technique. Large companies are

54
 establishing their own in-house development centre to develop the required skills and
knowledge among its employees. It is a technique for exposing future managers to practical
training courses so that they can enhance their managerial competencies.

Executive Orientation : This method is also called the on-board development method. In
fact, orientation is an initial training effort to inform the new managers about the company,
the job and the work group.

Chapter Seven
Performance and Potential Appraisal
7.1. Introduction
In simple terms, performance appraisal may be understood as the assessment of an individual’s
performance in a systematic way. The performance of employees can be measured against the
following factors: -job knowledge, quality and quantity of output, initiative, leadership abilities,
supervision, dependability, co-operation, judgment, versatility, health and the alike. However,
assessment should not be confined to past performance alone. Potentials of the employee for
future performance must also be assessed.

Definition of performance appraisal

 Evaluating an employee’s current and/or past performance relative to his or her performance
standards.
 . It is the process of evaluating how well employees do their jobs compared with a set of
standards and communicating that information to those employees.
 It is the systematic evaluation of the individual with respect to his/her performance on the
job and his or her potential for development. Performance appraisal is about employee
performance; not about the job. In the current world, organizations need high performance.

Therefore, to ensure whether employees perform according to the plan, the manager may use
performance appraisal.

It also uses to evaluate the result of recruitment, selection and training activities.

Objectives of PA

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1. Compensation Decision: It can serve as a basis for pay raises. This approach to compensation
is at the heart of the idea that raises should be given for merit rather than for seniority.

2. Promotion Decision: It can serve as a guide for job change or promotion.

3. Training and Development Programme: PA can inform employees about their progress and
tell them what skills they need to develop to become eligible for pay raises or promotions or
both.

4. Feedback: It can tell an employee what he can do to improve his present performance and go
up the organizational ladder.

5. Personal Development: It can help reveal the causes of good and poor employee
performance.

Characteristics PA

 It is a step by step process

 It examines the employee strengths and weaknesses
 Scientific and objective study
 Ongoing and continuous process
 Secure information for making correct decision on employees
 Fair & Accurate
 The system must be efficient
 Continuous, Flexible & Intuitive
 The system must focus on Employee Development
 Aligned towards org. goals
 Aligned towards org. culture & values
 The system must help with goal setting & tracking
 Integrates all aspects of employee development
 Customization, security & Integration
The Performance Appraisal Process
There are seven steps involved in performance appraisal. These are:
1. Establish standards of performance for each position and criteria for evaluation.
 Performance appraisal standards are established on job description and specification. The
standard should be clear and include quality of work, cost of work, quantity of work and time
to be assigned.

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Evaluation criteria should be
A. Relevant: Reliable and valid measure to evaluate job output.
B. Unbiased: Based on characteristics, not the person.
C. Significant: Related to enterprise goal.
D. Practical: that is measurable.
2. Set polices on when, how often and who evaluates
When should be done?
Arbitrary dates when the person was hired or near a single calendar, date or single day approach
is good.
How often should done?
Annually or Semi annually or more often who should be the appraiser?
The appraiser may be any person who has thorough knowledge about the job content, contents
to appraised, standards of contents, and who observes the employee while performing a job. The
most typical appraisers are supervisors, peers, subordinates, employee themselves, users of
service and consultants.
3. Communicate performance expectation to employees frequently
Inform these standards to all the employees including appraisers.
4. Measure actual performance
As per the evaluation method used in the organization and instructions given for appraisal,
evaluate actual performance of employees through observation, interview, records, and
reports.
5. Compare actual performance with standards
Comparing actual performance with standard sets and finds if there is any deviation.
Appraising employee's potential for growth and advancement.
6. Discuss the appraisal result with employee
This is a very challenging step in the appraisal process as it involves presenting accurate
appraisal to the employee and the person accepts the appraisal in a constructive manner.
7. If it is necessary, initiate corrective action
First, arrange for training and development of employee in order to ensure improve
performance. It could also involve making suggestions for some changes to be made in the
standard, job analysis, or other internal or external factors to facilitate effective performance

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 of employee. Second adjust the difference permanently by coaching, counseling, special
assignment and projects, person may be deputed for formal training; decision-making
responsibility and authority may be delegated to subordinates.

Potential Appraisal (Potential Rating Problems)

1. Unclear standards: An appraisal that is too open to interpretation
This rating scale seems objective. However, it might well result in unfair appraisals, because
the traits and degrees of merit are ambiguous. For example, different supervisors might
define “good” performance, “fair” performance, and so on, differently. The same is true of
traits such as “quality of work
2. Halo effect: In performance appraisal, the problem that occurs when a supervisor’s rating of
a subordinate on one trait biases the rating of that person on other traits.
Experts define halo effect as “the influence of a rater’s general impression on ratings of
specific ratee qualities.
For example, supervisors often rate unfriendly employees lower on all traits, rather than just
on “gets along well with others.” Being aware of this problem is a step toward avoiding it.
Supervisory training can also alleviate the problem, as can using a BARS (on which, recall,
the performance dimensions are usually more independent of each other).
3. Central tendency: A tendency to rate all employees the same way, such as rating them all
average.
Example: if the rating scale ranges from 1 to 7, raters tend to avoid the highs (6 and 7) and
lows (1 and 2) and rate most of their people between 3 and 5. Doing so distorts the
evaluations, making them less useful for promotion, salary, or counseling purposes. Ranking
employees instead of using graphic rating scales can reduce this problem, since ranking
means you can’t rate them all average
4. Leniency or Strictness: The problem that occurs when a supervisor has a tendency to rate
all subordinates either high or low.
5. Recency effects: Recency means letting what the employee has done recently blind you to
what his or her performance has been over the year.
6. Personal bias: The tendency to allow individual differences such as age, race, and sex to
affect the appraisal ratings employees receive.

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 Performance Appraisal Method
A. Common appraisal methods (Traditional Appraisal Method)
1. Confidential Report: This is the most traditional way of appraising an employee’s
performances. The supervisor evaluates his subordinate’s strength, weakness, past
performance and suggestions for improvement. The basic assumption here is that since the
supervisor is in direct contact, he knows his subordinate better than anyone else and hence
his appraisal would be more appropriate. Thus, the rater simply writes a brief narrative
describing the employees' performance. It tends to focus on extreme behavior in the
employees work rather than routine day to day performance. This type of evaluation depends
heavily on the evaluator's writing ability. The method is qualitative and not quantitative.
Thus, it is difficult to compare one with the others.
2. Forced Choice Method: In this method, there are several groups of statements or traits
given to the rater which may be favorable or unfavorable. In each group, the rater has to
choose a positive statement, one that best fits the ratee, and a negative one that least suits
him. In this way a balance is ensured, especially as regards the rater. Here, the desirable
answer for a particular job is not known to the rater. Because, keys are kept confidential
either in computer or files. Since the appraiser doesn't know the "correct answer" the bias is
minimized. This method is similar with checklist in that the rater is expected to select
statements that describe the ratee. The actual assessment is done by HR specialists.
3. Critical Incident Method: Raters are encouraged and required to make a note of critical
incidents of employee behavior continuously. In sending in their ratings, they have to
illustrate each of the traits, with some observed incident, either positive or negative. Here,
specific behavior is identified and focused instead of assessing individuals attributes of
personality or stating trait characteristics like intelligent, integrity, courageous etc. In many
cases the positive and negative aspects of each trait is specified. (Some examples of negative
behavior might be those of being habitually late, leaving work early, being absent without
leave on a certain date at a certain time.) This method needs continuous record of behavior
throughout the year and it is also impossible to compare one with other.
4. Behaviorally Anchored Rating Scales/BARS/: These scales combine major advantages
from critical method and graphic rating scale methods. Here, the actual behavior of employee
is rated rather than some vague personality or trait characteristics. Secondly, each behavior

