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HUMAN RESOURCE MANAGEMENT

Human Resource Management (HRM) is the function within an organization that focuses on

recruitment of, management of, and providing direction for the people who work in the

organization.

Human resource management (HRM, or simply HR) is the management of an organization's

workforce, or human resources. It is responsible for the attraction, selection, training,

assessment, and rewarding of employees, while also overseeing organizational leadership

and culture, and ensuring compliance with employment and labor laws.

Personnel management is essentially “workforce” centered whereas human resource

management is “resource” centered.

Figure 1.1 Human Resource Cycle

Personnel vs Human Resources at Various Levels

Human Resources denotes the total sum of all the components - skills, creative ability etc. -

with all the people (employed, self-employed, unemployed, employers, owners etc.)

whereas personnel is limited to employees of organisations only.

Human Resources, even at the organisation level, includes all resources of all the people

who contribute their services to the achievement of organisational goals and also others

who contribute their services to create hurdles in the achievement of the said goals.

Personnel management as defined by the Indian Institute of Personnel Management

“Personnel management is a responsibility of all those who manage people as well as being

a description of the work of those who are employed as specialists. It is that part of

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management which is concerned with people at work and with their relationships within an

enterprise. It applies not only to industry and commerce but to all fields of employment.”

PERSONNEL VS HUMAN RESOURCES MANAGEMENT

Personnel Management Human Resources Management

1. Personnel means persons employed. Personnel management is the management of people, skills employed.

1. Human Resources management is the management of employees’ knowledge, abilities, talents, aptitudes, creative abilities etc.

2. Employee in personnel management is mostly treated as an economic man as his services are exchanged for wage / salary.

2. Employee in human resource management is treated not only as economic man but also as social and psychological man. Thus, the complete man is viewed under this approach.

3. Employee is viewed as a commodity or tool or equipment which can be purchased.

3. Employee is treated as a resource.

4. Employees are treated as cost centres and therefore management controls the cost of labour.

4. Employees are treated as profit centres and therefore, invests capital for human resource development and future utility.

5. Employees are used mostly for the organisational benefit.

5. Employees are used for the multiple benefits of the organisation, employees and their family members.

6. Personnel function is treated as only an Auxiliary function.

6. Human resources management is a Strategic Management function.

Functions of Human Resources Management:

There are two broad functions of H R M. They are

1. Managerial Functions 2. Operational Functions

Managerial Functions:

Managerial functions of Personnel management include planning, organising, directing, co-

ordinating and controlling.

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Planning:

It is the charting out of programmes and changes in advance in the achievement of

organisational goals. Hence, it involves planning of human resources requirements,

recruitment, selection, training etc. It also involves forecasting of personnel needs, changing

values, attitudes and behaviour of their employees and their impact on the organisation.

Organising:

In the words of J.C. Massie, an organisation is a "structure and process by which co-

operative groups of human beings allocated its tasks among its members, identifies

relationships and integrates its activities towards a common objective." Given the complex

relationships that exist between specialised departments and the general departments,

many top managers seek the advice of personnel manager. In this manner, the organisation

establishes relationships among the employees so that they can together contribute to the

achievement of organisational goals.

Directing:

After planning and organising comes the execution of the plan. The willing and effective co-

operation of employees towards the achievement of organisation's goal has to be brought

about by proper direction. Identifying and utilising maximum potentials of people is possible

through motivation and command. Direction, therefore, is an important managerial function

in ensuring optimum employee contribution.

Co-ordinating:

It is the task of matrixing various employees’ efforts to ensure successful goal achievement.

The Personnel manager co-ordinates various managers at different levels as far as the

personnel functions are concerned.

Controlling:

After planning, organising, directing and co-ordinating, the various activities, the

performance is to be verified in order to know, at various points of time, whether the

activities are performed as per plans and directions. It involves checking, verifying and

comparing actual with the plans, identification of deviations if any and correcting the

deviations. Auditing training programmes, analysing labour turnover, overseeing morale

surveys, conducting exit interviews are some of the controlling functions of personnel

management.

Operative Functions:

The operative functions of H R M relate to employment, development,

compensation and relations. All these are interacted by managerial functions. Also, they are

to be performed in conjunction with management functions.

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Human Resources Planning

Recruitment EMPLOYMENT Selection Induction

Placement Performance Appraisal

Training HUMAN RESOURCE Management Development DEVELOPMENT Career Planning & Development Organisation Change & Organisation Development

Job Evaluation COMPENSATION Wage & Salary Administration MANAGEMENT Fringe Benefits Motivation

Morale HUMAN RELATIONS Job Satisfaction

Communication Grievance & Disciplinary Procedures Quality of Work Life & Quality Circles

ORGANISATIONAL DESIGN ---- JOB DESIGN ---- JOB ANALYSIS

Functions of H R M

Employment:

Employment function is securing and employing the people having required level of human

resources essential for achieving the organisational objectives. It involves job analysis,

human resources planning, recruitment, selection, placement, induction and handling

internal mobility.

Job Analysis:

It is the study and collection of data relating to the operations and responsibilities of a

specific job. It includes:

a. Collection of data and information and facts relating to the various aspects of jobs

including men, machines and materials.

b. Drawing up of job description, job specification, job requirements and employee

specification with which nature, levels and quantum human resources can be finalised.

c. Providing the guidelines, plans and the basis for job design and for all operative

functions of H R M.

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Human Resources Planning:

This is the process which assures the organisation that it will have adequate number of

qualified persons, at requisite times, performing in a way to satisfy the needs of the

organisation and also provide satisfaction to the individual employee, so employed.

The process involves:

a. Estimating the present and future requirements of human resources based on

objectives and long range plans of the organisation.

b. Calculation of net human resource requirements based on the present availability of

human resources.

c. Taking suitable steps to identify, mould, change and develop the strength of existing

employees so as to meet the future requirements.

d. Preparation of action plans to acquire the balance human resources from outside the

organisation and to develop the existing employees.

Recruitment:

It is the process of searching for future employees (requirement) and ensuring they apply

for jobs in the organisation.

It involves:

a. Identification of existing sources of candidates and developing them.

b. Seeking out and identifying new sources of applicants.

c. Motivating the right type of candidates to apply for jobs in the organisation.

d. Ensuring a healthy balance between internal and external sources

Selection:

It is the process of ascertaining the qualifications, experience, skill, knowledge etc. of an

applicant to ascertain his / her suitability for the job applied for.

This includes:

a. Developing application blanks.

b. Creating and developing valid and reliable testing techniques.

c. Formulating interviewing techniques.

d. Checking of references.

e. Setting up for medical examination policy and procedure.

f. Line Managers to be involved in the decision making.

g. Sending letters of appointment.

h. Employing the selected candidates, when he reports for duty

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Placement:

It is the process of allotting to the selected candidate the most suitable job, as per the job

requirements and employee specifications.

This function includes:

a. Counselling the concerned managers regarding the placement

b. Overseeing the follow-up studies, employee performance appraisal to monitor

employee adjustment to the job, in the coming days.

c. Correcting wrong / misjudged placements, if any.

Induction and Orientation:

These are procedures by which a new employee is rehabilitated in the new surroundings

and introduced to the practices, procedures, policies, people etc. of the organisation.

It includes:

a. Familiarising the employee with company philosophy, objectives, policies, career

planning and development, company product, market share, history, culture, etc.

b. Introduce the new employee to the people - his colleagues, supervisors and

subordinates.

c. Mould the employee by orientation methods to the new working conditions.

Human Resources Development:

This process involves improving, moulding, and developing the skills, knowledge, creativity,

attitude, aptitude, values, commitment etc. based on the present and future job and

company requirements.

Performance Appraisal:

It is the continuous and systematic evaluation of individual employees with respect to their

performance and their potential for future development. It includes:

a. Enunciating policies, procedures and techniques.

b. Assisting functional managers.

c. Reviewing and summarising reports.

d. Evaluating the effectiveness of various programmes.

Training:

It is the process of transmitting the employees the technical and operating skills and

knowledge. It includes:

a. Identification of training needs of the individuals and for the organisation.

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b. Developing appropriate training programmes.

c. Assisting and advising the management in the conduct of training programmes.

d. Transmitting requisite job skills and job knowledge to the employees.

e. Assess the effectiveness of training programmes.

Management Development:

It is the process of designing and conducting appropriate executive development

programmes so as to develop the managerial and human relations of skills of the

employees.

It includes:

a. Identification of the areas in which management development is needed.

b. Conducting development programmes.

c. Motivating executives / managers.

d. Designing special development programmes / assessment procedures for

promotions.

e. Utilising the services of specialists - both internal and external for development and /

or Institutional (external) development programmes.

f. Evaluating the effectiveness of executive development programmes.

Career Planning and Development:

It is the planning of one's career and implementation of career plans by means of education,

training, job search and acquiring of work experience.

It includes:

a. Internal mobility - vertical and horizontal transfers, promotion and demotion.

b. Transfer - process of placing employees in the same level jobs where they can be

utilised more effectively as per the needs of the organisation. This also means - developing

transfer policies, offering assistance and guidance to employees under transfer orders and

evaluating transfer policy periodically.

c. Promotion - it deals with the upward assignment of employees to occupy higher

positions (with better status and pay) in consonance with resources of employees and job

requirement. The Department must ensure that:

i. equitable, fair and consistent promotions are formulated and administered.

ii. managers and employees are given assistance and guidance on the subject of

promotion.

iii. execution of promotional policies are as per policies and procedures.

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d. Demotion - is the downward assignment of, an employee in an organisation. The

Department must ensure that:

i. equitable, fair and consistent demotion policies are drawn up.

ii. assisting and advising employees regarding demotions.

iii. ensure fair implementation of demotion policies and procedures.

Organisation Development:

The planned process drawn up to improve organisational effectiveness through changes in

individual and group behaviour, culture and systems of the organisation - drawing models

from applied behavioural science.

Compensation Management:

The process of providing equitable, fair and adequate remuneration to the employees. This

per se involves - Job evaluation, wage and salary administration, incentives, bonus, fringe

benefits, social security measures and so on.

a. Job Evaluation - the process of determining the relative worth of jobs:

i. Select suitable job evaluation techniques.

ii. Classify jobs in to various categories.

iii. Determining relative worth of jobs in various categories.

b. Wage and Salary Administration - developing and operating an appropriate wage

and salary programme. It will necessitate:

i. Initiate a wage and salary survey.

ii. Determining wage / salary rates based on various factors.

iii. Proper administration of Wage and Salary Programmes.

iv. The periodical evaluation of its effectiveness.

c. Incentives - formulation administration and reviewing the schemes of payment of

financial incentives in addition to regular wages and

i. Formulation of incentive schemes.

ii. Assisting managers on its operation.

iii. Periodical review to evaluate effectiveness and relevance.

d. Bonus - payment of statutory bonus according to the Payment of Bonus Act, 1965,

and its latest amendments.

e. Fringe Benefits - various benefits at the peripheral area of the wage. Organisation

provides these primarily to motivate the employees and to meet their contingencies.

Benefits include:

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i. Disablement benefit.

ii. Housing facilities.

iii. Educational facilities to employees’ children.

iv. Canteen facilities.

v. Conveyance facilities.

vi. Credit facilities.

vii. Legal assistance.

viii. Medical, maternity and welfare facilities.

ix. Company stores.

f. Social security measures -These measures are in addition to fringe benefits, which

include :

i. Workmen's compensation to those workers (or their dependants) who are involved

in accidents.

ii. Disablement benefits and allowance.

iii. Dependent benefits.

iv. Retirement benefits like Provident Fund, Pension, Gratuity etc.

Human Relations:

Administering various human resources policies like employment development and

compensation and interactions among the employees on one hand and employees and the,

management on the other, create a sense of working relationship between workers and

management and trade unions.

Basically they are all interactions between human beings. Human relations, is

therefore, is an important area in management which integrates people into work situations

in a way that motivates people to work together with economic, psychological and social

satisfaction thereby increasing their productivity. Hence Human Resources Management

functions will centre around:

a. Understanding perception, personality, learning, intra and inter personal relations,

inter and intra group relations.

b. Motivating all employees.

c. Promoting employee morale.

d. Developing communication skills.

e. Developing leadership skills.

f. Redressing satisfactorily through a well defined grievance procedure.

g. Handling disciplinary cases by established disciplinary procedures and in all fairness.

h. Providing adequate counselling to solve employees' personal, work and family

problems, thereby releasing their stress and strain.

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Objectives of Human Resource Management

1. Create and utilise capable and motivated workforce, to achieve the basic

organisational goals.

2. To establish and maintain proper and sound organisational structure and healthy

working relationships among all its employees.

3. To ensure the integration of individual group's goals with those of the organisation.

4. To create facilities for individuals and groups to develop so as to be in tune with the

growth of the organisation.

5. Proper and optimum utilisation of human resources.

6. Ensuring adequate and equitable wages, incentives and other benefits so that

satisfied individuals and groups are motivated to take on challenges.

7. Maintain high employee morale.

8. Continuously upgrading the skill and knowledge levels of employees, by training and

development programmes.

9. Ensure opportunity for participation in management to the extent possible.

10. Provide acceptable and effective leadership.

HRM Model

The HRM model contains all HR activities. When these activities are discharged effectively,

they will result in a competent and willing workforce who will help realize organizational

goals. There is another variable in the model – environment. It may be stated that the HR

function does not operate in vacuum. It is influenced by several internal and external forces

like economic, technological, political, legal, organizational, and professional conditions.

HRM: is a management function that helps manager’s recruit, select, train, and develop

members for an organization.

Human Resource Planning: is understood as the process of forecasting an organizations

future demand for, and supply of, the right type of people in the right number.

Job Analysis: is the process of studying and collecting information relating to the operations

and responsibilities of a specific job. The immediate products of this analysis are job

descriptions and job specification.

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. The result is a pool of applicants from which new employees are selected.

Selection: is the process of differentiating between applicants in order to identify (and hire)

those with greater likelihood of success in a job.

Placement: is understood as the allocation of people to jobs. It is the assignment or re-

assignment of an employee to a new or different job.

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Nature of HRM

Human

Resource

Planning

Job Analysis

Recruitment

Selection

Placement

Training and

Development

Remuneration

Motivation

Participative

Management

Communication

Safety and

Health

Welfare

Promotions etc

Industrial

Relations

Trade Unionism

Disputes

And their

Settlement

Future of HRM Figure 1.2 HRM Model

Training and development: it is an attempt to improve current or future employee

performance by increasing an employee’s ability to perform through learning, usually by

changing the employee’s attitude or increasing his or her skills and knowledge. The need for

Competent

and willing

workforce

Organizational

Goals

En

viro

nm

ent

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training and development is determined by employee’s performance deficiency, computed

as follows:

Training and development need = Standard performance – Actual performance

Remuneration: is the compensation an employee receives in return for his or her

contribution to the organization.

