HRM FullBook

Human Resource Management
Editors
Dr. Pushkar Dubey
Dr. Ashok Yakkaldevi
FIRST EDITION
LAXMI BOOK PUBLICATION

258/34, RaviwarPeth,
Solapur-413005
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Rs: 250 /Human Resource Management

Dr. Pushkar Dubey
Dr. Ashok Yakkaldevi
2015 by Laxmi Book Publication, Solapur

All rights reserved. No part of this book may be reproduced in any
form, by mimeograph or any other means, without permission in
writing from the publisher.
ISBN- 978-1-312-81750-0
Published by,
Laxmi Book Publication,
258/34, Raviwar Peth,
Solapur, Maharashtra, India.
Contact No. : +91 9595 359 435
Website :http://www.isrj.org
Email ID :ayisrj@yahoo.in
Preface
With modernization countries across the globe are coming
together. Sophisticated tools and machineries have made the lives of
millions easier. Products in the form of goods and services are
continuously changing their form to enhance their benefit and provide
better customer satisfaction. All these have only been possible due to
human effort. Human factor is therefore, the most imperative and
significant factor for production. Human Resource Management is an
unavoidable issue in the modern day globalization. Unlike other
resources which are viewed valuable, human resources are the most
valuable than all the other resources. Optimum utilization and
appropriate maintenance are the key issues behind creation of
competent workforce. Issues related to human resource like
recruitment, selection, orientation, training and development,
performance appraisal, potential assessment, Industrial relation,
grievance management, trade union are essential to understand and
develop human resource in order to increase productivity of an
organization. The book is essentially designed to cover all these issues
pertaining to understanding of human resource. The content has the
coverage which is useful for the academicians and the practitioners at
large. It covers the most of syllabus taught in HRM in Indian Universities.
I hope that I will act as a useful reference and guide to all the readers.
The entire work has been presented in ten different chapters.
Effort has been made to present each topic in simple and
understandable means for the readers. Topic under coverage includes
Introduction to Human Resource Management, Human Resource
planning and Job analysis, Selection process, Induction, Training and
Development, Performance appraisal, exit policy and potential
assessment, Job evaluation, Wage administration, Industrial Relations

and Human Resource Development.
Suggestions, reviews, comments and observations from the readers are
most welcome.
Dr. Pushkar Dubey
Acknowledgement
I would like to put on record my heartfelt gratitude to my
beloved teacher Professor (Dr.) Sudhirkumar Sharma, Professor of
Commerce, Government Arts and Commerce College, Bilaspur, for
contributing his valuable work in the completion of this book.
I am greatly indebted to my favourite teacher Dr. N. Surenthiran,
Manager (HR), NTPC Limited, Kudai, for his contribution,
encouragement, timely advice and inspiration made me to complete this
book.
I would take this opportunity to record my deep thanks to my
beloved colleague Sri Sushil Kumar Panigrahi, Assistant Professor,
Management for his suggestions and contribution in bringing this
valuable book in the short span of time. I also express my gratefulness to
my dear friend Sri. Abhishek Kumar Pathak, Asst. Professor, Department
of Management Studies, CVRU for his thoughtful participation in this
work.My key note of thanks to Sri Samir Kumar Purohit, Senior Lecturer,
Sundergarh Engineering College for his dedicated effort in completion of
the project. I am also thankful to Mrs. ArchanaAgrawal, Asst. Professor,
Department of Management Studies, CVRU for her appreciable work
towards this valuable project.
Last but not the least; I am gratified towards Dr. Ashok
Yakkaldevi, the founder of Laxmi book publication. He is the initiator
behind all this thoughtful work. He is the creator for the said work, who
has brought all the valuable resources under one roof. I acknowledge
him for providing me this precious opportunity of becoming editor of the
book. No language can express his immense help. Indeed I owe a deep
sense of gratitude in remembrance of his initiation and sacrifice for this
entire book.
I am extremely fortunate having blessed with the benevolence of

my mother, Smt. RashmiDubey and the great almighty goddess
MaaDurga. Both empowered me with lots of confidence, motivation and
enlightened my journey by clearing every hurdle which came in the way.
Dr. Pushkar Dubey
About Editor
Dr. Pushkar Dubey[MA (Economics); MBA (Gold
Medalist); UGC-NET (Management); PhD.] is
working as Assistant Professor in Department of
Management in PadmashreeKrutarthaAcharya
College of Engineering (PKACE), Bargarh, Odisha.
He has seven years of teaching experience
including three years of experience in the field of
Research. The author has a special inclination
towards academic research. The author has published over 20 research
papers in Journals of National and International repute. The author also
serves as a member to board of editors in many reputed Journals. He
has membership in many professional bodies across India.
Dr. Dubey is post graduate in Economics and has completed his
Master in Business Administration from Sambalpur University. He is a
Gold Medalist in MBA with specialization in Marketing and Human
Resource. He has also qualified UGC-NET (Management). Recently in the
year 2014 he has been awarded with prestigious doctorate (PhD.) degree
from Dr. C.V. Raman University, Chhattisgarh.
The author loves reading, writing and exploring concepts and
ideas to develop new insights. He has specialised skills on research and is
an active learner of various research tools. He has gained competence in
solving analytical problems on research methodology through statistical
software like SPSS and AMOS. He is also a PhD. Supervisor to Indian
Universities. The author strongly believes learning, as a vital tool for
Knowledge up gradation and is always active to accumulate new
thoughts and ideas.
About Editor
Dr. Ashok Yakkaldevi(Ph.D.) is double post graduate
(English & Sociology) major and Assistant Professor in
Solapur, (Maharashtra), India. He is founder member
of India's Second and World's leading research journal
indexing service named Directory of Research
Journals Indexing (DRJI) and many more online
research related projects also he is founder member
of Online Research courses which has been first
online courses of Solapur University which is completely online. He
enjoys writing blogs, articles and book chapters, and spends his time
daily writing something on research. In his free time, reading various
blogs, articles, creating innovative concepts regarding research
publishing and internet surfing.
Dr. Ashok looks forward to reading many books, research
articles and developing various innovative projects like Directory
of Research Journals Indexing (DRJI) etc. of his own interests and
skill at writing and publishing.
He has published more than 15 books, 41 research articles
and currently working on Encyclopaedia of Global Social Problems
which may expand up to 10 volumes.
Dr. Ashok is dedicated research on Padmashali community
migration, always thinking about innovation in academic education
and research work. He has been involved in Research for more
than 5 years. He is also enthusiastic learner for new technologies
related to computers and internet.
Read more about Ashok at http://ashokyakkaldevi.org/
List of Authors
Pushkar Dubey
Assistant Professor in
Management,
PadmashreeKrutarthaAcharya
College of Engineering,
Bargarh, Odisha,
India
pushkardubey@rediffmail.com
Samir Kumar Purohit
Senior Lecturer,
Humanities and Management
Department,
Sundargarh Engineering
College,
Sundargarh, Odisha,
Indian
Samirpurohit026@gmail.com,
Archana Agrawal
Abhishek Kumar Pathak
Assistant Professor,
Assistant Professor,
Department of Commerce & Department of Management,
Management,
Dr. C. V. Raman University,
Dr. C.V. Raman University,
Kota, Bilaspur, Chhattisgarh,
Bilaspur, Chhattisgarh,
India
anshu33868@gmail.com,
India
mailmearchee@gmail.com
Sudhir Kumar Sharma
Head,
Department of Commerce,
Government P.G. Arts
Commerce College,
Bilaspur, Chhattisgarh,
India
skumar99sharma@gmail.com
Sushil Kumar Panigrahi
Assistant Professor in
Management,
and P.K.A. College of Engineering,
Bargarh, Odisha,
India
sushil_panigrahi@rediffmail.com
N. Surenthiran
Manager (HR),
NTPC Limited,
Kudgi, Tamil Nadu,
India
surenthirann@rediffmail.com
Table of Contents
Sr. No.
1.
2.
3.
4.
5.
6.
7.
Topic
Introduction to
Human Resource
Management
Human Resource
Planning and Job
Analysis
Selection Process in
Organization
Induction and
Training Methods
Performance
Appraisal Methods
Concept of Exit
Policy & Potential
Assessment
Techniques of Job
Evaluation
Author (S)
Page No.
Dr. PushkarDubey
1-8
Dr. PushkarDubey
9-27
Mr. Samir Kumar Purohit
28-49
Mrs. ArchanaAgrawal
50-74
Mr. Abhishek Ku. Pathak
75-80
Prof (Dr.) Sudhir Ku. Sharma
81-87
Dr. PushkarDubey
88-98
8.
Wage Determination
Mr. Sushil Ku. Panagrahi
99-122
9.
Industrial Relations
Mr. Sushil Ku. Panagrahi
123-147
10.
Human Resource
Development in
Indian Organizations
Dr. PushkarDubey and

Dr. N. Surenthiran
148-170
Human Resource Management Introduction

Chapter-1
Introduction to Human Resource Management

Dr. Pushkar Dubey
Introduction
The 5 Ms in Production are Men, Material, Machine, Mission
and Money. Of all these factors People or Human resource is the vital
and most essential factor in the process of production. It is the central
resource of an organization and all other factors of production revolve
around the same. The success of an organization depends on the quality
of manpower it possesses. May it be any area of work, department or
organization as a whole, the growth lies in the effort and commitment of
people who work within? All the other factors remain dead or unutilized
in the absence of Human factor in the organization. Therefore human
resource is considered to be the most important and significant factor
for the production of utility goods and services needed by the society.
The beauty of the human brain has made to fulfill the endless wants of
individual in the modern era. Hence, management of Human factor for
an organization is the key issue. Human resource management is defined
as management functions that helps managers recruit, select, train and
develop members for an organization. HRM is concerned with peoples
dimension in organization.
Definitions:
1. A series of integrated decisions that govern employer-employee
relations. Their quality contributes to the ability of organizations and
1
2.
3.
4.
5.
6.
employees to achieve their objectives. (Milkovich& Boudreau,

1997).
Concerned with the people dimension to management. Since every
organization comprises people, acquiring their services, developing
their skills, motivating them to higher levels of performance and
ensuring that they continue at the same level of commitment to the
organization are essential to achieve organizational goal. This is true,
regardless of the type of organization: viz. government, business,
education, health, recreation, or social action. (Decenzo& Robbins,
1989).
The planning, organizing directing and controlling of the
procurement, development, compensation, integration, and
maintenance of human resource to the end those individual,
organizational, and social objectives are accomplished. (Flippo,
1984).
The organization function that focuses on the effective
management, direction, and utilization of people; both the people
who manage produce and market and sell the products and services
of an organization and those who support organizational activities. It
deals with the human element in the organization, people as
individuals and groups, their recruitment, selection, assignment,
motivation, empowerment, compensation, utilization, services,
training,
development,
promotion,
termination
and
retirement.(Tracey, 1994).
(Invancevich and Glueck) HRM is concerned with the most effective
use of people to achieve organizational and individual goals. It is the
way of managing people at work, so that they give their best to the
organization.
(According to Dessler, 2008) the policies and practices involved in
carrying out the people or human resource aspects of a
2

management position, including recruiting, screening, training,
rewarding, and appraising comprises of HRM.
The above definition signifies that HRM is concerned with
procuring, developing and maintaining component workforce in an
organization so as to meet short term and long term organizational
objectives.
Nature of Human Resource Management:
HRM has the following features:
1. It is a part of Management: HRM is a management. It is drawn from
management concept which relies on principles and techniques of
human resource. Therefore it is considered as a part of management
discipline.
2. It is Universal: HRM is needed in all the level of management of
organizations. It has universal application, hence pervasive in nature.
3. It is People oriented: HRM is concerned with people. People include
individuals as well as groups. It is the effort of individuals and the
groups which brings the desired organizational outcomes. Thus
reward, compensation and motivation are the tools which bring
improvement in people and organizational productivity.
4. It is Action oriented: HRM hugely relies on practical approach of
doing things. It is not confined to written records on books; it seeks
more on rational approach to attain objectives.
5. It is Objective oriented: HRM is a goal oriented approach, aims to
maximize organizational efficiency.
6. It is an Integrated Function: HRM organizes people to build and
maintain cordial relation between people and various level of
organization; it helps in putting together the combined efforts to
achieve the objective.

7. It is developmental: It aims to develop employee potential, skill,
competence etc through the means of training.
8. It is a Continuous Process: HRM is a lifelong continuous process; the
practices cannot be applied to the organization in a day or two, but
need a series of continuous everyday actions.
9. It is a Complete/ Comprehensive Function: HRM is applied to all
staffs, personnels, departments and the organization. Therefore it
becomes a complete function.
FUNCTIONS OF HRM
HR functions can be broadly divided into following categories:
(i) Managerial functions,
(ii) Operative functions,
(iii) Advisory functions.
Further these functions can be classified as:
Managerial Functions:
HRM performs the basic management functions like planning,
organizing, directing, coordinating, controlling etc.
1. Planning: Planning in advance is the foremost function of a manager.
It is necessary to determine the goals of the organization and lay
down policies and procedures to reach the goals. Planning for HR
involves filling vacancies, planning job requirements, job descriptions
and determination of the sources of recruitment. It the process of
personnel planning where supply and demand forecast for each job
category is made. Than the shortage and excess of personnel by job
category are projected for a specific time. Plans are then developed
to eliminate the forecast shortages and excess of particular
categories of human resources.
2. Organizing: Organizing involves bringing together the human
resource in a common platform to serve organizational objective.
4

Plans and programmes are developed to carry out operational work
with a specified organizational structure, with clearly defined roles
and responsibility of the employee and departmental concern.
3. Directing: It is the people who put the organizational plans into
actions. There is a direct effect of motivation and encouragement on
productivity. Directing function thus keeps the personnels active in
working process of the organization. Directing function thus can
motivate the employees in an organization through career planning,
salary administration, employee morale, developing cordial
relationships and provision of safety requirements and welfare of
employees.
4. Controlling: Controlling involves all the measures taken to check
whether the plans are put into correct actions. Thus controlling is
reverting back to the planning process. The results obtained are
compared with the standard plans and attempts are made to
minimize deviations or gaps (if any). Controlling helps in
performance monitoring and personnel audit.
Operative Functions:
Operative functions are concerned with entrusted task or duties
assigned to the human resource. It includes employment, development,
compensation, integration and maintenance of personnel of the
organization.
1. Employment: Manpower requirement is the basic necessity for any
organization. It is necessary to place the right kind of people in the
right place in right number with right skills to achieve the
predetermined objectives. Recruitment, selection, placement, etc. of
the personnel helps in fulfilling these objective functions.
2. Training and Development: Training and development programmes
are necessary to enhance knowledge, skills and ability in employees.
5
3.
4.
5.
6.
7.
It prepares the personnels for taking higher responsibilities and

acquiring the right skills for job performance. It is therefore
necessary for the organization to identify the training needs in
employees and to plan the intervention programmes accordingly.
Various on-job and off-job trainings programmes are given to
develop employees capability, required to perform a job.
Compensation: Rewarding employee for performance is the biggest
motivator. It increases the work excitement and prepares individual
for responsibilities. Equitable remuneration in the form of monetary
and non-monetary rewards helps in boosting the employees
confidence. Techniques like job-evaluation and performance
appraisal helps in wage fixation in an organization.
Maintenance (Working Conditions and Welfare): Workers health
and safety conditions are essential prerequisite for work life balance.
Efficiency of workers can be improved significantly by providing
them with health, safety and recreational measures. It includes
provision of cafeteria, rest rooms, counseling, group insurance,
education for children of employees, recreational facilities, etc.
Motivation: Motivation coupled with ability leads to performance.
Thus with higher motivation higher performance can be generated.
Organizations try to keep the employees motivated all the time so as
to culture a healthy work atmosphere for growth and development.
Personnel Records: Keeping appropriate track records of the
employees helps in identifying their potency and limitations. Records
on activities like training, achievements, transfer, promotion helps in
identifying the work behavior, which tends to reduce absenteeism
and employee turnover in an organization.
Industrial Relations: Maintenance of good or healthy Industrial
relations helps in reduction of employee grievances and disputes,
brings in higher discipline and empowerment of trade unions. It
6

provides an in-depth understanding of the labor problems and their
practical solutions to the top management of the organization.
8. Separation: It is concern with providing appropriate benefit to the
employees at the time of their retirement. Since organizations
sustainability is perennial and employees working in it have certain
limited role to perform during their service period, it becomes
essential to provide them with due benefits, so that they can live in
prosperity after they leave the organization.
Advisory Functions:
Advisory function of human resource is concern with providing
expert opinion on the matters of the organization. A human resource
manager thus can give advice to the top level management and the
departmental heads on various issues pertaining to manpower planning,
job analysis and design, recruitment and selection, placement, training,
performance appraisal, employee morale, plans and policies etc. This
would inculcate sound governance and congenial climate for growth of
organization concern.

References
1. Aswathappa. K. (2009). Human Resource Management: Text and
Cases. Tata McGraw hill New Delhi. 5th ed. ISBN No.:978-0-07066020-05.
2. Chhabra. T. N. (2010). Human Resource Management. DhanpatRai&
Co. New Delhi. 5th ed. 397. ISBN No.:81-7700-026-8.
3. David. K. and Newstrom. J. W. (1988). Human Behaviour at Work.
Organizational Behaviour. N.Y. Mcgraw Hill. 8th edition.
4. Decendo. D. A. and Robbins. S. P. (1989). Personal Management.
Prentice Hall of India New Delhi.
5. Fippo. Edwin. B. (1989). Principles of Personnel Management.
McGraw Hill Tokyo.
6. Haslinda. A. (2009). Evolving terms of Human resource management
and Development.The Journal of International Social Research. 2(9):
180-186.
7. Herry E. and Noon. M. (2003). A Dictionary of Human Resource
Management, Oxford New Delhi. 1st ed. ISBN No.:9780198296195.
8. Mamoria. C. B. (1998). Personal Management. Himalaya Publishing
House Mumbai.12th edition.
Human Resource Management Planning and Job Analysis
Chapter-2
Human Resource Planning and Job Analysis
Dr. Pushkar Dubey
Meaning or Definition of Manpower Planning or Hrp

Human Resource planning also called as manpower planning
process is a broad concept which involves issues on preparing plans for
hiring human resources at the time of organizational need. Various
authors have forwarded their views on HRP, illustrated as under:
Vetter. The process by which management determines how the
Organization should move from its current manpower position to its
desired manpower position. Through planning management strives to
have the right number and the right kind of people, at the right places, at
the right time, doing things which results in both the organisation and
the individual receiving maximum long run benefit.
Flippo. A manpower planning programme can be defined as an
appraisal of an organizations ability to perpetuate itself with respect to
its management as determined necessary to provide the essential
executive talent.
Dale S. Beach. It is a process for determining and assuring the
Organization to have an adequate number of qualified persons, available
at the proper times, performing jobs which meet the needs of the
enterprise ami which provide satisfaction for the individuals involved.
Coleman Bruce P. Manpower planning is the process of
determining manpower requirements and the means for meeting these
9

requirements in order to carry out the integrated plans of the
organization.
Macbeth. Manpower planning involves two stages. The first
stage is concerned with the detailed planning of manpower
requirements for all types and levels of employees throughout the
period of the plan. The second stage is concerned with planning
of manpower supplies to provide the organization with the right type of
people from all sources to meet the planned requirements.
Objectives of Human Resource Planning
1. To get optimum use of Human resource.
2. To access the manpower requirements at present and future
period of time.
3. To access the kind of skills required to satisfy organizational
objectives, and to plan for manpower needs.
4. To plan and access the control measures required, in terms of
availability of human resources.
5. To design cost control policies with respect to human resources.
6. To design suitable promotion and transfer policies in the
organization.
Characteristics of Man Power Planning
1. Continuous: The need of manpower in an industry changes from
time to time, thus planning for manpower becomes a continuous
issue.
2. Comprehensive: The coverage of manpower is widespread, as the
right number of people is required at the right time in the right
place.
3. Proactive: The supply forecast of manpower requirements are well
planned in advance to meet the demand factor. Suitable match
10

between demand and supply of manpower requirements avoids
Human resource gap.
4. Utilization of manpower: Factors like working environment, suitable
performance, promotions; transfer helps in utilization of manpower
to the optimum level.
5. Major responsibility of management: Manpower planning is the
responsibility of management as a whole and not only of the
personnel department. The personnel department only guides and
assists operating managers in framing manpower plans.
Basis of Manpower Planning
1. Determining the existing Stock of Manpower:
Existing stock of manpower for an organization can be obtained
by dividing the total manpower on the basis of function, occupation,
level of skill or qualification. The first basis of manpower planning and
the starting point of all planning processes is the existing stock of
manpower. A group wise comprehensive report is prepared giving the
number of workers in the group, their age, qualification, date of
retirement and chances for promotion, etc.
2. Identifying Manpower wastages:
Planning appropriate adjustments in the existing stock of
manpower should be made for the possible wastage of manpower
caused by any predictable changes in the organization. Rate of labour
turnover and the period of active management etc. should be studied in
order to analyze the wastage of manpower. Other reasons of wastage
may be expansion and modernization of plant, retirement, promotion,
transfer and training of workers etc. These factors should be taken into
consideration to make the necessary adjustments in the requirement of
personnel.
11

3. Future Manpower Requirement:
After evaluating the existing stock of manpower and analyzing
the various factors of wastage caused by any foreseeable change in the
organization, one may easily assess the future requirements of
manpower in an industry taking into account the future plans of the
company, government plans and programmes, employment policy,
demand and supply of manpower in future, productivity of labour and
other factors of production and replacement needs. Care should be
taken of the possible changes in the techniques and methods of
production in the near future.
Needs of Human Resource Planning
1. To enlarge in the size of the business: Expanding the business size
calls for manpower requirements, and thus planning for human
resource. Decisions in regards to recruitment and selection of
individual and workforce becomes a matter of prime importance, so
as to continue the work progression.
2. To design effective recruitment and Selection Policy: Human
resource planning gives a framework in designing effective
recruitment and selection policies for the organization, It ensures
that right people at the right place with right skills are deployed. It
can reduce the labour turnover.
3. To reduce Labour Cost: Effective human resource planning reduces
wastage of manpower, and thus brings organizational efficiency. This
in turn helps in cost reduction.
4. Smooth and continuous production: Trained, skilled and qualified
manpower can bring in qualitative production, by avoiding
disruption. This ensures smooth and continuous production flow.
5. Effective Employee Development Programme: Effective employee
development programme is a function of human resource planning.
12