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 pattern is rated on various degrees either on continuum or point scale. To prepare behavioral
anchored rating scales, it is advisable to follow the following steps.
 Generate effective or ineffective job behavior
 retranslate these into appropriate behavioral dimensions
 numerically scaled these behavioral incidents to level of performance
 those agreed by the raters are retained to use as an anchor on performance dimension.
 Several appraisal forms needed and prepared to accommodate different types of jobs in
the organization.
5. Straight ranking method: Straight Ranking is an appraisal system characterized by the
systematic ordering of employees from best to worst, based upon some single criteria. In the
ranking method, comparison of an individual is being done against the other member of the
work group. The rater ranks his subordinates from the best to the worst. He assign first rated
to the person he judges to be the best, second rank to the second best and so on.
6. Paired comparison Method: Under this method, each individual is compared to other
individuals in pairs once at a time. The raters compare each one of these individuals with the
other member and come out with the following results. For example, if there are five person
to be compared, then A’s , performance is compared with B,C,D,E and arrive at decision who
is better. Similarly B's performance is compared with all others individually especially C, D,
and E.
A was preferred over four others Rank I
B was preferred over three others Rank II
C was preferred over two others Rank III
D was preferred over one others Rank IV
E was preferred over none other Rank V

Sample of Paired Comparison performance Evaluation

In this method, each employee is compared with other employees on one- on one basis, usually
based on one trait only.
The number of possible pairs for a given number of employees is ascertained by the
following formula:

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N (N-1)/2
Where N = the total number of employees to be evaluated. Let this be exemplified with an
imaginary example. If the following five teachers have to be evaluated by the Vice dean of a
college: (MR. K), (MR. M) (MR. R), (MR. V), and (MR. B), the above formula gives 5 (5 -1) / 2
or 10 pairs.
These are:-

7. Graphic Rating scale method:In the graphic rating scale method, traits or characteristics of
individuals are rated. Some of the traits used for operative employees are quantity of work,
quality of work, ability to learn initiative cooperative, knowledge of worker, dependability,
analytical ability, emotional ability, for managers creativity, leadership abilities, planning
ability, judgment, express, and decision making.

The rating scale requires the rater to provide a subjective evaluation of an individual's
performance along a scale from low to high.

These evaluation is based on the opinions of the rater, and in many cases, the criteria are not
directly related to job performance. Responses may give numerical values to allow an average
score computed and compared.

Table6.1.Shows the rating for performance evaluation

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Sample on Rating Scales Performance Evaluation Method Or Graphic Rating Scale

8. Basic Checklist
The checklist method requires the rater to select words or statements that describe the employee's
performance and characteristics. The human resource department may assign weights to different
items on the checklist depending on irrelevant personality traits.
In the basic checklist appraisal system the appraiser reviews the lists of statements and checks
those descriptive of the employee.
Examples of simple checklist are

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1. Obtain customer signatures on delivery receipts.
2. Operate truck in an unsafe manner.
3. Require assistance to complete route deliveries. .
4. Submit ideas to improve the company.
5. Make errors in deliveries.
Sample on Check-List Method of Performance Evaluation
The basic purpose of utilizing check-list method is to ease the evaluation burden upon the rater.
In this method, a series of statements, i.e., questions with their answers in ‘yes’ or ‘no’ are
prepared by the HR department (see the sample). The check-list is, then, presented to the rater to
tick appropriate answers relevant to the evaluator. Each question carries a weight-age in
relationship to their importance.
Sample check list for appraising university teachers

9. Performance Test and observation

With a limited number of jobs, performance appraisals may base a test of knowledge or skills.
These tests are appropriate when a company relies on a pay-for knowledge or pay-for-skill
approach to compensation, rewarding, and employees primarily because of the skills or job
knowledge they have mastered. The test may be of the paper-and-pencil variety or may require
and actual demonstration of skills. It is more appropriate to measure potential than performance.
Practicality may suffer if the costs of test development or administration are high.
10. Group Rating. The simple process followed in this method is to have a committee of
members from line departments and staff positions who have had occasion to work with the
person to be evaluated. Each of them makes an independent appraisal, and then they meet
and consolidate their results. The purpose of group appraisals is to reduce the immediate

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 superior’s bias, to bring in factors of performance that he would probably not have known or
to call to his attention appraisal information he might have forgotten.
However, there are many drawbacks to group appraisal the difficulty of getting a suitable group
of people who really know the employee’s work; the time required for the process; the problem
of getting a meaningful consensus without undue compromise; and the failure of groups to feel
individual responsibility.

B. Other performance appraisal methods (Modern Appraisal Method)

1. Self Appraisals
Getting employees to conduct a self-appraisal cab is a useful evaluation technique if the goal of
evaluation is to further self-development. When employees evaluate themselves, defensive
behavior is less likely to occur and self-improvement is thus more likely. When self-appraisals
are used to determine areas of needed improvement, they can help users set personal goals for
the future. The risk is that the employee will be too lenient or too critical of his/her performance.
The important dimension of self-appraisal is the employee's involvement in and commitment to
the improvement process.
Sample of Self performance appraisal method
BSC Based Department Head’s Self-performance Evaluation Instrument (Format)
This evaluation instrument is designed to measure Department Head’s Performance with
regard to learning- teaching, research, community service and managerial and leadership
competence. Because the evaluation is about one’s own performance, you are kindly
requested to honestly answer each item.
Name of Instructor ________________________________________________________
Academic Year ________________________________________________________
Department ________________________________________________________________
Semester _____________________________________________________________
 Indicate your choice about your own performance corresponding to the specific
performance indicators) Specific performance variables).
 Use “√” mark to indicate your choice.

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 2. Management By Objectives: The heart of the MBO approach consists of goals that are
objectively measurable and mutually agreed on by the employee and the manager. Since
an employee gets to participate in setting his/her goals, the expectation is that employees
will be motivated to achieve those goals. Moreover, since they can measure their
progress, employees can adjust their behavior to ensure attainment of the objectives.
However, to adjust their efforts, employees must receive performance feedback on a
timely basis.

Objective also helps the employee and supervisor discuss the specific development needs of the
employee, which can make future training and development efforts appear more relevant to the
employee. When done correctly, performance discussions focus on the job's objectives, not on
personality variables. Biases are reduced to the extent that goal attainment can be measured
objectively.
3. Assessment Centers: Assessment centers are a form of standardized employee appraisal that
relies on multiple types of evaluation and multiple raters.
They are usually applied to managers who appear to have the potential to perform more jobs that
are responsible. The process puts selected employees through in depth interviews, psychological
tests, personal background histories, and peer ratings by other attendees, leaderless group
discussions, ratings by psychologists and managers, and simulated work exercises to evaluate

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 their potential. Decision making exercises, computer based business games, and other job like
opportunities that test the employee in realistic ways. These activities are usually performed
during a few days at a location physically removed from the job site. The psychologists and
managers, who do the rating, pool their estimates to arrive at a conclusion about each member of
the group.
The results assist management in training, development and placement decisions. Assessment
centers are both time consuming and costly.
4. 360-degree Feedback: Where multiple raters are involved in evaluating performance, the
technique is called 360- degree appraisal. The 360-degree technique is understood as systematic
collection of performance data on an individual or group, derived from a number of
stakeholders - the immediate supervisor, team members, customers, peers, and self.
The 360-degree appraisal provides a broader perspective about an employee’s performance. In
addition, the technique facilitates greater self-development of the employees. For one’s
development, multi-source feedback is highly useful. It enables an employee to compare his or
her perceptions about self with perceptions of others.

Besides, the 360-degree appraisal provides formalized communication links between an

employee and his or her customers. It makes the employee feel much more accountable to his or
her internal or external customers. The technique is particularly helpful in assessing soft skills
possessed by employees. By design, the 360-degree appraisal is effective in identifying and
measuring interpersonal skills, customer satisfaction, and team-building skills.
Sample of 360 Degree performance evaluation Form
Person being assessed: - ………………………………………………………
Profile relationship
A. You are this person’s… Manager Peer Customer

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From your professional experience, please rate the person using the following scale:

B. General Remarks: Strengths / Areas for Improvement.

Chapter Eight
Compensation, Employee Benefits and Services
Introduction

Developing an effective and appropriate compensation system is an important part of the HRM
process. Employees are not working for money alone, but it is a very important reason for
working. An effective and appropriate compensation system can help attract and retain
competent and talented individuals who can help the organization to accomplish its goals.