Motivation: is a process that starts with a psychological or physiological deficiency or need

that activates behavior or a drive that is aimed at a goal or an incentive.

Participative management: Workers participation may broadly be taken to cover all terms

of association of workers and their representatives with the decision making process,

ranging from exchange of information, consultations, decisions and negotiations to more

institutionalized forms such as the presence of workers members on management or

supervisory boards or even management by workers themselves as practiced in Yugoslavia.

((ILO)

Communication: may be understood as the process of exchanging information, and

understanding among people.

Safety and health: Safety means freedom from the occurrence or risk of injury or loss. In

order to ensure the continuing good health of their employees, the HRM focuses on the

need for healthy workers and health services.

Welfare: as defined by ILO at its Asian Regional Conference, defined labour welfare as a

term which is understood to include such services, facilities, and amenities as may be

established in or in the vicinity of undertakings to enable the person employed in them to

perform their work in healthy, congenial surroundings and to provide them with amenities

conducive to good health and high morale.

Promotions: means an improvement in pay, prestige, position and responsibilities of an

employee within his or her organization.

Transfer: involves a change in the job (accompanied by a change in the place of the job) of

an employee without a change in the responsibilities or remuneration.

Separations: Lay-offs, resignations and dismissals separate employees from the employers.

Industrial relations: is concerned with the systems, rules and procedures used by unions

and employers to determine the reward for effort and other conditions of employment, to

protect the interests of the employed and their employers, and to regulate the ways in

which employers treat their employees.

Trade Unions: are voluntary organizations of workers or employers formed to promote and

protect their interests through collective action.

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Disputes and their settlement: Industrial disputes mean any dispute or difference between

employers and employers, or between employers and workmen, or between workmen and

workmen, which is connected with the employment or non-employment or terms of

employment or with the conditions of labour of any person.

R O L E O F H R M A N A G E R S

1. Humanitarian Role: Reminding moral and ethical obligations to employees.

2. Counsellor: Consultations to employees about marital, health, mental, physical and career problems.

3. Mediator: Playing the role of a peacemaker during disputes, conflicts between individuals and groups or management.

4. Spokesman: To represent the company in Media and other forums because he has better overall picture of his company’s operations.

5. Problem Solver: Solving problems of overall human resource management and long-term organizational planning.

6. Change Agent: Introducing and implementing institutional changes and installing organizational development programs

7. Management of Manpower Resources: Broadly concerned with leadership both in the group and individual relationships and labour-management relations.

EVOLUTION OF HRM IN INDIA

The importance of personnel/human resources management is now universally accepted

and India is not an exception to this rule. In India, large business enterprises, public sector

enterprises and even medium and small enterprises appoint personnel manager or human

resources development (HRD) manager to look after the personnel functions such as

recruitment, promotions and transfers, training and manpower development, provision of

welfare facilities, compensation management and so on. The term HRM is a relatively new

term emerged during the 1970s. It is now used as a better and meaningful substitute to

personnel management. HRM is wider in scope and has its distinct philosophy.

The process of industrial development started in India rather late. It was during the British

Rule and that too after the First World War that textile, jute, iron and steel and other

organised industries started in India. Recruitment, wage payment, welfare facilities and

other personnel problems were noted only when labour class was employed on a large scale

in the industrial sector. This is the starting period for personnel management in India. In the

early British period and prior to that personnel management and personnel functions were

absent, (Reference to some personnel functions and systematic management of resources

was made in Kautilya's Arthashastra during the 4th century Be.) as industrial activities were

extremely limited. They were also conducted on a small scale. As compared to India, the

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industrial growth was rapid in Europe. As a result, the concept of personnel functions and

personnel management made rapid progress. The concept of personnel management

function in India is based on similar concept developed in Europe much earlier.

The personnel function in India has been the product(outcome) of various factors such as

industrial growth, labour, legislation, exploitation of workers in the early period and their

demand for certain basic necessities of life. (e.g. fair wage, weekly, holiday, essential

facilities at the work place)The need for labour officers in Indian industry was felt/realized

as early as 1929 for the protection of labour force in industrial units.

In 1931, the members of Bombay Mill owners' Association appointed Labour Officers in

their textile mills (on voluntary basis) for the settlement of grievances and disputes of

employees. Similar arrangement was introduced in the jute mills in Bengal (under the

leadership of Jute Mills Association). The labour welfare officers were given the

responsibility to promote sports and welfare activities and provide food shops (canteen

facility) to workers.

After Independence, many pro labour legislations were made for the protection and welfare

of workers. The scope of personnel management function was made more broad and

liberal. Many provisions regarding recruitment, salary payment and conditions of service

were laid down. This gave recognition to the personnel management function in the

industrial establishments.

Gradually, the need of personnel management and its role in cordial labour relations and

fair treatment to employees need were recognized by industrial organizations. Personnel

departments under the leadership of personnel managers were started in the companies.

Liberal welfare facilities were introduced for the benefit of employees. Such measures taken

for the protection and welfare of employees enlarged the scope of personnel management.

Even training and manpower development programmes added new dimensions to the

activities of personnel management. Many companies have now, prepared well-defined

personnel policies, grievance and other procedures and liberal package of welfare facilities.

Such additional activities/functions under personnel management raised the importance

and popularity of personnel department.

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MAN POWER PLANNING (HUMAN RESOUCE PLANNING)

Def. of human resource planning Human resource planning can be defined as the

process of identifying the number of people required by an organization in terms of quantity

and quality. All human resource management activities start with human resource planning.

So we can say that human resource planning is the principle/primary activity of human

resource management.

From human resource planning the organization identifies how many people it has

currently and how many people will be required in future. Based on this information major

human resource decisions are taken.

Process of HRP/MP//steps in HRP/MP

Human resource planning can be defined as the process of identifying the number of

people required by an organization in terms of quantity and quality. All human resource

management activities start with human resource planning. So we can say that human

resource planning is the principle/primary activity of human resource management.

The process of HRP involves various steps they can be explained with the help of the

following diagram.

1. Personnel requirement forecast :-

This is the very first step in HRP process. Here the HRP department finds out

department wise requirements of people for the company. The requirement consists of

number of people required as well as qualification they must posses.

2. Personnel supply forecast :-

In this step, HR department finds out how many people are actually available

in the departments of the company. The supply involves/includes number of people along

with their qualification.

3. Comparison:-

Based on the information collected in the 1st and 2nd step, the HR department makes

a comparison and finds out the difference. Two possibilities arise from this comparison

a. No difference :-

It is possible that personnel requirement = personnel supplied. In this case

there is no difference. Hence no change is required.

b. Yes, there is a difference :-

There may be difference between supply and requirement. The difference

may be

i. Personnel surplus

ii. Personnel shortage

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Human resource planning

Personal requirement Forecast Personal supply forecast

Yes No

Requirement = supply

Personnel (100=125) Personnel (100=75)

Surplus Shortage

Layoff Overtime

Termination Recruitment/hiring

VRS Subcontracting

4. Personnel surplus :-

When the supply of personnel is more than the requirement, we have personnel

surplus. We require 100 people, but have 125 people. That is we have a surplus of 25

people. Since extra employees increase expenditure of company the company must try to

remove excess staff by methods of

i. Layoff

ii. Termination

iii. VRS/CRS

5. Personnel shortage :-

When supply is less than the requirement, we have personnel shortage. We require

100 people; we have only 75 i.e. we are short of 25 people. In such case the HR department

can adopt methods like Overtime, Recruitment, Sub-contracting to obtain new employee

Comparison

Differences

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Advantages of HRP/need/importance/role/benefits

Human resource planning can be defined as the process of identifying the number of

people required by an organization in terms of quantity and quality. All human resource

management activities start with human resource planning. So we can say that human

resource planning is the principle/primary activity of human resource management.

The process of HRP plays a very important role in the organization. The importance

of HRP can be explained as follows.

1. Anticipating future requirement :-

Through this process of HRP, the company is able to find out how many people will

be required in future. Based on this requirement the company could take further actions.

This method also helps the company to identify the number of jobs which will become

vacant in the near future.

2. Recruitment and selection process :-

The recruitment and selection process is a very costly affair for a company. Many

companies spend lakhs of rupees on this process. Therefore recruitment and selection must

be carried out only if it is extremely necessary. HRP process helps to identify whether

recruitment and selection are necessary or not.

3. Placement of personnel :-

Since the HRP process is conducted for the entire organization, we can identify the

requirements for each and every department. Based on the requirement, we can identify

existing employees and place them on those jobs which are vacant.

4. Performance appraisal :-

HRP make performance appraisal more meaningful. Since feedback is provided in

performance appraisal and employee is informed about his future chances in same

company, the employee is motivated to work better. Information for all this is collected

from HRP process.

5. Promotion opportunity :-

HRP identifies vacancies in the entire organization including all the branches of all

the company. Therefore when the company implements promotion policy it can undertake

its activities in a very smooth manner.

Limitations of Human Resource Planning

Human resource planning can be defined as the process of identifying the number of

people required by an organization in terms of quantity and quality. All human resource

management activities start with human resource planning. So we can say that human

resource planning is the principle/primary activity of human resource management.

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Although HRP is a very advantageous method it has some limitations which can be

explained as follows

1. The future is uncertain :-

The future in any country is uncertain i.e. there are political, cultural, technological

changes taking place every day. This effects the employment situation. Accordingly the

company may have to appoint or remove people. Therefore HRP can only be a guiding

factor. We cannot rely too much on it and do every action according to it.

2. Conservative attitude of top management :-

Much top management adopts a conservative attitude and is not ready to make

changes. The process of HRP involves either appointing. Therefore it becomes very

difficult to implement HRP in organization because top management does not support

the decisions of other department.

3. Problem of surplus staff :-

HRP gives a clear out solution for excess staff i.e. Termination, layoff, VRS,. However

when certain employees are removed from company it mostly affects the psyche of

the existing employee, and they start feeling insecure, stressed out and do not believe in

the company. This is a limitation of HRP i.e. it does not provide alternative solution like

re-training so that employee need not be removed from the company.

4. Time consuming activity :-

HRP collects information from all departments, regarding demand and supply of

personnel. This information is collected in detail and each and every job is considered.

Therefore the activity takes up a lot of time.

5. Expensive process :-

The solution provided by process of HRP incurs expense E.g. VRS, overtime, etc.

company has to spend a lot of money in carrying out the activity. Hence we can say the

process is expensive.

Reasons for increased importance for HRP/Factors affecting HRP in the organization.

Human resource planning can be defined as the process of identifying the number of people

required by an organization in terms of quantity and quality. All human resource

management activities start with human resource planning. So we can say that human

resource planning is the principle/primary activity of human resource management.

1. Employment :-

HRP is affected by the employment situation in the country i.e. in countries where there

is greater unemployment; there may be more pressure on the company, from

government to appoint more people. Similarly some company may force shortage of

skilled labour and they may have to appoint people from other countries.

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2. Technical changes in the society :-

Technology changes at a very fast speed and new people having the required

knowledge are required for the company. In some cases, company may retain existing

employees and teach them the new technology and in some cases, the company have to

remove existing people and appoint new people.

3. Organizational changes :-

Changes take place within the organization from time to time i.e. the company

diversify into new products or close down business in some areas etc. in such cases the

HRP process i.e. appointing or removing people will change according to situation.

4. Demographic changes :-

Demographic changes refer to things referring to age, population, composition of

work force etc. A number of people retire every year. A new batch of graduates with

specialization turns out every year. This can change the appointment or the removal in

the company.

5. Shortage of skill due to labour turnover :-

Industries having high labour turnover rate, the HRP will change constantly i.e.

many new appointments will take place. This also affects the way HRP is implemented.

6. Multicultural workforce :-

Workers from different countries travel to other countries in search of job. When a

company plans its HRP it needs to take into account this factor also.

7. Pressure groups :-

Company has to keep in mind certain pleasure. Groups like human rights activist,

woman activist, media etc. as they are very capable for creating problems for the

company, when issues concerning these groups arise, appointment or retrenchment

becomes difficult.

Definition of VRS VRS refers to voluntary retirement scheme, when company faces the

problem of surplus labour, they have to remove the extra workers. This needs to be done to

avoid increase in cost. One of the methods used by the companies is the methods used by

companies is the VRS scheme.Under this scheme people have put in 20 or more number of

years of service are given an option to opt for early retirement benefits and some other

amount which is due to them are paid when they leave the company.

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RECRUITMENT

Recruitment means to estimate the available vacancies and to make suitable arrangements

for their selection and appointment. Recruitment refers to “Discovering potential applicants

for actual or anticipated organizational vacancies. Recruitment is a process “To discover the

source of manpower to meet the requirements of staffing, to employ effective measures for

attracting potential manpower in adequate number”. Recruitment is the process of

identifying the sources for prospective candidates and to stimulate them to apply for the

job. It’s linking activity bringing together those with jobs and those seeking jobs. It locates

the source of manpower to meet the requirements and job specifications. In recruitment

process available vacancies are given wide publicity and suitable candidates are encouraged

to submit application so as to have a pool of eligible candidates for scientific selection.

In recruitment, information is collected from interested candidates. For these different

sources of recruitment such as newspaper advertisement, employment exchange, internal

promotions, etc. are used. In the recruitment, a pool of eligible and interested candidates is

created for the selection of most suitable candidate. Recruitment represents the first

contact that a company makes with potential employees.

Recruitment is a positive function in which publicity is given to the jobs available in the

organization and interested candidates (qualified job applicants) are encouraged to submit

applications for the purpose of selection.

Definition of Recreuitment

According to Edwin Flippo, “Recruitment is the process of searching for prospective

employees and stimulating them to apply for jobs in the organization.

Objectives of Recruitment

The objectives of recruitment are as follows:

(i) To attract people with multi-dimensional skills and experiences that suits the present

and future organizational strategies,

(ii) To induct outsider with a new perspective to lead the company,

(iii) To infuse fresh blood at all levels of the organization,

(iv) To develop an organizational culture that attracts competent people to the

company,

(v) To search or head hunt/head pouch people whose skills fit the company’s values,

(vi) To search for talents globally and not just within the company.

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Purpose of Recruitment

Recruitment has three major purposes:

1) To increase the pool of job applicants with minimum cost.

2) To meet the organization’s legal and social obligations regarding the demographic

composition of its workforce.