Employee development is insignificant in the absence of appropriate
manpower plan. Thus human resource planning should be linked to
manpower requirements in the organization.
6. Maintaining Good Industrial Relations: An effective human resource
planning helps the management in developing the good employeremployee relationship, to bring harmony in Industries.
Factors Affecting Human Resource Planning
Following are the factors affecting Human resource planning:
a. Economic scenario/forces.
b. Production estimates or Departmental schedules.
c. Business expansion programmes.
d. Quality of personnels in the Industry.
e. Work standards.
f. Existing manpower Inventory.
g. Labor turnover rate.
h. Retirement and resignation of personnels.
i. Changes in Management.
j. Organizational structure.
Human Resource Planning Process
The process involved in Human resource planning process
involves the following steps (Fig 2.1):
1. Organizational objectives, plans and policies:
Every organization has to link the objectives with suitable plans
and policies. Issues related to human resources such as promotion,
transfer, capacity utilization, human resource inventory etc. should be
guided with appropriate plans and policies. Corporate level planning
process should be able to answer the following questions
a. Process and sources through which vacancies are to be filled?
13

b. Level of linkage of training and development programmes and
HRP process?
c. Constraints involved in HRP process?
d. What are the measures for job enrichment to eliminate
employee boredom on work?
e. Measures to downsize the organization to make it more
powerful and competitive?
f. Level of organizational automation?
g. Designing of flexible and competitive workforce?
2. Human Resource Planning:
After accessing the organizational objectives, plans, policies etc.
appropriate human resource plan is developed. The human resource
planning is based on two major activities:
a. Forecasting need of human resource: The present and future
human resource requirements are determined by the
organization. It is used to access the additional manpower
requirement in the organization concerned.
b. Forecasting supply of human resource: The demand of human
resource is matched with the supply of it. Availability of human
resources in future is determined to establish matching concept
between demand and supply forecast.
3. Identification of human resource gap:
If the demand criteria exceed the supply, supply gap is created.
On the other hand if supply criteria exceed the demand, demand gap is
created. The demand and supply forecast of human resource is matched
to identify human resource gap. Human resource need and availability
can result in either in surplus human resources or shortage of human
resources.
14

a. Surplus human resource: It is a situation where supply of human
resource exceeds the demand resulting in excess of human
resource flow.
b. Shortage of human resource: It is a situation where demand of
human resource exceeds the supply resulting in shortage of
human resource flow.
4. Action plans for bridging gap:
In order to bridge the gap of human resource gap, various action
plans are devised. In case of surplus human resources, action plans in the
form of voluntary retirement, retrenchment etc. may be done. On the
other hand in case of shortage of human resource, plans are devised to
recruit additional human resource in the organization.
Fig. 2.1 Human Resource planning Process
15

Techniques for Planning Human Resource Needs
Business adopts various tools and methodologies for forecasts.
These multivariate techniques are based on quantitative aspects of
measurement. However human resources are more governed by
qualitative aspects of measurement. A combination of both qualitative
and quantitative aspects of forecasts is used to forecast the human
resource needs in an organization.
Following are the techniques used to forecast the requirements of
human resources:
1. Managerial Judgment method:
It is a simple, most commonly used and conventional method of
forecast. Forecast is made by the managers on the basis of past
experience of various departments. Preparing human resource forecast
can take the form of:
a. Top down approach: This type of forecast is based on plans
which are made at the top level and is circulated to bottom
departments. After receiving the necessary data from various
departments, a forecast is arrived at, and finalized to prepare the
final forecast.
b. Bottom up approach: Here plans are prepared by various
departments on the basis of predesigned guidelines by the top
management. After receiving the plans of various departments,
the final forecast is prepared and behavior.
2. Delphi Technique:
It is also a form of expert opinion method (Fig. 2.2). This method
is more realistic, systematic, and wide and is based on interaction. The
Delphi technique involves minimum two rounds of experts comments in
the field. The experts are asked to fill a questionnaire containing a
predefined checklist of questions. Necessary information is provided to
the members, and any new information with other members is passed
16

along the line, so that every member has access to the information.
Opinions are collected after first round. A summary is presented, with
appropriate justification to the answers provided by the experts.
Common and divergent views are identified by the facilitator. Thus, the
other members are encouraged to rectify their previous answers, which
were not appropriately justified earlier. In the subsequent rounds this
differences in opinion is narrowed down and opinion in the subject is
converged to one single point. This technique may involve a number of
rounds depending on how quickly divergent views of experts are merged
to common viewpoint.
Fig. 2.2 Delphi Technique

3. Work Study Technique:
It deals with techniques of method study and work
measurement, which are employed to ensure the best possible use of
human, machine and material resources in carrying out a specified
activity. It is based on the volume of operation and working efficiency of
personnel. Firstly the volume of operation in an organization is
determined by the strength of organizational plan. Fluctuations like
17

increase or decrease in output is also included in the volume of
operation. The work efficiency or productivity is measured in terms of
time and motion study. The time and motion study gives standard
output per unit of time. The formula to calculate the number of
operation required to complete specified volume of operation is given
by:
No of operation=
(Planned output)
(Standard output per hour x Standard hour per person)
The standard output per hour is a variable factor and keeps on
changing over a period of time. This plan is work out in different level of
organization, to determine the aggregate level of manpower
requirement. This technique gives an idea on the total number of
employee required in an organization.
4. Ratio-trend Analysis:
Under this method the ratio between production/ sales level and
direct operatives; ratio between direct operatives and other personnels
is calculated. This ratio is calculated for a number of years based on the
past records of the organisation. The future trends are projected on the
basis of these ratios.
5. Statistical and Mathematical Models:
There are various statistical and mathematical models available
for forecasting human resource needs. This model includes:
6. Burack-smith model :
This model calculates the estimates of human resource needs
and is based on variables like:
(i) Total business activity.
(ii) Average productivity improvement.
(iii) Business activity- personnel ratio for the current year.
18

7. Regression Analysis:
It is a statistical means which employs the interdependence of
dependent and independent variables. The human resource needs of an
organization are a dependent variable and the business activities
involved acts as an independent variables. With the help of these two
variables equations are established to forecast the human resource need
of an organization.
8. Econometric model:
The science of economic measurement is called as econometrics.
It is the combination of mathematics and statistics. It is based on
relationship between variables, and on the basis of predicted
relationship growth of economic system is forecasted.
Barriers to effective Human Resource Planning
For successful human resource management, HRP becomes
imperative. There are certain factors which act as a hindrance to
effective HRP. These factors may be internal or external to the
organization. Some of the factors include:
1. Inadequate or improper linkage between HRP and corporate
level strategy.
2. Lack of realization of human resource planning needs.
3. Framing of inflexible attitude towards HRP by the management
or policy making bodies.
4. Effect of dynamic environment which is unpredictable and
uncertain in nature.
5. Variance in long and short term human resource planning
process of the organization.
6. Inadequate or lack of communication system in the organization.
19

Actions for effective Human resource planning
Human resource planning can be made effective in an
organization by the cultivating the following set of actions:
1. The top management who are the policy making bodies in the
organization should be fully committed to effectively design and
implement human resource planning policies in the organization.
2. Human resource managers and the top management of the
organization should be proactive towards human resource
planning.
3. More of participation from the employees and the managers
from all the sphere of the organization help in formulation of
effective HRP.
4. Rigid mindset of the policy making bodies should be changed, to
culture adaptive and flexible attitude.
5. Organizational culture should be nurturing, towards
development.
6. Effective communication networks should be established.
7. Human resource plans should be flexible and adaptive, so that it
can deal with changing dynamic environment.
8. Attempts should be made to link HRP and corporate level
strategies.
Job Analysis
Meaning and Definition Of Job Analysis
John A Shubin Job analysis is the methodical compilation and
study of work data in order to define and characterize each occupation
in such a manner as to distinguish it from all others.
Dale Yoder Job analysis is the procedure by which the facts with
respect to each job are systematically discovered and noted.
20

Scott, Clothier and SpriegelJob analysis is the process of
critically evaluating the operations, duties and relationship of the job.
Flippo. Job analysis is the process of studying and collecting
information relating to the operations and responsibilities of a specific
job.
Michael J Jucius Job analysis refers to the process of studying
the operations, duties and organizational aspects of jobs in order to
derive specifications or as they are called by some job descriptions.
United States Department of Labor Job analysis is defined as
the process of determining, by observation and study and reporting
pertinent information relating to the nature of a specific job. It is the
determination of the tasks which comprise the job and the skills,
knowledge, abilities and responsibilities required of the worker for
successful performance and which differentiates the job from all others.
Blum A job analysis is an accurate study of the various
components of a job. It is concerned not only with an analysis of the
duties and conditions of work, but also with the individual qualifications
of the worker.
J. D. Hackett In the process of job analysis, the fundamental,
elements of a job are established and clarified, while simultaneously the
abilities desirable in the worker are known, the abilities that will help
him to perform his function skillfully. Thus, job analysis has two aspects,
one the analysis of duties and conditions of work, and the other, the
analysis of qualities desired in the worker or employee.
Contents of Job Analysis
Thus job analysis is the process of job study. It provides the
analysis with the basic raw data pertaining to specific jobs. Dale Yoder
has classified Job analysis as:
1. The job identification: Title
21

2. Features of the job: location, physical setting, supervision,
hazards and discomforts etc.
3. Duties and responsibilities of the workers.
4. Needful equipments and materials.
5. How the job is performed.
6. Qualities required by personnel.
7. Job relationships.
Procedure of Job Analysis
Job analysis is a staff function. It is conducted by a job-analyst of
personnel department. It involves the observation of the job and the
reporting of facts which are observed and which are obtained in
conversation with workers, supervisors, and others. The major steps in
the process of job analysis are as follows:
1. Collection of accurate or realistic Material on Jobs:
It is the first step in job analysis process. Here all the accurate or
factual materials pertaining to job is collected in details. The information
collected is very useful in designing particular Jon in action. Various
methods are employed to collect relevant information on job. The
method includes: Various approaches are utilized in studying a job and
the four currently most popular are
a. Questionnaires
b. narrative descriptions,
c. observations and
d. Interviews.
The information collected mainly constitutes:
(i) Information on physical environment (includes dimensions like
temperature, noise, dirt, comforts and dangers etc.)
(ii) Information on social environment (tem work, individual work,
dual work etc.)
22

(iii) Information on financial conditions (wages, bonus, incentive
schemes or fringe benefits etc.), and
(iv) Information on physical demands (muscular energy, hours of
work, travel etc.)
(v) Information on intellectual demands (university, technical or
professional degrees and problem solving abilities ),
(vi) Information on skills, experience and personality factors required
on the job.
2. Preparing a draft:
Preparing a draft includes putting all the collected data into a
meaningful form to prepare an outline of the contents of job. It is a
statement showing the details of activities involve in job. Drafting of
information act as a source of reference for future purpose.
3. Identifying and organizing of Job Specification:
On the basis of draft made in the second step, attempts are
made to identify and specify the job. Job specification is the minimum
acceptable qualities required to place a person in the job. Key skills
required to perform a job is the key prerequisite taken into consideration
while preparing job specification.
4. Preparation of detailed Report:
A detailed report of job specification details are prepared to
present before the approval committee. It is then re-corrected on the
basis of suitable suggestions and advises to make it more useful and
informative. The corrected report is then put on for final approval for
action.
5. Approval:
After the final approval of the report it is sent to various
departments for putting it into final action.
23

Significance or Uses of Job Analysis
Job analysis is very useful in the following context:
1. It helps in manpower planning or human resource planning.
2. It assists the process of recruitment, selection and placement
process in an organization.
3. It is helpful in administering the training and development
programmes in an organization.
4. It helps in the process of job evaluation by determining the
relative worth in job.
5. It provides a benchmark for performance standard, set by the
organization.
6. It helps to study the elements involved in job which ultimately is
useful in job designing process.
7. It ensures health and safety measures to the workers by
eliminating the hazardous work environment like excessive heat,
noise, fumes, dust etc.
8. It provides the detail of job characteristics, which is linked to job
discipline.
Components of Job Analysis
Job Analysis specifically contains (Fig 2.3)
a. Job description and
b. Job specification.
Job Description
According to Edwin B. Fippo The first and immediate product of
the job analysis is the job description; the document is basically
descriptive in nature and constitutes a record of existing and pertinent
job facts.
24

Job Specification
According to Edwin B. Fippo A job specification is a statement of
minimum acceptable human qualities necessary to perform a job
properly
According to Dale Yoder The job specification is a summary
popularly described, thus a specialized job description, emphasizing
personnel requirement and designed especially to facilitate selection and
placement.
Fig. 2.3 Components of Job Analysis
25

References
2. Chhabra. T. N. (2010). Human Resource Management.
DhanpatRai& Co. New Delhi. 5th ed. 397. ISBN No.:81-7700-0268.
3. David. K. and Newstrom. J. W. (1988). Human Behaviour at
Work. Organizational Behaviour. N.Y. Mcgraw Hill. 8th edition.
Prentice Hall of India New Delhi. 79.
McGraw Hill Tokyo. 209.
6. Haslinda. A. (2009). Evolving terms of Human resource
management and Development.The Journal of International
Social Research. 2(9): 180-186.
Management,
Oxford
New
Delhi.
1st
ed.
ISBN
No.:9780198296195.
8. Mamoria. C. B. (1998). Personal Management. Himalaya
Publishing House Mumbai.12th edition.
9. Manolescu. A. (2003). Human Resource Management. 4th ed.
The economic publishing house. Bucarest.
10. Milkovich. G. T. and Boudreau. J. W. (1988). Personnel/ Human
Resources Management. 5th ed. Plano TX: Business publication.
11. Pareek. U. And Rao. T. V. (2003). Designing and Managing
Human Resource System. Oxford & IBH Publishing Company,
New Delhi, Ch. 21. 522-549. ISBN No.: 81-204-1610-4 Prahalad.
C.K. and Hamel. G. (1990). The Core Competence of Corporation.
Harvard Business Review. May-June. 79-91.
26

12. Prasad. L. M. (2005). Business Policy: Strategic Management.
Sultan Chand & Sons. 230. ISBN No.: 81-7014-920-7.
13. Ramasamy. T. (2011). Principles of Management. Himalaya
Publishing House. Mumbai. 141.
14. Rao P. S. (2007). Personnel and Human Resource Management.
Himalaya Publication, Mumbai. 3rd ed., Ch.7, p-114-126.
15. Rao. T. V. (1996). Human Resource Development: Experiences,
Interventions, Strategies. Sage Publication. New Delhi.
16. Rao. P. S. (2003). Personnel and Human Resource Management,
Himalaya Publishing House. Mumbai. 3rd ed. 232.
17. Rao. V. S. P. (2004). Human Resource Management: Text and
Cases. Excel Books. Ch.12, 245-26 2. ISBN No: 81-7446-213-9.
18. Ravichandran. A. (2011). Organisational structure, HR practices
and its outcome: A conceptual model. International Conference
on Technology and Business Management, March 28-30, Delhi.
19. Robbins. S. P. Judge. T. A. and Sanghi. S. (2009). Organizational
Behaviour. Prentice Hall New Delhi. 13th ed. 607. ISBN No.:97881-317-2121-6.
20. Terry. L. L. and Michael. D. (1990). Personal /Human Resource
Management. Macmillan New York.134.
27
Human Resource Management Selection Process in Organization
Chapter-3
Selection Process in Organisation
Samir Kumar Purohit
Introduction:In todays business context Human Resource Management is

playing a very dominant role within organizations. Its aim at developing
all the employees of an organization in a planned manner not only to
acquire and apply their existing capabilities but also their inner
potentials and help in building a climate with strong interpersonal bonds
which helps the organization to achieve its goals. Apart from this,
selection processes are one of the most important sets of methods to
take decisions an organization makes to employ people. All aspects of an
organizations activities are directed and enacted by the people that
comprise the organization. It involves the creation of climate where
human knowledge, skill, capabilities, and creativity can bloom. It involves
the use of process through which the employees of the organization are
prepared to give their best for the achievement of corporate objectives
and bring optimal effectiveness in their job as well.
The aim of this chapter is to help you explore the meaning and
implications of the concept of selection process and methods. I do not
assume that there is only one way of defining and understanding the
nature of selection process. On the contrary, Selection Process varies
according to the country in which HRM is conducted that provides the
cultural and institutional environment for the selection process in HRM.
Selection Process developed in response to the substantial increase in
28

competitive pressures American business organizations began
experiencing by the late 1970s as a result of such factors as globalization,
deregulation and rapid technological change. These pressures gave rise
to an enhanced concern on the part of firms to engage in strategic
planning, a process of anticipating future changes in the environmental
conditions (the nature as well as level of the market) and aligning the
various components of the organization in such a way, so as to promote
organizational effectiveness.
Human Resource Management and also personnel management
consist of all the activities undertaken by an enterprise to ensure the
effective utilization of employees towards the attainment of individuals,
group and organizational goals.
An organizations HRM function focuses on the people side of
management. It consists of practices that help the organization to deal
effectively with the people during the various phases of the employment
cycle, including pre-hire, staffing and post-hire. The pre-hire phase
involving planning practices. The organization must decide what type of
job openings will exist in the upcoming period and determine the
necessary qualifications for performing these jobs. During the hire phase
the organization select its employees. Selection practices including
recruiting applicants, assessing their qualifications and ultimately
selecting those who are deemed to be the most qualified.
In the post-hire phase, the organization develops selection for
effectively managing people once they come through the door. These
practices are designed to maximize the performance and satisfaction
levels of employees by providing them with the necessary knowledge
and skills to perform their jobs and by creating conditions that will
energize, direct and facilitate employees efforts towards the meeting the
organizations objectives.
29

Meaning of Selection:
Selection is the process of picking up individuals (out of the pool
of job applicants) with requisite qualifications and competence to fill jobs
in the organization. A formal definition of Selection is as under
Selection means a process by which the qualified personnel can
be chosen from the applicants who have offered their services to the
organization for employment. The selection process divides the
candidates for employment into two classes those who will be offered
employment and those who will be rejected. Thus the selection process
is a negative function because it attempts to eliminate applicants,
leaving only the best to be placed in the organization. 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
and those who are not.
Definition of Selection: Process of differentiating:Selection is the process of differentiating between applicants in
order to identify and hire those with a greater likelihood of success in a
job.
Difference between Recruitment and Selection:
Recruitment
Selection
1. Recruitment refers to the

process of identifying and
encouraging prospective
employees to apply for jobs.
2. Recruitment is said to be
positive in its approach as it seeks
to attract as many candidates as
possible.
1. Selection is concerned with

picking up the right candidates
from a pool of applicants.
2. Selection on the other hand is
negative in its application in as
much as it seeks to eliminate as
many unqualified applicants as
possible in order to identify the
right candidates.
30

Selection:
The process of choosing from a group of applicants the individual
best suited for a particular position and for the organization.
Selection Process:
The Application:The information requested on an application form may vary
from organization to organization and even by job type within an
organization. Typically, though, the application form should include
sections for the applicants name, address, telephone number,
education, military background, work experience and reference
information. There should be a place for the applicant to sign and a
preprinted statement that the applicants signature indicates his or her
attestation that everything on the form is true; if not, the candidate can
be released. When it is not prohibited by state law, many organizations
include an employment-at-will statement reminding employees that
either the employer or the employee can terminate the employment
relationship at any time. And finally, the form should include a statement
from the applicants giving permission to have references checked. Many
applicants include resumes along with their applications, and HR can
direct applicants to submit forms either online or in hard copy. Most
large organizations now use automated tracking systems that require
online submission. Automated systems can scan applications and
resumes for keywords, thereby eliminating the time spent by HR in
reviewing documents. Obviously, this saves time in the HR department,
but employers using automated tracking systems must be cautious.
Applicants are becoming more sophisticated in the process and
stuffing their applications and resumes with keywords even when they
are not truly qualified for the open position. Regardless of the methods
31

used, you may get hundreds of applications for only a few open
positions, particularly in as low economy with high unemployment.
Screening Interview:Before moving further into the selection process, many
organizations prefer to screening interview of those applicants that
appear qualified based on information submitted on their resume and
applications. Screening interviews are usually conducted by telephone.
The interviewer asks a few straightforward questions to determine the
candidates job qualifications and appropriateness for the open position.
If it is determined that the applicant is not appropriate for the
position, the Interviewer may refer the candidate to another open
position within the organization if there is something available that
matches the applicants skills. If there is nothing else available and the
candidate is obviously unqualified for the position, the process ends
there, saving both the candidate and the organization the time and
expense of going further into the selection process.
Selection Tests:Selection Test: - Any instrument used to make a decision about a
potential employee.
There are a number methods organizations use to determine if
an applicant has the potential to be successful on the job. Selection tests
are used to identify applicant skills that cannot be determined in an
interview process (Fig. 3.1). Using a variety of testing methods,
applicants are rated on aptitude, personality, abilities, honesty and
motivation. Properly designed selection tests are standardized, reliable
and valid in predicting an applicants success on the job.
Standardization: - The uniformity of procedures and conditions related
to administering tests. (R Wayne Mandy)
32

To equitably compare the performance of several applicants, the
processes used for testing those applicants must be as identical as
possible. The content of the test, the instructions and the time allowed
must be the same for all candidates. For example, when giving a timed
keyboarding test, it would be unfair for one applicant to be tested on a
manual typewriter while the other candidates were tested on
contemporary computer keyboards.
Reliability: - The extent to which a selection tests provides consistent
results. (R. Wayne Mandy)
A tests reliability should be questioned if it does not generate
consistent results each time it is used. For example if a person scores 125
on an intelligence test one week and scores only 80 on the same test
following week, you should assume the testing instrument is not reliable.
Validity: - The extents to which test measures what it claims to measure.
(R Wayne Mandy)
The skills tested in a selection instrument should be the same
skills used on the job. Therefore, we can assume that higher test scores
will correlate to higher success in job performance. If a specific test
cannot assess the ability to perform the job, it has no usefulness in the
selection process.
For example, for an administrative assistant position that
requires skilled keyboarding for job success, a keyboarding test would be
valid in the selection process. We could assume that a higher score on
the keyboarding test would indicate higher performance on the job.
Requiring the same job applicant to complete a lifting test would not be
valid for the position because the ability to lift specific weights is not a
job requirement and therefore a higher score on lifting would not be a
valid predictor of job success.
33