Thus, formulation and administration of a sound compensation is the prime responsibility of any
organization.

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Organizational compensation can include many different types of rewards and benefits.
However, the development and administration of a sound compensation system is not only
important, but also a complex managerial function.

It is complex because:
 Often, many problems between unions and management or internal conflicts relate to the
question of compensation.
 Compensation costs are often one of the largest parts of the total cost of production.
 Thus, the compensation system influences the survival and growth of an organization to
agreed extent.
 The influence of compensation over distribution of income, consumption, savings,
employment rates and prices is also significant. This goes however beyond the scope of
HRM and is the subject of economics.

Concept of Compensation

Employees are backbone of the organization. The attainment of organizational objectives largely
depends on when employees are motivated to work. Among other things, employees are
motivated to work when they are provided a fair financial and non-financial compensation for
work rendered to the organization. What, then, is compensation? What is its significance?

8.1. Compensation

All forms of pay or rewards going to employees and arising from their employment

Compensation is a human resource management function which deals with every type of
rewards individuals receive in exchange for performing organizational task. Compensation is the
total of all rewards provided to employees in return for their services. The components of
compensation can be classified as financial compensation and non financial compensation.

1. Financial Compensations.

Consists of Direct and Indirect compensations

Direct financial compensation is paid in the form of wages & salaries, incentives like overtime
payment, bonuses, commissions etc. Indirect financial compensation, on the other hand,

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includes all financial rewards/fringe benefits and perquisites/ that are not included in the direct
financial compensation or that are not directly gained from the job activities consists of health
benefits, payment of time not worked, security/social benefits, workers' compensation, disability,
life insurance benefits, unemployment insurance, educational assistance, subsidized cafeteria etc.
2. Non-Financial Compensation. There are also Non-financial rewards that can be resulted
from the job and job environment. A worker can receive satisfaction from the job itself or from
the psychological and/or physical environment in which he/she works. If employees found the
job has interesting duties, challenges, opportunities for recognition, feeling of achievement and
advancement, it motivates the worker. On the other hand, sound policies, competent supervision,
congenital co-workers, appropriate status, conducive working environment, challenging job,
responsibilities, recognition, growth prospectus, management suitability, work place ergonomics,
work organization, working time, autonomy-freedom, task identity, significance or skill variety,
safety, welfare and social services etc are some to be mentioned as non-financial rewards.

Importance of Compensation

Compensation has significant contribution to both employees and employers.

To employees

It is the primary /and often the only/ source of income for employees and their family. It
determines employees' social status. The income level is often used as a measure of a person's
worth. It is a fair reward for the work employees perform and the benefit they provide for the
employer.

To Employers

It enables to attract capable employees to the organization, to motivate employees towards

superior performance levels (productivity) and to retain current employees. If the compensation
is not tied up to work, employees are likely to look for a better paying job. Moreover, other
implications of pay dissatisfaction are

 Poor performance
 Strikes
 Grievances

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  Search for higher paying job
 Psychological withdrawal
 Absenteeism
 employees turnover
 Job dissatisfaction
 Dispensary visits
 poor mental health

As organization differ in size and purpose, so do in pay level. Regarding payment, there are three
strategies: high-pay-level strategy/paying higher than the average pay level either to enhance
employees' productivity or attract others, low-pay level strategy/paying below the average level/
and comparable pay level strategy/paying equitable pay compared to other competitor's pay.

8.2. Factors affecting compensation

The influencing factors can be, generally classified as, internal and external factors. The internal
factors include size and age of organization, labor, budget or resource allocation strategy,
managerial philosophy and business strategy, job evaluation and performance appraisal and the
employee.
1. External factors. The external factors consist of the current cost of living, government
legislations, labor market, labor union, economy, comparable wage rate etc.
a. Labor Market. Demand for and supply of labor usually influence wage and salary fixation
i.e. fix low wage when supply is higher than demand and vice versa.
b. Cost of Living. The real wage of workers should not be allowed to be whittled down by price
increases. A rise in the cost of living is sought to be compensated by payment of dearness
allowance but basic pay remain undisturbed.
c. Labor Unions. Employers in non-unionized organizations enjoy the freedom to fix wages and
salaries as they please where as this are not possible in strongly unionized organizations.
d. Government Legislation. Government develops various labor laws like payment of wages
act, the minimum wage act, the equal remuneration act etc.
e. Economy. Since the cost of living is commonly used as a pay standard, the economy's health
exerts a major impact up on pay decision. In such situations labor unions, the government and
society put pressure to increase pay rate.

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f. Comparable wage rate. Other competitors' payment rate for similar qualification or
experience affects employees’ compensation policy.
2. Internal factors. refers to size and age of the organization, the labor budgets (resource
allocation strategy), management philosophy or strategy, attitude of maintaining equity among
employees, job evaluation and performance appraisal results employees experience, potential and
even sheer luck etc
a. Compensation and Motivation. Motivation is a set of forces that cause people to behave in
certain ways. The basic principle is that performance of an individual depends on his/her ability
and motivation. Performance = f(Ability, Motivation). Motivation has the following importance:

 Makes employees to look for better ways to do the job

 Makes employees to be quality oriented
 Makes them productive as opposed to apathetic workers
 Makes employees to perform tasks in dependable manner, engage in some form of
creative, innovative and spontaneous behavior at work.
 Helps them to adapt easily with the new automation/use of new equipments, machines or
tools/
There are various assumptions, models and principles developed to govern the extent of
motivation. To mention some, two sets of assumptions in Douglas Mc Gregor's theory showed
two diametrically opposite behaviors. While theory x represents pessimistic, static and rigid
assumptions and thus controlling employees can be primarily important, theory Y is optimistic,
dynamic and flexible and thus self direction and integration of individual needs with the
organization systems is vital. According to Herzberg's theory, there are also two sets of
motivating factor. In one set are dissatisfies, which are related to the job context (circumstances
and conditions) and in the other set are the satisfiers or motivators, which are related to the
content of the job. According to Vroom's theory, employees are motivated to reach goals if they
think that the goal is worthwhile and can see that their effort will help them achieve the goal. The
Porter and Lawler model also presents that essentially performance is a function of ability, the
perception of the task required and effort. Effort is again influenced by the value of rewards and
the perceived effort-reward probability. Equity theory underlines individual subjective judgments
about fairness of the reward received for inputs in comparison with the rewards of others. In
another dimension, according to Skinner, people are motivated by praise of desirable behavior;

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people should participate in setting their own goals and should receive regular feedback with
recognition and praise. In line with promotion, McCelland's theory suggests that employees have
a need for power, the need for affiliation and the need for achievement. For Abraham Maslow,
satisfied needs are not motivators. All these and other theories point out particular direction to
practice appropriate motivational means in accordance with the prevailing conditions.

Note: Refer books or other sources regarding each theory or model of motivation.

b. Job Evaluation. Here, it is necessary to get a clear understanding of how is compensation

determined for various jobs in an organization. Compensation within the organization is
determined by comparing one job to other job. This comparison is made possible with the job
evaluation. Thus, what is job evaluation? Job evaluation is that part of a compensation system in
which a firm determines the relative value of one job in relation to another. Job evaluation is a
systematic determination of the value of each job in relation to other jobs in the organization. If it
is done properly, the relati9ve value of the job is reflected in the relative wage rate for the jobs.
The major reason of job evaluation is to maintain internal pay equity among various jobs in the
organization. Moreover, job evaluation is used to :

 Identify the organization's job structure

 bring an order to the relationships among jobs
 develop a hierarchy of job value that can be used to create a pay structure
 achieve a consensus among managers and employees regarding jobs and pay in the firm
Job evaluation rates the job not the employee performing the job. It is, therefore, a process of
analyzing the worth of the job to that of another, without regard to personalities on the job. In
this process accurate job description and job specification must be available to analyze and
assign monetary value to each organizational job. Note that the more skill, education and
responsibility required in the job the more it worth.