3) To help increase the success rte of the selection process by reducing the percentage

of applicants who are either poorly qualified or have the wrong skills.

Need for Recruitment

The need for recruitment may be due to the following reasons/situations:

(a) Vacancies due to promotions, transfers, retirement, termination, permanent

disability, death and labour turnover.

(b) Creation of new vacancies due to growth, expansion and diversification of business

activities of an enterprise. In addition, new vacancies are possible due to job respecification.

RECRUITMENT PROCESS

Recruitment is a process of finding and attracting capable applicants for

employment. The process begins when new recruits are sought and ends when their

applications are submitted. The result is a pool of applicants from which new employees are

selected. A well-planned and well-managed recruiting effort will result in high quality

applicants, whereas a haphazard and piecemeal effort will result in a mediocre once. Several

factors such as external factors like supply an demand unemployment rate, labour markets

and political and legal considerations, internal factors like recruiting policy, size, cost of

recruiting etc govern the recruiting process.

The process comprises of 5 inter related stages: -

1. Planning

2. Strategy development

3. Searching

4. Screening

5. Evaluation and control

I Planning

The first stage in recruitment process is planning. Planning involves translation of likely job

vacancies and information about the nature of these jobs into a set of objectives or targets

that specify the number and the type of applicants to be contacted.

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Number of contacts: organisations always plan to attract more applicants than they plan to

hire. Some of those contacted will be uninterested unqualified or both. Each time a

recruitment process is contemplated, one task is to estimate the number of applicants

necessary to fill all the vacancies with qualified people.

Type of contacts: this refers to the type of people to be informed about the job openings.

The types of people depend on the tasks and responsibilities involved and the qualifications

and experience expected. These details are available through job description and job

specification.

II Strategy development

Once it is known how many and what type of recruits are required, consideration needs to

be given to make or buy employees, technical sophistication of recruitment and selection

devices, geographic distribution of labour markets comprising job seekers, sources of

recruitment, and sequencing the activities in the recruitment process.

Make or buy refers to hire less skilled employees ad to invest in training and education

programmes or hire skilled professionals. The second decision in strategic relates to the

methods used in recruitment and selection. The advent of computers has made it possible

for employers to scan national and international applicants qualifications. It has also made

possible for job seekers to gain better access. In order to reduce costs, companies look into

the national markets for managerial employees, regional or local markets for technical

employees, and local markets for clerical and blue-collar employees.

The sources for recruitment may be internal or external. The internal sources would be

present employees, referrals given by the employees, former employees or previous

applicants. Whereas the external sources would be consultants, headhunters,

advertisements, employee exchanges, campus recruitment, contractors, displaced persons,

radio and television, acquisitions and mergers, competitors, international recruitment etc.

then both the sources of recruitment are evaluated. Both have their own advantages and

disadvantages.

III Searching

Once a recruitment plan and strategy are worked out, the search process can begin. It

involves two steps:

1. Source aviation

2. Selling

1. Source Aviation:

Typically sources and search methods are activated by issuances of an employee requisition.

This means that no actual recruiting takes place until line managers have verified that a

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vacancy does exist or will exist. If the organisation has planned well and done a good job of

developing its sources and search methods, activation soon results in a flood of applications

and/or resumes. The application received must be screened. Those who pass have to be

contacted, and invited for interview. Unsuccessful applicants must be sent letters of regret.

2. Selling

The second issue to be addressed in the searching process concerns communication. Here,

contacts are tightrope. On tone hand they want as many applications and on the other hand

they must resist overselling of their virtues. In selling the organisation both message and the

media need attention. Selection of medium or media has to be done with lot of care.

IV Screening

Screening of applicants can be regarded as an integral part of recruiting process. The

selection process will begin after the applicants have been scrutinized and short-listed.

Applications received in response to advertisement are screened and only the eligible

applicants are called for interview.

The purpose of screening is to remove from the recruiting process, at an early stage those

applicants who are visibly unqualified for the job. Effective screening can save a great deal

of time and money. Care must be taken that potentially good employees are not lost and

women and minorities receive full and fair consideration.

In screening, clear job specifications are invaluable. Applications are judged on the basis of

their knowledge, skills, abilities, and interests required to do the job. The techniques used to

screen applicants vary depending on the candidate sources and recruiting methods used.

Interviews and application blanks are used to screen walk ins. Campus recruiters and agency

representative’s use in interviews and resumes. References checks are also useful in

screening.

V Evaluation and control

Evaluation and control is necessary as considerable costs are incurred in the recruitment

process. The costs generally incurred are

Salaries for recruiters

Management and professional time spent on preparing job description, job

specification, advertisements, agency liaison, and so forth

The cost of advertisement and other recruitment methods like agency fees

Cost of producing supporting literature

Recruitment overheads and administrative expenses

Cost of overtime and outsourcing while the vacancies are remain unfilled

Cost of recruiting unsuitable candidates for selection process

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Questions should always be asked as to whether the recruitment methods used are valid

and whether the recruitment process itself is valid. Statistical information on the cost of

advertisements, time taken for the process etc should be gathered and evaluated. However,

exercises seem to be seldom carried out in practice.

Evaluation of recruitment methods:

The evaluation of recruitment methods include:

Number of initial inquiries received which resulted in completed application forms.

Number of candidates at various stages of the recruitment and selection process,

especially those short-listed.

Number of candidates recruited

Number of candidates retained in the organization after six months.

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SELECTION

Selection is one of the most important of all functions in the management of personnel.

Selection is more closely related to recruitment because both are concerned with

processing individuals to place them in a job. Selection is next to recruitment. After

identifying the sources of human resources, searching for prospective employees and

stimulating them to apply for jobs in an organization, the management has to perform the

function of selecting the right employees at the right time. “Right man at the right job” is

the basic principle in selection. Selection is the process of collecting and evaluating

information about an individual in order to extend an offer of employment. It is the process

of logically choosing individuals who possess the necessary skills, abilities and personality to

successfully fill specific jobs in the organization.

Selection means a process by which the qualified personnel can be choosen from the

applicants who have offered their services to the organization for employment. Thus

selection process is negative function because it attempt to eliminate applicants, leaving the

best to be selected. In the words of Dale Yodev, “Selection is the process in which

candidates for employment are divided into two classes – those who are to be offered

employment and those who are not”. In short, selection is the process of choosing a person

suitable for the job out of several persons.

The objective of the selection decision is to chose the individual who can most successfully

perform the job from the pool of qualified candidates. The selection procedures are the

system of functions and devices adopted in a given company to ascertain whether the

candidate’s specification is matched with the job specification and requirements or not. The

selection procedures cannot be effective until and unless:

1) Requirements of the job to be filled, have been clearly specified (job analysis, etc)

2) Employee specifications (physical, mental, social, and behavioral, etc) have been

clearly specified.

3) Candidates for screening have been attracted.

Thus, the development of job analyses, human resource planning and recruitment are

necessary prerequisites to the selection process. The breakdown in any of these processes

can make even the best selection system ineffective.

Importance of Selection

The importance of selection may be judged from the following facts:-

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1) Procurement of Qualified and Skilled Workers: - Scientific selection facilitates the

procurement of well qualified and skilled workers in the organization. It is in the interest of

the organization in order to maintain the supremacy over the other competitive firms.

Selection of skilled personnel reduces the labour cost and increases the production.

Selection of skilled personnel also facilitates the expansion in the size of the business.

2) Reduce Cost of Training and Development:- Proper selection of candidates reduces

the cost of training because qualified personnel have better grasping power. They can

understand the technique of work better and in less time. Further, the organization can

develop different training programmes for different persons on the basis of their individual

differences, thus reducing the time and cost of training considerably.

3) Absence of Personnel Problems: - Proper selection of personnel reduces personnel

problems in the organization. Many problems like labour turnover, absenteeism and

monotony shall not be experienced in their severity in the organization. Labour relation will

be better because workers will be fully satisfied by the work. Skilled workers help the

management to expand the business and to earn more profits and in turn management

compensates, the workers with high wages, benefits etc.

Meaning and Definition of Placement

Placement means offering of the job to the finally selected candidate. One the employee is

selected he should be placed on a suitable job. According to Pigors and Myres, placement

may be defined as “the determination of the job to which an accepted candidate is to be

assigned, and his assignment to that job. It is matching of what the supervisor has reason to

think he can dos with the job demands(job requirements); it is matching of what he

imposes(in strain, working condition) and what offers is the form of pay roll, companionship

with other promotional possibilities etc.” A proper placement reduced the employee

turnover, absenteeism and accident rate and improves the morale. Placement is not an easy

process. It is very difficult for a new employee who is quite unknown to the job and

environment. For this reason, the employee is generally put on a probation period ranging

from one year to two years. At the end of the probation period, if the employee show a

good performance, he is confirmed as a regular employee of the organization. Thus, the

probation period or trial period is a transition period at the end of which management has

to take decision whether the employee should be made regular or discharged from the job.

Principle of Placement

Following principles are followed at the time of placement of an employee:

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1) The man should be placed on the job according to requirements of the job. The job

should not be adjusted according to the qualifications or requirements of the man. “Job

first, man next” should be the principle of placement.

2) The job should be offered to the man according to his qualifications. Neither higher,

nor lower job should be offered to the new employee.

3) The employee should be made conversant with the conditions prevailing in the

industry and all things relating to the job. He should also be made aware of the penalties if

he commits a wrong.

4) While introducing the job to the new employee, an effort should be mad to develop

a sense of loyalty and cooperation in him so that he may realize his responsibilities better

towards the job and the organization.

Types of Selection Test

Different selection test are adopted by different organization depending upon their

requirements. These tests are specialized test which have been scientifically tested and

hence they are also known as scientific test. Different types of test can be explained with

the help of following diagram,

Types of selection test

Aptitude Test Intelligence Test Personality Test Performance test

1.Mental ability/ Intelligence test

2.Medical aptitude test

3. Psycho motor test

I. Aptitude test :-

Aptitude tests are test which assess the potential and ability of a candidate. It

enables to find out whether the candidate is suitable for the job. The job may

be managerial technical or clerical. The different types of aptitude test are

a. Mental ability/mental intelligence test :-

This test is used to measure the over all intelligence and

intellectual ability of the candidate to deal with problems. It judges the decision making

abilities.

b. Mechanical aptitude test :-

This test deals with the ability of the candidate to do mechanical work.

It is used to judge and measure the specialized knowledge and problem

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solving ability. It is used for technical and maintenance staff.

c. Psycho motor test :-

This test judges the motor skills the hand and eye co-ordination and

evaluates the ability to do jobs like packing, quality testing, quality

inspection etc.

II. Intelligence test :-

This test measures the numerical skills and reasoning abilities of the

candidates. Such abilities become important in decision making. The test

consists of logical reasoning ability, data interpretation, comprehension skills

and basic language skills.

III. Personality test :-

In this test the emotional ability or the emotional quotient is tested. This test

judges the ability to work in a group, inter personal skills,ability to understand

and handle conflicts and judge motivation levels. This test is becoming very

popular now days.

IV. Performance test :-

This test judges and evaluates the acquired knowledge and experience of the

knowledge and experience of the individual and his speed and accuracy in

performing a job. It is used to test performance of typist, data entry operators

etc.

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TRAINING AND DEVELOPMENT

Training plays an important role in human resource development. It comes next to

recruitment and selection. In fact, the main purpose of training is to develop the

human resources present within the employees. In brief, training is the watchword

of present dynamic business world. Training is necessary due to technological

changes rapidly taking place in the industrial field. New machines, new methods and

new techniques are introduced in the production, marketing and other aspect of

business.

Training is for developing overall personality of an employee. It also creates

positive attitude towards fellow employees, job and the organization where he is

working. Training is the responsibility of the management as it is basically for raising

the efficiency and productivity of employees.

The purpose of training is to achieve a change in the behaviour of those trained

and to enable them to do their jobs in a better way. The trainees will acquire new

manipulative skills, technical knowledge, problem solving ability or attitudes etc.

training is not a one step process but is a continuous or never-ending process.

Training makes newly recruited workers fully productive in the minimum of time.

Even for old workers, training is necessary to refresh them and enable them to keep

up with new methods and techniques. In short training is the act of improving or

updating the knowledge and skill of an employee for performing a particular job.

Definition of Training:-

According to Edwin Flippo, training is “the act of increasing the knowledge and

skill of an employee for doing a particular job”.

Principles of Employee Training:-

A sound training programme must possess the following characteristics:

1. Training programme should be less expensive.

2. Training programme should be developed for all in the organization and not

for a particular group.

3. The programme should be conducted by a senior and experienced supervisor

or executive of the concern or by the training director who is incharge of the training

section under personnel department.

4. Training programme should be designed taking in view the interests of both

employer and employees.

Training and Development need = Standard performance – Actual performance.

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5. It is not essential to follow the single method of training for all the

employees. The purpose of training is to develop the men and therefore more than

one method may be followed for different groups.

6. Training should be followed by a reward. A reward should be provided at the

conclusion of the training such as promotion or a better job so that employees may

be motivated.

7. Sufficient time should be provided to practice what has been learned by the

employees.

Meaning and Importance:-

After an employee is selected, placed and introduced he or she must be provided

with training facilities. Training is the act of increasing the knowledge and skill of an

employee for doing a particular job. Training is a short-term educational process and

utilizing a systematic and organized procedure by which employees learn technical

knowledge and skills for a definite purpose. In other words training improves,

changes, moulds the employee’s knowledge, skill, behaviour, aptitude, and attitude

towards the requirements of the job and organization. Training refers to the

teaching and learning activities carried on for the primary purpose of helping

members of an organization, to acquire and apply the knowledge, skills, abilities and

attitudes needed by a particular job and organization.

Training is the most important technique of human resource development. As

stated earlier, no organization can get a candidate who exactly matches with the job

and the organizational requirements. Hence, training is important to develop the

employee and make him suitable to the job. Trained employees would be a valuable

asset to an organisation. Organizational efficiency, productivity, progress and

development to a greater extent depend on training. Organizational objectives like

viability, stability and growth can also be achieved through training.

Need for Employee Training:-

The need for training of employee is universally accepted and practical training in

the form of information, instructions and guidance is given to all categories of

employees. It is a must for raising efficiency of employees. Training is necessary in

the present competitive and ever changing industrial world. Specifically, the need for

training arises due to the following reasons:

I. To match the employee specifications with the job requirements and

organizational needs: Management finds deviations between employee’s present

specifications and the job requirements and organizational needs. Training is needed

to fill these gaps by developing and moulding the employee’s skill, knowledge,

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attitude, behaviour etc. to the tune of the job requirements and organizational

needs.