Tests are generally administered and evaluated before
interviewing candidates. Testing helps trim the applicant field by further
eliminating those with inadequate skill levels to be successful in the job.
Applicant testing has two major advantages: test results are objective
and free from personal bias and they are usually expressed numerically
so they can be validated by statistical analysis. Employers usually use
tests to determine the applicants knowledge or proficiency level in the
required job skills. Some organizations also use aptitude tests as well as
personality, honesty and physical ability testing. If your organization
does testing for substance abuse, it must occur at the end of the
selection process and be done in conjunction with a job offer.
Interviewing Candidates:The most widely used interview techniques are the structured or
patterned interview, the nondirective interview and the
situational/problem-solving interview. In a structured or patterned
interview, the interviewer follows a pre-set list of questions asked of all
candidates. This allows for consistency in the process, ensures that
important questions are not left out and helps guarantee that all
candidates will be assessed by the same standards. Though consistency
is desirable, the interview should not be so rigid that interviewers are
not allowed follow-up questions based on the candidates answers; you
dont want to miss important information that the candidate may
provide from further questions. Situational interviewing is characterized
by questions like, what would you do in this situation, allowing the
candidate to speculate on how he or she would handle a particular job
problem. Behavioral interviewing asks the candidate to describe what he
or she did in a particular situation. It requires the candidate to give real
examples of past actions and results, and it is based on the theory that
past behavior is a good predictor of future behavior. Generally,
34

behavioral questions are more likely to give real-world information that
may be relevant in making a good selection decision.
The non-directive interview takes the opposite approach from a
structured interview. It is conducted with a minimum of questions asked
by the interviewer and questions are not always planned in advance.
This technique involves open-ended questions such as tell me
about the work you do in your field, allowing the candidate to express
his or her thoughts and feelings that might be relevant to the job and
allowing the interviewer to follow the direction set by the candidate.
This technique can reveal information that may never arise in a
structured interview, but it can lead to problems if the candidate reveals
inappropriate or potentially discriminatory information. Sometimes
interviews without structure can become nothing more than casual
conversations, with the interviewer focusing solely on getting to know
the candidate. This may be nice for social gatherings, but it has almost no
predictive ability in the hiring process. Youll have a more successful new
hire if you stay away from the casual conversation trap and instead
plan carefully for a structured interview that focuses on job-related
information.
Team or Individual Interview:In the past, the supervisor may have been the only person
interviewing the candidate, but the trend now is to use an interview
team consisting of representatives from the various areas of the
organization that will interact with the new person. The advantage of
this approach is that multiple interviewers represent broader areas of
interest, and when interviewing is completed, there is more than one
person to make the selection decision. This may also help the new hire
to be more quickly accepted by the team, since those who participated
in choosing the new team member are generally supportive of that
35

choice. The downside to team interviews is simply logistics. The larger
the team, the more difficult it is to find a time and a place in everyones
busy schedules to make the interview happen. In addition, candidates
are likely to find a panel interview more stressful than an interview by a
single person.
Background Verification and Reference Check:Once you have made your selection decision, you must verify the
information provided by the candidate and check the candidates
references. Millions of background and reference checks are done on
applicants annually, and unfortunately, much of the information on
application forms and resumes are inaccurate. According to ADP
Screening and Selection Services, 40 percent of applicants lie about their
work histories and educational backgrounds and about 20 percent
present false credentials and licenses. Nationwide, an estimated 30
percent of job applicants make material misrepresentations on their
resumes. Another survey found that 95 percent of college students said
they would lie to get a job and 41 percent said that they had already
done so. One survey of top executives found that 15 percent admitted
falsifying resume information.
Difficult as it may be to check references, you must get accurate
information on your prospective new hire. Unfortunately, past
employers are increasingly reluctant to give references mostly because
they fear defamation lawsuits from disgruntled former employees.
Consequently, many employers strictly limit the information they
provide about former employees. Its a no-win situation for employers,
though, because they can be sued either way. Withholding negative
information about former employees may offer protection for the
employer from a defamation lawsuit, but it increases its exposure to a
36

lawsuit based on negligence if the employer withholds information
regarding the volatility of a former employee.
A past employer that fails to warn about an employees known
propensity to violence may be guilty of negligent referral, and a potential
employer that fails to do proper reference checks that may have
uncovered the potential risk of a new employee may be guilty of
negligent hiring, if the new employee causes injury to another in the
workplace. It is a reminder to HR that we must diligently ferret out
information on new hires and, at the same time, keep accurate
employment records on current employees so that when asked, we can
provide verifiable and reliable reference information. Because of the
difficulty of obtaining information from past employers, many
organizations conduct criminal background checks, credit checks and
Internet searches to find information on job candidates. In 2006,
according to research from SHRM, 96 percent of employers conducted
background checks on applicants, up from 66 percent only a decade ago.
Though controversial, these background searches are not illegal if the
candidate has given proper permission. Before conducting any
background check on a potential employee, be sure your candidate signs
the proper release forms.
Making the job offer:A job offer may be extended by phone, letter or in person
whatever is customary in the organization. Most commonly, the job offer
is handled by the HR department. At this time, salary and benefits are
discussed and the prospective employee is told of any further conditions
that must be met. If any organization requires a physical examination or
a drug screen, arrangements should be made to complete the process. If
the candidate needs time to think over the job offer, a time should be
established for notification.
37

The selection of the best person for the job is only the first step
in building an effective management team. Even companies that make
great efforts in the recruitment and selection process often ignores the
need of new managers after they have been hired. The selection process
may include interviews, various tests and the use of assessment centers.
To avoid dissatisfaction and employee turnover, companies must ensure
that new employees are introduced to and integrated with other persons
in the organization.
Correct selection decisions are those where the candidate was
predicted to be successful in advance and prove to be successful on the
job. At times the applicant is predicted to be unsuccessful and, as
expected, performs unsatisfactorily after getting selected. While in the
first case, we the worker is successfully accepted, in the later the worker
is successfully rejected.
Errors arise when we reject a candidate who would have
performed successfully on the job. This is termed as reject error. In
certain situations a worker is accepted ultimately and performs
unsatisfactorily. This is called accept errors.
Both the above errors can be minimized if the system is
impartial, has a degree of objectivity and follows a fairly uniform
standard of assessment. A skilled manager should understand the
benefits of good selection and also should be aware of the cost of poor
selection decision.
Induction
The induction of new staff into their role is the final step of the
recruitment and selection process and the first step in welcoming the
new employee into the Organisation. All new employees should attend
at the Human Resources Department on their first day to provide the
employee with an induction pack.
38

It is the responsibility of the recruiting manager, or a suitable
nominee, to ensure that the new member of staff is introduced to their
department and, understands their job and where it fits into the
organization. Generally new employees will be allocated a Buddy who
can provide an informal introduction to the Organization and be a
friendly face in the early days of the new employment. The Human
Resources Department and the Learning and Development Manager
provide advice and support to recruiting managers on effective
induction.
For professorial appointments the Chair of the panel should
complete the pro-forma provided by the local Human Resources team
and return this with the other interview papers to the representative
from Human Resources.
In the event that a candidate requests feedback about their
performance in the selection process this should be arranged by the
Chair of the panel, although he or she may delegate this to another
member of the panel where appropriate.
Unsuccessful interview candidates should be dealt with
courteously and sensitively and should as a minimum receive written
notification of the outcome of the selection process.
Apart from the above methods, Selection can also be determined
by means of the following selection steps.
Selection Steps (Methods)
39

Selection Steps
Applicants Greeted
Preliminary Interview
Application Form Completed
Skill/ Knowledge Testing
Candidate Interviewed
Background and Reference Checks
Short List Screening
Appropriate Candidate is selected
New Employee Induced
Fig. 3.1 Steps in Selection Process

Selection and Organizational Effectiveness:
In the past decade, there has been a growing interest in
establishing that selection procedures and the human capital attracted
by an organization have an impact on organizational-level outcomes such
as profitability and productivity. Studies have also attempted to show
what combinations of human resource interventions, as well as other
organizational inputs, have such impact. Early approaches that examined
40

the impact of selection decision practices at the organizational level did
so in isolation of other human resource (HR) functions (e.g. Terpstra and
Rozell 1993). These studies were soon replaced by studies looking at the
effect of multiple HR functions (Huselid 1995) and specific combinations
of functions, sometimes thought to represent high-performance work
systems.
Senior-level personnel usually provide responses to single-item
measures of HR functioning, sometimes about issues of which they could
not be well informed. Questions are often superficial, perhaps resulting
from an effort to keep survey instruments short and maximize return
rates. Wright et al. (2001) point out that these measures cannot possibly
be very reliable; this lack of reliability may be one reason why the
relationship with firm outcomes is often so very low.
Even with the potential limitations of the database on the
relationships between HR functions and firm performance, there seems
to be consensus on several issues. First, it is not productive to consider
HR functions or human capital in isolation of other aspects of the
organization or even of the society in which the organization functions.
Most representative of this position is the work of Lepak and Snell (2002)
who describe configurations of HR activities that are most often
associated with particular types of employment modes (i.e. knowledgebased, job-based, contract work, and alliance or partnerships). Second,
successful organizations, or systems, must have human capital
(knowledge, skills, and abilities, or KSAs), the social capital (internal and
external relationships), and organizational capital (processes,
technologies, and databases) to be successful. Firms must have the KSAs,
but also develop practices that motivate people. This resource-based
view (Wright et al. 2001) and a more theoretical view of performance,
strategy, and the role of human resources appear to be the direction in
which this area of study is now headed. Finally, Wright et al. (2005)
41

shows that HR practices are strongly related to future performance as
well as past performance.
The principle underlying typical selection practices is that
individual divergence characteristics will determine who will be of
greatest value to the organization based on their job performance
(Motowidlo 2003). In appropriately designed jobs that take
organizational needs into consideration, employees will improve
organizational effectiveness simply by performing their duties well,
where duties might include citizenship performance and other
supportive behaviors, as well as task performance. Alas, many jobs are
designed imperfectly. Consequently, Ployhart and Schneider (2002)
emphasize the potential need to conduct teamwork analyses or
organizational needs assessments, in addition to traditional job analysis,
to ensure that individuals performance will be adding value to an
organization.
From a multilevel perspective, individual work behaviors can
then be divided into those that accomplish individual job tasks and those
that lead to the fulfillment of higher-level needs. Although the First
section of this chapter suggested that selection decisions and general HR
practices must be compatible, this section provides a closer look at how
individuals can be selected to fulfill needs beyond their specific job.
Selection Policy:1) Fair selection of applicants:A. Educational attainment
B. Expertise
C. Work Experiences
D. Psychological Examination
E. Health Background
F. Previous employment Background Checking
42

G. Legal age (not below 18 years old)
Selection Principles:1. Each employee will be evaluated fairly based on their performance
and ensures objectivity, equal chances during promotion and
internal hiring for higher job category.
2. Re-hiring of former regular employee has been considered,
processing will be the same as the regular procedure of selection and
hiring.
3. Equal opportunities for training, advancement of employees at all
levels.
4. There shall be no preferential treatment or discrimination of
employees for any reason such as age, gender, race, sexual
orientation, marital status, religious belief or disability.
5. Fairness, due-process and justice shall be the basis for treatment to
employee grievance.
6. The organization must commit to provide a healthy and safe
workplace and working conditions to all employees.
Types of Employment tests and Selection Procedures: Cognitive tests assess reasoning, memory, perceptual speed and
accuracy, and skills in arithmetic and reading comprehension, as well
as knowledge of a particular function or job;
Physical ability tests measure the physical ability to perform a
particular task or the strength of specific muscle groups, as well as
strength and stamina in general;
Sample job tasks (e.g., performance tests, simulations, work
samples, and realistic job previews) assess performance and aptitude
on particular tasks;
43
Medical inquiries and physical examinations, including psychological

tests, assess physical or mental health;
Personality tests and integrity tests assess the degree to which a
person has certain traits or dispositions (e.g., dependability,
cooperativeness, safety) or aim to predict the likelihood that a
person will engage in certain conduct (e.g., theft, absenteeism);
Criminal background checks provide information on arrest and
conviction history;
Credit checks provide information on credit and financial history;
Performance appraisals reflect a supervisors assessment of an
individuals performance; and
English proficiency tests determine English fluency.
Employers Best Practices For Testing and Selection: Employers should administer tests and other selection procedures
without regard to race, color, national origin, sex, religion, age (40 or
older), or disability.
Employers should ensure that employment tests and other selection
procedures are properly validated for the positions and purposes for
which they are used. The test or selection procedure must be jobrelated and its results appropriate for the employers purpose. While
a test vendors documentation supporting the validity of a test may
be helpful, the employer is still responsible for ensuring that its tests
are valid under UGESP.
If a selection procedure screens out a protected group, the employer
should determine whether there is an equally effective alternative
selection procedure that has less adverse impact and, if so, adopt
the alternative procedure. For example, if the selection procedure is
a test, the employer should determine whether another test would
44
predict job performance but not disproportionately exclude the

protected group.
To ensure that a test or selection procedure remains predictive of
success in a job, employers should keep abreast of changes in job
requirements and should update the test specifications or selection
procedures accordingly.
Employers should ensure that tests and selection procedures are not
adopted casually by managers who know little about these
processes. A test or selection procedure can be an effective
management tool, but no test or selection procedure should be
implemented without an understanding of its effectiveness and
limitations for the organization, its appropriateness for a specific job,
and whether it can be appropriately administered and scored.
The Competency Approach:Typically, decisions on selecting a potential worker are made

primarily with a view to taking on the most appropriate person to do a
particular job in terms of their current or, more commonly, potential
competencies. In recent years this concept has been extended to search
for workers who are flexible and able to contribute to additional and/or
changing job roles. This approach contrasts with a more traditional
model which involves first compiling a wide-ranging job description for
the post in question, followed by the use of a person specification, which
in effect forms a checklist along which candidates can be evaluated on
criteria such as knowledge, skills and personal qualities. This traditional
approach, in essence, involves matching characteristics of an ideal
person to fill a defined job. There is a seductive logic in this apparently
rational approach. However, there are in-built problems in its application
if judgments of an individuals personality are inherently subjective and
45

open to error and, furthermore, if these personal characteristics are
suited to present rather than changing circumstances.
The competencies model in contrast, seeks to identify abilities
needed to perform a job well rather than focusing on personal
characteristics such as politeness or assertiveness. Torrington et al (2008,
p 170) identify some potentially important advantages of referring to
competencies in this area noting that:
they can be used in an integrated way for selection,
development, appraisal and reward activities; and also that from them
behavioral indicators can be derived against which assessment can take
place.
Competency-based models are becoming increasingly popular in
graduate selection process where organizations are making decisions on
future potential. Fordham and Stevens (2000) found that managers in
the public sector increasingly viewed traditional job descriptions and
person specifications as archaic, rigid and rarely an accurate reflection of
the requirements of the job.
There is increasing evidence that this popularity is more
widespread. A CIPD report (2007) found that 86 per cent of organizations
surveyed were now using competency-based interviews in some way;
and in another survey, over half of employers polled had started using
them in the past year (William, 2008). It is suggested that the
competency-based model may be a more meaningful way of
underpinning recruitment and selection in the current fast-moving world
of work and can accordingly contribute more effectively to securing high
performance.
Selection and Organizational Culture:It is unsurprising that the culture of a particular work
organization will influence selection decisions, with recruiters both
consciously and unconsciously selecting those individuals who will best
46

fit that culture. In some organizations recruitment policy and practice is
derived from their overall strategy which disseminates values into the
recruitment and selection process. Mullins (2007, p 727) provides the
example of Garden Festival Wales, an organization created to run for a
designated and short time-period. This organizations managers were
particularly concerned to create a culture via recruitment of suitable
employees. This is an interesting example because this organization had
no prior history and it indicates the power of recruitment and selection
in inculcating particular cultural norms.
Other research has demonstrated that individuals as well as
organizations seek this best fit, providing evidence that many
individuals prefer to work in organizations that reflect their personal
values. Judge and Cable (1997) and Backhaus (2003) found that jobseekers may actively seek a good person organization fit when
considering prospective employers. This, of course, provides further
support for the procession of two-way model of recruitment and
selection. However, justifying selection decisions on the basis of cultural
fit means that there are ethical issues to consider in terms of reasons for
rejection: are organizations justified in determining who does and does
not fit? It may be that practical concerns also emerge for example, in
the danger of maintaining organizations in the image of current role
models which may be inappropriate in the future. Psychologists have
also long recognized the threat posed by Groupthink where innovation
is suppressed by a dominant group and an emperors new clothes
syndrome develops, with individuals reluctant to voice objections to bad
group decisions.
47

References
1. Arnold, J. et al (2005) Work Psychology: Understanding human
behavior in the workplace 4th ed. Harlow: FT Prentice Hall.
2. Andrews, K A (1987) the Concept of Corporate Strategy, Irwin,
Georgetown, Ontario.
3. Barrett, G. V., and Luecke, S. B. (2004). Legal and Practical
Implications of Banding for Personnel Selection. in H. Aguinis (ed.),
Test Score Banding in Human Resource Selection.
4. Batt, R. (2002). Managing Customer Services: Human Resource
Practices, Quit Rates, and Sales Growth. Academy of Management
Journal, 45: 587 97.
5. Becker, B. E., and Huselid, M. A. (1998). High Performance Work
Systems and Firm Performance: A Synthesis of Research and
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Resource Management Practice on Perceptions of Organizational
Performance. Academy of Management Journal, 39: 949 69.
7. Gardner, T. M. (2005). InterWrm Competition for Human Resources:
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Corporate Image, Recruitment Image, and Initial Job Choice
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9. http//eeco.gov/eeco/meetings/archieve/5-16-07/index.html.
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11. Huselid, M. A. (1995). The Impact of Human Resource Management
Practices on Turnover, Productivity, and Corporate Financial
Performance. Academy of Management Journal, 38: 635 72.
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12. Mayo, A (1998) The learning organization and knowledge
management, Presentation at the IPD Annual Conference, October.
13. Miller, P (1987) Strategic industrial relations and human resource
management: distinction, definition and recognition, Journal of
Management Studies.
14. Rothwell, W (2002) Models for Human Resource Improvement, 2nd
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VASHRM Online. Society for Human Resource Management.
Available from http://www.shrm.org.
15. www.articlebase.com/organisatinal-articles.
49
Human Resource Management Induction and Training Methods
Chapter-4
Induction and Training Methods
Archana Agrawal
What is induction?
Once an employee is selected and placed on an appropriate job,
the process of familiarizing him with the job and the organization is
known as induction.
Induction is the process of receiving and welcoming an employee
when he first joins the company and giving him basic information he
needs to settle down quickly and happily and stars work.
What are the objectives of induction?
Induction is designed to achieve following objectives: 1. To help the new comer to overcome his shyness and overcome
his nervousness in meeting new people in a new environment.
2. To give new comer necessary information such as location of a
cafe, rest period etc.
3. To build new employee confidence in the organization.
4. It helps in reducing labor turnover and absenteeism.
5. It reduces confusion and develops healthy relations in the
organization.
6. To ensure that the new comer do not form false impression and
negative attitude towards the organization.
7. To develop among the new comer a sense of belonging and
loyalty to the organization.
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What are the advantages of formal induction?
The advantages of formal induction are: 1. Induction helps to build up a two-way channel of communication
between management and workers.
2. Proper induction facilitates informal relation and team work
among employee.
3. Effective induction helps to integrate the new employee into the
organization and to develop a sense of belonging.
4. Induction helps to develop good relation.
5. A formal induction programme proves that the company is
taking interest in getting him off to good start.
6. Proper induction reduces employee grievances, absenteeism and
labor turnover.
7. Induction is helpful in supplying information concerning the
organization, the job and employee welfare facilities.
What are the contents of induction programme?
A formal induction programme should provide following
information: 1. Brief history and operations of the company.
2. The companys organization structure.
3. Policies and procedure of the company.
4. Products and services of the company.
5. Location of department and employee facilities.
6. Safety measures.
7. Grievances procedures.
8. Benefits and services of employee.
9. Standing orders and disciplinary procedures.
10. Opportunities for training, promotions transfer etc.
11. Suggestion schemes.
51

12. Rules and regulations.
Training
Definition:Training means process of teaching new knowledge and skills to
perform their job effectively.
According to Dale S Beach, Training is the organized
procedure by which people learn new knowledge and skills for definite
purpose.
There are various methods of training, which can be divided in to
cognitive and behavioral methods. Trainers need to understand the pros
and cons of each method, also its impact on trainees keeping their
background and skills in mind before giving training.
Cognitive methods are more of giving theoretical training to the
trainees. The various methods under Cognitive approach provide the
rules for how to do something, written or verbal information,
demonstrate relationships among concepts, etc. These methods are
associated with changes in knowledge and attitude by stimulating
learning.
Lectures
It is one of the oldest methods of training. This method is used to
create understanding of a topic or to influence behavior, attitudes
through lecture. A lecture can be in printed or oral form. Lecture is
telling someone about something. Lecture is given to enhance the
knowledge of listener or to give him the theoretical aspect of a topic.
Training is basically incomplete without lecture. When the trainer begins
the training session by telling the aim, goal, agenda, processes, or
methods that will be used in training that means the trainer is using the
lecture method. It is difficult to imagine training without lecture format.
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There are some variations in Lecture method. The variation here
means that some forms of lectures are interactive while some are not.
Straight Lecture: Straight lecture method consists of presenting
information, which the trainee attempts to absorb. In this method, the
trainer speaks to a group about a topic. However, it does not involve any
kind of interaction between the trainer and the trainees. A lecture may
also take the form of printed text, such as books, notes, etc. The
difference between the straight lecture and the printed material is the
trainers intonation, control of speed, body language, and visual image of
the trainer. The trainer in case of straight lecture can decide to vary from
the training script, based on the signals from the trainees, whereas same
material in print is restricted to what is printed.
A good lecture consists of introduction of the topic, purpose of
the lecture, and priorities and preferences of the order in which the topic
will be covered.
Main Features of Lecture Method
Some of the main features of lecture method are:
Inability to identify and correct misunderstandings
Less expensive
Can be reached large number of people at once
Knowledge building exercise
Less effective because lectures require long periods of trainee
inactivity
Demonstration
This method is a visual display of how something works or how
to do something. As an example, trainer shows the trainees how to
perform or how to do the tasks of the job. In order to be more effective,
demonstration method should be accompanied by the discussion or
lecture method.
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To carry out an effective demonstration, a trainer first prepares
the lesson plan by breaking the task to be performed into smaller
modules, easily learned parts. Then, the trainer sequentially organizes
those modules and prepares an explanation for why that part is
required. While performing the demonstration, trainer:
Demonstrates the task by describing how to do, while doing
Helps the focusing their attention on critical aspects of the task
Tells the trainees what you will be doing so they understand
what you will be showing them
Explains why it should be carried out in that way
The difference between the lecture method and the
demonstration method is the level of involvement of the trainee. In the
lecture method, the more the trainee is involved, the more learning will
occur.
The financial costs that occur in the demonstration method are
as follows:
Cost of training facility for the program
Cost of materials that facilitate training
Food, travel, lodging for the trainees and the trainers
Compensation of time spent in training to trainers and trainees
Cost related to creating content, material
Cost related to the organization of the training
After completing the demonstration the trainer provide
feedback, both positive and or negative, give the trainee the opportunity
to do the task and describe what he is doing and why.
Discussion
This method uses a lecturer to provide the learners with context
that is supported, elaborated, explains, or expanded on through
interactions both among the trainees and between the trainer and the
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trainees. The interaction and the communication between these two
make it much more effective and powerful than the lecture method. If
the Discussion method is used with proper sequence i.e. lectures,
followed by discussion and questioning, can achieve higher level
knowledge objectives, such as problem solving and principle learning.
The Discussion method consists a two-way flow of
communication i.e. knowledge in the form of lecture is communicated to
trainees, and then understanding is conveyed back by trainees to trainer.
Understanding is conveyed in the form of verbal and non-verbal
feedback that enables the trainer to determine whether the material is
understood. If yes, then definitely it would help out the trainees to
implement it at their workplaces and if not, the trainer may need to
spend more time on that particular area by presenting the information
again in a different manner.
Questioning can be done by both ways i.e. the trainees and the
trainer. When the trainees ask questions, they explain their thinking
about the content of the lecture. A trainer who asks questions stimulates
thinking about the content of the lecture. Asking and responding
questions are beneficial to trainees because it enhance understanding
and keep the trainees focused on the content. Besides that, discussions,
and interactions allow the trainee to be actively engaged in the material
of the trainer. This activity helps in improving recall.
Computer Based Training
With the worldwide expansion of companies and changing
technologies, the demands for knowledge and skilled employees have
increased more than ever, which in turn, is putting pressure on HR
department to provide training at lower costs. Many organizations are
now implementing CBT as an alternative to classroom based training to
accomplish those goals.
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Some of the benefits of Computer Based Training are (Fig. 4.1):
Fig. 4.1 Benefits of Computer based Training