Organizations use the following major types of job evaluation methods.

These are Job Ranking, Job Grading, Factor Comparison, and Point System.
a. Job Ranking Method. It is simple and appropriate for small organization having limited
number of employees. A committee or evaluators review the job description and rank each

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 job from the simplest to most challenging job in the organization. It is based on subjective
evaluation of relative value of jobs.
b. Job Grading Method. Here, jobs are assigned to grades by comparing the job description
with the standard description. Jobs which might be classified as grade I are simple and
routine. Jobs become more difficult as the grade level increases. For example, jobs under
grade IV are believed to be complex and require high level skills. In attaching monetary
value to the various jobs, thereafter makes pay level differentials between jobs, based on their
complexity. More challenging jobs are paid more. in this non-analytical method, "complex
jobs are difficult to fit into the system; a job may seem to have the characteristics of two or
more grades.
c. Factor Comparison Method. This method demand more quantitative analysis of the jobs
involved, each job is broken down into factors, which are considered common to all types of
jobs. The compensable factors to be used to compare jobs in the organization are skill,
mental requirements, physical requirements, responsibilities and working condition.

The factors are ranked according to their relative importance in the job and then assign a
monetary value to each factor. For example, a job which worth Birr 1200,00 per month may have
its different contributing factor valued as follows: Skills (Birr 240), mental (Birr 360),
Responsibility (Birr 240) Physical requirement (Birr 192) and working condition (Birr 168).

d. Point Method. It is the most accurate and widely used method of job evaluation. It resembles
factors comparison method in that, in both cases, jobs are broken down into factors like skill,
mental effort, responsibility, physical effort and working condition.

8.3 Employee Benefits and Services (Fringe benefits)

Employees' Incentives and Benefits: These are group membership rewards that provide
security for employees and their family members. They are sometimes called indirect
compensation because they are given in the form of plan rather than cash.

Incentives: These are direct financial compensation and they are also called "payment by
results" and paid in addition to wages and salaries. There are individual incentive schemes and
group incentive schemes depending of task accomplishment whether it is accomplished by

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individual or group effort. Incentives depend up on productivity, sales, profit, or cost reduction
efforts.

Benefits: include such employee benefits as provident fund, gratuity, medical care,
hospitalization, accident relief, health and group insurance, canteen, uniform, recreation and the
like. Benefits can be broadly classified in to two categories: Legally required (mandated or
involuntary) benefits and voluntary benefits.

Statutory/legally required/ benefits: These are enforced or required by law to be practiced by

employers. It includes annual live granted based on service year, maternity leave, sick leave,
marriage leave, special leave without /with pay, medical benefits, injury leave, disability pension
and compensation, pension/provident fund/ and other benefits.

Voluntary benefits: These are provided by the organizations voluntarily and stated at
employer's discretion. These are payment for time not worked, health benefits, security benefits
like life insurance, disability protection works' compensation, and retirement plan and employee
services like relocation, subsidize costs of child care, educational assistance, subsidized cafeteria,
hazard pay etc.

Perquisites: These are allowed to executives and include company car, club membership, paid
holidays, furnished houses, stock options schemes and the like. It is used to retain competent
executives

Chapter 9

OCCUPATION, HEALTH & SAFETY & Managing Stress

A. Elements of Workplace Safety and Health

Safety: Involves protecting employees from injuries due to work-related accidents.
Health: Refers to the employees’ freedom from physical or emotional illness

Safety programs may be designed to accomplish their purposes in two primary ways. The first
approach is to create a psychological environment and attitudes that promote safety. A strong

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company policy emphasizing safety and health is crucial. The second approach to safety program
design is to develop and maintain a safe physical working environment.
• Physical Conditions: Conditions resulting from the workplace environment that include
occupational diseases and accidents, such as:
• Repetitive motion injuries
• Back pain
• Cancer Etc.
• Psychological Conditions: Conditions resulting from the workplace environment that result
from organizational stress and low quality of working life. These include:
• Dissatisfaction, withdrawal
• Mistrust in others, irritability

I. Safety Programs
Today, it has become clear that optimal health can generally be achieved through environmental
safety, organizational changes, and different lifestyles.
a. Developing Safety Programs—Organizational safety programs require planning for
prevention of workplace accidents. Plans may be relatively simple or more complex and
highly sophisticated in order to fit the organization’s size. Top management’s support is
essential if safety programs are to be effective. Tremendous economic losses can result
from accidents.
1. Job hazard analysis: The main goal of safety and health professionals is to prevent job-
related injuries and illnesses.
2. Employee involvement: One way to strengthen a safety program is to include employee
input, which provides workers with a sense of accomplishment.
b. Accident Investigation: Accidents can happen even in the most safety-conscious firms.
Each accident, whether or not it results in an injury, should be carefully evaluated to
determine its cause and to ensure that it doesn’t recur. The safety engineer and the line
manager jointly investigate accidents—why, how, and where they occur and who is
involved. Main causes that can create accidents at workplace are:
• Chance occurrences
• Unsafe working conditions
• Unsafe acts by employees

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• Unsafe conditions
􀂾 Physical conditions
• Defective Equipment
• Inadequate Machine Guards
• Lack of Protective Equipment
􀂾 Environmental conditions
• Noise
• Dust, Fumes
• Stress
• Unsafe behaviors

c. Evaluation of Safety Programs—Perhaps the best indicator that a safety program is

succeeding is a reduction in the frequency and severity of injuries and illnesses.

d. Rationale for Safety and Health Trends—Firms are spending an increasing amount of
money on safety.
Reasons include;
(1) Profitability: employees can produce only while they are on the job
(2) Employee relations: firms with good safety records can attract and retain good employees
(3) Reduced liability: an effective safety program can reduce corporate and executive liability,
(4) Marketing: a good safety record may well provide companies with a competitive edge, and
productivity
(5) An effective safety program may boost morale and productivity while simultaneously
reducing rising costs.
II. Ways to manage Safe and Healthy environment in organization

To cope with physical hazards and other hazards such as stress, unsafe behavior, and poor health
habits, employers often design comprehensive safety and health programs. Among these are
safety programs, employee assistance programs, and wellness programs.
a. Safety Programs
A safe working environment does not just happen; it has to be created. The organizations with
the best reputations for safety have developed well-planned and thorough safety programs.
b. Employee Assistance Programs (EAPs)

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EAPs are programs designed to help employees whose job performance is suffering because of
physical, mental, or emotional problems.
c. Wellness Programs
A complete wellness program has three components:
• It helps employees identify potential health risks through screening and testing.
• It educates employees about health risks such as high blood pressure, smoking, poor diet, and
stress.
• It encourages employees to change their lifestyles through exercise, well nutrition, and health
d. Smoking in the work place
Numerous studies have concluded that workplace smoking not only is hazardous to employees’
health, but also is detrimental to the firm’s financial health. Increased costs of insurance
premiums, higher absenteeism, and lost productivity cost huge amount a year.

Effective safety programs share the following features:

• They include the formation of safety committee and participation by all departments within the
company. Employees participate in safety decision and management carefully
considers employee suggestions for improving safety.
• They communicate safety with a multimedia approach that includes safety lectures, films,
poster, pamphlets, and computer presentations.
• They use incentives, rewards, and positive reinforcement to encourage safe behavior.
• They communicate safety rules and enforce them.
• They use safety directors and/or the safety committee to engage in regular self-inspection
and accident research to identify potentially dangerous situations, and to understand why
accidents occur and how to correct them.