II. Organizational viability and the transformation process: The primary goal of

most of the organizations is that their viability is continuously influenced by

environmental pressure. If the organisation does not adapt itself to the changing

factors in the environment, it will lose its market share. If the organisation desires to

adapt these changes, first it has to train the employees to impart specific skills and

knowledge in order to enable them to contribute to the organizational efficiency and

to cope with the changing environment.

III. Technological advances: Every organization in order to survive and to be

effective should adopt the latest technology, i.e., mechanization, computerization

and automation. Adoption of latest technological means and methods, will not be

complete until they are manned by employees possessing skill to operate them. So,

organization should train the employees to enrich them in the areas of changing

technical skills and knowledge from time to time.

IV. Organizational complexity: With the emergence of increased mechanization

and automation, manufacturing of multiple products and by-products or dealing in

services of diversified lines, extension of operations to various regions of the country

or in overseas countries, organisation of most of the companies has become

complex. This creates the complex problems of co-ordination and integration of

activities adaptable for and adaptable to the expanding and diversifying situations.

This situation calls for training in the skills of co-ordination, integration and

adaptability to the requirements of growth, diversification and expansion.

V. Human relations: Trends in approach towards personnel management has

changed form the commodity approach to partnership approach, crossing the

human relations approach. So today, managements of most of the organizations has

to maintain human relations besides maintaining sound industrial relations although

hitherto the managers are not accustomed to deal with the workers accordingly. So

training in human relations is necessary to deal with human problems (including

alienation, inter-personal and inter-group conflicts etc.) and to maintain human

relations.

VI. Change in the job assignment: Training is also necessary when the existing

employee is promoted to the higher level in the organisation and when there is

some new job or occupation due to transfer. Training is also necessary to equip the

old employees with the advanced disciplines, techniques or technology.

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Objectives/Purposes of Employee Training:-

1) To raise efficiency and productivity of employees and the organization as a

whole. This means to maintain and improve the work performance of employees.

2) To create a pool of well trained, capable and loyal employees at all levels and

thereby to make provision to meet the future needs of an organization.

3) To provide opportunities of growth and self-development (career planning)

to employees and thereby to motivate them for promotion and other monetary

benefits. In addition, to give safety and security to the life and health of employees.

4) To avoid accidents and wastages of all kinds. In addition, to develop

balanced, healthy and safety attitudes among the employees.

5) To meet the challenges posed by new developments in the field of science

and technology.

6) To improve the quality of production and thereby to create market demand

and reputation in the business world.

7) To develop positive attitude and behaviour pattern required by an employee

in order to perform a given job efficiently. In other words, the purpose of training is

to improve the culture of the organisation.

8) To develop certain personal qualities among employees which can serve as

personal assets on long term basis.

Selection of Trainees:-

Once you have decided what training is necessary and where it is needed, the

next decision is who should be trained? For a small business, this question is crucial.

Training an employee is expensive, especially when he or she leaves your firm for a

better job. Therefore, it is important to carefully select who will be trained.

Training programs should be designed to consider the ability of the employee to

learn the material and to use it effectively, and to make the most efficient use of

resources possible. It is also important that employees be motivated by the training

experience. Employee failure in the program is not only damaging to the employee

but a waste of money as well. Selecting the right trainees is important to the success

of the program.

Training Goals:-

The goals of the training program should relate directly to the needs outlined

above. Course objectives should clearly state what behavior or skill will be changed

as a result of the training and should relate to the mission and strategic plan of the

company. Goals should include milestones to help take the employee from where he

or she is today to where the firm wants him or her in the future. Setting goals helps

to evaluate the training program and also to motivate employees. Allowing

employees to participate in setting goals increases the probability of success.

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Evaluation of Training Programme:-

The process of training evaluation has been defined as “any attempt to obtain

information on the effects of training performance, and to assess the value of

training in the light of that information.” Evaluation leads to controlling and

correcting the training programme. Hamblin suggested five levels at which

evaluation of training can take place, viz., reactions, learning, job behaviour,

organization and ultimate value.

i. REACTIONS:-

Training programme is evaluated on the basis of trainee’s reactions to the usefulness

of coverage of the matter, depth of the course content, method of presentation,

teaching methods etc.

ii. LEARNING:-

Training programme, trainer’s ability and trainee ability are evaluated on the basis of

quantity of content learned and time in which it is learned and the learner’s ability to

use or apply, the content he learned.

iii. JOB BEHAVIOUR:-

This evaluation includes the manner and extent to which the trainee has applied his

learning to his job.

iv. ORGANISATION:-

This evaluation measures the use of training, learning and change in the job

behaviour of the department/organization in the form of increased productivity,

quality, morale, sales turnover and the like.

v. ULTIMATE VALUE:-

It is the measurement of ultimate result of the contributions of the training

programme to the company goals like survival, growth, profitability etc., and to the

individual goals like development of personality and social goals like maximizing

social benefit.

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PROCESS/PROCEDURE OF TRAINING

Determining training need of employee

Select a target group for training

Preparing trainers

Developing training packages

Presentation

Performance

Follow up

1. Determining training needs of employee :- In the very 1st step of training procedure, the HR department, identifies the

number of people requiring training, specific area in which they need training,

the age group of employee, the level in organization etc. in some cases the

employee may be totally new to the organization. Here the general introduction

training is required. Some employees may have problems in specific areas; here

the training must be specific. This entire information is collected by HR

department.

2. Selecting target group :- Based on information collected in step 1 the HR department divides

employee into groups based on the following.

i. Age group of the employee to be trained

ii The area in which training is required

iii Level of the employee in the organization

iv The intensity of training etc.

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3. Preparing trainers :- Once the employees have been divided into groups, the HR department

arranges for trainers. Trainers can be in house trainers or specialized trainers

from outside. The trainers are given details by HR department, like number of

people in the group, their age, their level in organization, the result desired at

the end of training, the area of training, the number of days of training, the

training budget, facilities available etc.

4. Preparing training packages :- Based on the information provided by trainers, he prepares entire training

schedule i.e. number of days, number of sessions for each day, topics to be

handled each day, depth of which the subject should be covered, the

methodology for each session, the tests to be given foe each session,

handout/printed material to be given in each session etc.

5. Presentation :- On the first day of training program the trainer introduces himself and

specifies the need and objective of the program. This is done so that employees

get the right idea about the objectives. He then actually starts the program. The

performance of each employee is tracked by the trained and necessary feedback

is provided.

6. Performance :- At the end of training program the participants reports back to their office or

branches. They prepare report on the entire training program and what they

have learned. They the start using whatever they have learnt during their

training. Their progress and performance is constantly tracked and suitable

incentives are given if the participant is able to use whatever he has learnt in

training.

7. Follow up :- Based on the employee performance, after training, the HR department is

able to identify what is exactly wrong with training program and suitable

correction is made in the training programmes in the future.

ASSESSMENT OF TRAINING NEEDS:

Organizations spend vast sums of money on training and development. Before

committing such huge resources, organizations would do well to assess the training

needs of the employees. Organizations that implement training programmes without

conducting needs assessment may be making errors.

Needs assessment occurs at two levels:

a) Individual

b) Group

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Individual:

An individual obviously needs training when his or her training falls short of

standards, that is, when there is performance deficiency. Inadequacy in performance

may be due to lack of skill or knowledge or any other problem. The problem of

performance deficiency is caused by absence of skills or knowledge can be remedied

by training. Faulty selection, poor job design, uninspiring supervision or some

personal problem may also result in poor performance. Transfer, job redesign,

improving quality of supervision, or discharge will solve the problem.

Individuals may also require new skills because of possible job transfers. Although

job transfers are as common as organizational personal demands vary, they do not

necessarily require elaborate training efforts. Employees commonly require an

orientation to new facilities and jobs. Recently, however, economic forces have

necessitated significant retraining efforts in order to assure continuous employment

for many individuals.

Group:

Assessment of training needs occurs at group level too. Any change in the

organization’s strategy necessitates training groups of employees. For example,

when the organization decides to introduce a new line of products, sales personnel

and production workers have to be trained to produce, sell and service the new

products. Training can also be used when high scrap or accident rates, low morale

and motivation, or other problems are diagnosed.

Needs Assessment Methods:

Several assessment methods for are available for assessing training needs. Some are

useful for organizational level needs assessment and others for individual needs

assessment.

Benefits of Needs Assessment:

Needs assessment helps diagnose the cause of performance deficiency of

employees. Causes require remedial actions. There are specific benefits of needs

assessment.

Trainers may be informed about the broader needs of the training group and

their sponsoring organizations.

The sponsoring organizations are able to reduce the perception gap between the

participant and his or her boss about their needs and expectations from the

training programme.

Trainers are able to pitch their course inputs closer to the specific needs of the

participants.

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METHODS OF TRAINING FOR MANAGERS/ METHODS OF

DEVELOPMENT / MANAGERIAL DEVELOPMENT/ EXECUTIVE

DEVELOPMENT

An organization has to take steps for training programmes for supervisory staff and

managers such training programs are called management development

programmes. Management development programme acts as a key factor for the

survival and growth of a business unit.

Management development programme includes systematic review to identify the

members of the management who can be expected to raise their managerial

effectiveness through training and special assignments.

Management development is a way to improving the culture of the organization so

that it could be geared to excellence. Leading houses like Tatas, Birlas, Bajaj and

others have started taking keen interest in management development.

They believe that “People move organizations – not machines.”

Definition:-

“The term Development here refers to those learning opportunities designed to help

employees to grow.”

NEEDS ASSESSMENT METHODS

Group analysis

Organizational goals and

objectives

Personnel/skills inventories

Organizational climate indices

Efficiency indices

Exit interviews

MBO or work planning systems

Quality circles

Customer survey/satisfaction data

Consideration of current and projected changes

Individual analysis

Performance Appraisal

Work sampling

Interviews

Questionnaires

Attitude survey

Training progress

Rating scales

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Objectives of Development

1. Attitude Tuning:- it is done to broaden the mind of employees by providing

them with opportunities for an inter change of experiences within and

outside. Development helps in correcting the narrowness of outlook,

emotional stability, analytical ability, acquiring long term perception,

professional ethics, and social objectives.

2. Motivation:- one of the objectives of development is to boost individual and

collective moral and motivate the employees through words and deeds.

3. Leadership:- To build and maintain an appropriate working climate, develop

decision making abilities and delegation through adaptive leadership.

4. Communication:- communication helps in maintaining good inter personal

and inter group relations, it also helps in Conflict settlement, compromises.

5. Paradigm Shift:- To prepare the employee both the new and the old to meet

the present as well as changing requirement of the job and the organization.

Importance of Development

1. Increase in moral and motivation of employees:- Development increases

employees moral and motivation by inculcating sense of better self

confidence. Higher efficiency and productivity gives higher job satisfaction,

which motivates him to work attentively.

2. Better human relations:- development gives the employees an opportunity

to cultivate better inter personal and human relations. Development in the

sense is sharing of experiences and helps in improving the quality of human

relations. This facilitates smooth and harmonious functioning of the

organization.

3. Development and promotion:- Development not only improves the

knowledge and skills for doing the existing job successfully but also helps the

employees with abilities and attitudes needed for higher positions. In a way

development aids in contribution to growth of their personality.

4. Accuracy:- it makes the employee more proficient and competent and

enables him to avoid mistakes. It helps an individual in making better

decision and solving efficiently.

ON THE JOB METHOD :- On the job method refers to training given to personnel

inside the company. There are different methods of on the job training.

1. Job rotation

This method enables the company to train managerial personnel in

departmental work. They are taught everything about the department. Starting

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from the lowest level job in the department to the highest level job. This helps

when the person takes over as a manager and is required to check whether his

juniors are doing the job properly or not. Every minute detail is studied.

2. Planned progression :-

In this method juniors are assigned a certain job of their senior in addition to

their own job. The method allows the employee to slowly learn the job of his

senior so that when he is promoted to his senior’s job it becomes very easy for

him to adjust to the new situation. It also provides a chance to learn higher level

jobs.

Methods of training managers

On the job training Off the job training

Job rotation Classroom method

Planned progression Simulation

Coaching and counseling Business games

Under study Committees

Junior boards Conferences

Readings

In-basket training

3. Coaching and counseling :-

Coaching refers to actually teaching a job to a junior. The senior person who

is the coach actually teaches his junior regarding how the work must be handled

and how decisions must be taken, the different techniques that can be used on

the job, how to handle pressure. There is active participation from the senior.

Counseling refers to advising the junior employee as and when he faces

problems. The counselor superior plays an advisory role and does not actively

teach employees.

4. Under study :-

In this method of training a junior is deputed to work under a senior. He

takes orders from the senior, observes the senior, attends meetings with him,

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learns about decision making and handling of day to day problems. The method

is used when the senior is on the verge of retirement and the job will be taken

over by the junior.

5. Junior board :-

In this method a group of junior level managers are identified and they work

together in a group called junior board. They function just like the board of

directors. They identify certain problems, they study the problem and provide

suggestions. This method improves team work and decision making ability. It

gives an idea about the intensity of problem faced by the company. Only

promising and capable junior level managers are selected for this method.

OFF THE JOB TRAINING METHOD :- Off the job training refers to method of training given

outside the company. The different methods adopted here are

1. Classroom method :- The classroom method is used when a group of managers have to be trained in

theoretical aspects. The training involves using lectures, audio visuals, case study, role

play method, group discussions etc. The method is interactive and provides very good

results.

2. Simulation :- Simulation involves creating an atmosphere which is very similar to the original work

environment. The method helps to train managers in handling stress, taking immediate

decisions, handling pressure on the jobs etc. An actual feel of the real job environment is

given here.

3. Business games :- This method involves providing a market situation to the trainee manager and asking

him to provide solutions. If there are many people to be trained they can be divided into

groups and each group becomes a separate team and play against each other.

4. Committee :- A committee refers to a group of people who are officially appointed to look into a

problem and provide solutions. Trainee managers are put in the committee to identify

and study a problem in the organization and to provide suggestions on how they will

solve the problem and to explain what they learnt from it.

5. Conference :- Conferences are conducted by various companies to have elaborate discussions on

specific topics. The company which organizes the conference invites trainee managers

from different companies and calls for experts in different fields to give presentations or

lectures. The trainee managers can ask their doubts to these experts and understand

how problems can be solved on the job.

6. Readings :- This method involves encouraging the trainee manager to increase his reading

related to his subject and then asking him to make a presentation on what he has learnt.

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Information can be collected by trainee manager from books, magazines and internet

etc.