According to a recent survey, about 75% of the organizations are
providing training to employees through Intranet or Internet. Internet is
not the method of training, but has become the technique of delivering
training. The growth of electronic technology has created alternative
training delivery systems.
CBT does not require face to face interaction with a human
trainer. This method is so varied in its applications that it is difficult to
describe in concise terms.
56

Intelligent Tutorial System
This Intelligent Tutorial system uses artificial intelligence to assist
in training or tutoring the participants. This system learns through
trainee responses.
Features of Intelligent Tutorial Systems (ITS)
It selects the appropriate level of instructions for the participants
It guides the trainees
It is a text-based system
It also evaluates the training program
It also improves the methodology for teaching the trainee based
on the information
It is an interactive system
It determines the trainees level of understanding
Intelligent Tutorial System (ITS) comprises of 5 components:
1. A domain expert also called the expert knowledge base
2. A trainee model stores the information on how the trainee is
performing during the training program
3. A scenario generator
4. A training session manager interprets trainees responses and
responds either with tutoring, more content or information.
5. A user interface allows the trainee to communicate with the
Intelligent tutorial System
Considering an example, in the following table there are 3
students ABC, DEF, GHI. The Intelligent Tutorial System determines the
problem with the three students, diagnose them, and provide them a
different type if instruction to each student keeping the errors they make
in mind.
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Programmed Instruction
Programmed instruction is a Computer-based training that
comprises of graphics, multimedia, text that is connected to one another
and is stored in memory
Programmed instruction is the procedure of guiding the
participants strategically through the information in a way that facilitates
the most effective and efficient learning. It provides the participant with
content, information, asks questions, and based on the answer goes to
the next level of information i.e. if the trainee gives the correct answer;
one branch moves the trainee forward to the new information. And if
the trainee gives the wrong answer then different branch is activated,
taking the trainee back to the review relevant information in more
elaborate manner.
This method allows the trainees to go through the content
according to the individual speed, and capability. Those trainees, who
respond better, move through the content rapidly.
Programmed Instruction also comes in
Printed form i.e. books
Tape
Interactive Video
Other formats
Features of Programmed Instruction
Some of the features of programmed instructions are:
1. It provides immediate feedback to trainee response
2. It frequently reviews the content
3. It programs small learning steps that results in fewer response
errors
4. It allows trainees to move through the content at their own
speed, or capability
5. It requires frequent active responses by the traine
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Virtual Reality
Virtual Reality is a training method that puts the participant in 3D environment. The three dimensional environment stimulates
situations and events that are experienced in the job. The participant
interacts with 3-D images to accomplish the training objectives. This type
of environment is created to give trainee the impression of physical
involvement in an environment. To experience virtual reality, the trainee
wears devices, like headset, gloves, treadmills, etc.
Virtual Reality provides trainees with an understanding of the
consequences of their actions in the work environment by interpreting
and responding to the trainees actions through its accessories:
Headset provides audio and visual information
Gloves provides tactile information
Treadmills is used for creating the sense of movement.
Features of Virtual Reality (VR) System
Some of the features of Virtual Reality System are:
1. It is poorly understood requires technical understanding
2. It is expensive
3. It is time consuming
4. It is flexible in nature
5. It does not incur travelling, lodging, or food cost
6. It requires excellent infrastructure
Behavioral Method
Behavioral methods are more of giving practical training to the
trainees. The various methods under Behavioral approach allow the
trainee to behavior in a real fashion. These methods are best used for
skill development.
The various methods that come under Behavioural approach are:
a) Games and simulations
59

b)
c)
d)
e)
f)
g)
Behavior-modeling
Business games
Case studies
Equipment stimulators
In-basket technique
Role plays
Behavior Modeling
Behaviors Modeling uses the innate inclination for people to
observe others to discover how to do something new. It is more often
used in combination with some other techniques.
Procedure of Behaviors Modeling Technique
In this method, some kind of process or behavior is videotaped
and then is watched by the trainees. Games and simulation section is
also included because once the trainees see the videotape, they practice
the behavior through role plays or other kind of simulation techniques.
The trainee first observes the behavior modeled in the video and then
reproduces the behavior on the job.
a) The skills that are required to build up are defined
b) A brief overview of the theory is then provided to the trainers
c) Then, trainees are given instructions that what specific learning
points or critical behavior they have to watch
d) Then the expert is used to model the suitable behaviors
e) Then, the trainees are encouraged to practice the suitable
behavior in a role play or through any other method of
simulation
f) Trainees are then provided with some opportunities to give
reinforcement for appropriate imitation of the models behavior
g) In the end, trainer ensures that trainees appropriately reinforces
the behavior on the work place
60
Business games
Business games are the type of simulators that try to present the
way an industry, company, organization, consultancy, or subunit of a
company functions. Basically, they are based on the set of rules,
procedures, plans, relationships, principles derived from the research. In
the business games, trainees are given some information that describes
a particular situation and are then asked to make decisions that will best
suit in the favor of the company. And then the system provides the
feedback about the impact of their decision.
Again, on the basis of the feedback they are asked to make the
decisions again. This process continues until some meaningful results do
not came out or some predefined state of the organization exists or a
specified number of trails are completed.
As an example, if the focus is on organization's financial state,
the game may end when the organization reach at desirable or defined
profitability level.
Some of the benefits of the business games are:
1. It develops leadership skills
2. It improves application of total quality principles
3. It develops skills in using quality tools
4. It strengthen management skills
5. It demonstrates principles and concepts
It explores and solves complex problem.
61
Fig. 4.2 Benefits of Computer games

Case Studies
Case Studies try to simulate decision making situation that
trainees may find at their work place. It reflects the situations and
complex problems faced by managers, staff, HR, CEO, etc. The objective
of the case study method is to get trainees to apply known concepts and
ideologies and ascertain new ones. The case study method emphasize on
approach to see a particular problem rather than a solution. Their
solutions are not as important as the understanding of advantages and
disadvantages.
Procedure of the Case Study Method
The trainee is given with some written material, and the some
complex situations of a real or imaginary organization. A case
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study may range from 50 to 200 pages depending upon the
problem of the organization.
A series of questions usually appears at the end of the case
study.
The longer case studies provide enough of the information to be
examined while the shorter ones require the trainee to explore
and conduct research to gather appropriate amount of
information.
The trainee then makes certain judgment and opines about the
case by identifying and giving possible solutions to the problem.
In between trainees are given time to digest the information. If
there is enough time left, they are also allowed to collect
relevant information that supports their solution.
Once the individuals reach the solution of a problem, they meet
in small groups to discuss the options, solutions generated.
Then, the trainee meets with the trainer, who further discusses
the case.
Case Study method focuses on:
Building decision making skills
Assessing and developing Knowledge, Skills and Attitudes (KSAs)
Developing communication and interpersonal skills
Developing management skills
Developing procedural and strategic knowledge
In-Basket Technique
In-Basket Technique It provides trainees with a log of written
text or information and requests, such as memos, messages, and reports,
which would be handled by manager, Engineer, reporting officer, or
administrator.
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Procedure of the In basket Technique
In this technique, trainee is given some information about the
role to be played such as, description, responsibilities, general
context about the role.
The trainee is then given the log of materials that make up the
in-basket and asked to respond to materials within a particular
time period.
After all the trainees complete in-basket, a discussion with the
trainer takes place.
In this discussion the trainee describes the justification for the
decisions.
The trainer then provides feedback, reinforcing decisions made
suitably or encouraging the trainee to increase alternatives for
those made unsuitably.
A variation on the technique is to run multiple, simultaneous in
baskets in which each trainee receives a different but organized set of
information. It is important that trainees must communicate with each
other to accumulate the entire information required to make a suitable
decision.
This technique focuses on:
Building decision making skills
Assess and develops Knowledge, Skills and Attitudes (KSAs)
Develops of communication and interpersonal skills
Develops procedural knowledge
Develops strategic knowledge
Role play
Role play is a simulation in which each participant is given a role
to play. Trainees are given with some information related to description
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of the role, concerns, objectives, responsibilities, emotions, etc. Then, a
general description of the situation, and the problem that each one of
them faces, is given. For instance, situation could be strike in factory,
managing conflict, two parties in conflict, scheduling vacation days, etc.
Once the participants read their role descriptions, they act out their roles
by interacting with one another.
Role Plays helps in
Developing interpersonal skills and communication skills.
Conflict resolution
Group decision making
Developing insight into ones own behavior and its impact on
others
There are various types of role plays, such as:
a. Multiple Role Play: In this type of role play, all trainees are in groups,
with each group acting out the role play simultaneously. After the
role play, each group analyzes the interactions and identifies the
learning points.
b. Single Role Play: One group of participants plays the role for the
rest, providing demonstrations of situation. Other participants
observe the role play, analyze their interactions with one another
and learn from the play.
c. Role Rotation: It starts as a single role play. After the interaction of
participants, the trainer will stop the role play and discuss what
happened so far. Then the participants are asked to exchange
characters. This method allows a variety of ways to approach the
role.
d. Spontaneous Role Play: In this kind of role play, one of the trainees
plays herself while the other trainees play people with whom the
first participant interacted before.
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Another Method Is Management Development Method
Management Development
The more future oriented method and more concerned with
education of the employees. To become a better performer by education
implies that management development activities attempt to instill sound
reasoning processes. Management development method is further
divided into two parts:
On The Job Training
The development of a manager's abilities can take place on the
job. The four techniques for on the job development are:
COACHING
MENTORING
JOB ROTATION
JOB INSTRUCTION TECHNIQUE (JIT)
Off The Job Training
There are many management development techniques that an
employee can take in off the job. The few popular methods are:
SENSITIVITY TRAINING
TRANSACTIONAL ANALYSIS
STRAIGHT LECTURES/ LECTURES
SIMULATION EXERCISES
Coaching
Coaching is one of the training methods, which is considered as a
corrective method for inadequate performance. According to a survey
conducted by International Coach Federation (ICF), more than 4,000
companies are using coach for their executives. These coaches are
experts most of the time outside consultants.
A coach is the best training plan for the CEOs because
It is one to one interaction.
66
It can be done at the convenience of CEO.

It can be done on phone, meetings, through e-mails, chat.
It provides an opportunity to receive feedback from an expert
It helps in identifying weaknesses and focus on the area that
needs improvement. This method best suits for the people at the
top because if we see on emotional front, when a person
reaches the top, he gets lonely and it becomes difficult to find
someone to talk to. It helps in finding out the executives specific
developmental needs. The needs can be identified through 60
degree performance reviews.
Procedure of the Coaching

The procedure of the coaching is mutually determined by the
executive and coach. The procedure is followed by successive counseling
and meetings at the executives convenience by the coach.
1. Understand the participants job, the knowledge, skills, and
attitudes, and resources required to meet the desired
expectation
2. Meet the participant and mutually agree on the objective that
has to be achieved
3. Mutually arrive at a plan and schedule
4. At the job, show the participant how to achieve the objectives,
observe the performance and then provide feedback
5. Repeat step 4 until performance improves
Mentoring
Mentoring is an ongoing relationship that is developed between
a senior and junior employee. Mentoring provides guidance and clear
understanding of how the organization goes to achieve its vision and
mission to the junior employee.
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The meetings are not as structured and regular than in coaching.
Executive mentoring is generally done by someone inside the company.
The executive can learn a lot from mentoring. By dealing with diverse
mentees, the executive is given the chance to grow professionally by
developing management skills and learning how to work with people
with diverse background, culture, and language and personality types.
Executives also have mentors. In cases where the executive is
new to the organization, a senior executive could be assigned as a
mentor to assist the new executive settled into his role. Mentoring is one
of the important methods for preparing them to be future executives.
This method allows the mentor to determine what is required to
improve mentees performance. Once the mentor identifies the
problem, weakness, and the area that needs to be worked upon, the
mentor can advise relevant training. The mentor can also provide
opportunities to work on special processes and projects that require use
of proficiency.
Some key points on Mentoring
Mentoring focus on attitude development
Conducted for management-level employees
Mentoring is done by someone inside the company
It is one-to-one interaction
It helps in identifying weaknesses and focus on the area that
needs improvement
Job Rotation
Job rotation takes on different perspectives. The executive is
usually not simply going to another department. In some vertically
integrated organizations, for example, where the supplier is actually part
of same organization or subsidiary, job rotation might be to the supplier
to see how the business operates from the supplier point of view.
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Learning how the organization is perceived from the outside broadens
the executives outlook on the process of the organization. Or the
rotation might be to a foreign office to provide a global perspective.
For managers being developed for executive roles, rotation to
different functions in the company is regular carried out.
This approach allows the manger to operate in diverse roles and
understand the different issues that crop up. If someone is to be a
corporate leader, they must have this type of training. A recent study
indicated that the single most significant factor that leads to leaders
achievement was the variety of experiences in different departments,
business units, cities, and countries.
An organized and helpful way to develop talent for the
management or executive level of the organization is job rotation. It is
the process of preparing employees at a lower level to replace someone
at the next higher level. It is generally done for the designations that are
crucial for the effective and efficient functioning of the organization.
Benefits of job rotation
Some of the major benefits of job rotation are:
It provides the employees with opportunities to broaden the
horizon of knowledge, skills, and abilities by working in different
departments, business units, functions, and countries
Identification of Knowledge, skills, and attitudes (KSAs) required
It determines the areas where improvement is required
Assessment of the employees who have the potential and caliber
for filling the position
Job Instruction Technique (JIT)
JIT) uses a strategy with focus on knowledge (factual and
procedural), Skills and attitudes development.
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Procedure of Job Instruction Technique (JIT)
JIT consists of four steps:
Plan This step includes a written breakdown of the work to be
done because the trainer and the trainee must understand that
documentation is must and important for the familiarity of work. A
trainer who is aware of the work well is likely to do many things and
in the process might miss few things. Therefore, a structured analysis
and proper documentation ensures that all the points are covered in
the training program. The second step is to find out what the trainee
knows and what training should focus on. Then, the next step is to
create a comfortable atmosphere for the trainees i.e. proper
orientation program, availing the resources, familiarizing trainee
with the training program, etc.
Present In this step, trainer provides the synopsis of the job while
presenting the participants the different aspects of the work. When
the trainer finished, the trainee demonstrates how to do the job and
why is that done in that specific manner. Trainee actually
demonstrates the procedure while emphasizing the key points and
safety instructions.
Trial This step actually a kind of rehearsal step, in which trainee
tries to perform the work and the trainer is able to provide instant
feedback. In this step, the focus is on improving the method of
instruction because a trainer considers that any error if occurring
may be a function of training not the trainee. This step allows the
trainee to see the after effects of using an incorrect method. The
trainer then helps the trainee by questioning and guiding to identify
the correct procedure.
Follow-up In this step, the trainer checks the trainees job
frequently after the training program is over to prevent bad work
habits from developing
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Sensitivity Training
Sensitivity training is about making people understand about
themselves and others reasonably, which is done by developing in them
social sensitivity and behavioral flexibility.
Social sensitivity in one word is empathy. It is ability of an
individual to sense what others feel and think from their own
point of view.
Behavioral flexibility is ability to behave suitably in light of
understanding.
Procedures of Sensitivity Training
Sensitivity Training Program requires three steps:
1. Unfreezing the old values It requires that
The trainees become aware of the inadequacy of the old values.
This can be done when the trainee faces dilemma in which his old values
is not able to provide proper guidance. The first step consists of a small
procedure:
An unstructured group of 10-15 people is formed.
Unstructured group without any objective looks to the trainer
for its guidance
But the trainer refuses to provide guidance and assume
leadership
Soon, the trainees are motivated to resolve the uncertainty
Then, they try to form some hierarchy. Some try assume
leadership role which may not be liked by other trainees
Then, they started realizing that what they desire to do and
realize the alternative ways of dealing with the situation
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Procedure of Sensitivity Training
2. Development of new values With the trainers support, trainees
begin to examine their interpersonal behaviour and giving each
other feedback. The reasoning of the feedbacks are discussed which
motivates trainees to experiment with range of new behaviors and
values. This process constitutes the second step in the change
process of the development of these values.
3. Refreezing the new ones This step depends upon how much
opportunity the trainees get to practice their new behaviors and
values at their work place.
Transactional Analysis
Transactional Analysis provides trainees with a realistic and
useful method for analyzing and understanding the behavior of others. In
every social interaction, there is a motivation provided by one person
and a reaction to that motivation given by another person. This
motivation reaction relationship between two persons is a transaction.
Transactional analysis can be done by the ego states of an individual.
An ego state is a system of feelings accompanied by a related set of
behaviors.
There are basically three ego states:
1. Child: It is a collection of recordings in the brain of an individual of
behaviors, attitudes, and impulses which come to her naturally from
her own understanding as a child. The characteristics of this ego are
to be spontaneous, intense, unconfident, reliant, probing, anxious,
etc. Verbal clues that a person is operating from its child state are
the use of words like "I guess", "I suppose", etc. and nonverbal clues
like, giggling, coyness, silent, attention seeking etc.
2. Parent: It is a collection of recordings in the brain of an individual of
behaviors, attitudes, and impulses imposed on her in her childhood
72

from various sources such as, social, parents, friends, etc. The
characteristics of this ego are to be overprotective, isolated, rigid,
bossy, etc. Verbal clues that a person is operating from its parent
states are the use of words like, always, should, never, etc and nonverbal clues such as, raising eyebrows, pointing an accusing finger at
somebody, etc.
3. Adult: It is a collection of reality testing, rational behavior, decision
making, etc. A person in this ego state verifies, updates the data
which she has received from the other two states. It is a shift from
the taught and felt concepts to tested concepts.
All of us evoke behavior from one ego state which is responded
to by the other person from any of these three states.
Games and Simulations
Games and Simulations are structured and sometimes
unstructured, that are usually played for enjoyment sometimes are used
for training purposes as an educational tool. Training games and
simulations are different from work as they are designed to reproduce or
simulate events, circumstances, processes that take Place in trainees
job.
A Training Game is defined as spirited activity or exercise in
which trainees compete with each other according to the defined set of
rules.
Simulation is creating computer versions of real-life games.
Simulation is about imitating or making judgment or opining how events
might occur in a real situation.
73

References
1. Gupta K. Shashi and Joshi Rosy. Human Resource Management.
Kalyani Publication.
2. Rao P.Subba.Essential of Human Resource Management and
Industrial Relation. Himalaya Publishing House.
3. http://corehr.wordpress.com
4. http://jpk.tjtc.edu.cn/08/jiudian/3_Lect/d06.htm
5. www.citehr.com
74
Human Resource Management Performance Appraisal Methods
Chapter-5
Performance Appraisal Methods
Abhishek Kumar Pathak
Introduction
In simple terms, performance appraisal may be understood as
assessment or measurement of an individuals performance in
systematic way. The performance being measured against such factors
as job knowledge, quality and quantity of output, initiative, leadership
abilities, supervision, dependability, cooperation, judgment, versatility,
health and like.
FlippoPerformance appraisal is a systematic, periodic and so far
as humanly possible and impartial rating of employees excellence in
matters pertaining to his present job and to his potentialities for better
job.
Alford and Beatty It is the evaluation or appraisal of the relative
worth to the company of a mans services on his job.
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.
Objectives of Performance Appraisal
The main purposes of performance appraisal are as follows:
1. It acts as a base for promotion process.
2. To confirm the job of a probationary employee.
3. To access the training need of the employees.
75

4. To decide on the issue of necessary pay rise.
5. To set a minimum benchmark of standard performance at work.
6. To let the employee know about their work progress and present
level of performance.
7. To improve the communication process in an organization.
8. To evaluate the effectiveness of human resource process like
recruitment, selection, training and transfer.
9. To build healthy competition in the workplace by creating a
competitive base or standard among employees.
10. To evaluate the employees from the organizational view point
and their improvement in work.
Methods of Performance Appraisal
There are a number of methods available to measure the
employees performance. These methods can be broadly classified into
(Figure 5.1)
a. Traditional methods and
b. Modern methods
76

Methods of Performance Appraisal
Traditional Methods
Modern Methods
BARS
Assessment centre
Human
resource
accounting
MBO
Psychological
appraisal
Ranking Methods
Graphical rating scale
Grating Methods
Paired comparison Methods
Forced distribution methods
Checklist Method
Critical incident methods
Essay or free form appraisal
Group appraisal
Confidence report
Fig 5.1 Methods of Performance Appraisal

Traditional Method
Traditional methods include the following methods:
1. Graphical rating scale: This is a method which is used to compare
individual performance to an absolute standard. The performance is
measured in a scale which is either continuous or discontinuous. The
performance characteristics are denoted by personal quality such as
dependability, leadership, initiative taker, innovation etc. The
performance judgment is finally arrived for individual rating.
2. Ranking method: It is one of the simplest and most commonly used
methods of performance appraisal. The employees are ranked one
after the other, from best to worst.
3. Paired comparison method: This method employs comparison of
employee to all other employees in a group, one at a time. This is a
useful method where the number of comparisons made is less, while
it becomes less effective in case the number of employees increases.
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4. Grading method: This is a method where the employees are put on
different grades or categories like excellent, very good, good,
average, poor, very poor etc. This grade helps in identifying the
performance of the employees.
5. Forced distribution method: Under this method of performance
appraisal, the rater after assigning the point to the performance of
each employee has to distribute his ratings in the pattern to conform
the normal frequency distribution curve.
6. Checklist method: It is also known as questionnaire method. It is a
simple method of performance appraisal where the supervisors are
given a list of statements or questions and ate asked to check against
employees performance.
7. Critical incident method: Under this method the critical incidence of
the employees are taken into consideration for making the
comparison. Critical incident are the key act of behaviour in
employees which tends to differentiate them from one another.
These incidents are put on rating on the basis of their importance to
arrive at an appraisal system.
8. Essay or free form appraisal: It is a method where the ratters are
asked to write or give a description on the employees performance
on the job.
9. Group appraisal: Here the employee is appraised by a group of
appraisers. The group consists of the immediate supervisors of the
employees.
10. Confidence reports: It is presentation of employees performance in
the form of confidential reports.
Modern methods
Modern methods include the following methods:
1. BARS: It stands for behaviorally anchored rating scale. This method
combines the elements of traditional rating scales and the critical
incident method.
2. Assessment centre: An assessment centre consists of groups of
experts who judge or access the employees performance. This
78

technique includes role playing exercises, case studies, simulation
exercise, transactional analysis etc.
3. Human resource accounting: Human resource accounting deals with
cost and contribution factor of human resource. The cost factor of
human resource is taken as standard and is then compared with the
contribution factor to derive the performance standard.
4. MBO: MBO or management by objective is the process by which
superior and subordinate manager jointly identifies the common
goal and defines the individual area of responsibility.
5. Psychological appraisal: Psychological appraisals are conducted to
assess the employees potential. It consists of :
a) In-depth interview
b) Psychological tests
c) Consultation and discussion with the employees
d) Discussion with the superior
e) Review of others evaluation.
79