STRESS MANAGEMENT

A. Stress
Stress is the perceived threat to one’s physical or psychological well being. Because of the silent
nature of the perceived threat, stress is often called a ‘silent killer’.
Stress is the body’s nonspecific reaction to any demand made on it. For various reasons,
programs dealing with stress and its related problems are becoming increasingly popular. Long-

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term productivity depends largely on the dedication and commitment of the company’s
employees. Employees are increasingly holding their employers liable for emotional problems
they claim are work related. And, stress-related mental disorders have become the fastest-
growing occupational disease. There is increasing evidence indicating that severe, prolonged
stress is related to the diseases that are leading causes of death—coronary heart disease,
stroke, hypertension, cancer, emphysema, diabetes, and cirrhosis; stress may even lead to
suicide. Some signs that may indicate problems include impaired judgment and effectiveness,
rigid behavior, medical problems, increased irritability, excessive absences, emerging addictive
behaviors, lowered self-esteem, and apathetic behavior.
Stress is useful and is called eustress.
In the case of psychological stress and especially due to the intensity and frequency of threat in
modern life or because of the maker of an individual, the cycle does not get cut off. Then, it
becomes bad and is called distress.

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 Fig. 1: Stress and Performance
I. Sources of Stress
Regardless of its origin, stress possesses the same devastating potential. Some factors are
controllable to varying degrees, whereas others are not.
Stressor
The person or event that triggers the stress response, it can be organizational, personal or
environmental factor that can become the source of stress.
a. Organizational Factors: Many factors associated with a person’s employment can be
potentially stressful. These include the firm’s culture, the individual’s job, and general
working conditions.
b. Personal Factors: Stress factors outside the job and job environment also may affect job
performance. Factors in this category include the family, financial problems, and living
conditions.
c. The General Environment: Stress is a part of everyone’s everyday life and it’s potential
lurks not only in the workplace and the home but also in our general environment. The
three-hour commute in rush traffic, the unrelenting rain, the oppressive heat, or chilling
cold can all create stress. Excessive noise, wherever it is encountered, can drive some
people up the wall.

II. Symptoms of Stress

Stress can express following four types of the symptoms:
a. Short-term physical symptoms: Short-term physical symptoms include; faster
heart beat, increased sweating, cool skin Cold hands and feet Feelings of nausea,

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or 'Butterflies in stomach' Rapid Breathing, Tense Muscles, dry Mouth, desire to urinate,
diarrhea
b. Long-term physical symptoms: Change in appetite frequent colds illnesses (such as asthma
Back pain digestive problems headaches aches and pains) feelings of intense and long-term
tiredness, Risk factors (Heart attacks and strokes Hypertension and headaches Ulcers
Allergies)
c. Internal symptoms: Internal symptoms include Worry or anxiety, Confusion, and an inability
to concentrate or make decisions, Feeling ill, Feeling out of control or overwhelmed by events,
Mood changes, Depression, Frustration, Helplessness, Restlessness, Being more lethargic,
Difficulty sleeping, drinking more alcohol and smoking more, Changing eating habits, relying
more on medication.
d. Behavioral symptoms: Behavioral Symptoms include, talking too fast or, too loud Bad
moods being irritable Defensiveness Being critical Aggression, Irrationality, Overreaction
and reacting emotionally Reduced personal effectiveness Being unreasonably negative
Making less realistic judgments Being unable to concentrate and having difficulty making
decisions being more forgetful Making more mistakes being more accident-prone Changing
work habits Increased absenteeism Neglect of personal appearance
Outcomes of Organization due to stress
o Continuous stress in working environment results in some problem in organizational
operations like poorer decision-making, decreased creativity, lost work time, increased
turnover and more sabotage.
o Stress can affect the performance in positive as well as negative ways.
o Stress is a dynamic condition in which an individual is confronted with an opportunity,
constraints or demand related to what he or she desires, and for which the outcome is
perceived to be both uncertain and important.
o Stress is a complex issue, so let’s look at it more closely. Stress can manifest itself both in
positive and negative way.
o Stress is said to be positive when the situation offers an opportunity for one to gain
something; for example, the “psyching up “that an athlete goes through can be stressful, but
this can lead to maximum performance.

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o It is when constraints or demands are placed on us that stress can become negative.
Constraints are barriers that keep us from doing what we desire.
o Demands, on the other hand, may cause you to give up something. Demands are desires that
are backed by the purchasing power or affordability.
Coping Strategies for Stress
Experts emphasize that some stress is healthy and moderate stress is the key to survival.
1. Individual coping approaches:
o There are a number of ways that individuals may take to control excessive stress.
o There are several specific techniques that individuals can utilize to deal with stress.
These methods include hypnosis, biofeedback, and transcendental meditation.
a. Hypnosis: An altered state of consciousness that is artificially induced and characterized by
increased receptiveness to suggestions.
b. Biofeedback: A method that can be used to control involuntary bodily processes, such as
blood pressure or heart beat rate.
c. Transcendental meditation (TM): A stress-reduction technique whereby a secret word or
phrase (mantra) provided by a trained instructor is mentally repeated while an individual is
comfortably seated.

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b. Organizational Coping Approaches—A number of programs and techniques may
effectively prevent or relieve excessive stress. General organizational programs, although
not specifically designed to cope with stress, may nevertheless play a major role.

Chapter 10

Employee and Labor Relation

o Employee Relations refers simply to the direct relationship between an organization and its
employees.
o Labor Relations refers to the direct relationship between the organization and its employees
and the relationship between the organization and the union(s) that either represents the
employees or who could potentially represent them.
o Industrial Relations refers to the direct relationship between the organization and its
employees and the relationship between the organization and the union(s) that either
represent the employees or who could potentially represent them and the relationship
between the organization and all other important stakeholders.

Labor Relations
Field that emphasizes skills that managers and union leaders can use to minimize costly forms of
conflict (such as strikes) and seek win-win solutions to disagreements.
Labor relations involve three levels of decisions:

Type of Union-Management Relationship

Sloane & Witney list six types union-mgt relations that may exist in an orgn.:
1. Conflict:
– Each challenges the other’s actions & motivation;
– Cooperation is nonexistent, & uncompromising attitudes & union militancy are present.
2. Armed truce:
– Each views the other as antagonistic but tries to avoid head-on conflict;
Bargaining obligations & contract provisions are strictly interpreted.

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 3. Power bargaining:
– Mgt accepts the union;
– Each side tries to gain advantage from the other.
4. Accommodation:
– Each tolerates the other in a live and let live atmosphere & attempts to reduce
conflict without eliminating it.
5. Cooperation:
– Each side accepts the other, both work together to resolve human resource &
production problems as they occur.
6. Collusion:
– Both cooperate to the point of adversely affecting the legitimate interests of
employees, other businesses in the industry, & the consuming public
This involves conniving to control markets, supplies, & prices illegally and/or unethical.

Labor Relation involves three levels of Decisions

1. Labor relations strategy: For management, the decision involves whether the organization
will work with unions or develop (or maintain) nonunion operations.
This decision is influenced by outside forces such as public opinion and competition. For unions,
the decision involves whether to fight changes in how unions relate to the organization or accept
new kinds of labor-management relationships.
2. Negotiating contracts: contract negotiations in a union setting involve decisions about pay
structure, job security, work rules, workplace safety, and many other issues. These decisions
affect workers’ and the employer’s situation for the term of the contract.
3. Administering contracts: These decisions involve day-to-day activities in which union
members and the organization’s managers may have disagreements. Issues include complaints of
work rules being violated or workers being treated unfairly in particular situations. A formal
grievance procedure is typically used to resolve these issues.

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Collective Bargaining
 Negotiation between union representatives and management representatives to arrive at a
contract defining conditions of employment for the term of the contract and to administer
that contract.
 The process through which representatives of management and the union meet to
negotiate a labor agreement.