7. In basket training :- The method is adopted from the ‘IN’ and ‘OUT’ baskets normally found in the

manager’s cabin. In this method the training is given to the manager to handle files

coming in and to finish his work and take decisions within a specified time limit. The

trainee manager is taught how to prioritize his work, the activities which are important

for his job and how to take decisions within limited time.

Difference between Training and Development:

Training Development

Nature Tangible in nature.

Training is more specific, job-related information.

Intangible in nature. Development is more

general in nature, especially at the top level

management level.

Importance Training is important because technology is

improving and changing.

Development is important to adapt to new

technology and changing patterns in organization.

Skills Training deals with non-

human skills. Development deals with

human skills.

Directed towards

Training is normally directed at operative

employees and relates to technical aspects.

It is directed at managerial personnel to acquire

conceptual and human skills.

Methodology Greater emphasis on ON-

JOB methods Greater emphasis on OFF

the Job methods.

Frequency

Training is less frequent; it is carried out mostly at

induction and every succeeding stage of the

job.

It is more frequent and continuous in nature.

Who imparts Mostly the supervisors

impart training

Supervisors, external experts and self undertake

development.

Relevance Training is of more

relevance at junior-levels.

Development is of higher relevance at middle and

senior levels.

Cost involved Imparting is less expensive Imparting development is

more expensive.

Duration Training courses are

designed mostly for short term.

It involves a broader long-term education for a long

run term.

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OFF THE JOB TRAINING

Trainings conducted in simulated environments, classrooms, seminars, etc are called

Off the Job Training.

Advantages of Off-the-Job Training

1. Trainers are usually experienced enough to train

2. It is systematically organized

3. Efficiently created programs may add lot of value

Disadvantages of Off-the-Job Training:

1. It is not directly in the context of job

2. It is often formal

3. It may not be based on experience.

4. It is expensive.

5. Trainees may not be much motivated

6. It is artificial in nature

“Off the Job Training” Methods

1. Classroom Lectures: Advantage – It can be used for large groups. Cost

per trainee is low. Disadvantages – Low interest of employees . It is

not learning by practice. It is One-way communication. No authentic

feedback mechanism. Likely to lead to boredom for employees.

2. Audio-Visual: It can be done using Films, Televisions, Video, and

Presentations etc. Advantages – Wide range of realistic examples,

quality control possible. Disadvantages – One-way communication,

No feedback mechanism. No flexibility for different audience.

3. Simulation: Creating a real life situation for decision-making and

understanding the actual job conditions give it. Ensures active

participation of all trainees. Can be very effective but needs good

conductors.

4. Case Studies: It is a written description of an actual situation in the past

in same organisation or some where else and trainees are supposed

to analyze and give their conclusions in writing. This is another

excellent method to ensure full and whole hearted participation of

employees and generates good interest among them. Case is later

discussed by instructor with all the pros and cons of each option. It is

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an ideal method to promote decision-making abilities within the

constraints of limited data.

5. Role Plays: Here trainees assume the part of the specific personalities

in a case study and enact it in front of the audience. It is more

emotional orientation and improves interpersonal relationships.

Attitudinal change is another result. These are generally used in MDP.

6. Sensitivity Trainings: This is more from the point of view of behavioural

assessment as to how an individual will conduct himself and behave

towards others under different circumstances. There is no pre-

planned agenda and it is instant. Advantages – increased ability to

empathize, listening skills, openness, tolerance, and conflict

resolution skills. Disadvantage – Participants may resort to their old

habits after the training.

7. Programmed Instructions: Provided in the form of blocks either in book

or a teaching machine using questions and feedbacks without the

intervention of trainer. Advantages – Self paced, trainees can progress

at their own speed, strong motivation for repeat learning, material is

structured and self-contained. Disadvantages – Scope for learning is

less; cost of books, manuals or machinery is expensive.

8. Computer Aided Instructions: It is extension of PI method, by using

computers. Advantages – Provides accountabilities, modifiable to

technological innovations, flexible to time. Disadvantages – High cost.

9. Laboratory Training.

I N D U C T I O N & O R I E N A T I O N

Induction and Orientation are the procedure that a new employee has to go through

in the organisation. Every employee starting from the lower most, say, from peon to

CEO, need orientation course when they join the organisation. A new employee

carries with him a lot of apprehension about place, job, colleagues, organisational

culture, and so on. On the day of reporting, he needs to know his office/work place,

routine, amenities, functional and reporting channels, etc.

Definition

“It is a Planned Introduction of employees to their jobs, their co-workers and the

organization per se.”

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Difference Between Induction and Orientation

Induction refers to formal training programs that an employee has to complete

before he is put on job. Like in Military, before a new recruit is sent to border, he is

trained for a few months in Drill/Parade, physical fitness, weapon handling, etc. This

is called Induction.

Orientation is the information given to the new employees to make him aware of the

comfort issues - where the facilities are, what time lunch is, who are the people he

would be working with and so forth.

Orientation conveys following information:

1. Organisation’s geography/layout

2. Organisational set up (Structure)

3. Daily Work Routine

4. Organization Profile, History, Objectives, Products and Services, etc

5. Introduction to colleagues/immediate superiors and subordinates.

6. Importance of Jobs to the organization

7. Detailed Orientation Presentation covering policies, work rules and employee

benefits.

P U R P O S E O F O R I E N T A T I O N

The idea of Orientation programme is to make the new employees feel “at home” in

new environment. Any employee while joining a new organisation is anxious about

the new set-up, new colleagues, his own performance vis a vis other more

experienced employees in the organisation, his work place, his exact responsibilities,

etc. A structured information and introduction system will make his transitory period

short and reduce his anxiety quickly. He will begin to perform to his potential quickly.

T Y P E S O F O R I E N T A T I O N P R O G R A M S

1. Formal or Informal: In informal orientation, new employees are put on the jobs

and they are expected to acclimatise themselves with the work and the

organisation. In contrast, in formal orientation, an employee goes through a

structured introduction programme.

2. Individual or Collective: Another choice is to be made whether new employees

are to be inducted in group or individually.

3. Serial or Disjunctive: Orientation becomes serial when the person relinquishing

the post hands over the position to the new incumbent. It becomes disjunctive

when the new employee occupies a vacant position with no one to hand him

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over the position. He learns the prevalent practices and history slowly from his

subordinates and superiors on gradual basis.

4. Investiture or Divestiture: This is the final strategic choice which relates to

decision regarding allowing the new employees to affect the organisation with

his identity/ideas/functional methods or asking him to modify his identity to

merge with existing culture of the organisation. This is more applicable to high

positions who may have been hired with a view to bring in their experiences and

methods of management to the organisation.

How long should the induction process take?

It starts when the job ad is written, continues through the selection process and is

not complete until the new team member is comfortable as a full contributor to the

organization's goals.

The first hour on day one is a critical component - signing on, issuing keys and

passwords, explaining no go zones, emergency procedures, meeting the people that

you will interact with all have to be done immediately. Until they are done the

newcomer is on the payroll, but is not employed.

After that it is a matter of just in time training - expanding the content as new duties

are undertaken.

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PERFORMANCE APPRAISAL

Meaning of Performance Appraisal

Performance appraisal may be understood as the assessment of individual’s performance in

a systematic way, the performance being measured against factors such as job knowledge,

quality and quantity output, initiative, leadership abilities, supervision, dependability, co-

operation, judgment, versatility, health and the like. Assessment should be confined to past

performance alone. Potentials of the employee for future performance must also be

assessed.

Performance appraisal is a method of evaluating the behavior of employees in the work

spot, normally including both the quantitative and qualitative aspect of job performance.

Performances here refer to the degree of accomplishment of the tasks that make up an

individual’s job. It indicates how well an individual is fulfilling the job demands. Often the

term is confused with effort, but performance is always measured in terms of result and not

efforts.

A formal definition of performance appraisal is “it is the systematic evaluation of the

individual with respect to his or her performance on the job and his or her potential for

development.”

Features of Performance Appraisal

1) Performance appraisal is the systematic description of an employee’s job relevant

strengths and weaknesses.

2) The basic purpose is to find out how well the employee is performing the job and

establish a plan of improvement.

3) Appraisals are arranged periodically according to a definite plan.

4) Performance appraisal is not job evaluation. It refers to how well someone is doing

the assigned job. Job evaluation determines how much a job is worth to the

organization and there for, what range of pay should be assigned to the job.

5) Performance appraisal is a continuous process in every large scale organization.

Process of Performance Appraisal

1. Establish Performance Standards.

Appraisal systems require performance standards, which serve as benchmarks against which

performance is measured. In order to be useful, standards should relate to the desired

results of each job. Appraisals must have a clear- cut criteria. Performance standards must

be both to the appraiser and the appraise. The performance standards of goals must be

developed after a thorough analysis of the job. Goals must be written down. They must be

measurable within certain time and cost considerations.

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Performance appraisal is planned, developed and implemented through a series of steps:

Figure 6.1 Process of Performance Appraisal

2. Communicate the Standards.

Performance appraisal involves attract two parties; the appraiser who does the appraisal

and the appraise whose performance is being evaluated. Both are expected to do certain

things. The appraiser should prepare job descriptions clearly, help appraise set his goals and

targets; analysis results objectively; offer coaching and guidance to appraise whenever

required and reward good results. The appraiser should be very clear about what he is doing

and why he is doing. For this purpose, the performance standards must be communicated

to appraise and their reactions are noted initially. These standards must be revised or

modified as and when required.

3. Measure Actual Performance.

After the performance standards are set and accepted, the next step is to measure actual

performance. This requires the use of dependable performance measures, the ratings used

to evaluate performance. Performance measures in order to be helpful must be easy to use,

reliable and report on the critical behaviors that determine performance. Generally,

ESTABLISHING PERFORMANCE STANDARD

CONNUNICATION OF PERFORMANCE

STANDARDS

MEASUREMENT OF ACTUAL PERFORMANCE

COMPARISON OF ACTUAL PERFORMANCE

WITH THE STANDARDS

FOLLOW UP ACTIONS

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managers regarding how to measure actual performance use four common sources of

information: personal observation, statistical reports, oral reports and written reports.

4. Compare Actual Performance with Standards and Discuss the Appraisal.

Actual performance may be better than expected and sometimes it may even go off the

track. The assessment of another person's contribution and ability is not an easy task. It has

serious emotional overtones as it affects the self-esteem of the appraise. Any appraisal

asked on subjective criteria is likely to be questioned by the appraisers and leave him quite

dejected and unhappy when the appraisal turns out to be negative.

5. Taking Corrective Action, if Necessary.

Corrective action is of two types: The one, which puts out the fires immediately and the

other one, which strikes at the root of the problems permanently. Immediate action sets

things right and get things back or track, whereas the basic corrective action gets to the

source of deviations and seems to adjust the difference permanently. Basic corrective step

seek to find out how and why performance deviate.

Methods of Performance Appraisal:

Methods of Performance Appraisal

A) Traditional Methods B) Modern Methods

Confidential report 1. Human resource accounting

Ranking 2. Management by objective

Graphical rating scale 3. Assessment centre

Checklists 4. BARS( Behaviorally Anchored

Forced distribution Rating Scale )

Critical incidents

Essay evaluation

Group appraisals

Traditional methods (Past Oriented):

1. Confidential report method

It is mostly used in government organizations. It is a descriptive report generally prepared at

the end of the year, by the employee’s immediate superior. The report highlights the

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strengths, weaknesses, major mistakes, merits, good work done etc. of the subordinate. The

impression of the superior about the superior is merely recorded here. It does not offer any

feedback to appraise. It is a narrative method of performance appraisal since the report is

not made public and hence no freedom is available, the subjective analysis of the superior is

likely to be hotly contested.

2. Essay Appraisal

Under this method the rater is asked to express the strong as well as the weak points of the

employee’s behavior. This technique is normally used with a combination of the graphical

rating scale because the rater an elaborately present the scale by sustaining an explanation

for his rating. In it, the rater considers the following factors:

-Job knowledge and potential of the employee.

-Employees understanding about the company’s programmes, policies, objective, etc.

-The employees general planning, organizing and controlling ability.

-The employee’s relation with the co-workers and superiors.

-The attitude and perceptions of the worker, in general.

3. Group appraisal

In this method an employee is appraised by a group of appraisers. This group consists of the

immediate supervisor of the employee, other supervisors who have close contact with

employee’s work, manager or head of department or consultant. The head of department

or manager may be the chairman of the group and the supervisor may act as the coordinate

for the group activities. The immediate supervisor enlighten other members about the job

characteristics, demand, standards or performance etc. then the group appraise the

performance of the employee, compares the performance with the standards, finds out the

deviation, discusses the reasons, therefore suggests ways for improvement of performance,

prepares an action plan, studies the need for change in the job analysis and standards and

recommends changes, if necessary. This method eliminates “personal bias” to a large

extent, as performance is evaluated by multiple rates. However, it is very time consuming

process.

B) Modern Methods (Future Oriented):

1. Human resource accounting

HRA is a sophisticated way to measure in financial terms the effectiveness of the personal

manager activities and the use of people in an organization. It is process of accounting

people as an organization resource. It tries to place a value on the organizational human

resources as assets and not as expenses. This method shows the investment the

organization makes in the people and how the value of these people change over a time.

The acquisition of employee is compared with the replacement cost from time to time. In

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brief, in this method the employees’ performance is evaluated in terms of costs and

contributions of employees.

2. Management by objectives

It is the modern method of evaluating the performance of personnel. Managers have

become increasingly aware that the traditional performance evaluation systems are

characterized by facing goals. The concept of MBO is actually the outcome the pioneering

work of Drucker, Mcgreger and Odioine in management science. MBO can be described as

the process whereby the superior and subordinate manager of an organization jointly

identify its common goals, each individual’s areas of operations, responsibility in terms of

results expected of him and use these measures as a guide for operating the unit and

assessing the contributions of each of its members. MBO thus represents more than an

evaluation process.

The MBO can be described in four steps:

The first step is to establish the goals each subordinate is to attain. The goals

typically refer to the desired outcome to be achieved. The goals can be then used to

evaluate the employee performance

The second step involves setting of the performance standard fro the subordinates

in a previously arranged time period.

In the third step, the actual level of goal attainment is compared with the goals

agreed upon. The evaluator explores the reasons or the goals that were not met and

the goals that were exceeded. This step helps to determine the training needs. It also

alerts the superior of the conditions that may affect but over which the subordinate

has no control.

The final step involves establishing new goals and, possibly, new strategies for goals

that previously not attained. At this point, subordinate and superior involvement in

the goal setting may change. Subordinates who successively reach the established

goals may be allowed to participate more in the goal setting process the next time.