References
1. Chhabra. T. N. (2010). Human Resource Management.
DhanpatRai& Co. New Delhi. 5th ed. 397. ISBN No.:81-7700-0268.
3. Mamoria. C. B. (1998). Personal Management. Himalaya
Publishing House Mumbai.12th edition.
Himalaya Publication, Mumbai.
5. Rao. V. S. P. (2004). Human Resource Management: Text and
Cases. Excel Books.
80
Human Resource Management Policy and Potential Assessment
Chapter-6
Concept of Exit Policy and Potential Assessment
Dr. Sudhir Kumar Sharma
Introduction to Exit Policy

With the technological changes in wider effect, the need for
manpower is declining considerably in Indian organization and across the
world. The wide spread corporate restructuring in the economy is
increasing the issue over the excess manpower in organizations. The
concept of disguised unemployment is a cause of worry in Indian
Industries. It is a situation where some of the employed workers can be
taken off or removed without affecting the process of production. Public
sector companies of India are hugely characterized by excess of
manpower without suitable work. However private enterprises are
largely driven by work to pay rule and thus are efficient in the
production process with optimum allocation of resources. Thus, cutting
down of excess or surplus manpower is the major issue in present
economic conditions. Exit policy in this regard is a major step both from
the organizational and employee view point. Government of India with
its liberalization policy in effect, adapted the exit policy in March 1992. It
motto was to close down the unproductive or sick Industrial units, to
reduce the financial burden and asking the employees to quit by taking
voluntary retirement. The problem of Industrial sickness was
investigated by Go swami committee and suggested the sick units to
adapt the exit policy.
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Meaning
Exit policy refers to the policy regarding the retrenchment of the
surplus manpower resulting from restructuring of Industrial units or
workers becoming unemployed by the closure of sick units. In a wider
sense it refers to the policy governing the compensations and
rehabilitation of the employees who leave or quit the organization.
Need for Exit Policy
Exit policy is essential in the view to:
1. To solve the problem of disguised unemployment both in public and
private sector enterprises.
2. In order to become cost effective. Reduction in surplus manpower in
an Industry gives sufficient scope for production with less or cheaper
cost.
3. Reduced manpower in an Industry paves the way for technological
up gradation. Modernization helps in error free production, thus
enhancing quality of the product.
4. It makes an organization more capital intensive, thus the Industrial
scenario will shift from labor intensive to capital intensive form of
production.
5. Excess of manpower with obsolete technology can lead to Industrial
sickness.
6. For the revival of sick and unproductive units. Finance spend on sick
Industries can be made spend on the social and economic welfare of
the people of the society. Moreover sick units can be closed and
liquated to spend the findings into other emerging units of similar
types.
7. It will make the market more competitive. Cost effective production,
efficient manpower and economies of scale will result in
organizational efficiency.
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8. Customer can bear the real competitive price of the product with
wider availability choices and preferences.
Exit Policy Schemes
There are two general exit policy schemes widely practiced in
Indian organizations:
1. VRS (Voluntary Retirement Scheme): It is also known as golden
handshake scheme. Under this scheme provision has been made to
seek voluntary retirement to the employees who have attained forty
years of age or tenure of ten years of service period employment.
Companies offer attractive packages and benefits for the employees
who opt for VRS. Although VRS is an effective scheme for reducing
the manpower, but the fear lies in loosing those employees who are
efficient and effective in production.
2. National Renewal Fund: National Renewal Fund (NRF) came into
existence in 1992 by the central government of India. It has a wide
range of scope for the workers who are affected by restructuring or
modernization of firms or due to Industrial sickness. The main motto
of NRF is to:
a. To provide constructive restructuring of those firms which are
affected by restructuring policies and are of poor in
modernization?
b. It tends to redeploy employees who are affected by such
modernization or technological changes, occurring with
reference to time frame.
c. It covers both the public and private sector organizations in
terms of providing compensations.
d. It provides means of reemployment to the labours in organized
and unorganized sector.
83

e. It calls for establishment of social safety to the net labour force
in operation.
Introduction to Potential Assessment
Performance assessment is largely based on past records and
has little to do with future. But the matter lies in the fact there is no
correlation between past performance and likely future performance.
Potential appraisal or assessment is a modern technique followed widely
in the organizations to prepare the employees with higher roles and
responsibilities.
The objective of potential appraisal is to identify the potential of
a given employee to occupy higher positions in the organizational
hierarchy and undertake higher responsibilities.
Potential assessment attempts to generate the relevant data of
employees in relation to different roles and deciding upon to select the
employees for a given job with given responsibilities.
Benefits of Potential Appraisal
Following are the two key benefits of potential appraisal:
1. It helps in locating and making use of employees hidden
potential in job.
2. Potential appraisal can be linked to career development.
Steps in Good Potential Appraisal System
Under given steps are followed for good potential appraisal system:
1. Role Description: Transparency or role clarity is the base of potential
appraisal. The function and role associated with job must be
adequately defined. Job description is a common method to depict
the task involved in a job.
2. Qualities required in performing the roles: Job description only
narrates the task involved in the job, but it requires qualities to fulfil
them. Thus it is vital to shortlist the qualities needed to perform
84

specific job. These qualities may take the form of technical,
managerial and behavioural skills. These skills enable the potential
employees to perform a distinct set of functions.
3. Quality Indicators/ Rating Systems: It is very essential to review the
qualities in employees, to know whether a given set of work can be
performed by him or not. In order to judge the qualities following
methods can be employed:
(i) Rating by others: The supervisory officer immediate to the
employees can rate the employees performance on the basis of
past acquaintance and records. Mostly technical skills can be
rated by this method.
(ii) Psychological tests: It involves measurement of employees
psychology for a given work on the basis managerial and
behavioural dimensions. It conforms the maximum likelihood
and interest in employee for a given role and responsibility.
(iii) Games and Exercises: Management games like role playing
exercises, case studies, in basket exercises, mind games,
assessment centers can also be conducted to identify the hidden
talent in a potential candidate.
(iv) Past Performance Records: Records of past performance can also
be analyzed and taken into consideration in order to find out
employee traits like creativity, risk taking abilities, leadership
quality, team work, innovation etc. These ratings can also
provide valuable information on employees for accessing
potential appraisal.
4. Organizing the system: After successfully rating the employee, one
must organise the system to develop a transparent policy with
respect to potential assessment. One must answer the following
questions before implementing the policy:
(i) Whether the organisationfavour merit or seniority for
promotional base.
(ii) Weightage given to different quality dimension viz technical,
managerial and behavioral qualities.
85

(iii) The mechanism to access individual on different potential bases
or indicators and how far it is reliable.
5. Feedback on potential appraisal: Employees should be made known
with the obtain scores or result of potential appraisal, so that they
can identify their strengths and limitations and can prepare
themselves for future. Through appropriate feedback one can know
the actual qualities required in performing a role, for which an
employee thinks of. Employees thus can develop a sense of self
perception and can plan ahead for their future development.
86

References
1. Cherunilam F. (2007) Business Environment. Himalaya Publishing
House, Mumbai, Chapter-32, p-519-524.
2. Rao T.V, Verma K.K., Khandelwal A and Abraham E (Ed.), Alternative
Approaches and strategies of Human resource development Rawat
Publication, Jaipur. ISBN No.:81-7033-381-4.
3. McGuire. D. (2010). Foundations of HRD. in McGuire. D. and
Jorgensen K. M. (2010). Human Resource Development: Theory and
Practice. Sage Publication. ISBN No.: 9781412922999.
Himalaya Publication, Mumbai. 3rd ed.
6. Rao. T. V. (1999). HRD Audit: Evaluating the Human Resource
Function for Business Improvement. Response Books. Sage
Publication. New Delhi. 100-103. ISBN No.: 81-7036-815-4.
7. Rao. V. S. P. (2004). Human Resource Management: Text and Cases.
Excel Books.. ISBN No: 81-7446-213-9.
87
Techniques of Job Evaluation
Chapter -7
Dr. Pushkar Dubey
The process of determining the money value of work is called as

job evaluation. The International Labor organization defined job
evaluation as attempt to determine and compare demands which the
normal performance of a particular job makes on normal workers
without taking into account the individual abilities or performance of the
workers concerned.
Wendell L. French defined job evaluation as a process of
determining the relative worth of the various jobs within the
organization, so that differential wages may be paid to the jobs of
different worth.
The above definition clearly signifies that job evaluation involves:
1. Determining the relative worth of jobs.
2. Ranking and grading the jobs on the basis of duties,
responsibilities, and knowledge involved in the job.
3. The result of job evaluation is related to compensation or
payment with respect to jobs.
Objectives of job evaluation
1. Gathering of job informations: including job description, job
specification.
2. To compare and evaluate one job with the other on the basis of
duties, responsibilities and knowledge.
88
3. To determine and ranking the jobs with other jobs in the

organization.
4. To ensure that the right compensation is paid on the basis of
task and responsibilities involved in the job.
5. To minimize the discrimination with respect to pay to employees
with different sex, religion, caste, ages etc.
6. To establish equitable wage and salary payment in an
organization.
Process of Job Evaluation
The job evaluation process involves eight different steps,
highlighted as under (Fig 7.1):
1. Job Analysis
2. Job Description
3. Job Specification
4. Appointment of committee for job evaluation
5. Training for Job evaluation
6. Defining criteria for job evaluation
7. Selecting methods for job evaluation
8. Job Classification
These steps can be further described as:
1. Job Analysis: Job evaluation process starts with job analysis. Job
analysis is the process of job study. It provides the analysis with the
basic raw data pertaining to specific jobs. It consists of Job
description and Job specification. Job description is the document is
basically descriptive in nature and constitutes a record of existing
and pertinent job facts. A job specification is a statement of
minimum acceptable human qualities necessary to perform a job
properly.
2. Appointment of committee for Job evaluation: Job evaluation is a
specialized function. It is done by the committee of experts drawn
89
from the organization, who are from different line of departments.

HR experts generally head or chairperson of the constituted
committee.
3. Training for Job evaluation: Members of the committee are given
with appropriate training in order to prepare themselves as an
evaluator. Since the members are drawn from different line and
from different departments of an organization, they should seek a
common platform for evaluation. Thus training becomes essential.
Various issues are discussed in relation to evaluation;
a) What is job evaluation?
b) What is the need of job evaluation?
c) How it works?
d) How it affects the promotional policies?
e) How the system is kept updated?
f) Does it mean that the same grade personnels get the same
grade of pay?
g) What happens if individual disagrees with the grading?
h) How appeals on grading are dealt with?
i) How the grading for a new job is done?
4. Defining criteria for job evaluation: For defining different criteria for
job evaluation, two steps are essentially required:
a) Firstly the critical factors involved in the job are to be identified
and evaluated. These factors are skills, responsibility and effort.
b) Secondly the identifying various factors, criteria in respect of
these have to be fixed. For fixing criteria, benchmark has to be
established.
5. Selecting methods of job evaluation: There are different methods for
job evaluation. It is divided into quantitative and non-quantitative
methods. Further it includes methods like point method, factor
comparison method, ranking method and grading method.
90
6. Job Classification: Classification refers to gradation. The act of

putting job into different grades is called as job classification. There
is also internal classification of different grades. On the basis of
different ordering system, job hierarchy is made and is useful in
wages and salary administration. Ex: Classification are based on
junior executives, middle level executives and senior level executives
in the organization.
Fig. 7.1 Process of Job Evaluation
91
Methods or Techniques of Job evaluation:

Job can be evaluated on the basis of different techniques. These
techniques are classified as quantitative and non-quantitative techniques
(Fig. 7.2)
1. Ranking Method
2. Grading Method
3. Point rating Method
4. Factor comparison Method
Fig. 7.2 Methods of Job Evaluation

1. Non-Quantitative method: These are also known as traditional or
non-analytical methods of job evaluation. It includes ranking and
grading method.
2. Quantitative method: These are relatively modern method of job
evaluation which includes point method and factor comparison
method.
Further all the methods of job evaluation are described as under:
92
1. Ranking method: This method where comparison of different job is

made and rank is assigned to different jobs. This method includes
the following steps.
a) Each member of the job evaluation committee firstly ranks each
job, with all other jobs. This is done on independent basis with a
benchmark. Different ranks are assigned to each job on the
basis of individual comparison.
b) The step one is repeated twice or thrice in order to increase the
reliability.
c) Final judgment is arrived after receiving comments from all the
reviewers. In case of significant opinion difference, the matter is
sort out with mutual discussion.
Merits
(i) This is a simple method of job evaluation.
(ii) It is easily under stable.
(iii) It can be successfully applied to organizations of smaller size.
(iv) It is less costly in comparison to other methods of job evaluation.
Demerits
(i) It is a judgmental approach, and is subjected to favoritism.
Personal preferences are the bases of favoritism for the job
evaluators.
(ii) It doesnt explain the difference between two jobs.
(iii) Worth of difference between two jobs cannot be exactly
specified.
2. Grading method: It is also known a job classification method. This
method tends to establish different grades for different categories of
job. For example: Workers may be classified on the basis of unskilled,
semiskilled, skilled and highly skilled. This method includes the
following steps:
a) Firstly the number of job classes or grades is decided.
93
b) The grades can be formed on the basis of natural class of the job.
c) The job evaluation committee may prepare series of job class
description in advance, on the basis of which job may be graded.
d) Different characteristics of each job are placed in the class with
which it matches the best.
Merits
(i) It is mostly practiced in government organizations.
(ii) It is simple to operate and understand.
(iii) It makes wage and salary fixation easier, as all the jobs are
classified into different grades.
Demerits
(i) It is not based on scientific approach.
(ii) It may become vague due to personal bias.
(iii) There is a chance of employee resistance, in case a new job
grade is prepared.
3. Point method: It is one of the methods which is widely used for job
evaluation on Indian organizations. It is a method which is based on
analysis, and is a quantitative means of evaluation. Points are
allotted to each specific factor on job. The sum total of these points
allotted to various job factors is the worth of the job. Following are
the sequential steps in point method:
a) The jobs under evaluation are broken into different components.
b) These components are the factors which contribute towards job
performance.
c) The examples of job component include skills, responsibility,
effort etc.
d) Each major component of job is further broken into minor
components. For ex: skill into education, experience, initiative
etc.
94
e) Each minor factor is assigned a scale. i.e degree of response.

Then evaluation is made on these point scale by the raters.
f) Finally the job evaluation is done on the basis of comparing the
various degrees of job factors and assigning points which are
relevant to each factor or sub factor.
g) These points are then summated to find out the total points
scored by a job.
Merits
(i) It is most widely used method of job evaluation.
(ii) It a an objective oriented method, as it rates various factors of a
job with predetermined goal measurement.
(iii) It is easily under stable, as the rate rates the components on a
varying scale.
(iv) This type of job evaluation makes wages and salary
administration flexible and easy.
(v) It can rate a job on various degrees, as specified.
Demerits
(i) It is a costly method of job-evaluation.
(ii) It is time consuming.
(iii) This method may not be useful, and its application is doubtful for
the smaller organizations.
(iv) Skilled persons, who are aware of the method or technique, are
required for job evaluation.
(v) This method is judgmental in approach.
4. Factor Comparison method: This method is also known as key job
method. It was originally developed at Philadelphia Rapid Transit
Company, USA by Eugene J. Benge in 1926. It overcomes two major
problems faced by point method. Firstly determining the relative
importance of the factors and secondly describing the degree
involved in the factors. In factor comparison method, each factor of
95
a job is compared with the same factor of the other jobs. When all
the factors are compared, final rating is arrived at by adding the
value received at each comparison. Benge in this regards identified
five factors: mental effort, skill, physical effort, responsibility and
working conditions. The detail procedure involved in this method is
highlighted as under:
a) Firstly some key jobs are selected. This jobs should be 15-20 in
numbers, from the cross sectional departments.
b) Various job factors which are to be compared are identified.
These factors may be mental effort, skill, physical effort,
responsibility and working conditions.
c) Each factor of a job is compared with the same factor of the key
job and the rank is awarded.
d) This process of awarding ranks is followed for all the factors.
e) Finally the worth of a job is determined by adding the ranks
obtained by different factors of a job.
Merits
(i) It is more systematic and analytical, as compared to any other
methods.
(ii) The informations arrived by this methods are more accurate in
comparison to other methods.
(iii) There are reduced chances of overlapping, as limited number of
relevant factors is taken into consideration.
(iv) The logic behind factor comparison method is acceptable to
majority of employees in the organization.
Demerits
(i) It is a costly method of job evaluation.
(ii) It is more time consuming process.
(iii) The process involved in job evaluation is difficult to understand.
96
(iv) Only skillful persons with in-depth understanding are subjected

to evaluation.
(v) This method becomes obsolete when wage rate is used for
making comparisons.
(vi) Limited numbers of job factors are taken into consideration.
97
References
Prentice Hall of India New Delhi. 79.
6. Manolescu. A. (2003). Human Resource Management. 4th ed. The
economic publishing house. Bucarest.
7. Milkovich. G. T. and Boudreau. J. W. (1988). Personnel/ Human
Resources Management. 5th ed. Plano TX: Business publication.
Publishing House. Mumbai.
Himalaya Publication, Mumbai. 3rd ed.
10. Rao. P. S. (2003). Personnel and Human Resource Management,
Himalaya Publishing House. Mumbai. 3rd ed.
11. Rao. V. S. P. (2004). Human Resource Management: Text and Cases.
Excel Books. Ch.12, 245-26 2. ISBN No: 81-7446-213-9.
12. Ravichandran. A. (2011). Organisational structure, HR practices and
its outcome: A conceptual model. International Conference on
Technology and Business Management, March 28-30, Delhi.
Management. Macmillan New York.
98
Human Resource Management Wage Determination
Chapter-8
Wage Determination
Introduction
Wage, salaries and other incentives of employee remuneration
constitute a very large component of operating costs. Remuneration of
employees is a vital factor not only affecting the cost of production but
also industrial relations of the organization. No organization can expect
to attract and attain qualified and motivated employees unless it pays
them fair remuneration. Employee remuneration therefore influences
vitally the growth and profitability of the company. Wages and salaries
have significant influence on our distribution of income, consumption,
savings, employment and prices. Thus employee remuneration is a very
significant issue from the viewpoint of employers, employees and the
nation as whole.
Objectives of an Ideal Wage System
An ideal wage system is required to achieve the following objectives:
(1) The wage system should establish a fair and equitable
remuneration.
(2) A sound wage system helps to attract qualified and efficient
worker by ensuring an adequate payment.
(3) It assists to improve the motivation and moral of employees
which in turn lead to higher productivity.
(4) It enables effective control of labor cost.
99

(5) An Ideal wage system helps to improve union-management
relations. It should reduce grievances arising out of wage
inequities.
(6) It should facilitate job sequences and lines of promotion
wherever applicable.
(7) An ideal system seeks to project the image of a progressive
employer and to comply with legal requirements relating to
wages and salaries.
Method of Remuneration
There are two basic methods of wage payment: (1) Time Wage
System and (2) Piece Wage System. Under time wage system wages are
paid on the basis of time spent on the job irrespective of the amount of
work done. This is known as Time Rate or Day Wage System. The unit of
time may be a day, a week, a fortnight or a month. Under piece wage
system, remuneration is based on the amount of work done or output of
a worker. This is known as "Piece Rate System" or "Payment by Result."
Thus a workman is paid in direct proportion to his output. A variety of
bonus and premium plans have been designed to overcome the
drawbacks of two basic methods of wage payments. A system of
incentive plans also takes into consideration the primary principles of
these two basic plans known as Incentive or Bonus or Premium Plan.
The following are the important methods of remuneration which
may be grouped into:
(1) Time Rate Systems
(2) Piece Rate Systems
(3) Bonus System (or) Incentives Schemes.
(4) Indirect Monetary Incentives.
These may be further classified as under:
1. Time Rate Systems:
a) At Ordinary Levels
100
2.
3.
4.
5.
b) At High Wage Levels

c) Guaranteed Time Rates.
Piece Rate Systems:
a) Straight Piece Rate
b) Piece Rates with Guaranteed Time Rate
c) Differential Piece Rates:
Taylor's Differential Piece Rate System
a) Merrick Differential Piece Rate System
b) Gantt Task and Bonus Plan.
c) Bonus System or Incentive Schemes:
d) Halsey Premium Plan
e) Halsey-Weir Premium Plan
f) Rowan Plan
g) Barth Variable Sharing Plan
h) Emerson Efficiency Plan
i) Bedaux Point Premium System
j) Accelerating Premium Plan
k) Group or Collective Bonus Plans.
Indirect Monetary Incentives:
Non-Monetary Incentives:
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Figure 1.1 Methods of Remuneration
Fig. 8.1 Methods of Remuneration
102

Table 1.1 Difference between Time Rate and Piece Rate system
Time Rate System
Piece Rate System
Under this system earnings of a

(1) worker are calculated on the basis
of time spent job
(2)
(3)
In this system, minimum

guaranteed time rate is paid to
every worker
Under time rate system,
remunerations are not directly
linked with productivity.
(I)
(2)
(3)
(4)
Under this system emphasis is on

high quality of work.
(4)
(5)
Under time rate system, strict

supervision is essential.
(5)
(6)
This method may lead to trade

unions to support it.
(6)
(7)
More idle time arises in time rate

systems.
(7)
In this system earnings of a

worker are calculated on the
basis of number of units
produced.
Under this system, no guarantee
of minimum payment to every
worker.
Remuneration of workers
directly linked with productivity.
Under piece rate system there is
no consideration for the quality of
work.
In this system, close supervision is
not required.
Under this method the attitude
of trade unions is not to cooperate with the schemes.
Compared with time rate system
there is no change of idle time in
piece rate schemes.
(1) Time Wage System

(a) Time Rate at Ordinary Levels:
This is also termed as "Day Wage System" or "Flat Rate System."
Under this system, wages are paid to the workers on the basis of time
spent on the job irrespective of the quantity of work produced by the
workers. Payment can be made at a rate per day or a week, a fortnight
103

or a month. The formula for calculation of payment of time rate of
ordinary levels is as follows:
Remuneration or Earnings = Hours Worked X Rate Per Hour
Time wage system is suitable under the following conditions:
(1) Where the units of output are difficult to measurable, e.g.,
watchman.
(2) Where the quality of work is more important, e.g., artistic
furniture, fine jewellery, carving etc.
(3) Where machinery and materials used are very sophisticated and
expensive.
(4) Where supervision is effective and close supervision is possible.
(5) Where the workers are new and learning the job.
(6) Where the work is of a highly varied nature and standard of
performance cannot be established.
Advantages
(1) It is simple and easy to calculate.
(2) Earning of workers are regular and fixed.
(3) Time rate system is accepted by trade unions.
(4) Quality of the work is not affected.
(5) This method also avoids inefficient handling of materials and
tools.
Disadvantages
(1) No distinction between efficient and inefficient worker is made
and hence they get the same remuneration.
(2) Cost of supervision is high due to strict supervision used for high
productivity of labor.
(3) Labor cost is difficult to control due to more payment may be
made for the lesser amount of work.
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(4) No incentive is given to efficient workers. It will depress the
efficient workers.
(5) There are no specific standards for evaluating the merit of
different employees for promotions.
(b) Time Rate at High Levels:
Under this system, efficient workers are paid higher wages in
order to increase production. The main object of this method designed
to remove the drawbacks of time rate at ordinary levels. This system is
simple and easily understandable. When higher rate of wages are paid, it
not only reduces labor turnover but also increases production and
efficiency.
(c) Guaranteed Time Rates:
Under this method, the wage rate is calculated by considering to
changes in cost of living index. Accordingly, the wage rate is varied for
each worker according to the change in cost of living index. This system
is suitable during the period of raising prices.
(2) Piece Rate System:
This is also known as "Piece Wage System" or "Payment By
Result." Under this system, wages of a worker are calculated on the basis
of amount of work done or output of a worker. Accordingly, a worker is
paid in direct proportion to his output.
Advantages
(1) It facilitates direct relation between efforts and reward.
(2) This system encourages the efficient workers to increase
production.
(3) Under this system efficient workers are recognized and
rewarded.
(4) It helps to reduce the cost of supervision and idle time.
(5) Tenders or quotations can be prepared confidently and
accurately.
105