Typical Provisions in Collective Bargaining Contracts

 Establishment and administration of the agreement
 Bargaining unit
 Contract duration and reopening and renegotiation provisions
 Union security and the check off
 Special bargaining committees
 Grievance procedures
 Arbitration and mediation
 Strikes and lockouts
 Contract enforcement
 Functions, rights, and responsibilities
 Management rights clauses
 Subcontracting
 Union activities on company time and premises
 Union–management cooperation
 Regulation of technological change
 Advance notice and consultation

Wage determination and administration

 General provisions
 Rate structure and wage differentials
 Allowances
 Incentive systems and production bonus plans
 Production standards and time studies

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  Job classification and job evaluation
 Individual wage adjustments
 General wage adjustments during the contract period
Plant operations
 Work and shop rules
 Rest periods and other in-plant time allowances
 Safety and health
 Plant committees
 Hours of work and premium pay practices
 Shift operations
 Hazardous work
 Discipline and discharge
Paid and unpaid leave
 Vacations and holidays
 Sick leave
 Funeral and personal leave
 Military leave and jury duty
Employee benefit plans
 Health and insurance plans
 Pension plans
 Profit-sharing, stock purchase, and thrift plans
 Bonus plans

Unions
Organizations formed for the purpose of representing their members’ interests in dealing
with employers.
Mediation Conflict resolution procedure in which a mediator hears the views of both sides and
facilitates the negotiation process but has no formal authority to dictate a resolution.
In mediation a neutral third party tries to engage the parties in a negotiated solution through
persuasion and rational argument.

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Arbitration Conflict resolution procedure in which an arbitrator or arbitration board determines
a binding settlement.
In arbitration a neutral third party acts as judge with the power to issue a decision binding for
all parties.

Unions typically place high priority on negotiating two types of contract provisions with an
Employer that is critical to a union’s security and viability:
1. check off provisions
o Contract provision under which the employer, on behalf of the union, automatically
deducts union dues from employees’ paychecks.
2. Provisions relating to union membership or contribution.
a. Closed Shop : Union security arrangement under which a person must be a union
member before being hired; illegal for those covered by the National Labor Relations
Act.
b. Union Shop: Union security arrangement that requires employees to join the union
within a certain amount of time (30 days) after beginning employment.
c. Agency Shop: Union security arrangement that requires the payment of union dues but not
union membership

d. Maintenance of Membership: Union security rules not requiring union membership but
requiring that employees who join the union remain members for a certain period of time.

Collective Bargaining Process

1. Preparing for Negotiation
2. Bargaining Issues
 Mandatory bargaining issues- wages, refusal to bargain in these area is a ground for
unfair labour practice charge
 permissive bargaining issues- may be raised but neither side may insist that they be
bargained over
 Recognition, management rights, union security, compensation & benefits, grievance
procedure, employees security

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  prohibited bargaining issues- statutorily outlawed( e.g. closed shop)
3. Negotiating on issues
If agreement reached administration activities continue but negotiation breakdown (agreement
not reached)
Overcoming breakdowns
 Reaching the agreement
 Ratifying the agreement
 Administration of the agreement
4. After negotiation took place still if there is no agreement breakdowns can be overcome third
party intervention either as Mediation or Arbitration
a. Mediation
 A neutral third party tries to engage the parties in a negotiated solution through
persuasion and rational argument
 hears the view of both sides
 facilitates the negotiation process
 has no formal authority to dictates a resolution
b. Arbitration
 A neutral third party acts as judge with the power to issue a decision binding for all parties
Disciplining Employees
Definition
1. “Discipline is a force that prompts an individual or a group to observe the rules, regulations,
and procedures, which are deemed to be necessary to the attainment of an objective.”
William R. Spriegel and Edward Schultz
2. “Discipline is the state of employee self-control and orderly conduct that indicates the extent
of genuine teamwork within an organization.” R. Wayne Mondy
Types of Disciplines
1. Positive Discipline
 Which is called self-discipline, as well as preventive discipline
 Aims at seeking the willing cooperation of employees in observing the discipline code
of the organization.
The two inherent aspects of positive discipline are:

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(i) personal responsibility of employees for maintaining discipline; and
(ii) Independent decision making by them to eliminate their unsuitable and undesirable
behavior.
The responsibility of the organization is to create a positive environment that gently prompts the
employees to comply with the organizational code of conduct.
Besides, the management must provide unambiguous instructions to the employees and relevant
and timely feedback about the performance and its behavior expectations.
The prerequisites for implementing positive discipline are:
 An excellent communication network
 A well-defined line of authority
 Appropriate working conditions
 Sufficient discipline training
2. Negative Discipline
 It is a traditional form of discipline followed by an orthodox management.
 In this method, fear is the key to the maintenance of discipline.
For instance, the fear of punishment for the acts of indiscipline will be the driving force for the
employees to avoiding misconduct. It also forces them to obey the rules and regulations of the
organization.
 This form of discipline is also known by names like punitive discipline and enforced
discipline.
 It never seeks the willing cooperation of the employees in ensuring discipline within the
organization.
 Besides, employees working under a negative environment view discipline as a restraint
on their freedom of behavior.
. For instance, when the management threatens the employees with dire consequences if
they do not report for duty at 10 a.m. and remain till 5 p.m., their response would be to
ensure that they remain in the office during the stipulated office hours but not reach earlier
or leave later than that time. The intention here is evading threat of punishment and not
extending cooperation or performing to the potential.
The consequences of negative discipline are:
• Distrust in industrial relations and mutual antagonism

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 • Low morale and motivation
• High labor turnover
• Work-to-rule approach
• Lack of self-belief
3. Progressive Discipline
 It is a popular form of discipline adopted successfully by many organizations in
maintaining discipline among their employees.
 This method of discipline has found wide acceptance even among the unions.
 Progressive discipline requires an organization to adopt a step-by-step approach in
dealing with the indiscipline problems of an employee.
For instance, the disciplinary process may begin with an oral reprimand to an employee for
performance indiscipline and may end up in his dismissal, if all the efforts to correct his
behaviour fail.
 Progressive discipline may be defined as any employee discipline system that provides a
graduated range of responses to employee performance or conduct problems.
Although progressive discipline is similar to positive discipline, it differs on one basic aspect,
which is the gradually growing and proportionate punishment to the employees. The extent of
punishment depends on the frequency and severity of the performance and behavior problem and
the length of service of the employee.
Types of Disciplinary Action
Disciplinary action: Invokes penalty against employee who fails to meet established standards
As shown in Figure below, different types of punishment are normally awarded for different
kinds of offences.

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1. Oral Reprimand
 It is an oral warning issued to an employee by a manager for the performance or behavior
misconduct reported against that employee.
 The purpose of oral reprimand is to caution the employee against the continuance of the
same misconduct in the future.
 The manager also explains the likely consequence of a similar misconduct in the future.
 Oral reprimands are normally issued in private and the matter is kept confidential.
 As far as possible, the focus of the discussion must be on the problem and not on the
person.
However, the employee may be allowed to offer a brief response to the charges made out
against him.
2. Written Warning
 When an oral warning or counseling to the employee does not produce the desired
result, the manager may issue a written warning to the employee.
 On many occasions, this is the first stage of the formal discipline process.
 The written reprimand normally specifies the nature of offence and also its implications
for the organization, the co-workers and the employee concerned.

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  The employee is normally asked to acknowledge the receipt of the written reprimand,
irrespective of whether he agrees with the content of the letter.
 The written warnings are usually legal documents and may have to be presented in the
court at a later stage.
3. Denial of Increments, Promotions and Pay Hikes
 On some occasions, the management may refuse promotions, increments or pay hike by
blacklisting the employee for a specified period of time.
 These are usually punishments of a temporary nature.
 At a later stage, the management may review the progress in the performance or
behaviour of the employees to decide whether to clear his name for pay hike,
promotions and increments or not.
4. Pay Reductions and Disciplinary Demotions
 This is usually more severe than the denial of pay hikes and promotions because the
employee loses part of even the existing benefits and privileges hitherto received by
him.
 In case of demotion, the employee loses social status too in addition to the monetary
loss.
5. Suspension
 A few offences normally require the direct suspension of the employee without any prior
warnings, oral or written.
 In other offences, it normally comes as the next logical step after oral and written
reprimands in the discipline process.
 Depending upon the nature of the misconduct committed by the employee, the immediate
supervisor or manager may demand the suspension of the employee accused of
misconduct. However, the decision regarding suspension is normally made by higher
authorities in the organization.
 It is also a temporary punishment.
 Once the investigation is over, the suspension may be converted into dismissal or into
some other less severe punishment or simply revoked.
6. Discharge or Dismissal
 This is the severest punishment of all.