The process is repeated.

3. Assessment center

In this approach individuals from various departments are brought together to spend two or

three days working on an individual or a group assignment similar to the ones they would be

handling when promoted. Observers rank the performance of each and every participant in

order to merit since assessment centers are basically meant for evaluating the potential of

candidates to be considered for promotion, training on development, they offer an excellent

means for conducting evaluation process in an objective way. All assesses get an equal

opportunity to show their talents and capabilities based on merit.

Essential Features of an Assessment Centre

While the specific objectives for which the assessment centre is set up may vary in

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making a promotion decision, diagnosing training needs, developing managerial skills,

placement, etc., there are some essential steps that are common in all assessment centres.

The essential features of an assessment centre are:

a. Job analysis: The aim of conducting job analysis is to reveal the details of the target job its

illustrative tasks, problems, and situations that a jobholder is likely to face in a given

situation. Through job analysis, the dimensions like the skills, qualities, attributes,

knowledge, motivation, tasks required for effective performance of a target job are

systematically identified. These dimensions provide the framework for developing the

instruments to evaluate or assess the participants and for giving the feedback.

b. Multiple assessment techniques: The assessment centre aims at providing multiple

opportunities to observe the complex behaviour of the participants and assess it against the

dimensions identified in the job analysis. A variety of assessment techniques can be used,

ensuring that these are the appropriate ways of observing one or more of the dimensions.

These can include - interviews, psychological tests, questionnaires, situational exercises, etc.

c. Situational exercises: These exercises are simulations that portray the most important

aspects of target jobs. Typically, a situational exercise tries to present the participant with a

complex set of stimuli that he is likely to deal with on the job. For example, an in-basket

exercise that captures the typical sample of tasks one is likely to encounter in a job.

d. Behavioural responses: Situational exercises provide a lot of opportunity to oversee the

behaviour of participants, which are indicators of complex competences.

e. Behavioural observations: The assessors are trained to focus on the behaviour of the

participants. These observations give a specific statement of observable actions and even

actual words.

f. Multiple assessors: The basis for using multiple assessors is that this helps in ironing out

individual biases. Different backgrounds and experiences of a group help to provide a rich

perspective to the centre. It is recommended that a line manager, an HR manager, an

outside consultant and others, familiar with the target job, may be included in the assessor

panel. There should be at least three assessors to make observations on each participant's

performance.

g. Trained assessors: It is important that the assessors have thorough training in assessment

skills and also have a common frame of reference regarding the objectives, design and

implementation programme of the centre. Specifically, training should be imparted on

observing and recording behaviours, classifying behaviour into directions, making

judgements about the performance levels, communicating individual judgements and

understanding to others, integrating behavioural observations from different sources, etc. If

required, make evaluation an overall success and give suggestions for future development.

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h. Integration of observations: Regarding integration of observations, there are two schools of

thought on its methodology. Traditionally, the judgemental method has been used in which

the assessors use their pre-knowledge, wisdom and discretion in noting, classifying and

integrating observations to derive an overall rating. The alternative method is found to be

especially appropriate for some assessment situations, for instance, while screening a large

number of candidates, for low level jobs. This is the statistical method. Here predetermined

weights are assigned to dimensions and scores on exercises. These are then combined using

a formula.

4. Behaviorally Anchored Rating Scale

This method is also known as behavioral expectation scale. This method represent he latest

innovation in the performance appraisal. It is the combination of the rating scale and critical

incident techniques of employee performance evaluation. The critical incidents serve as the

anchor statement on a scale and the rating form usually contains six to eight specifically

defined performance dimensions.

360° PERFORMANCE APPRAISAL

The appraisal may be any person who has thorough knowledge about the job contents,

contents to be appraised, standards of contents and who observes the employee's by

performing a job. The appraisal should be capable of determining what is more important

and what is relatively less important. He should prepare reports and made judgments

without bias. Typical appraisals are supervisors, peers. Subordinates, employees

themselves, user of service and consultants. Performance Appraisal by all these parties is

called 360° Performance Appraisal.

1. Supervisors

Supervisors include superiors of the employee, other superiors having knowledge about the

work of the employee and department head or manager. General practice is that immediate

superior appraises the performance, which in turn is reviewed by the departmental head/

managers. This is because superiors are responsible free managing their subordinates and

they have the opportunity to observe, direct and control the subordinate continuously.

Moreover, they are accountable for the successful performance of their subordinates.

Sometimes other supervisors, who have close contact with employee work also appraise

with a view to provide additional information.

2. Peers

Peer appraisal may be reliable of the workgroup is stable over a reasonably long period of

time and performs tasks that require interaction.

3. Subordinates

In developed countries, the concept of change superiors rated by subordinates in being used

in most organizations. Such a method can be useful provided the relationships between

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superiors and subordinates art cordial. Subordinate's ratings in such cases can be quite

useful in identifying competent superiors.

4. Self-Appraisal

If individuals understand the objectives they are expected to achieve and the standards by

which they are to be evaluated, they are to a great extent in the best position to appraise

their own performance. Also, since employee development means self-development,

employees who appraise their own performance may become highly motivated.

5. Users of Services/Customers

The customers on users of services can, better judge employee performance in service

organizations relating to behaviors, promptness, speed in doing the job and accuracy.

Example, students better judge a teacher’s performance.

6. Consultants

Sometimes consultants may be engaged for appraisal when employees or employers do not

trust the supervisory appraisal and management does not trust the self-appraisal and the

appraisal done by subordinates. In such situation, the consultants are trained and they

observe the employee at work for sufficiently long periods for the purpose of appraisal.

7. When to appraise?

Informal appraisals are conducted whenever the supervisor or personnel manager feel it

necessary. However, systematic appraisals are conducted on a regular basis; say for

example, every six month or annually.

Requirements of A Good Appraisal System:

1) It must be easily understandable:

If the system is too much complex or to time consuming, it may be anchored to the ground

by its own dead weight of complicated forms which nobody but the experts understand.

2) It musty has support of all line people who administer it:

If the line people think that there role is not very important then they will not consider the

system seriously. Similarly, if the people find that the system is too theoretical, too

ambitious, or that has been foisted on them by the ivory-tower staff consultants who have

no comprehension of the demand then they will recent it.

3) The system should be sufficiently grounded in the requirement of the organization:

It should reflect the value system of the organization. In fact functioning as a definition of

performance, it should tell he employee what set of activities or what qualities are

considered desirable by the organization. As such it should have linkage with the job

description.

4) The system should be both valid and reliable:

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The validity of the ratings is the degree to which they are truly indicative of the intrinsic

merit of the employees. The reliability of the ratings is the consistency with which the

ratings are made, either by different sectors, one by one rater at different times. Both

validity and reliability result from objectivity. The appraisal system of many organizations

lacks this objectivity and bunches all employees into one or two top ranks without taking

into account their merits. This raises outstanding performances but also raises doubts about

the validity of the system.

5) The system should have built-in incentive:

This means that the reward should follow satisfactory performance. Many authors however,

advocate against the direct linkage between the appraisal and rewards. In their opinion,

such a connection throttles downward communication of performance appraisal because

superiors do not like being questioned by disgruntled subordinates.

6) The system should be open and participative:

It should involve employees in goal-setting process. This helps in planning performance

better.

7) The systems should focus more on the development and growth:

Of the employee than on generating data for administrative decision making related to

promotions, increments, etc. the system must help in identifying employee’s strengths and

weaknesses and indicate corrective actions. For example it may reveal that goals need to be

modified on; there is need for classification of duties or for additional training or job

rotation or job enrichment.

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WAGE AND SALARY ADMINISTRATION

CONCEPTS OF WAGES.

While evolving the wage policy, three concepts of wages are generally considered, namely,

1. Minimum Wages,

2. Fair Wages, and

3. Living Wages.

Minimum Wages

Minimum wage is the one that provides not merely the bare sustenance of life but also for

the preservation of the efficiency of the worker. For this purpose, the minimum wage must

also provide for some measure of education, medical requirements and amenities.

Minimum wage may be tied by an agreement between the management and the workers,

but is usually determined through legislation. This is more so in the unorganized sector

where labour is unionised. In the fixation of minimum wages, besides the needs of workers,

other factors like ability of the concern to pay, nature of the jobs, and so on, are also

considered.

Fair Wages

Fair wage is understood in two ways. In a narrow sense, wage is fair if it is equal to the rate

prevailing in the same trade and in the neighbourhood for similar work. In a wider sense, it

will be fair if it is equal to the predominant rate for similar work throughout the country and

for traders in general. Irrespective of the way in which fair wage is understood, it can be

fixed only by comparison with an accepted standard wage. Such a standard can be

determined with reference to those industries where labour is well organized and has been

able to bargain well with the employers.

Living Wages

Living wage is a step higher than fair wage. Living wage may be described as one which

should enable the wage earner to provide for himself and his family not on the bare

essentials of life like food, clothing and shelter, but a measure of frugal comfort including

education for children; protection against ill health; requirements of essential social needs;

and/or measure of insurance against the more important misfortunes including old age. A

living wage must be fixed considering the general economic conditions of the country. The

concept of living wage, therefore, varies from country to country. In the more advanced

countries, living wage itself forms the basis for the minimum wage.

In India, minimum wage is determined mainly for sweated industries under the

provisions of the Minimum Wages Act, 1948. Fair wage is fixed for other industries

considering prevailing rates of wages, productivity of labour, capacity of the employer to

pay, level of national income and other related factors.

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Tribunals, awards and wage boards play major role in fair wage fixation. Many people

are of the opinion that living wage is a luxury for a developing country like India and can

therefore be deferred.

Incentive Systems of Wage Payment

The wage plan should be highly incentive means it should encourage workers to take more

initiative and interest in the work, produce more and also earn more. The wage plan which

serves all these purposes is called incentive wage plan. Such an incentive plan is beneficial

to both - employers and employees as well as it is useful for the rapid industrial growth.

Incentives include monetary as weft as non-monetary benefits offered. There is motivation

to work hard and to earn more. In every incentive plan, wages are linked with the given

output. Incentives are not fixed like wages and salaries. They vary from individual to

individual and from period to period.

ILO defines incentives as "payment by results". Incentives can also be described as

"incentive systems of payment".

According to Dale Yoder, “Incentive wages relate earnings to productivity and may use

premiums, bonuses, or a variety of rates to compensate for superior performance” Piece

rate system is the oldest incentive wage plan which is also useful for attracting and retaining

qualified personnel in the organisation and for motivating personnel to higher levels of

performance. In many incentive plans, a combination of time rate and piece rate sysh3ms is

used. Such combination creates an ideal incentive plan.

Features/Requisites of a Good Incentive Plan:

Simplicity:

A good incentive plan is one which is easy to understand and simple to operate. An average

worker must be able to know the incentive offered and what he is expected to do. The

monetary as well as non-monetary benefits offered must be made clear to all workers.

Encourage initiative:

A good incentive plan should create initiative among workers to work more and to earn

more. It must offer more income to workers and more profit/production to the firm or

company.

Definiteness and flexibility:

A good incentive plan should be definite. This means frequent changes should not be made

as regard rates, etc. as such changes create confusion and doubts in the minds of workers.

Such plan must give clear benefits to workers

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In addition, an ideal incentive plan should be flexible. It should take care of technological

and other changes taking place from time-to-time. There should be suitable provision for

such adjustment. Flexibility makes incentive plan adaptable.

Wide coverage and equitable:

A good incentive plan should not be for employees in certain departments only. It should

have a wide coverage and almost all employees should be covered in such plan. Such wide

coverage makes the plan popular at all levels and among all categories of workers.

An incentive plan should be equitable. This means it should provide equal opportunity to all

employees to show efficiency and earn more. This avoids dissatisfaction among employees

and makes the plan just and fair to all employees.

Guarantee of minimum wage payment:

An incentive wage plan should include certain minimum wage payment to every worker per

month. This should be irrespective of the production he gives. Such provision of guarantee

payments creates a sense of security and confidence among workers.

Scientific fixation of standard workload:

Under the incentive plan, extra payment is given for the extra work i.e. work which is over

and above certain quality. Such standard work-load must be clear, specific and fixed with

scientific time studies so that majority of employees will be able to give extra production for

extra payment.

Justice to employer and employees:

A good incentive plan should do justice to both parties. The employer must get additional

production along with extra profit and the workers must get extra payment for extra

production.

Challenges affecting Remuneration

People who administer wage and salary face challenges, which often necessitate

adjustments to a remuneration plan. The more important of the challenges are: -

Skill-based pay: In the traditional job-based pay, employees were paid on the bases of jobs

the do. In the skill-based system, workers are paid on the basis of number of jobs they are

capable of doing. The purpose of this system was to motivate employees to acquire

additional skills so that they become more useful to the organization. Skill-based pay

systems work well when,

a) HRM philosophy is characterized by mutual trust and the conviction that the employees

have the ability and motivation to perform well.

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b) Technology and the organization structure changes frequently.

c) Employee turnover is relatively high.

d) Workers value teamwork and opportunity to participate.

Pay Reviews: Pay once determined should not remain constant. It must be reviewed and

changed often, but the question is “how often?” Pay reviews may be made on pre-

determined dates, anniversary dates or there could be flexible reviews. In fixed dates,

wages and salaries of all the employees are reviewed and raised on a specific date of each

year. In anniversary dates salaries may be reviewed at an interval of twelve months from

the date when employee was hired. In organized industrial establishments pay reviews are

held once in three years. In government departments this is done once every ten-fifteen

years.

Pay-secrecy: Equity in remuneration is a significant factor in the employee performance.

Perceived inequality in wages and salaries will demotivate and demoralize employees, which

will lower employee performance. One way of avoiding this problem is to maintain pay-

secrecy.

Comparable worth: One of the popular principles in employee remuneration is equal pay

for equal work. Under equal remuneration act, male and female workers are to paid same if

their merit and seniority match. Beyond the concept of equal wages is the concept of

comparable wages, which implies that if there are two employees under different jobs, but

receive same points under a point ranking method of job evaluation they have to be paid

the same.

International Pay: In increasing globalization of business international pay assumes greater

relevance. The amount of remuneration its composition and other factors pose serious

challenge to HR manager.

Components of Employee Remuneration and Fringe Benefits

Remuneration is the compensation an employee receives in return for his or her

contribution to the organization. Remuneration occupies an important place in the life of an

employee. His or her standard of living, status in the society, motivation, loyalty, and

productivity depend upon the remuneration he or she receives. For the employer too,

employee remuneration is significant because of its’ contribution to the cost of production.