Disadvantages
(1) Where a concern is producing large quantities, it is difficult to fix
a piece rate.
(2) In order to maximize their earnings, workers working with high
speed may affect their health.
(3) The quality of output cannot be maintained.
(4) This system is not encouraging to the inefficient workers.
(5) Temporary delays or difficulties may affect the earnings of the
workers.
Piece Rate System is Suitable Where:
(1) Quality and workmanship are not important.
(2) Work can be measured accurately.
(3) Quantity of output directly depends upon the efforts of the
worker.
(4) Production of standardized goods in a factory.
(5) Job is of a repetitive nature.
There are three important methods of paying labour
remuneration falling under this type: (a) Straight Piece Rate (2) Piece
Rates with Guaranteed Time Rates and (c) Differential Piece Rates.
(a) Straight Piece Rate:
Under this system, workers are paid according to the number of
units produced at a given rate per unit. Thus, total earnings of each
worker are calculated on the basis of his output irrespective of the time
taken by him. The following formula is used for measuring piece work
earning:
Straight Piece Work Earnings = Units Produced x Rate per Hour
(b) Piece Rates with Guaranteed Time Rates:
Under this method, the worker earning from piece work less
than the guaranteed minimum wage, will get the fixed amount of
106

guaranteed time rate. A guaranteed rate would be paid per hour rate or
day rate or week rate.
(c) Differential Piece Rates:
This system is designed to provide for variation of piece rates at
different levels of output. Accordingly increase in wages is proportionate
to increase in output. Under this system, efficient workers get ample
reward and at the same time inefficient workers are motivated to earn
more. The following are the three important types of differential piece
rates:
(a) Taylor's Differential Piece Rates System.
(b) Merrick's Differential Piece Rates System.
(c) Gantt Task Bonus Plan.
(a) Taylor's Differential Piece Rates System
F.W. Taylor, father of scientific management introduced this
plan. Under this system, two piece rates are applicable on the basis of
standard of performance established. Accordingly one is high rate and
the other one is lower rate. Thus high piece rate is applicable for
standard and above the standard performance. Lower piece rate for
workers below the standard performance.
Illustration: 1
Calculate the earnings of workers A and B under Straight Piece
Rate System and Taylor's Differential Piece Rate System from the
following particulars:
1. Standard time allowed 100 units per hour.
2. Normal time rate per hour Rs.200.
3. Differentials to be applied.
4. 80% of Piece rate below standard.
5. 120% of Piece rate at or above standard.
6. In a day of 8 hours A produced 600 units and B produced 900
units.
107

Solution:
Calculation of Piece Rates:
Standard production per hour = 100 units.
Standard production for 8 hours = 100 x 8 = 800 units.
Rate per hour = Rs. 200.
Piece Rate per unit =200/100 = Rs. 2 per unit
Straight Piece Rate System
A for 600 units @ Rs. 2 = 600 x 2 = Rs. 1200
B for 900 units @ Rs. 2 = 900 x 2 = Rs. 1800
Differential Piece Rate System
Low Piece Rate at 80% differential = (2 x 80)/ 100 = Rs. 1.60
High Piece Rate at 120% differential =(2 x 120)/100 = Rs. 2.40
Standard production in 8 hours = 8 x 100 units per hour = 800 units
Earnings
A produced 600 units (below standard)
= 600 x 1.60 = Rs.960
Therefore low Piece rate of Rs. 1.60 applicable
B Produced 450 units (above standard)
= 900 x 2.40 = Rs.2160
Therefore high Piece rate of Rs. 240 applicable
(b) Merrick Differential Piece Rate System:

This is also termed as Multiple Piece Rate system. This plan is
designed to overcome the drawback of Taylor's Differential Piece Rate
System. This method has three piece rates that are applied with
different levels of performance. Accordingly
108

Performance
(1)
(2)
(3)
Differential Piece Rate System.

Normal Piece Rate (or) Basic Piece
Less than 83%
Rate
From 83% to 100%
110% of Normal Piece Rate
More than 100%
120% of Normal Piece Rate
Illustration: 2
From the following particulars calculate the total earning of the
three workers under Merrick Differential Piece Rate
Normal rate per hour Rs. 5 per unit and Standard production per
hour 10 units in 8 hours a day:
A produced 80 units. B produced 100 units.
C produced 60 units. D produced 120 units.
Solution:
Standard output per day = 10 units x 8 hours = 80 units
Piece rate = Rs.5 per units
Level Performance:
A produced = 80 units
A's level of performance = Actual Output / Standard Output x 100
= 80 /80 x 100 = 100 %
B's level of performance = Actual Output / Standard Output x 100
= 100 /80 x 100 = 125 %
C's level of performance = Actual Output / Standard Output x 100
= 60/80 x 100 = 75 %
D's level of performance = Actual Output / Standard Output x 100
= 120 /80 x 100 = 150%
Piece Rate Applicable:
Up to 83 % - Normal Piece Rate
109

83 % to 100% - 110 % of Normal Piece Rate
Above 100% - 120% of Normal Piece Rate
Earning of Workers:
As level of performance is 87.5 %
Earnings = (Units Produced x Normal Piece Rate) x (110/100)
= 80 x 5 x (110/100) = Rs.440
B's level of performance is 112.5 %
= 100 x 5 x (120/100) = Rs.600
C's level of performance is 81.25 %
Earnings = (Units Produced x Normal Piece Rate)
= 60 x 5 = Rs.300
D's level of performance is 150 %
= 120 x 5 x (120/100) = Rs.720
(c) Gantt's Task Bonus Plan
This system is designed by Henry L. Gantt. Under this system,
standard time for every task is fixed through time and motion study. The
main feature of this system is a good combination of time rate,
differential piece rate and bonus. In this system day wages are
guaranteed to all workers. Wages under this system are calculated as
follows:
Performance (Output)
Earnings
(1) Output Below Standard
- Time Rate (Guaranteed)
(2) Output at Standard

(3)
Output
Standard
at
Above
- Wages of Time Rate plus Bonus of 20% of the

Time Rate
- High Piece Rate on worker's output
110

Illustration: 3
From the following particulars, calculate total earnings of each
worker under Gantt's Task and Bonus Scheme:
Standard production per week per worker is 2000 units, piece work rate
Rs. 5 per unit
Actual production during the month: A- 1000 units, B - 2000 units, C 2500 units
Solution:
Standard production per month = 2000 units
Piece work rate = Re. 0.50 per unit
Guaranteed Time Rate = (2000/0.50) = Rs. 4000 per month
Level of Efficiency:
Standard output per month = 2000 units
(100% efficiency)
A's actual production = 1000 units
A's level of efficiency = 1000 / 2000 x 100 = 50 %
B's actual production = 2000 units
B's level of efficiency = 2000 / 2000 x 100 = 100 %
C's actual production = 2500 units
Cs level of efficiency = 2500 / 2000 x 100 = 125 %
Earnings:
Under Gantt's Task and Bonus Plan wages are computed as follows:
Output Rate
Output
Below Standard
At Standard
Above Standard
Rate
-
Guaranteed Time Wages
Given piece wages plus bonus of

20%
High piece rate on worker's whole

111

output.
The earnings of the worker will be as follows :
A (50% below the standard)
=Rs. 4000 (Guaranteed monthly wages)
B (100% efficiency)
= 2000 units x Re. 0.50 per unit + Bonus of

20%
=Rs. 1000 + 20% of Rs. 1000
=Rs. 1000 + 200 = Rs. 1200
C (125% efficiency above

standard)
= 2500 units x Re. 0.50 + Bonus of 20%

=Rs. 1250 + 20% of Rs. 1250
= Rs.1500
(3) Bonus or Incentives Schemes:

Incentive schemes of wage payment are also known as Premium
Bonus Plans. Introduced in order to increase production with ensuring
proper industrial climate. Wage incentive plans may be of two types:
(A) Individual Incentive Plans and (B) Group Incentive Plans.
Under individual incentive plans, remuneration can be measured
on the performance of the individual worker. In the case of the group
incentive scheme earnings can be measured on the basis of the
productivity of the group of workers or entire work force of the
organization. Various types of incentive schemes are combinations of
time and piece rate systems.
(A) Individual Incentive Plans
The following are the important individual incentive plans
discussed below:
112

(1) Halsey Premium Plan: (Split Bonus Plan or Fifty-Fifty Plan)
This Plan was developed by F. A. Halsey. Under this plan,
standard time is fixed for each job or operation on the basis of past
performance. If a worker completes his job within or more than the
standard time then the worker is paid a guaranteed time wage. If a
worker completes his job within or less than the standard time, then he
gets a bonus of 50% of the time saved plus normal earnings. Under this
method, the total earnings is calculated as Follows:
Total Earning = Guaranteed Time Wages + Bonus of 50% of Time Saved
Or
Total Earnings = T x R + 50% (S - T) R
Where,
T - Time Taken
R - Hourly Rate
S - Standard Time
.'. Total Earnings = Time Taken x Hourly Rate + (50/100) (Time Saved x
Hourly Rate)
Illustration: 4
Calculate the total earnings of the worker under Halsey Premium Plans:
Standard Time = 12 hours
Hourly Rate = Rs. 3
Time Taken = 8 hours
Solution:
Earnings under Halsey Premium Plan:
Time Saved = Standard Time - Time Taken = 12 - 8 = 4 hours
Rate per hour = Rs.3
113

Total Earnings = T x R + 50% (S T) R = 8 x 3 + (50/100) x (4 x 3)= 24 + 6 =
Rs. 30
Merits
(i) It is simple to understand.
(ii) Total earnings of each worker can be easy to calculate.
(iii) Both employer and employee get equal benefit of time saved.
(iv) This system not only benefits efficient worker but also provides
average worker to get guaranteed minimum wages.
(v) This system is based on time saved and it can reduce the labour
cost.
Demerits
(i) Lack of co-operation among the employees.
(ii) Under this system establishment of standard is very difficult.
(iii) Earning is reduced at high level of efficiency.
(2) The Halsey- Weir Scheme:
Under this system, the worker gets the bonus of 30% of the time
saved instead of 50% of time saved under Halsey Plan. Except for this,
Halsey Plan and Halsey-Weir Systems are similar in all other respects.
Illustration: 5
From the following particulars calculate total earnings of a worker under
Halsey-Weir Plan
Solution:
Hourly Rate = Rs.2 per hour
Earnings Under Halsey-Weir Premium Plan :
Standard Time =10 hours
Time Taken =8 hours
Time Saved = Standard Time - Time Taken = 10-8 = 2 hours
114

Rate per hour = Rs. 2
Total earnings = TxR+30% (S - T) R= 8 x 2 + (30 / 100) x (10 - 8) x 2 = 16 +
1.20
Total Earnings = Rs.17.20
(3) Rowan Plan:
This plan was introduced by James Rowan of England. It was
similar to the Halsey Plan in many respects except that it differs in
calculation of bonus. Under this system. bonus is determined as the
proportion of the time taken which the time saved bears to the standard
time allowed. Under this system the following formula is applied to
calculation of bonus:
Bonus =
Time Saved
Standard Time
Total Earnings =
Time Taken x Hourly Rate +
Time Saved =
Time Wages =
Standard Time - Time Taken

Time Taken x Hourly Rate
x Time Wages
Time Saved
Standard Time
x Tx R
Illustration: 6
From the following information, calculate total earnings of a worker
under Rowan System:
Solution:
Calculation of total earnings under Rowan Plan :
Time Saved = Standard Time - Time Taken = 10 - 8 = 2 hours
115

Time Saved
Total Earnings =
Time Taken x Hourly Rate +
x Tx R
Standard Time
2
Total Earnings =
8x3+
x 8x 3
10
= 24 + 4.8 = Rs 28.8
(4) Emerson's Efficiency Sharing Plan:
Under this plan, earning of a worker is by combining guaranteed
day wages with a differential piece rate. Accordingly the level of
efficiency is determined on the basis of establishment of standard task
for a unit of time. If the level of worker's efficiency reaches 67% the
bonus is paid to him at a normal rate. The rate of bonus increases in a
given rate as the output increases from 67% to 100% efficiency. Above
100% efficiency, the bonus increases to 20% of the wage earned plus
additional bonus of 1 % is added for each increase of 1 % in efficiency.
Illustration: 9
From the following particulars calculate total earnings of a
worker under Emerson's Efficiency Sharing Plan :
Standard output per day of 8 hours is 16 units
Actual output of a worker for 8 hours is 20 units
Rate per hour is Rs. 2.50
Solution:
Calculation of earnings under Emerson's Sharing Plan:
Actual Output
Level of performance =
x 100
Standard Output
20 units x 100 = 125%

16 units
116

Bonus Payable
At 100% efficiency = 20% of time wages
Further increase of 1 % in the bonus is given for every 1 % increase in the
efficiency.
each 1 % increase in efficiency
= 25% of Time Wages
For next 25% efficiency @ 1 % for
Total Bonus payable = 45% of Time Wages.
Earning
Time Wages for 8 hours @ Rs. 2.50 per hour = Rs. 20.
Add: 45% bonus of time wages = (45/100) x 20 = Rs. 9
Total Earning = Rs. 20 + Rs. 9 = Rs. 29
Barth Variable Sharing Plan:
This scheme introduced to attract newly recruited and skilled
employees who are motivated to learn work. It provides sufficient
incentives to inefficient workers who are motivated to increase
productivity.
Earning under this method is calculated by applying the following
formula:
Earnings = Rate per hour x
Standard Time x Time Taken
Illustration: 10
From the following particulars calculate earnings of a worker under Barth
Variable sharing plan:
Solution:
Standard Time= 12 hours
Calculation of earnings under Barth Variable sharing plan:
Earnings = Rate per hour x
Standard Time x Time Taken

117

=5x
12x8 =Rs.48.98
(5) Bedaux Point Premium System:

This plan was introduced by Charles E. Bedaux in 1911. Under
this plan, standard time fixed for each operation or job is expressed in
terms of Bedaux point or'S.' For example, a standard time of 360 B
means the operation or job should be completed within 360 minutes.
The chief advantage of this plan is that it can be applied to any kind of a
job. Under this system, worker is paid at the time for actual hours
worked, and 75% of the wages for the time saved are paid as bonus to
the worker and 25% to the foremen, supervisors etc. The following is the
formula for calculation of total wages of a worker:
Total Earnings = S x R + 75% of R (S - T)
Illustration: 11
From the following particulars, calculate total earnings of a
worker under Bedaux Point Premium System:
Standard Time= 360 B
Time Taken= 240 B
Rate per hour= Re. 1
Solution:
Calculation of total earnings under Bedaux Point System:
Standard Time = 360 B's = 360/60 =6 hours
Time Taken = 240 B's =240 / 60 = 4 hours
Total earnings = S x R + 75% of R (S - T)
= 360 x 1 + 0.75 x 1 (360 - 240)
= 360 + 0.75 x 120
= Rs. 360 + Rs. 90 = Rs. 450
118

(6) Accelerating Premium Bonus Plan:
Under this plan, bonus is determined on the basis of time saved
unlike a fixed percentage under Halsey Plan and as a decreasing
percentage under Rowan Plan. The bonus is paid to workers at an
increased rate according to more and more time saved. This provides
increasing incentives to efficient workers.
Group or Collective Bonus Plan
Production of goods or services not only depends on individual
efforts but also group efforts. It is, therefore, essential that a group
incentive scheme be introduced. Bonus is calculated for a group
incentive scheme. The bonus is calculated for a group of workers and the
total amount is distributed among the group of workers on anyone of
the following basis
(a) Equally by all the workers of the group.
(b) Pro rate on the time rate basis.
(c) Pre-determined percentage basis.
(d) Specified proportion basis.
B. Group Incentive Plans
The following are the important types of group incentive bonus plans:
(1) Budgeted Expenses Bonus Plan
(2) Priest Man Bonus Plan
(3) Towne's Gain-sharing Plan
(4) Scanlon Plan
(1) Budgeted Expenses Bonus Plan: Under this method, bonus is
determined on the basis of savings in actual expenditure compared
with total budgeted expenditure.
(2) Priest Man Bonus Plan: Under this plan, standard performance is
fixed by the management and committee of workers. The group of
workers get bonus when actual performance exceeds the standard
performance irrespective of individual's efficiency or inefficiency.
(3) Towne's Gain-sharing Plan: Under this plan, bonus is calculated on
the basis of savings in labor cost. The group of workers get bonus
when actual costs is less than the standard costs, one-half of the
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savings is distributed among workers including foremen in
proportion with the wages earned.
(4) Scanlon Plan: Scanlon Plan is designed with the chief aim of reducing
the cost of operations in order to increase the production efficiency.
This plan is generally applicable in industries where the operation
cost is high. Under this scheme, bonus is determined on the basis of
standard costs or wastages and percentage of the reduction in
operation cost.
5. Indirect Monetary Incentives :
Incentive schemes are regarded beneficial to both employers
and workers. In this regard, under indirect monetary incentives by giving
them a share of profit and introducing co-partnership schemes or as they
have become partners in the business in order to make a very profitable
enterprise.
I.
Profit Sharing: Profit sharing and bonus is also known as Profit
sharing bonus. Under this scheme, there is an agreement
between the employer and employee by which employee
receives a share, fixed in advance of the profits. Accordingly
profit sharing bonus refers to the distribution of profit on the
basis of a certain percentage of one's monthly earnings. The
amount to be distributed depends on the profits earned by an
enterprise. The proportion of the profits to be distributed among
the employees is determined in advance.
II.
Co-partnership: This system provides not only a worker to
become partner in the business but also to share in the profits of
the concern. There are different degrees of partnership and
share of responsibilities allowed to the workers to take part in its
control.
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6. Non-Monetary Incentive Schemes:
Under this system, employees are provided better facilities,
instead of additional monetary payments. Some of the examples of nonmonetary incentives are free education for children, rent free
accommodation, medical facilities, canteen facilities, welfare facilities,
and entertainment facilities etc.
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References
1. Understanding Wage And Compensation System A. M. Sharma
2. Human Resource Management - V S P Rao
3. Human Resource Management - Khanka
4. Human Resource Management - K.Aswathappa
5. Human Resource Management- Durai
6. Personnel And Human Resource Management- P. SubbaRao
7. A Text Book Of Financial Cost And Management Accounting- P.
Periasamy
8. Industrial Engineering And Management - O.P. Khanna
9. Industrial Engineering And Production Management- M.S . Mahajan
10. Industrial Relation , Trade Unions And Labour Legislation - Sinha
And Shekhar
11. Financial Management - Prasanna Chandra
12. Industrial And Labour Legislation - L.M. Powal And Sanjeev Kumar
13. Compensation And Reward Management - B.D Singh
14. Wages Www.Wikipedia.Org
15. Study Material On Wages Stramore University
16. Study Materials On Wages Institute Of Cost And Work Accounts Of
India
122
Human Resource Management Industrial Relations
Chapter-9
Industrial Relations
Meaning:
The relationship between the employers and employees and
trade unions is called Industrial Relations. Harmonious relationship is
necessary for both the employers and employees to safeguard the
interests of both the parties of production.
Definitions:
Industrial relations have been defined by some of the thinkers a
follows:1. Industrial relations and personnel management are almost
synonymous term with the only difference the former places
emphasis on the aspect of employer relationship rather than on
the executive policies and activities that are set up to foster
good relations. (E.F.L. Brec)
2. Industrial relations is that part of management which is
concerned with the man power of the enterprise- whether
machine operator, skilled worker or manager. (Ethel)
3. Industrial relationship is the composite result of the attitudes
and approaches the employers and employees towards each
other with regard to planning, supervision, direction and coordination of the activities of an organization with a minimum of
human efforts and friction, with an animating sprite of co123

operation and with proper regard for the genuine well-being of
all the members of the organization. (Tead and Matcal)
It is clear from the analysis of the above definitions that
employment relations are generally called industrial relations. It is a
relationship between employer and employees, employee and employee
and trade unions and employees.
Importance of IR
IR is the key for increased productivity in industrial establishment.
For example, at the Alwar plant of Eicher Tractors, productivity went
up from 32% between 1994 and 1996 to 38% in 1997, the production
of Engine cylinders has gone up from 29390 (in 1995-96) to 32501 (in
1996-97). This increase has been possible because of peaceful IR. IR
has moral dimensions, too. It is unethical on the part of any
management to take advantage of the helplessness of workers and
exploit them. Unemployment compels workers - particularly illiterate
and unskilled - to accept jobs, inhuman working conditions and
wages notwithstanding.
One of its objectives is to protect workers interest and to improve
their economic conditions.
IR seeks to protect the right of managers too. Managers expects
workers to observe code of discipline, not to join illegal strikes, not
to indulged in damaging the companys properties, not to assault
supervisors or peers, and not to come inebriated the workplace.
Where workers behavior deviates from expected lines.
It is management's prerogative to take action.
There is a set procedure for handling any act of indiscipline or
indiscretion on the part of an employee and if the management
satisfied the procedure, it is justified in taking action or even
removing the employee from service.
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Little do all of us realize that it is the people who creates problem

everywhere and it is only who can find solutions too. If there is a
problem from employees, there is a solution also. Viewing every
problem seriously and resorting the manipulative style of IR which
emphasis the need the labour is check by floating stooge unions,
buying up unions, and striking clandestine deals with powerful
politicians do no good to managers or to the organization they
represent.
The field of IR needs a new looks a look which is free from suspicion,
prejudice and ill will towards workers.
Concept and determinants of Industrial relations and its position in