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  In this, the employee is permanently removed from service.
 Dismissal or discharge must be done in accordance with the relevant provisions of the
law.
 It must stand the scrutiny of the judicial and quasi-judicial authorities.
 It is normally preceded by a termination meeting in which the employee is informed of
the decision by the management.
 Usually, higher authorities are consulted on the matters pertaining to dismissal or
discharge.
 In case of dismissal, the employee is not entitled to any separation benefits.
 In contrast, the employee is eligible for his provident fund and other retirement benefits
in the event of his discharge from the job.

CHAPTER ELEVEN
INTERNAL MOBLITY, SEPARATIONS, ABSENTEEISM AND TURNOVER

Introduction
There are two types of employee mobility in an organization, internal and external.
External mobility refers to the movement of an employee from one organization to another
seeking better employment/placement based on his or her skill and experience and the
requirements and needs of various organizations or an organization seeking external candidates
for a vacancy because they are not convinced there are suitable internal candidates. This situation
in the development of both individuals and organizations results in external mobility or
employee turnover.
11. 1. Internal mobility
An employee prefers most of the times internal mobility as long as he/she is sure of getting
suitable placement/employment within the organization. However, employees who are not
satisfied with their career in the present organization may seek suitable employment in other
organizations.

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The three types of internal mobility:
Promotions: the movement of employees to higher level jobs, in order to meet the demand for
higher order skills
Transfers: the movement of employees from one job to another, in the same level of
organizational hierarchy.
Demotion: re-assignment of a lower level job to an employee.
1. Transfer
Transfer is the movement of an employee from one job to another in the same level of
organizational hierarchy.
Purpose of Transfer
The transfer are generally affected to build up a more satisfactory work team and to achieve the
following purposes.
 To increase the effectiveness of the organization.
 To increase versatility and competence of the key positions.
 To deal with fluctuations in work requirements.
 To correct incompatibilities in employee relations.
 To correct erroneous placement.
 To adjust workforce.
 To punish employees
Reasons for Transfer
Transfers are of three categories, i.e. Employee initiated, company initiated and public-initiated
(political) transfers.
Employee initiated transfers or personal transfers are primarily in the interest of the employee
and according to his needs and wishes.
Reasons for employee-initiated transfers can be:
 Health and illnesses
 Relief from uncomfortable circumstances (climate)
 Education
 Family related problems
 To avoid conflicts with superiors

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Company initiated transfers are at the initiative of the company. Reasons can be:
 Lack of the right type of human resources in a certain location
 Absenteeism of employees Fluctuation in production
 Change in business activities, technology, organizational structure, etc.
 Improve employee job satisfaction.
Public initiated transfers are initiating through politician or governments for the following
reasons:
 Employee behavior is against the social norms
 The functioning of an employee is against the public interest
Transfers can be either permanent or temporary.
Problems with transfer
Transfers benefit both the employees and the organization, but sometimes some problems can be
associated with transfers. These are:
 Adjustment problems from the employee to the new job, location, environment, superior
and colleagues
 Transfer from one place to another cause much inconvenience and cost to the employee
and his family members relating to housing, transport, educa6tion of the children etc.
 Company initiated transfers might reduce loss in motivation of the employee and his/her
contribution to the organization.
Transfer policy
The problems with transfer can minimize through formulation a systematic transfer policy.
Another reason for clearly specifying a transfer policy is that otherwise superiors may transfer
their subordinates they do not like without a valid reason.
A systematic transfer policy should contain at least the following items:
 Specifications of the circumstances under which an employee will transferee in case of
a company initiated transfer.
 Specification of superior who is authorized and responsible to initiate transfer
 Jobs from and to which transfers will be made, based on job specification and
classification, etc. Norms to decide priority when two or more employees request for
transfer

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 Specification of pay, allowances, benefits that are to allow to the employee in the new
job.
 Specification of other facilities to be extended to the transferee like special leave during
the period of transfer, special allowance for packaging luggage, transportation, etc.
Types of Transfer
There are several types of transfer. Some of them are:-
A. Production transfers
A shortage or surplus of the labor force is common in different departments in a plant or
several plants in an organization. Surplus employees in a department have to be laid-off,
unless they are transferred to another department. Such kind of transfer we call that
production transfer.
B. Replacement Transfers
Replacement transfers, too, are intended to avoid imminent lay-offs, particularly, of
senior employees. A junior employee may be replaced by a senior employee to avoid
lying off the later. A replacement transfer program is used when all the operations are
declining and is designed to retain long-service employees as long as possible.
C. Versatility Transfer
Versatility transfers to make employees versatile and competent in more than one skill.
Versatile options are valuable assets during rush periods and periods when work is dull.
Versatile transfers may be used as a preparation for production or replacement transfer.
D. Shift transfers
Generally speaking, industrial establishments operate more than one shift. Transfers
between shifts are common, such transfers being made mostly on a rotation basis. Such
kind of transfers may be done on special requests from employees.
E. Remedial Transfer
Remedial transfers are done at the request of employees and are, therefore, called
personal transfers. It takes place because the initial placement of an employee may have
been faulty or the worker may not get along with his or her supervisor or with other
workers in the department. He or she may be getting too old in his or her regular job, or
the type of job or working conditions may not be well-adapted to his or her present health

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 or accident record. If the job is repetitive, the worker may stagnate and would benefit by
transfer to a different kind of work. Such kind of transfer we call that remedial transfer.
Promotion
Vacancies can be filled either from internal or external sources. If the organization prefers to fill
a vacancy only by internal candidates and it assigns a higher level job, most of the times by using
some promotional tests-to a selected employee, it is called promotion.
If an organization, starts a selection procedure for both external and internal candidates and the
internal candidates gets the job it is not called promotion. A promotion involves an increase in
status, responsibilities and pay. But in certain cases only the pay increases and the other elements
remain stagnant. In other cases, the status only increases without a corresponding increase in pay
or responsibilities.
Thus, the main conditions for promotion are:
 Assignment of a higher-level job to an employee, than what he/she is presently
performing
 The employee will be delegated with greater responsibility and authority than what he
has earlier
 Promotion normally accompanied by higher pay
Sometimes, for honorary reasons or because of a probation period, promotion does not come
with higher pay. Promotions can be permanent or temporary.

Purposes of promotion
Organizations promote the employees with a view to achieve the following purposes:
 To use the employee skills, knowledge and experience at the appropriate level in the
organizational hierarchy, resulting in organizational effectiveness and employee
satisfaction.
 To develop competitive spirit and motivate employees to acquire the skill, knowledge, etc.
necessary to obtain higher-level jobs.
 To develop competent (qualified internal source of employees) ready to take up higher
level jobs in the changing environment
 To promote interest in training and development program and team development areas
 To build loyalty and boost morale

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  To reward committed and loyal employees
 To reduce labor turnover
Types of Promotion
Promotions may be classified into the following types.
i. Horizontal Promotion
This type of promotion involves an increase in responsibilities and pay, and a change in
designation. But the employee concerned does not transgress (go beyond the limit) the job
classification. For e.g. lower division clerk will be promoted to upper division clerk. In this case
there is no change in the nature of the job.
ii. Vertical Promotion
This type of promotion results in greater responsibility, prestige and pay, together
with a change in the nature of the job.
iii. Dry Promotion
Dry promotions are sometimes given in lieu of increases in remuneration. Designations
are different but no change in responsibilities.
Bases of promotion
Management of most organizations uses merit/achievement/qualities as a basis for promotion.
Merit is an employee's skills, knowledge, ability, efficiency and achievements as measured from
educational, training and past employment and performance appraisal record.
Sometimes seniority, which is length of services, is use as a basis for promotion. If favoritism is
use as a basis for promotion, employees are promoting on basis of friendship, political ideas or
corruption.
Sometimes promotions may base merit and seniority. If two or more employees with the same
level of merits are eligible for promotion, the employee with the most seniority will get the
position.