Besides, many battles (in the form of strikes and lock-outs) are fought between the

employer and the employees on issues relating to wages or bonus. For HRM too,

employees’ remuneration is a major function. The HR specialist has a difficult task of fixing

wages and wage differentials acceptable to employees and their leaders.

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An average employee in the organized sector is entitles to several benefits –both financial as

well as non-financial. To be specific, typical remuneration of an employee comprises-wages

and salary, incentives, fringe benefits, perquisites, and non-monetary benefits.

We will now discuss them in detail:-

1. Wages and Salary

Wages represent hourly rates of pay, and salary refers to the monthly rate of pay,

irrespective of the number of hours put in by an employee. Wages and salaries are subject

to annual to small increments. They differ from employee to employee, and depend upon

the nature of job, seniority, and merit.

2. Incentives

Also called ‘payments by results’, incentives are paid in addition to wages and salaries.

Incentives depend upon productivity, sales, profit, or cost reduction efforts.

These are:-I) individual incentive schemes and ii) group incentive programmes. Individual

incentives are applicable to specific employee performance. Where a task demands group

effort for completion, incentives are paid to the group as a whole. The amount is later

divided among group members on an equitable basis.

3. Fringe Benefits

These include such employee benefits as provident fund, gratuity, medical care,

hospitalization accident relief, health and group insurance, canteen, uniform, recreation and

the like. Other examples of fringe benefits are (A) Legally required payments i.e old age

,survivors, disability and health insurance, workers compensation fund, unemployment

compensation.(B) Contingent and deferred benefits i.e. pension plans, group life insurance,

group health insurance, guaranteed annual wage, prepaid legal expenses, military leave and

pay, jury duty and bereavement paid leave, maternity leave, severence pay.(C) Payments for

time not worked i.e vacations, holiday, voting pay allowances.(D) Other benefits i.e. travel

allowances, company car and subsidies, moving expenses, uniform and tool expenses,

employee meal allowances, discounts on employer’s goods and services, child care facilities.

4. Perquisites

These are allowed to executives and include company car, club membership, paid holidays,

furnished house, stock option schemes and the like. Perquisites are offered to retain

competent executives.

5. Non-Monetary Benefits

These include challenging job responsibilities, recognition of merit, growth prospects,

competent supervision, comfortable working conditions, job sharing and flexitime.

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Devising a Remuneration Plan

Any remuneration plan must be understandable, workable and acceptable. The

remuneration scheme must have two components – a base rate and the scope for

increasing the base rate. The remuneration plan must be determined keeping in mind the

requisites and the components.

The persons responsible for determining a remuneration plan are advised to employ

sequential steps. (see figure ) as described below.

Job Description

Job Evaluation

Individual Pay for Each

Job within a Range

Job Hierarchy

Pay Survey

Pricing Jobs

Figure 7.1 Remuneration Model

Job Description: Job description are crucial in designing pay systems, for, they help to

identify important job characteristics. They also help determine, define and weigh

compensable factors (factors for which an organization is willing to pay-skill, experience,

effort and working environment.

Job Evaluation: The next step in pay fixation is to establish relative worth of jobs by

employing job evaluation. A number of techniques are available to evaluate jobs. For

example, in the point-ranking method of job evaluation, each job is analysed and defined in

terms of the compensable factors an organization has agreed to adopt. Points are assigned

to each degree of a compensable factor, such as responsibility.

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Job Hierarchy: The points assigned to all compensable factors are aggregated. The total

points scored will help to establish the hierarchy of job worth, starting from the highest

point total to the lowest point total.

Pay Surveys: Job hierarchy being established, the next step is to establish pay differentials.

Before fixing wage and salary differentials, prevailing wage and salary rates in the labour

market need to be ascertained. Hence the relevance of pay surveys.

One way of collecting pay details is to conduct a survey. This requires that a sample of key

jobs and a sample of companies need to be selected. Questionnaires could be mailed to

select companies, requesting them to furnish pay details relating to key jobs. Information

can also be collected over the telephone.

There are also other sources of collecting pay details. Labour departments of the

government, trade unions, and professional bodies, and consulting firms provide copious

amount of information about the prevailing wage and salary rates.

Job evaluation helps establish job hierarchy. Through surveys, the rate for key jobs in the

labour market is also known. The next logical step is to determine pay structures.

Pricing Jobs: In pricing jobs, the job evaluation worth is matched with the labour market

worth. Two activities need to be performed: (i) establishing the appropriate pay level for

each job, and (ii) grouping the different pay levels into pay grades.

Pay levels: in order to set a pay level, the points assigned and the survey wage rates are

combined through the use of a graph called scatter gram. In the figure below, the vertical

axis represent pay rates. The horizontal axis is used for points. The total points and the wage

rates for each key job are plotted to obtain the scatter gram.

100 200 300 400 500 600 700 800 900 1000

10

9

8

7

6

5

4

Point Values

Wa

ges or S

alaries

Key Job A

Non-Key

Job B

Wage-trend

Line

Figure 7.2 Development of a wage-trend line

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Thus, each dot in the above figure represents the intersection of the point value and the

market-determined wage rate fir a particular key job. For example, key job A is worth 500

points and is paid Rs. 60 per hour. Similarly, key job B earns 700 points and has a prevailing

rate of Rs. 70 per hour.

The dots that represent key jobs can be used to draw a wage-trend line as, close to as many

points as possible, employing a statistical technique called least squares method of

regression. This method relates point values to wage rates in the labour market. If the

employer wants to lead or lag behind in the market rate by a given percentage, the wage-

trend line can be moved up or down by the same percentage.

Determining pay grades: A pay grade comprises jobs of approximately equal difficulty or

importance. Where point-ranking method of job evaluation is used, the grade consists of

jobs falling within a range of points. It is convenient to organize jobs into groups, also called

classes, so that there are limited number of wage rates. Where individual jobs are retained,

an organization will have hundreds of remuneration rates. The existence of hundreds of

separate wage rates would be meaningless as differences between jobs might be just a few

rupees.

Where grouping of jobs is done, the wage-curve line is to be replaced with a series of

ascending dashes, as shown in the figure below. Thus all jobs in the same class will receive

the same wage rate. A job valued at 105 points, for example, receives the same pay as a job

with 145 points.

100 150 200 250 300 350 400 450 500 550

Am

ou

nt, $

0 101 151 201 251 301 351 401 451 501

I II III IV V VI VII VIII IX X

0

Figure 7.3 Impact of job classes on the wage-trend line

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Modern Methods of Remuneration

Pay is a motivator that rewards the contribution that employees make to an organization.

Many organisations have devised pay methods that link individual or team performance to a

pay system that rewards them. Alternatively, pay has been used to recognise such factors

as individual development, responsibility, risk-taking and loyalty or experience.

The various modern methods of remuneration are:

1. Market Based Pay

This system uses a direct market pricing approach for all of a firm’s jobs. This type of pay

structure is feasible if all jobs are benchmark jobs and direct matches can be found in the

market. Pay surveys can be used to determine the market prices of the jobs in question. This

type of pay system may be used in entrepreneurial start-up firms, research and

development units, and sales organizations. Larger firms with more diverse jobs, however,

may have to rely on market pricing only for benchmark jobs and use job evaluation in order

to price non-benchmark jobs.

2. Competency Based Pay or Skill or Knowledge based Pay

Under such a system, workers are paid not on the basis of the job they currently are doing

but, rather, on the basis of the number of jobs they are capable of doing, that is, on the

basis of their skills or their depth of knowledge, both of which are termed ‘competencies’. In

a world of slimmed down big companies and agile small ones, the last thing any manager

wants to hear from an employee is “It’s not my job.” To see how such a system might work

in practice, consider Polaroid’s pay system.

Competency based Pay at Polaroid Corporation

Polaroid initiated a company wide, competency based pay system in April 1990. Polaroid

employees are encouraged to form work teams and to redesign their work functions in

order to make them more efficient. Although Polaroid’s system includes everyone from the

mailroom clerk to the chief executive officer, it has been more effective in the

manufacturing part of the business.

Polaroid’s manufacturing employees have learned skills in a number of different areas,

rather than focusing on a single job. In addition, the work teams have picked up some of the

responsibilities of supervisors such as scheduling assignments and overtime. Employees who

have succeeded at the new jobs have received more money. “Their pay has gone beyond

what was traditionally the top”, said the manager.

The focus of Polaroid’s white-collar employees has been on learning new technologies. But

here, the process has not worked as smoothly. Part of the problem is that skills, or

competencies, are not so easy to measure in managerial jobs. But that will not stop

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companies from attempting to apply this scheme to their white-collar workforces. “Slowly,

but surely we’re becoming a skill-based society where your market value is tied to what you

can do and what your skill set is … In this new world, where skills and knowledge are what

really count, it doesn’t make sense to treat people as jobholders. It makes sense to treat

them as people with specific skills, and to pay them for those skills.”

3. Variable Pay

Variable pay links employees' earnings to how well or badly an organisation, department or

unit/section performs. In a successful period the potential for employees to earn more

could be substantive. However, where corporate performance is deemed to be poor the

workforce has to take more responsibility for this and ultimately be prepared to face a

financial penalty.

The potential to be rewarded well can make variable pay attractive to employees.

Employers are also attracted to the concept because of its ability to promote a common

interest for improved performance between staff and management.

In the private sector variable pay is often linked to profit sharing and share option schemes.

Profit sharing links cash bonuses to organisational performance. Payments are made from a

profit sharing pool that is determined by the Board of Directors. Typically individual

payments are a fixed percentage of salary although under some schemes eligibility depends

on individual performance.

Share option schemes give employees the right to buy/ own shares in a company. It is

claimed that this can assist recruitment in a competitive market by giving staff a chance to

share in the wealth that they have created.

4. Team pay

Team pay is a method of linking the pay of employees to the level of performance that they

have achieved in a team. By reinforcing group performance through the recognition of team

working, it can harness the collective potential of employees. It is claimed that this should

lead to improvement in service delivery areas.

Team performance can only be improved by financial reward if the individuals within it are

strongly motivated by money. However, an even more crucial factor is the amount of money

that is available for this purpose. If employees deem that this amount is derisory it will have

a limited impact as a mechanism for raising performance and productivity.

Equally important is how team pay is to be awarded. A common method of linking pay to

performance is to pay non-recurring bonuses. These can be shared with teams in a variety

of ways including even cash sums, scaled or stepped cash sums or most popularly, as a

percentage of basic salary.

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GRIEVANCE HANDLING

Introduction

Expressions such as problem, discontentment, deep problem etc. can be used to describe a

grievance. Dissatisfaction or discontent is not a grievance. They initially find expression in

the form of a complaint. When a complaint remains unattended and the employee

concerned feels a sense of lack of justice and fair play, the dissatisfaction grows and

assumes the status of a grievance.

Dissatisfaction: maybe defined as anything that disturbs an employee, whether or not such

unrest is expressed in word e.g. engineers and technicians may be upset because they are

suddenly instructed to observe regular hours.

Complaint: It is a spoken or written dissatisfaction, brought to the attention of the

supervisor and the union leader. The complaint may or may not specially assign a cause for

dissatisfaction e.g. "four times this morning I have had to chase around looking for the

pliers".

Grievance: It is simply a complaint, which has been formally presented in writing, to a

management representative or a union official. However for most of the people, the word

"grievance" suggests a complaint that has been ignored, overridden or dismissed without

due consideration.

ILO defines a grievance as a complaint of one or more workers related to:

- Wages and allowance

- Conditions of work

- Interpretation of service conditions covering such as OT, Leave, Transfer,

Promotion, Seniority, Job Assignment & Termination of Service"

The National Commission on Labour Observed that "Complaints affecting one or more

individual workers in respect of their workers

- Wage payments, OT, Leave, Transfer Promotion, Seniority, Work Assignment &

Discharges Constitute Grievances".

Definition: According to Michael Jucius, " A grievance can be any discontent or

dissatisfaction, whether expressed or not, whether valid or not, and arising out of anything

connected with the company that an employee thinks, believes, or even feels as unfair,

unjust, or inequitable."

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Let us understand this definition. A grievance means any discontentment or dissatisfaction

in an employee arising out of anything related to the enterprise where he is working. It

may not be expressed and even may not be valid.

It arises when an employee feels that something has happened or is going to happen which

is unfair, unjust or inequitable. Thus, a grievance represents a situation in which an

employee feels that something unfavorable to him has happened or is going to happen. In

an industrial enterprise, an employee may have grievance because of long hours of work,

non-fulfillment of terms of service by the management, unfair treatment in promotion,

poor working facilities, etc.

Nature of Grievance:

Grievances are symptoms of conflicts in the enterprise. Just like smoke could mean

fire, similarly grievances could lead to serious problem if it is not addressed immediately! So

they should be handled very promptly and efficiently. Coping with grievances forms an

important part of any job. The manner in which a manager deal with grievances determines

his efficiency of dealing with subordinates. A manager is successful if he is able to build a

team of satisfied workers by removing their grievances.

While dealing with grievances of subordinates, it is necessary to keep in mind the following

points:

- A grievance may or may not be real.

- Grievance may arise out of not one cause but multifarious causes.

- Every individual does not give expression to his grievances.

The complaints of employees relating to interpretation and implementation of agreements,

labour legislations, various personnel policies, rules and regulations, past practices, code of

conduct are very much grievances.

The grievances may relate to either one employee (individual grievances) or group of

employees (group grievances). Individual and group grievances are to be redressed through

grievance procedure, which we would be studying in detail a little later in the class.

Individual employee or group of employees concerned and manager concerned play vital

role in grievance procedure.

Anyway, Please understand that differences between employees and employers relating to

various personnel policies, wage levels and variety of benefits, awards, rules and

regulations are conflicts. Conflicts are to be settled through collective bargaining. Trade

unions and management participate in collective bargaining for settling disputes. Thus,

conflicts have wider policy implications as compared to grievances.

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Forms of Grievances.

A grievance may take any of the following forms:

- Factual,

- Imaginary,

- Disguised.

Factual: When an employee is dissatisfied with his job, for genuine or factual

reasons like a breach of terms of employment or any other reasons that are clearly

attributed to the management, he is said to have a factual grievance. Thus, factual

grievances arise when the legitimate needs are unfulfilled. The problem that he has

is real and not virtual

Imaginary: When an employee's grievance or dissatisfaction is not because of any

factual or valid reason but because of wrong perception, wrong attitude or wrong

information he has. Such a grievance is called an imaginary grievance. Though it is

not the fault of management, the responsibility of dealing with it still rests with the

management. So the problem is not real. It is in the mind or just a feeling towards

someone or something. So be careful your grievances could be very much imaginary!