India
In this we try to find the concept of Industrial Relations and its
determinants we discuss the parties for better Industrial Relations. Some
of the major causes for industrial unrest and discuss the sequel to unrest
and its manifestations.
The main concepts of industrial relations are
1. Preservation and promotion of economic interest of workers
along with social interest.
2. Peace and productivity goes hand in hand hence attempt to
reduce industrial dispute and promote peace is a necessity.
3. Employer employee relation should be made healthy and
growing.
4. Running of the industry, day to day work should be made more
democratic with increasing workers participation.
5. Producing products at a very competitive price so that country
can promote export and our economy can improve.
6. Bringing mental revolution in management.
The determinants of good industrial relation can be promoted by:
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1. Measures for securing and preserving unity and better relations
between workers and employers.
2. Arrange to probe and settle industrial dispute between employer
employee or employer and employer or employee and
employee, give proper representation to workers union and
industrial federations of employers.
3. Both the ultimate weapons of employers and employee strike
and lock out should be prevented at any cost. Proper relief to
workers after a lock out or lay off through government
agencies.
4. Workers participation at all levels and encourages give and take
principle in collective bargaining.
Industrial relation requires a study regarding i) conditions of
work (ii) compensation paid for the sweat the worker makes iii)
permanency of the job assured continuance of work or otherwise.
The parties to Industrial Relations are
1. Workers and their unions, the intelligence level knowledge of
workers, background of worker leaders, real or boghus their
linkage with political unions, are to be considered for the
effective relations.
2. Nature of employment and employers, whether benevolent,
interested in workers or aiming to get as much profit as possible
squeezing workers their attitude plays vital role in maintaining
better relations. Whether they want to have team and growth of
their team as a whole or just hire and fire system.
3. Position of government, political wills whether opportunitie
favoring employers or interested in workers, are to be seen.
Their interest in workers can be seen through their actions in
creating Laws for labour welfare and implementing them
effectively.
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Industrial relations development can be based
1. On a spirit of team development team building workers are to be
seen as partners in the industry for national development thro
industrial development, most of the laws and governments
directives wants to enforce workers participation joint councils,
collective improvements work etc.
2. In the above method it is Bipartite, partite there is yet another
arrangement of tripartite nature; introduction acceptance and
bringing up of unions.
In the first case the welfare / personal man is the link between
employers and employee. In this type of 1.R approach the unions are
encouraged as a unifying force and to make workers understand the
policies from a different position. The work becomes easier if unions
are working with spirit of development and understanding. In this type of
industrial Relation approach unions are having upper hand. Sometimes
they make workers as pawn. Only workers interest is put on the front,
for getting the status of employers. Pressure tactics are adopted,
sometime leading to strike to extract maximum from employer, this
attitudes which may push towards terror tactics may not yield desired
results. Quite likely entrepreneurs may start shrinking, existence of such
industries may be jeopardised. Similarly the employers roaming with a
lock in his hand also will not contribute for better relations. It is the
mutual understanding and appreciation only will give better results.
Industrial Relations in India
Industrial Relations has undergone a wide change in Indian
scererio, during the end of british period in India an awakening in
working class was seen. The world wars forced the employers to become
friendlier with the workers; to see UN interrupted production is ensured
during war time. Out of their self-interest they have to become
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benevolent, at the same time leaders also came up, Mr. Roy Tilak
Mahatma Gandhi and others were instrumental to organize workers
union, and also force government to frame labor laws, to improve the lot
of workers.
In 1929 Industrial dispute Act was enacted later in 1947 it
became industrial dispute, act where in machineries to solve industrial
dispute were indicated.
1) The Directive principles of state policy, as enshrined in our
constitution stipulate that the state should endevour to improve
the workers conditions, working conditions, and also
productivity of industries which will improve wealth of nations.
2) Several acts are enacted by parliament both before and after
independence which were focusing on workers interests, welfare
health etc. The Tric Act Factory, Act. Industrial Dispute Act;
Trade union Act gives major direction to achieve the
constitutional directives.
3) Besides this, wages Act 1948, Bonus Act 1965, Grativity Act 1972,
Equal remuneration Act 1975, are some of the acts in the above
direction.
4) In 1972 National commission on labour, recommended setting
up a permanent industrial Relations commission this was not
well received by government.
5) National conference in 1982 made several recommendations
Emphasis on formation of permanent industrial Relations
commission Stringent action on contravention of a mutually
agreed code of conduct A check off system was prescribed
where in by ballot election, how many are real members of a
union how many, dual, boghusetc could come to light. This did
not find well with unions but some unions have arranged for
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deduction of their subscription through employers pay counter
to some extent the check of system is working.
Causes of industrial unrest in India
Causes of industrial unrest in India can be classified mainly under
four heads they are
1) Financial Aspects
a. Demand for increase of wages, salaries and other perks. Workers
demand goes on increasing with the increase in cost of living.
b. Demand for more perks, and fringe benefits. Issue of bonus also
has become a contentious one, even though Bonus Act has come
fixing minimum rate payable as 81/3% of their total salary in
spite of profit or loss incurred by the industry.
c. Incentives festivals allowances, concessions etc requires a hike
every now and then, workers compare these benefits with other
industries and demand them, without comparing the capacity of
the industry where they are working.
2) Non-financial aspects
a. Working hours, rest hours, traveling hours are source of
disputes. If houses are provided some section of workers want to
include travel time also as working hours.
b. Introduction of machines, computers modernization, and
automation - In effect any act of management which may result
in economy in man power is resisted.
c. More facilities like free meals free group travel etc are sought
every now and then
3) Administrators Causes
a. Non implementation of agreements awards and other local
settlements with full sprit.
b. Stifling with recognition of labor unions.
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c. Attempt to weaken existing trade unions and trying to foist fake
unions.
d. Unhealthy working conditions.
e. Lack of skill on the part of leaders supervisors.
f. Disproportionate works loads, favoritism.
g. Victimization, nepotism attitude of management in recruitment,
promotion, transfers etc.
h. Instead of re deployment or skill improvement easier way of
retrenchment forced voluntary retirement schemes (C.R.S) are
adopted.
4) Government and political pressures
a. Industrial unions affiliating with political unions which are in
power, resulting in frequent shift of loyalty and resultant unrest.
b. Politician influencing workers group closes examples is the Nalco
taken over by Sterlite, the state government supported
(propped up) strike at Chhattisgarh state against Nalco, for
months together resulting in total stoppage of the industry for
some time.
c. Sometime unions, workers strike against mergers, acquisition,
taken over, disinvestments policies, of government and private
sectors.
5) Other causes of strained relations
a. Refusal to have workers participation in the running of the
industry.
b. Non adherence to laid out standing orders grievances
procedures.
c. Refusal to have free frank, and transparent collective bargaining.
d. Sympathetic strike a show of readership to workers of
neighboring industries, and conducting a token strike when they
are in full strike. This may cause internal bitterness.
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Consequences of strained Industrial relations
1. May result in go slow tactics, Strike, lock out etc.
2. Industrial production and productivity may be affected, growth
of industries will be stunted.
3. May result in recited atmosphere, law and order situation will
deteriorate.
4. Employer, Management, labour relations will be affected mutual
faith and team spirit will vanish.
5. Absence of mutual cooperation affects participation forums and
bargaining plot forms.
6. Government also will lose revenue, and may need to spend more
to keep law and order around the industry.
7. National income, per capital income will go order.
8. Will result in loss in earnings of workers with added suffering.
9. The industries also will suffer loss, and it is a loss to common
consumers also.
The manifestation of industrial strife, disputes come in the form
of strike lockout, layoff and retrenchment.
Strike:
Means a cessation of work by a body of persons employed in any
industry acting in combination or a concerted refusal or a refusal under a
common understanding of any number of persons who are or have been
so employed to continue to work or to accept employment. The
ingredients can be summed up as
1. A cessation of work.
2. This abstinence of work must be by a body of persons employed
in an industry.
3. The strikers must have been acting in combination.
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4. They must be persons working in an industry as per this 1.D Act
1947.
5. There must be concerted refusal or refusal in a common
understanding; they must stop work for some demands relating
to this employment or its terms, or conditions of labor.
The strike may be manifested in different forums like, hunger, sit
down, solve down, pend own, lighting etc.
Lock out:
It means the temporary closing of a place of employment or the
suspension of work, or the refusal by an employer to continue to employ
any number of person employed by him There is temporary closing of
employment. The elements of demand for which the industry is locked
out must be present. The intention to reopen or take the workers back if
they accept the demands, must exist lock out is not closure it is a tactics
in bargaining it is intended for the purpose of compelling the employee
to accept any terms or conditions affecting employment. It is a weapons
in the hands of employers, A lock out declared in consequence of an
illegal strike or a strict declared in consequence of a illegal lock out shall
not be deemed to be illegal.
Lay off:
Means, failure, refusal or inability of an employer on account of
shortage of fuel power or raw materials, or the accumulation of stock or
the breakdown of machinery to give employment to a workman whose
name is on the master rells of his industrial establishment and who has
not been retrenched. It is a short term removal of workers. The
essentials of a layoff are failure refusal in ability of the employers to give
work the employees must be permanent in nature at the time of lay off.
The failure to give work should be due to reason beyond his powers like
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a) A major break down of machinery.
b) Shortage of raw material, power, coal etc.
c) Marketing problem of stocks resulting in accumulation.
d) Any other act of god beyond employers control.
The workman must not have been retrenched
Retrenchment
Means termination of the services of a workman by employer for
any reason whatsoever otherwise them as a punishment inflicted by way
of disciplinary action, but does not include,
a) Voluntary retirement of the workmen, or
b) Retirement of the workman or reaching the age of
supermuation.
c) 10 Termination (natural) at the end of a contract.
d) Termination due to continuous ill health.
Essentials of retrenchment
1. Termination of services of a workman not amounting to
dismissal.
2. Termination on the ground of surplus labour or staff.
3. Service terminated must be a continuous one perpetual in
nature.
4. Termination not to victimize or due to unfair labour practice.
5. The above 4 weapons may create industrial relations strain,
cause dispute etc.
Attempts by government to safeguard IR
1. The strikes may be declared illegal if adequate notices are not given
if given it becomes legal and they may get compensation etc if any
action is taken by employer.
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2. During lay of which is beyond the control of employers, workers
should be paid the wages for sustenance at least up to 45 days.
3. Lockout can be as a consequence to illegal strike. If strike is
withdrawn work can resume, of course punitive action can be
completed.
4. Retrenchment is an extreme action, but when industry comes back
to normal running, the retrenched workers can reestablish their lien,
and they will be given preference for absorption.
Thus it can be seen every attempt is made by government and
various acts to retain relationship between worker and management
which only can give industrial peace for progress.
Specifically, IR covers the following areas:
1. Collective bargaining.
2. Role of management, unions, and government.
3. Machinery for resolution of industrial disputes.
4. Individual grievance and disciplinary policy.
5. Labour legislation.
6. Industrial relations training
1. Collective Bargaining
Collective Bargaining is a process in which representatives of two
groups (employers and employees) meet and try to negotiate an
agreement which specifies the nature of future relationship (pertaining
to employment) between the two. According to Beach, Collective
Bargaining is concerned with the relations between unions representing
employees and employers (or their representatives). It involves the
process of union organization of employees; negotiation, administration
and interpretation of collective agreements covering wages, hours of
work and other conditions of employment; engaging in concerted
economic action; and dispute settlement procedures.
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According to Dale Yoder, Collective Bargaining is the term used
to describe a situation in which the essential conditions of employment
are determined by bargaining process undertaken by representatives of
a group of workers on the one hand and of one or more employers on
the other.
In the words of Flippo, Collective Bargaining is a process in
which the representatives of a labour organization and the
representatives of business organization meet and attempt to negotiate
a contract or agreement, which specifies the nature of employee
employer-union relationship.
Features of Collective Bargaining
The essential features of collective bargaining are as follows:
a. It is joint or collective process. The representatives of both the
management and the employees participate in it.
b. It is a continuous process. It establishes regular and stable
relationship between the parties involved. It involves not only
the negotiation of the contract, but also the administration of
contract, but also the administration of contract. When we say
that collective bargain includes the administration or application
of the contract also, it means that bargaining is a day-to-day
process. In this context, Summer Slitcher has rightly observed, It
would be a mistake to assume that collective bargaining begins
and ends with the writing of the contract. Actually that is only
the beginning of collective bargaining.
c. It is a dynamic process. The parties have to adopt a flexible
attitude throughout the process of bargaining.
d. It is a form of industrial democracy.
e. It is an adjustment formula based on give and take approach of
both sides.
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f.
It is an attempt to achieve and maintain discipline in industry.
Subjective matter of collective bargaining

The subject matter of collective bargaining covers a variety of
issues affecting employment relationships between the workers and the
management. According to Ghosh and Nath the issues covered in the
collective bargaining are recognition of union or unions, wages and
allowances, hours of work, leave and festival holidays, bonus and profit
sharing schemes, seniority, rationalization and the issues relating to the
fixation of workloads, and standard labour force, programmes of
planning and development influencing workforce, issues relating to
retrenchment and lay off, victimization for trade union activities,
provident fund, gratuity and other retirement benefit schemes, incentive
systems, housing and transport facilities, issues relating to discipline and
shop rules, grievance procedure, working conditions and issues related
to safety and accident prevention, occupational diseases and protective
clothing, employee benefits such as canteens, rest rooms, medical and
health services and creches, administration of welfare funds, cooperative
thrift and credit societies and educational, recreational and training
schemes.
The Indian Institute of Personnel Management, Calcutta, gives
the following as the subject matter of collective bargaining:
i.
Purpose of the agreement, its scope and the definition of
important terms;
ii.
Rights and responsibilities of the management and of the trade
union;
iii.
Wages, bonus, production norms, leave, retirement benefits and
terms and conditions of service;
iv.
Grievance redressal procedure;
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v.
vi.
Methods and machinery for the settlement of possible future

disputes; and
Termination clause.
Importance of Collective Bargaining

Collective Bargaining not only includes negotiation,
administration and enforcement of the written contracts between the
employees and the employers, but also includes the process of resolving
labour-management conflicts. Thus, collective bargaining is a legally and
socially sanctioned way of regulating in the public interest the forces of
power and influence inherent in organized labour and management
groups.
Importance of Employees
Collective Bargaining helps the employees:
i.
To develop a sense of self-respect and responsibility among the
employees.
ii.
To increase the strength of the workers. Their bargaining
capacity as a group increases.
iii.
To increase the morale and productivity of employees.
iv.
To restrict managements freedom for arbitrary action against
the employees, unilateral actions by the management are
discouraged.
v.
To strengthen the trade union movement.
Importance to Employers
i.
The workers feel motivated as they can talk to the employers on
various matters and bargain for higher benefits. As a result, their
productivity increases.
ii.
It is easier for the management to resolve issues at the
bargaining table rather than taking up complaints of employees
individually.
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iii.
Collective bargaining promotes a sense of job security among the

employees and thereby tends to reduce cost of labour turnover
to management, employees as well as the society at large.
iv.
Collective bargaining opens up the channels of communications
between the top and bottom levels of organization which may
be difficult otherwise.
Importance to society
Collective Bargaining helps the society:
i.
To attain industrial peace in the country.
ii.
To establish a harmonious industrial climate which supports the
pace of a nations efforts towards economic and social
development since the obstacles to such development can be
largely eliminated or reduced. As a vehicle of industrial peace or
harmony, collective bargaining has no equal.
iii.
To extend the democratic principle from the political to the
industrial field. It builds up a system of industrial jurisprudence
by introducing civil rights in industry and ensures that
management is conducted by rules rather than by arbitrary
decisions.
iv.
To check the exploitation of workers by the management.
v.
To distribute equitably the benefits derived from industry among
all the participants including the employees, the unions, the
management, the customers, the suppliers and the public.
Industrial disputes
Our modern industrial system is threatened by the ravaging
industrial disharmony characterized by the embittered relationships
between the employers and the workers. Smooth industrial relations
requires that all the participants are to be motivated to work whole
heartedly for making the system to work. According to the new
138

economic policy during 1991 a series of industrial fiscal and trade
reforms were announced by the government to create industrial peace
and prosperity. Generally, the reasons for industrial disputes in India
were psychological, political and economic. To achieve industrial peace,
changes in the attitude of workers, employers and trade unions are
required along with political and economic changes. It is to be seen that
whether such changes have taken place in India after the instruction of
new economic policy.
Managing Industrial Relations changes, Industrial Relations and
Productivity
With increasing education level of workers, growing industries,
foreign companies coming in, etc requires our scrutiny of relations with
industrial workers. There should be a shift in the maintenance of
industrial relations in the light of above changes.
Managing Industrial Relations changes:
There are phenomenal changes in industrial relations field in
India why globally also the same thing. To improve the working
conditions in industries and also to safeguard the interest of the workers
and to put a check on amassment of wealth by industrialists, in early
fifties Nationalization of industries galore started. This has resulted in
public sector undertakings, with improved industrial relations. Now after
half a century the myth of socialistic pattern public sector mode is having
a shift to privatization which has become a global necessity also. Need
for cordial relation became necessary
i.
To have workers whole hearted co-operation in our
modernization endeavors.
ii.
More transparency is required everywhere and this helps in
better collective bargaining.
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iii.
iv.
This will not only facilitate enhancement in production but also

improve productivity.
The net outcome of increasing efficiency and profit will go to
industrialists as well as to workers.
P.M and H.R.M Industrial Relations

Companies have started to improve their personal management,
instead of personal management, concept of human relations
management. Has taken over this aspect. This has created new ways to
improve relation.
a. This enables to consider work force as a part of management
and proper motivation and career planning etc are attended to
properly.
b. By developing team spirit give and take policy is pumped in, the
memorandum of understanding M.B.O approach which fixes the
thing at proper perspective is gaining momentum by improving
relations.
c. The above approach and flattened hierarchial set up, improves
the communication and no room is given for suspicion
misunderstanding.
d. Since there is spelt out career growth this helps to improve
efficiency of workers for mutual benefit.
e. H.R.M is giving more scope for proper union activities resulting
in better negotiations and meaningful settlements.
f. The participative forums envisaged right from 1947 through
Factories Act etc is gaining momentum improving Industrial
Relations.
H.R.M replacing personal management has made lot of changes
in personal relationships and personal handling the Industrial Relations
changes are visible as follows.
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1. The rules regulations etc are now days so tailored to suit the workers
they are seen with a humanitarian approach. The old pattern, I dont
know what you will do is changed, a co-operative attitude is taken
now, and this has resulted in a jump in Industrial Relations.
2. The laid out procedures are contracted as per need of the hour The
focus is to get the things done not to stick to reties and get stuck up.
3. The superintendence pattern is shifted and a guidance pattern is
adopted by managers hence workers feel homely and as a team.
4. The managers facilitate the works under the transformed leadership
not the old transfixed position.
5. Team work is facilitated Go and do it is changed into let us go and
do it.
6. Industrial workers are industrial assets has become the motto of
Tata iron and steel companys motto is Tata family a feeling of
oneness this has resulted in owning of the industry. This motto has
paved way for its phenomenal growth and diversification more or
less it is coming towards Japanese style.
7. Higher thrust is given for the development of workers, skill
improvement; management development career growth planning
etc has improved the industrial relations.
Industrial Relations Changes has brought lot of changes in
a) Management, entrepreneurs, employees because of necessity
and compelling circumstances.
b) In the trade unions.
c) In the workers themselves.
d) Attitude of the government, politicians.
e) Judiciary also
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This can be discussed as follows
1. Management has changed Human Relations Management
policies.
2. Employers have formed their effective associations to tackle not
only their workers but also to compete.
3. Linkage with international business organizations, participation
in world trade suggesting requisite changes in commercial laws
etc. has become the order of the day.
4. Linkage with international labourorganisation they can, up to
date, the informations to see their suggestions and improve
workers conditions.
5. ASSO CHAM chamber of commerce etchave emerged as
confederation of Indian Industries.
INDUSTRIAL DISPUTES SETTLEMENT MACHINERIES
1. Mediation
Mediations is a process available to the parties involved in
contract negotiations by which an outside party is called in by union and
management to help them reach a settlement. The neutral mediator
does not ultimately resolve the dispute, but instead tries to move the
parties towards agreement by maintaining communication and
suggesting alternative solutions to dead-locked issues. The mediators
function is to provide a positive environment for dispute resolution by
drawing on extensive professional experience in the field of labour
management interaction. The mediator must possess thorough
knowledge of the issues, and an ability to innovate solutions to
problems. The mediator must be an effective communicator, know the
importance of timing and most of all, have the confidence and trust of
the parties. A mediator must possess attributes such as integrity,
impartiality and fairness.
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2. Conciliation
Conciliation is a process by which representatives of workers and
employers are brought together before a third person or a group of
persons with a view to persuade them to come to a mutually satisfying
agreement. The objective of this method is to settle disputes quickly and
prevent prolonged work stoppages if they have already occurred. The
essential hallmarks of this approach are10:
i.
The conciliator tries to bridge the gulf between the parties, if
possible.
ii.
If he does not fully succeed, he tries to reduce the differences to
the extent possible. He acts as a conduit through which message
are passed from one side to the other, coupled with his own
interpretations facilitating the understanding of disputing
parties. To the extent possible, he tries to clear the fog
surrounding the issue.
iii.
He persuades parties to take a fresh look at the whole issues,
through a process of give and take and explore the possibility of
reaching a consensus.
iv.
He only advances possible lines of solutions for consideration by
the disputants. He never tries to force the parties to accept his
viewpoint. He never offers judgement on the issues. If parties
feel that the suggestions offered by the conciliator are
acceptable, they may strike a deal.
v.
The conciliator need not follow the same path in each case. The
process of conciliation, therefore, has a certain amount of
flexibility and informality built around it. The conciliation
machinery in India consists of the following:
A) Conciliation Officer
According to the Industrial Disputes Act, 1947, the Central and
State governments can appoint a conciliation officer to mediate in all
143

disputes brought to his notice. The officer enjoys the powers of a civil
court. He can call and witness disputing parties on oath and interpret the
facts of the case. He is expected to give judgment within 14 days of the
commencement of the conciliation proceedings. His judgments is binding
on all the parties to the dispute. The conciliation officer has a lot of
discretion over the ways and means to be followed to bring about a
settlement between the disputants. He may do all such things as he
thinks fit for the purpose of inducing the parties to come to a fair and
amicable settlement of disputes.
B) Board of Conciliation
When the conciliation officer fails to resolve the disputes
between the parties, the governments can appoint a Board of
Conciliation. The Board of Conciliation is not a permanent institution like
the Conciliation officer. It is an adhoc, tripartite body having the powers
of a civil court, created for a specific dispute. It consists of a Chairman
and two or four other members nominated in equal number by the
parties to the dispute. The chairman who is appointed by the
government should not be connected with the dispute or with any
industry directly affected by such dispute. The board, it should be
remembered, cannot admit a dispute voluntarily. It can act only when
the dispute is referred to it by the Government. The board conducts
Conciliation proceedings in the same way as conducted by a Conciliation
officer. The board, however, is expected to submit its report within two
months of the date on which the dispute was referred to it. The Boards
of Conciliation are rarely constituted by the government these days. In
actual practice, settling disputes through a conciliation officer was found
to be more flexible when compared to the Board of Conciliation.
3. Voluntary Arbitration
When conciliation proceedings fail to settle the dispute, the
conciliation officer may persuade the conflicting parties to voluntary
144

refer the dispute to a third party known as Arbitrator, appointed by the
parties themselves. The arbitrator listens to the viewpoints of both
parties and delivers an award or judgments on the dispute. He, however,
does not enjoy judicial powers. The arbitrator submits his judgement on
the dispute to the government. Thereafter the government publishes the
award within 30 days of its submission. The award becomes enforceable
after 30 days of its publication. The arbitration award is binding on all the
parties to the agreement and all other parties summoned to appear in
the proceedings as parties to dispute. Before delivering the judgement,
the arbitrator is expected to follow due procedure of giving notice to
parties, giving a fair hearing, relying upon all available evidence and
records and following the principles of natural justice.
Arbitration is effective as a means of resolving disputes because it is:
1. Established by the parties themselves and the decisions is acceptable
to them, and
2. Relatively expeditious when compared to courts or tribunals. Delays
are cut down and settlements are speeded up. Arbitration has
achieved a certain degree of success in resolving disputes between
the labor and the management. However, it is not without its
weakness. Some weaknesses are:
i.
Arbitration is expensive. The expenditure needs to be shared by
the labour and the management.
ii.
Judgment becomes arbitrary if there is a mistake in selecting the
arbitrator.
iii.
Too much arbitration is not a sign of healthy IR.
3. Adjudication
Adjudication or compulsory arbitration is the ultimate remedy
for the settlement of disputes in India. Adjudication consists of settling
disputes through the intervention of a third party appointed by the
government. An industrial dispute can be referred to adjudication by the
145

mutual consent of the disputing parties. The government can also refer a
dispute to adjudication without the consent of the parties. The Industrial
Disputes Act, 1947, provides three-tier adjudication machinery -namely
Labor Courts, Industrial Tribunals and National Tribunals - for the
settlement of industrial disputes. Under the provisions of the Act, Labour
Courts and Industrial Tribunals can be constituted by both Central and
State governments but the National Tribunals can be constituted by the
Central government only.
4. Employers Associations
Employers Associations came into existence as a result of the
formation of ILO and the growing presence of Trade Unions, especially
after the First World War. The Royal Commission on Labour, 1929,
recommended that the Indian employers need an organization to deal
with labor problems from the employers point of view. As rightly
pointed out by Mr. Naval Tata, employers organizations are required to:
i.
Develop healthy and stable industrial relations;
ii.
Promote collective bargaining at different levels;
iii.
Bring a unified employers viewpoint on the issues of industrial
relations to the government in a concerted manner; and
iv.
Represent in the meetings of ILC and SLC boards in conformity
with tripartite approach to labour matters.
146