Problems with promotion

 It disappoints some employees. Some employees who are not promoted will disappoint
when their colleagues with similar qualifications and experience are promoted. These
employees may lose their motivation and contribute less to the organization.

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  Some employees refuse promotion. There is a general tendency that employees accept
promotion. However, sometimes employees refuse promotion. This might be the case
when a promotion includes a transfer to an unwanted location. Another reason for
refusing a promotion might be that the employee feels he might not be able to cope with
the workload and responsibilities that comes with a job at a higher level. In addition,
personal circumstances (illness of family members, education) might be a reason to
refuse promotion.
 Some superiors will not release their subordinates. The main reason for superiors not to
release a subordinate is that they feel they cannot miss that person in their department.
Promotion policy
Problems of promotion can overcome with a clear promotion policy. It is thus advice that
each organization makes its own promotion policy.
The most important basic characteristics of a promotion policy:
 It should be consistent in such a way that the policy should apply uniformly to all
employees, independent of the background of the person.
 It should be fair and impartial. In other words it should not allow favoritism.
 It should ensure open policy, in the sense that every eligible employee should be
considered for promotion, rather than a closed system which consider only a class of
employees.
 It should contain clear norms and criteria for judging merit, seniority, potentiality, etc
The contents of promotion policy:
Promotion policies should contain at least the following items:
 Percentage of vacancies to be filled by promotions in each job family or job class
 The basis for promotion, i.e. merit, seniority or a combination of these two
 The norms to judge merit, tests to be used to measure merit and potentiality, norms to
measure seniority, etc…
 Necessary qualifications, level of performance on the present job, level of potentialities
to possess by employees to considered for promotion.
 Establishment of clear-cut promotion channels from one level of job to another, from
one department to another, etc.

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  Mode of acquiring the new skills, knowledge and facilities that offered by the
organization like guidance by superiors, training facilities, leave facilities, for acquiring
higher academic qualification, etc.
 Their present superiors or head of the departments should make provision (regulations)
for immediate relief of the promoted candidate.
Demotions
What is demotion?
The other type of internal mobility is demotion. It is the opposite of promotion.
Demotion is the assignment of a lower level job to an employee. In the new position, the
employee has lower level pay. Organizations use demotions less frequently as it affects
employee career, prospects and morale.
Reasons for demotions
Demotions are necessary for the following reasons:
i. Unsuitability of the employee to the higher level of job
Employee may promote based on past performance and seniority. However, some of the
employees promoted on those bases may not meet the job requirements of the higher-
level job.
Such employees may be demoted the lower level jobs, where their skill, knowledge and aptitude
fit the job requirements. It happens often that employees are promoted to a level where they are
not competent anymore.
ii. Bad business conditions
Generally, bad business conditions forces the organization to reduce production, close
certain departments of close complete factories. Consequently, organizations minimize
the number of employees. Junior employees will fire demoted under such conditions.
iii. New technology and new methods of operation
New technology and new methods often demand new and higher level skills. If the
existing employees do not develop themselves to meet those new requirements,
organizations demote them to lower level jobs, which are suitable.
iv. Disciplinary ground
Employees are demoting on disciplinary grounds. This is an extreme step and as such,
organizations rarely use this measure.

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11.3. Separation
The final operative function of HRM is separation of the employee from the organization in
order to return him or her to society.
The three main processes of separation are;
(1) The retirement of older employees
(2) The layoff or release of qualified younger employees no longer needed by the organization
(3) The discharge of employees who do not meet the organizations expectations.
a. Resignation or voluntary quit by employees: when they are dissatisfied with the present job
and/or organization, or when they can get better employment in another organization. When the
employee him/herself initiates a termination, it is called a resignation. There are resignations,
which are avoidable, and others, which are unavoidable. For example, avoidable resignations
indicator room for some improvement in the organizational climate. The Human Resource
Department should investigate the real reasons behind such a resignation. A study of exit
interviews over a time may disclose a fixed pattern suggesting improvements in the Human
resource Management function in aspects such as the nature of supervision, compensation
structure, promotional policies, etc.
b. Layoff from work: Organizations terminate the services of employees because the number of
jobs are reduced or eliminated, due to bad business conditions, change in technology or lack of
materials or other causes.
c. Firing, discharge, or dismissal: Organizations terminate the services of employees if they
are dissatisfied with the performance or conduct/behavior of employees or sometimes when an
employee has lack of qualifications. As a safeguard, responsibility for firing should not only rest
by the immediate supervisor. The approval of the next higher manager should generally be taken.
Firing can be on the ground of unsatisfactory performance, misconduct or lack of qualifications
for the job. Unsatisfactory performance refers to persistent failure on part of the employee to
perform his assigned tasks or duties or to meet the required standards for the job.
d. Retirement and death will terminate the contract between employer and employee. e.
Misconduct refers to willful violation by an employee of the rules of the organization. It would
include insubordination, dishonesty and calls for extreme action.

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11.4. Employee Turnover (Labor Turnover)
Labor turnover is a familiar term used to describe the permanent withdrawal of employees from
an organization.
Turnover means shifting of employees into and out of an organization. It is defined as the rate of
change in the employees of an organization during a definite period. It measures the extent to
which old employees leave and new employees enter into an organization.
Annual manpower turnover = Leavers over 12 months X 100 %
Average manpower over same period
The employee turnover rate is usually calculated by dividing the number of employees separated
from the company they were working for by the base number of jobs during the period.
Employees who transfer to other positions within the same organization are not considered in the
calculation, as well as those who retired, had their job phased-out or were terminated due to
downsizing.

Turnover rates for employees can be measured and compared over time and across companies
using what is commonly referred to as the employee turnover index.
The index is calculated as follows:
TTR = [S/N] x 100
TTR = total turnover rate
S = number of employees separated in the period
N = average number of employees in the unit in the period
Similarly, the rates can computed separately for different types of separations like voluntary quit,
lay-off, etc. These formulae are useful to compute and compare the rates with those of other
organizations for the same period and of the same organization for the past years. The
comparison shows trends in the turnover rates and the magnitude of the problem and indicates
the effects of external mobility.
Certain level of external mobility is inevitable due to death, retirement, and layoff. It is desirable
as it enables a certain healthy flow of new human resources into the organization. However,
turnover or mobility beyond that level confronts managers with many problems like transferring
human resources among various departments and job or recruiting new employees. This will

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increase the cost of induction, training and placement as well as increase the rates of incidents,
wastage and decreasing productivity.
Though external mobility is in some case good for the employees, it also causes problems in
many cases. These problems include discontinuation in service, loss of salary, disadvantage in
getting various fringe benefits that are tie to the length of service, like bonus, retirement benefits,
etc.
Types of Turnover
There are a few generally accepted models of employee turnover. The first model suggests that
turnover is either voluntary or involuntary. Suggesting that an employee has chosen to leave the
organization (voluntary) or they have been forced to leave (involuntary).
Below average performers may be forced out of an organization with threats of firing or with
unattractive hours or assignments, yet if the employee initiates the terminations they are recorded
as voluntary. These types of employee initiated resignations are not truly a function of the
employees desire to leave and, therefore, should be treated separately.
The second model that has been generally described as job related, non job related and lack of fit
within the organization.

Job-related turnover includes employees who left the organization due to reasons that were
somewhat within the control of the employer. Such factors would include dissatisfaction with
working conditions, supervising conflicts or salary discrepancies. Non-job related turnover
occurs when an employee leaves the organization due to things in the employee's personal life
that impact their performance in the workplace. Examples of these would be relocation, family
problems, marital issues, emotional instability or mental health, addictions, and chemical abuse.
The third type of turnover is due to the employee’s lack of fit within the organization.
Examples of this type of turnover would include employees who were so uncomfortable in the
work environment that they could not continue the employment. The discomfort may be due to
many reasons. Possibly they are not fully qualified and they are having difficulty fulfilling the
position, or perhaps the employee is qualified but does not work best in the work environment he
or she is being placed in. These are just a few examples of an employee’s lack of fit within the
organization.

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