Disguised: An employee may have dissatisfaction for reasons that are unknown to

himself. This may be because of pressures and frustrations that an employee is

feeling from other sources like his personal life. I am sure you will agree that if you

have fought at home and come to the institute, you cannot concentrate in the class.

Similarly if you have had a bad day in the institute, that will reflect in the mood at

home. We are all humans and are sensitive to the environment that we operate in!.

The managers have to detect the disguised grievances and attend to them by

counseling the concerned employees. They have to find out the root cause of the

problem rather than find quick fix solutions to them.

Identifying Grievances (Discovery of Grievances)

- It is so beautifully described that good management redresses grievances as

they arise; excellent management anticipates and prevents them from arising. An

effective manager thus has to be proactive. A manager can know about the

problems even before they turn into actual grievances through several means such

as:

Exit interviews

Suggestions boxes

Opinion surveys

Open door policy.

(A) Exit interview: Employees usually quit organizations due to dissatisfaction or better

prospects elsewhere. Exit interviews, if conducted carefully, can provide important

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information about employees' grievances. This can help the management to gather

feedback and to genuinely incorporate feedback. The management should carefully

act upon the information drawn from such employees .It should be careful that the

discontentment is reduced so that no more employees quit the organization

because of similar reasons.

(B) Gripe Boxes: These are boxes in which the employees can drop their anonymous

complaints. They are different from the suggestion boxes in which employees drop

their named suggestion with an intention to receive rewards It is normally said that

if you want to progress in life, you should be close to critics. These gripe boxes can

perform the role of critics for the organisation. The management should carefully

act upon the information thus gathered. Now I don't want to sound repetitive by

saying that the internal customers of an organisation should be satisfied if the

external customers are to be kept happy.

(C) Opinion Survey: The management can be proactive by conducting group meetings,

periodical interviews with employees, collective bargaining sessions etc. through

which one can get information about employees' dissatisfaction before it turns into

a grievance.

(D) Open-door Policy. Some organisation extend a general invitation to their employees

to informally drop in the manager's room any time and talk over their grievances.

This can be very effective because it ca n nip the evil in the bud. That is it can take

care of the problem before it gets out of hand. In fact the management should hold

formal and informal get together with the employees. The management should also

remember that the employees might just need a patient hearing at times. They

need blow off the steam as we hear it more commonly.

What leads to a grievance?

Causes of grievances

In order to handle the grievances efficiently, it is necessary to find and analyse

the grievances of the subordinates. If a grievance is found to be genuine or real (factual),

the corrective action should be taken immediately. But if the grievance arises due to

imagination or disturbed frame of mind of the worker, then it is necessary to explain and

clear up the matter. Before dealing with the grievances, their causes must be diagnosed.

But when the grievances are not given expression by the subordinates, it is manager's job to

detect the possible grievances and their causes. He may realise the existence of grievances

because of high turnover, high rate of absenteeism and poor quality of work. These

problems will go on multiplying if the causes of grievances are not cured.

The causes of grievances may be broadly classified into the following categories:

- Grievances resulting from working conditions

- Improper matching of the worker with the job.

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- Changes in schedules or procedures.

- Non-availability of proper tools, machines and equipment for doing

The job

- Unreasonably high production standards.

- Poor working conditions.

- Bad employer - employee relationship, etc.

- Grievances resulting from management policy

Wage payment and job rates.

Leave.

Overtime.

Seniority and Promotional.

Transfer.

Disciplinary action.

Lack of employee development

plan.

Lack of role clarity.

(3) Grievances resulting from personal maladjustment

- Over - ambition.

- Excessive self-esteem or what we better know as ego.

- Impractical attitude to life etc.

Effects of Grievances:

- Frustration

- Alienation

- Demotivation

- Slackness

- Low Productivity

- Increase in Wastage & Costs

- Absenteeism

- In discipline

- Labor unrest

Establishing a Grievance Procedure.

It is advisable to set up an effective grievance procedure in the organization. The procedure

should be flexible enough to meet the requirements of the organization. It should be simple

so that an average employee is able to understand it. Though such a procedure will vary in

different organizations, yet the following principles should be observed while laying down a

procedure:

1. A grievance should be dealt with in the first instance at the lowest level: that is, an

employee should raise his grievance with his immediate superior. It may be simple

to settle it on the spot and that will be the end of it. Even if it cannot be settled at

that level, the man's superior will know what is happening. This is necessary not only

to maintain his authority, but also to prevent him from being aggrieved, as he will

certainly be, if he is by-passed and hears of the complaint from his own superior.

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2. It must be made clear to the employee what line of appeal is available. If he cannot

get satisfaction from his immediate superior, he should know the next higher

authority to which he can go.

3. Since delay causes frustration and tempers may rise and rumors spread around the

work, it is essential that grievances should be dealt with speedily. As it is said that a

stitch in time saves nine, similarly the problems of the employees should be taken

care of by the management least it should become a major for the management.

4. The grievance procedure should be set up with the participation of the employees

and it should be applicable to all in the organisation. The policies and rules regarding

grievances should be laid down after taking inputs from the employees and it should

be uniformly applicable to all in the organisation. It should be agreed that there

would be no recourse to the official machinery of conciliation unless the procedure

has been carried out and there is still dissatisfaction, and moreover, there must be

no direct action on either side, which might prejudice the case or raise tempers

while the grievance is being investigated.

5. Can you explain to me that why do we need to take inputs from the employees

while framing the policies? Yes... it is necessary because it is going to be applicable

to the employees and not only that; if the employees have contributed to the

policies then their commitment is higher.

6. Open - Door Policy and the step- ladder procedure

Open door policy:

Under this policy, any employee can take his grievance to the chief boss and talk

over the problem. As the name suggests, the management keeps its doors open for

the employees to share their problems. It is said that this policy can remove the

cause of grievance quickly. Though this policy appears to the attractive, it has some

prerequisites.

The open door policy is workable only in small organizations. In big organizations,

the top management does not have the time to attend to innumerable routine

grievances daily that is the work of lower-level managers.

Under this policy, the front-line supervisor who should be the first man to know

about the grievances of his subordinates is by passed. This provokes him in two

ways. First, he thinks the man who skipped him is disrespectful. Secondly, he fears

that he will incur his superior's displeasure because of his failure to handle his

subordinates will interpret this.

Step-Ladder Procedure

Under the step-ladder procedure, the employee with a grievance has to proceed

step by step unless he is able to redress his grievance. According to the Model

Grievance Procedure, an aggrieved employee shall first present his grievance

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verbally in person to the officer designated by the management for this purpose. An

answer shall be given within 48 hours. If he is dissatisfied with the answer, the

worker will present his grievance to the head of the department, who will give his

answer within 3 days. If the worker is dissatisfied with the answer, he may ask that

his grievance should be referred to the Grievance Committee, which shall make its

recommendations within 7 days to the manger. The management must implement

unanimous recommendations of this committee. A dissatisfied worker can apply to

the management for a revision of its decision within on week's time.

ESSENTIALS OF A GRIEVANCE PROCEDURE:

A grievance procedure should incorporate the following features:

1. Conformity with existing legislation: The procedure should be designed in

conformity with the existing statutory provisions. Where practicable, the procedure

can make use of such machinery as the law might have already provided for.

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2. Acceptability: Everybody must accept the grievance procedure. In order to be

generally acceptable, it must ensure the following:

- A sense of fair-play and justice to the worker,

- Reasonable exercise of authority to the manager, and

- Adequate participation of the union.

3. Simplicity: The following points should be noted in this regard:

- The procedure should be simple enough to be understood by every employee.

- The steps should be as few as possible.

- Channels for handling grievances should be carefully developed.

- Employees must know the authorities to be contacted at various levels.

- Information about the procedure should be thoroughly disseminated among all

employees through pictures, charts, diagrams, etc.

4. Promptness: Speedy settlement of a grievance is the cornerstone of a sound

personnel policy. It should be remembered that justice delayed is justice denied. The

procedure should aim at a rapid disposal of the grievance. This can be achieved by

incorporating the following feature in the procedure:

• As far as possible, grievances should be settled at the lowest level

• No matter should ordinarily be taken up at more than two levels, i.e.

normally there should be only one appeal.

• Different types of grievances may be referred to appropriate authorities.

• Time limit should be placed at each step and it should be rigidly followed at

each level.

5. Training: In order to ensure effective working of the grievance procedure, it is

necessary that supervisors and the union representatives should be given training in

working of the grievance procedure. All the policies should be conveyed to the

concerned parties.

6. Follow-up: The personnel department should review the working of the grievance

procedure periodically and necessary changes should be introduced to make it more

effective. This is generally ignored by the organizations. A regular follow up of the

system increase the faith of the people in the system. Therefore it is necessary that

the grievance procedure should be reviewed whenever it is so required.

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COMPENSATION MANAGEMENT

MEANING OF FRINGE BENEFITS Fringe benefits may be defined as wide range of benefits and services that employees receive as an integral part of their total compensation package. They are based on critical job factors and performance. Fringe benefits constitute indirect compensation as they are usually extended as a condition of employment and not directly related to performance of concerned employee. Fringe benefits are supplements to regular wages received by the workers at a cost of employers. They include benefits such as paid vacation, pension, health and insurance plans, etc. Such benefits are computable in terms of money and the amount of benefit is generally not predetermined.

The purpose of fringe benefits is to retain efficient and capable people in the organisation over a long period. They foster loyalty and acts as a security base for the employees.

FEATURES OF FRINGE BENEFITS:

Different from regular wages: Fringe benefits are different from regular wages as such

benefits are those payments, which an employee enjoys in addition to wages he

receives. It is a supplementary payment and provides support to an employee.

Employee motivation: Fringe benefits are not given to employees for performing

certain jobs. The purpose is to encourage them to take more interest in the assigned

work.

Useful but avoidable expenditure: Fringe benefits constitute a labour cost for the

employer.

Not directly linked with efforts: Fringe benefits are not direct reward for the efforts

made or the production given by an employee.

Beneficial to all employees: Fringe benefits are a labour cost but its benefits should be

made available to the entire labour force and not to a small group of employees.

OBJECTIVES OF FRINGE BENEFITS:

To supplement direct remuneration: Fringe benefits supplement regular pay of

employed. It raises the total earnings of an employee and provides better life

and welfare to him.

Employers prefer fringe benefits: employers prefer this indirect remuneration to

direct pay increase.

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To retain competent employees: Fringe benefits create satisfied labour force. In

addition, the management can attract and retain competent personnel in the

organisation by offering liberal packet of fringe benefits.

To develop good corporate image: Fringe benefits help to develop a good

corporate image.

To raise employee morale: Liberal package of Fringe raises the morale of

employees.

LIMITATIONS OF FRINGE BENEFITS: There are some limitations of Fringe Benefits. These are:

Fringe Benefits may lead to unhealthy competition among employees

The expected benefit may not be available if the monetary benefits are not adequately attractive to employees.

The motivation may not be as per expectation if the implementation of the benefits scheme is not transparent.

ADVANTAGES OF FRINGE BENEFITS

There are certain advantages of Fringe benefits. These are:

Fringe benefits provide support to remuneration paid to employees.

Fringe benefits improve efficiency and productivity of employees.

Fringe benefits act as an added attraction to the employees.

Fringe benefits reduce monotony and fatigue of employees. They make employees efficient and co-operative for whatever organisational changes required to be introduced.

Fringe benefits raise morale of the employees. They develop affinity for the organisation.

Fringe benefits develop good corporate image and raise market standing of the organisation.

Fringe benefits act as a motivating force. They motivate employees and induce them to work for the progress and prosperity of the organisation.

TYPES OF FRINGES/ FRINGE BENEFITS: (1) Payment for time not worked by the employee:

Holidays.

Vacations.

Leave with pay and allowances. (2) Contingent and deferred benefits:

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Pension payment.

Group life insurance benefit.

Group health insurance.

Sick leave, maternity leave, child care leave, etc.

Suggestion/service award

Severance pay. (3) Legally required payments:

Old age, disability and health insurance

Unemployment compensation

Worker's compensation. (4) Misc. benefits:

Travel allowances.

Company car and membership of clubs, etc

Moving expenses.

Child care facilities.

Tool expenses and meal allowances, etc.

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LABOUR LEGISLATION

Introduction:

The term `labour legislation’ is used to cover all the laws which have been enacted to deal

with “employment and non-employment” wages, working conditions, industrial relations,

social security and welfare of persons employed in industries.

Need for labour legislation in India:

=> Organized industry in a planned economy calls for the spirit of co-operation and mutual

dependence for attaining the common purpose of greater, better and cheaper production.

=> Since this has not been happening voluntarily, the need for State intervention.

=> In India, labour legislation is treated as an arm of the State for the regulation of working

and living conditions of workers.

The need for labour legislation may be summarized as under:

o Necessary for the health, safety, and welfare of workers;

o Necessary to protect workers against oppressive terms as individual worker is

economically weak and has little bargaining power;

o To encourage and facilitate the workers in the organization;

o To deal with industrial disputes;

o To enforce social insurance and labour welfare schemes.

Objectives:

The objectives of labour legislations are two-fold:

o Preservation of the health, safety and welfare of workers;

o Maintenance of good relations between employers and employees.

PRINCIPLES OF LABOUR LEGISLATION:

Social Justice:

o The essence of democracy is ensuring social justice to all sections of the community.

o This demands the protection of those who cannot protect themselves.

o In modern industrial set-up, workers, left to themselves, are unable to protect their

interest.

o Therefore, the State has to intervene to help them by granting them freedom of

association, the power of collective bargaining and by providing for mediation or arbitration

in the case of industrial conflict.

Social Equity:

o Legislation based on this principle provides for achievement of definite standards.

Standards in terms of living, position in society etc. of the working population.

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These standards for the working class can be achieved by bringing about changes in the Law

of our land.

o Power to change the Law is exercised by the government.

Existing laws may be amended to meet the changed standards.

National Economy:

Measures have to be provided through legislation to:

Ensure normal growth of industry for the benefit of the nation as a whole;

Satisfy the physical and intellectual needs of the citizens;

Ensure the growth of industrial efficiency such as to adjust the wage system with a

view to increase the productivity and prosperity of the workers.

International Uniformity:

o Since its inception, securing minimum standards (for the working population – worldwide)

on a uniform basis in respect of all labour matters has been the main objective of ILO.

o To this end, conventions are passed at the conferences of ILO.

o As a member of the ILO, adopting these conventions would require appropriate legislation

to be brought about.

o The influence of international labour conventions has been significant in shaping the

course of labour legislation in India.