References
1. Industrial Relation - C.S. VenkataRatnam
2. HRM And Industrial Relation - P. SubbaRao
3. Personnel Management And Industrial Relation- Nair And Nair
4. Dyanamic Of Industrial Relation - Mamoria , Gankar
5. Industrial Relation , Trade Unions And Labour Legislation - Sinha
And Shekhar
6. Industrial Relation- Balasubramanian
7. Collective Bargaining And Labour Relation - Terry .L. Leap
8. Collective Bargaining And Industrial Relation - T.A. Kochan, Kartz,
Henery
9. Industrial Safety Management- L.M.Deshmukh
10. Industrial Engineering And Management - O.P. Khanna
11. Industrial Engineering And Production Management- M.S . Mahajan
12. Industrial Relation - www.Wikipedia.Org
13. Industrial Relation - Www.Nou.Edu
14. Industrial Relation And Contract Labour In India FederationWww.Ficci.Com
15. The
Study
of
Industrial
Relation
InChanging
Highered.Mhednation.Com
16. Notes On Industrial Relation Www. Rahulgladwin.Com
17. The Study Materials Of Industrial Relation - Einsten College , Odisha
18. The Study Materials Of Industrial Relation - Guru Jambheswar
University, Hisar
147
Human Resource Management Indian Organizations
Chapter-10
Human Resource Development in Indian Organizations
Dr. Pushkar Dubey and Dr. N. Surenthiran
Introduction
In 1969 Len Nadler firstly introduced the concept of Human
Resource Development at American Society for Training and
Development in United States of America. The Concept was popularised
in India in late 70s. In 1975 Larsen and Turbo introduced the concept of
Human resource Development. Soon it was followed by State bank of
India. In present time Human Resource Development is gaining
acquaintance in most of the Indian Organization.
Human Resource Development was generalized in India by
eminent Professor T.V. Rao and Management Consultant UdaiPareek.
Concept of HRD
Human resource development may be defined as a continuous
process to ensure the development of employee competencies,
dynamism, motivation and effectiveness in systematic and planned way.
It prepares an individual for future organizational role by bringing in
behavioral changes in employee.
According to Professor T.V. Rao, (1985) Human Resource
Development in the organizational context is a process by which the
employees of an organization are helped in a continuous, planned way
to:
148

(a) Acquire or sharpen capabilities required to perform various
functions associated with their present or expected future roles;
(b) Develop their general capabilities as individuals and discover and
exploit their own inner potentials for their own and/or
organizational development processes; and
(c) Develop an organizational culture in which supervisorsubordinate relationships, team work and collaboration among
sub units are strong and contribute to the professional wellbeing, motivation and pride of employees.
According IswarDayal (1990), HRD involves:
(a) Ways to better adjust the individual to his job and environment,
(b) The greatest involvement of an employee in various aspects of
his work; and
(c) The greatest concern for enhancing the capabilities of the
individual.
Table below shows various definitions of HRD identified by
McGuire (2010) in the previous literature:
Definitions of HRD by various Authors
Author
Harbison and
Myers (1964)
Nadler (1970)
Jones (1981)
Chalofsky and
Lincoln (1983)
Definition
Human Resource Development is the process of
increasing the knowledge, the skills, and the capacities
of all the people in the society
HRD is a series of organized activities conducted within
a specified time and designed to produce behavioral
change
HRD is a systematic expansion of people's work-related
abilities, focused on the attainment of both
organization personal goals
Discipline of HRD is the study of how individuals and
groups in organizations change through learning.
149
Swanson(1987)
Smith. R.
(1988)
Watkins(1989)
McLagan
(1989)
Gilley and
England (1989)
Nadler and
Nadler (1989)
Smith (1990)
Chalofsky
(1992)
HRD is a process of improving an organizations

performance through the capabilities of its systems
personnel. HRD includes activities dealing with work
design, aptitude, expertise and motivation
HRD consists of programs and activities, direct and
indirect, instructional and/or individual that positively
affect the development of the individual and the
productivity and profit of the organization
HRD is the field of study and practice responsible for
the fostering of a long-term, work-related learning
capacity at the individual, group, and organizational
level of organizations. As such, it includes-but is not
limited to-training, career development, and
organizational development
HRD is the integrated use of training and development,
career development and organizational development
to improve individual and organizational effectiveness
HRD is organized learning activities arranged within an
organization to improve performance and/or personal
performance growth for the purpose of improving the
job, the individual, and/or the organization
HRD is organized learning experiences provided by
employees within a specified period of time to bring
about the possibility of performance improvement
and/or personal growth
HRD is the process of determining the optimum
methods of developing and improving the human
resources of an organization and the systematic
improvement of the performance and productivity of
employees through training, education and
development and leadership for the mutual attainment
of organizational and personal goals
HRD is the study and practice of increasing the
learning capacity of individuals, groups, collectives and
150

organizations through the development and
application of learning-based interventions for the
purpose of optimizing human and organizational
growth and effectiveness
HRD as a combination of training, career development,
and organizational development offers the theoretical
Marsick and
integration needed to envision a learning organization,
Watkins (1994)
but it must also be positioned to act strategically
throughout the organization
HRD is a process of developing and unleashing human
Swanson
expertise through organization development and
(1995)
personnel training and development for the purpose of
improving performance
HRD is any process or activity that, either initially or
over the long term, has the potential to develop adults'
McLean and
work-based knowledge, expertise, productivity and
McLean (2001) satisfaction, whether for personal or group/team gain,
or for the benefit of an organization, community,
nation, or, ultimately, the whole of humanity
HRD is a process of developing and unleashing
Swanson
expertise for the purpose of improving organizational
(2009)
system, work process, team and individual
performance
Source- McGuire D(2010),Foundations of HRD, in McGuire D and
Jorgensen K M(2010), Human Resource Development: Theory and
Practice, Sage Publication, 1-5.
Evolution of HRD in India
HRD evolution in India is of recent origin. Table below shows
HRD practices, year of Introduction, goals and strategy in Indian
organisation. (Tripathi , 2010)
151

HRD initiatives by the Indian Companies
SI
No.
Organization
Year
Major HRD Goals
Larsen &
Toubro
1975
To introduce
developmentoriented
performance
appraisal system
State Bank of
India
1979
To meet new
challenges
Crompton
Greaves Ltd.
197980
To meet ambitiou
s expansion and
diversification
programme
BHEL, Bhopal
1981
To improve
production
Voltas Ltd.
198283
To develop
human resource
for improving
performance
152
HRD Strategy(Choice of
Instruments)
Integrated HRD system,
combined performance
appraisal, potential
appraisal, feedback and
counseling, career planning
training and OD
Data-based manpower
planning system,
performance appraisal
focusing on individual
growth, well defined career
path plan, vibrant training
system, OD aimed at
promoting organizations
capabilities to anticipate
and manage change.
Role analysis, Teamoriented performance
appraisal, performance
counseling, potential
development by using inbasket exercises
OD initiatives such as
management-employee
communication meetings,
team building, survey
feedback, performance
appraisal
Communication policy
aimed at wider
participation, openness and
regular flow of information,
redesigning of managerial
appraisal system
Indian Oil
Corporation
Steel
Authority of
India
Sundaram
Fasteners Ltd.
1983
Self-renewal
Identification of key
performance areas by role
analysis, surveys to measure
organizational climate
1985
Improvement in
work culture,
optimization of
capacity
utilization,
Increase in
productivity, cost
control, customer
services
New performance appraisal

system, counseling
198485
To meet growth
and
diversification
needs of trained
man-power
Change in organization
structure, Manpower
planning, Developmentoriented performance
appraisal system, training,
career planning, rewards
Source-Tripathi P C (2010), Human Resource Development, Sultan Chand

& Sons, New Delhi, 6th ed, 40-41.
Micro and Macro View of HRD
On the basis of application HRD can be viewed both at micro and
macro level.
(a) Micro level: It is concerned with the development of people at
institutional or organizational level. Organization forms the base for
the development of employees. It is root with which individual
employee learn the work. Development of employees leads to
increased organizational productivity. Micro level development
includes Human Resource dimensions like Manpower planning,
Selection, training, Performance appraisal, Potential appraisal,
Compensation etc.
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(b) Macro level: It is concerned with the development of people for the
prosperity of a nation. Macro level HRD is the aggregate or broad
level in comparison to micro level HRD. Macro level HRD includes
dimensions like health, capabilities, knowledge, skills, attitude of the
people, which are more constructive for the progress of entire
nation. For the purpose of economic planning of a nation these
dimensions at individual level provides a concrete foundation. HRD
role at this level has not been popularized yet.
Objectives of HRD
Following are the main objectives of HRD:
1. To develop employees competencies in an organization.
2. To generate the most of human resources for the accomplishment of
individual and organizational objective.
3. To provide a prospect and complete structure for the development
of human resources in an organization for full expression of their
hidden and visible potentials.
4. To identify, establish and develop employees competence in
relation to their present role in the organization.
5. To recognize and develop employees capability in the organization
with respect to likely potential or future roles in the organization.
6. To build up the positive mind and an overall personality of the
employees.
7. To develop the sense of team spirit, team work and inter-team
collaboration.
8. To develop the organizational health, culture and effectiveness.
9. To cultivate civilized work in the organization.
10. To develop lively relationship between employee and employer in
the organization.
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11. To strive for the development of organizational health, culture and
climate.
12. To generate orderly information about human resources.
Nature of HRD
1. HRD is a system: A system consists of many interrelated
subsystems which are interdependent on one another. HRD is
said to be the core of Human resource system. All other
subsystems like marketing, production, finance, information
technology are directly or indirectly integrated with Human
Resource Development system.
2. HRD is a continuous and planned process: HRD is a proactive
process which aims at continuous improvement of the
employees. It believes in the learning process of the employees
which is lifelong and never ending. HRD believe in systematic
and intended development of the employees.
3. HRD is an inter-disciplinary concept: It is a blend of ideas,
concepts, theories, principles and practices of different
knowledge hub. It is drawn from the branches of psychology,
sociology, anthropology, economics etc.
4. HRD is helpful in development of competencies: It is helpful for
the development of competencies at four levels. viz. Individual,
Interpersonal, group and organizational level. Competency
development at all level of organization contributes towards the
achievement of organizational goal.
5. HRD enhances quality of life: HRD brings improvement in
human life. It aims at improving the quality of work life so that
employees derive greater satisfaction which motivates them to
achieve higher productivity.
155

Need and Significance of HRD
In the absence of employee development, organization find
difficult to survive in competitive business environment. HRD is believed
to be a core of all other subsystems in the organization. It can be well
interrelated to production, finance, marketing and all other subsystems
of the organization. With the growing concept of globalization and
liberalization in Indian economy, the need for development of people in
organization has found unique attention. Both public and private sector
enterprises are laying a concrete foundation to develop and retain
quality manpower for gaining long term competitive advantage. There
exist huge pressure on Indian industries to produce quality goods and
services at competitive costs. For this reason Industries need to have
upgraded methods of working, work norms, technical and managerial
efficiency, motivated employees, skilled manpower to combat upcoming
new challenges. Therefore there is a huge need for HRD in Indian
organization. Following under given points highlights the need of HRD:
1. HRD is requisite for restructuring and redefining organization:
Departmentation is a part of the organizational process by which
similar activities of business are grouped into units for the purpose
of facilitating smooth administration at all levels (Ramasamy, 2011).
There is a need for reformulation of organizational hierarchy from
tall and narrow structure to short and wide structure. This will bring
in more decentralization, effective communication, role clarity and
higher responsibility among employees to achieve organizational
goal.
2. HRD is vital for gaining competitive advantage and core
competence: Competitive advantage or strategic advantage is
essentially a position of superiority on the part of an organization in
relation to its competitors (Prasad, 2005).
Whereas core
competence is an enduring strength of an organization which acts as
156
3.
4.
5.
6.
a source of competitive advantage, having potential breadth of

application difficult for the competitor to imitate (Prahalad and
Hamel, 1990). HRD is essential for employee motivation and with
highly motivated workforce organizations gain competitive
advantage and core competence to face internal and external
competition.
HRD can focus on better quality products: Customer purchases are
based on priority to quality products and services. Skilled and trained
staffs can manufacture defect free products and services with high
efficiency thereby satisfying the ultimate needs and wants of
customers.
HRD is necessary to cope with technological changes: Rapid
technological advancement in Indian power sector have urged for
the supply of trained and skilled manpower who can effectively
handle the changing technology. The growth of e-commerce and MIS
(management information system) has lessened the paper work and
has made the information flow more accurate, fast and effective.
Consequently there exist necessity of training and development
process for the employees.
HRD is significant for workforce empowerment: Corporate believe
in employees with greater authority, higher job titles, higher
responsibility and accountability. To make a sound democratic
organization workers capability to participate in key organisational
issues finds meaningful place.
HRD is meaningful for greater employee retention and
commitment: Frequent employee turnover can lead to degradation
of organizational health. Retention of talented people can help the
organization to face future challenges. HRD intervention helps the
organization to acquire behavioral changes and establish new work
ethics which helps in retention of committed employees.
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7. HRD helps in development of team spirit and inter-team
collaboration: Organizational work depends on mutual cooperation
and team effort. Every subsystem of organization is dependent or
linked to one another in direct or indirect way. HRD helps in
minimizing inter and intra-departmental conflicts and brings in team
spirit and inter team collaboration.
8. HRD helps in acquiring new organizational culture: In order to face
global competition organization needs to inculcate values, norms
and dynamism in the form of culture in employees. Organizational
culture refers to a system of shared meaning held by the members
that distinguishes the organization from other organization (Becker,
1982). Consistency in behavior can deal with organizations changing
environment (Robbins et al., 2009 p-607). With the help of
OCTAPACE culture (openness, collaboration, trust, authenticity,
proaction, autonomy, confrontation and experimentation)
organization create trans-cultural employees who can operate
effectively in several culture.
9. HRD is important to deal with organizations external environment:
HRD prepares an organization to skillfully deal with external
environment of the organization like government, trade unions,
customers, trade bodies etc.
10. HRD facilitates integrated growth of employees: Human resource
can well utilize all other resources of organization. Therefore HRD is
significant. HRD facilitates employees to know their strengths and
weakness and enables them to improve their performance and to
that of the organization.
Vision of HRD
Vision represents the image or dream. Every organization has
vision for Human resource development. Vision of HRD represents
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building 3 Cs in individual and organization i.e. competence,
commitment and culture. Every individual has hidden potential which
remains unutilized or unrealized. The grand vision of HRD enables every
individual to identify, develop and make the most of hidden potential.
Development of individual competency, building commitment and
cultivation of adequate culture brings in satisfaction and makes
individual life happier and healthier. It brings peace of mind and
prosperity and reduces conflict, greed and negative energy in human
beings. Professor T.V. Rao (2007, p-97) enumerated the following
organizational vision for Human Resource Development:
1. Every organization is a family.
2. Everyone is his or her own HRD manager.
3. The CEO is the chief facilitator of HRD.
4. People enjoy working in the organization and derive a lot of
satisfaction, finding it meaningful and fulfilling to their lives.
5. People value work and the people they work with.
6. Every experience is learning experience and every moment is
filled with learning and development.
7. Mistakes are used as learning experiences.
8. Everyone is a source of learning for self and others.
9. People articulate their vision and share it.
10. People are respected for what they say and do.
11. The organization and everyone strives continuously for their own
development and of others competencies.
12. People strive to do better each day, using their own and previous
performance as benchmarks.
13. Everyone strives to understand internal customers and their
requirements and treat them with respect. They try their best to
meet or exceed the same.
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14. Everyone tries to create and contribute to organisational
ambience and culture that facilitates the development and
optimization of potential.
15. The organization and its member keep trying out new ways of
learning and doing things.
16. People are committed and work hard to ensure that the
organization achieves what it has set out to achieve.
17. People share a common set of values and strive to achieve the
organizational mission and vision.
18. The organization adds value to peoples lives and helps them to
meet their career aspirations.
19. The organization is instrumental in taking care of peoples
psychological needs and reduces tensions and other overheads.
20. Every employee is treated with dignity without reference to his
designation, department and other forms of identity.
21. Every role is respected and scope is provided for innovations.
HRD Culture
Culture represents a set of belief, norms etc that widely persists
in working environment. Culture is the life blood of any organization. As
blood circulates through various organs in human body to provide life,
strong culture circulates in organization for performance outcomes and
development. Therefore practice of strong culture plays a decisive role in
making environment favorable for growth. Organizational climate is the
strong determinant of organizational performance. It is evident that
multinationals survive in challenging environment by the virtue of their
strong culture. HRD Culture has the following characteristics (Rao, 1999):
1. HRD culture is a learning culture. It induces individual and
organizational learning.
160

2. HRD culture helps in identifying new capabilities in individual,
dyads and team.
3. It identifies new talents and unfolds hidden potentials of
individuals in organization.
4. HRD helps in development of new capability in employees.
5. HRD culture promotes motivational values. Motivation inculcates
commitment in people for doing work.
6. HRD culture helps individuals to take early work initiative and
provides to experiment with new ideas.
7. Strong work culture makes employees enjoy their work, build
employee relationship and bring more satisfaction.
8. It enhances creativity, decision making and problem solving
capabilities of individuals in organization.
9. Strong culture builds team spirit and morale in organization.
10. It makes the work more lively, action oriented, systematic and
constructive.
HRD culture can be broadly classified into three broad categories:
a) General climate
b) OCTAPACE culture
c) HRD mechanism and Implementation
The items included in general climate dimension spotlight the
importance given to Human Resources Development by the top
management and higher level managers. Items in OCTAPACE dimension
deals with the degree to which Openness, Confrontation, Trust,
Autonomy, Pro-activity, Authenticity, Collaboration and Experimentation
are treasured and encouraged in the organization. Items included in
Human Resource Development mechanisms dimension evaluate the
level to which Human Resource Development mechanisms are
implemented seriously.
161

Organizational Climate is a conventional or conservative term
often used in literature as an alternative for HRD Climate. The use of
term climate with reference to Human resource development was
firstly introduced by T. V. Rao (1996).
1.4.10 HRD Matrix
Figure 10.1 outlines the interrelationship between HRD
instruments, processes, outcomes and organisational effectiveness in the
form of HRD matrix (Rao, 1990). HRD subsystem or mechanism includes
instruments like performance appraisal, potential appraisal, feedback
counseling, training, role analysis, career planning, job rotation, quality
circle, reward system, organizational development, quality of working
life, human resource planning, recruitment, selection and placement etc.
Top management including managers should provide due priority to all
these dimensions to keep the workforce motivated all the time. This
instrument show the way to the generation of role clarity, development
planning, development climate, dynamism and risk taking attitude etc. in
employees. HRD process results in more proficient and contented
employees who contribute to desired organizational outcome. The HRD
outcome leads to organizational effectiveness in the form of higher
productivity, growth, reduction in costs, higher profit and better image.
Organizational effectiveness also depends on a number of other
variables like environment, technology, competition level etc. Thus,
organizations having better HRD climate and processes are likely to be
more effective than other similar organizations which do not have them.
162
Fig. 10.1 Linkage between HRD instruments, processes and organisational effectiveness (source: T.V. Rao 1990,
The HRD Missionary, Oxford & IBH, New Delhi
163

HRD Subsystems (Mechanism or instruments)
HRD as a part of total system can be grouped into various
subgroups or subsystems. Different authors have different viewpoints in
designing mechanisms or subsystem. HRD subsystem can be grouped
into following key categories:
1. Performance appraisal: It is defined as objective assessment of an
individuals performance against well-defined benchmarks
(Aswathappa, 2009). Benchmarks includes factors like job
knowledge, quality and quantity of output, imitative, leadership
abilities, supervision, dependability, cooperation, judgment, health
etc. It is the process of evaluation of performance and qualifications
of the employees in terms of the requirements of job for which
individual is employed, for purposes of administration including
placement, selection for promotions, providing financial rewards and
other actions which require differential treatment among the
members of a group as distinguished from actions affecting all
members equally. It is a step where the management finds out the
effectiveness of hiring and placing employees (Mamoria, 1998).
2. Potential appraisal: Employees performance on job depends on
their skillful abilities to complete a given set of work. Past
performance is an indicator of employee promotion, but it is not
significant in handling higher responsibilities. Every individual has
innate potential which needs to be identified. Potential appraisal
identifies the potential of an employee to occupy higher position in
organizational hierarchy and undertake higher responsibility in jobs
(Chhabra, 2010).
3. Feedback counseling: Feedback data is used for developing
employees performance, identification of training needs, career
counseling, reward systems etc. counseling serves the purpose of
strengthening employee relationship, open communication,
164
4.
5.
6.
7.
8.
strengths and weakness identification and preparing future action

plans for overall development process.
Training: Trained manpower is the valuable asset to any
organisation. They are more efficient than the normal workers and
can handle work challenges at any point of time. Training is an act of
increasing the knowledge and skills of an employee for doing a
particular job (Fippo, 1989). It brings improvement in performance
through learning techniques required to perform specific tasks
(Chhabra, 1978).
Role analysis: It defines the work content of a role in relation role
occupant. Role analysis is a participatory process where individual
must know his role in channelizing the work to be performed in the
organization.
Career planning: Career planning is the process through which
individuals identify and implement steps to attain their career goals
(Milkovich and Boudreau, 1988). According to Edlar Schein It is a
continuous process of discovery in which an individual slow develops
his own occupational concepts as a result of his skills or abilities,
needs motivations and aspirations of his own value system
(Manolescu , 2003). It links individual needs and aspiration with
organisational needs and opportunities (Popescu, 2003).
Job rotation: It is the process of rotating workers among different
narrowly defined tasks without disrupting the flow of work (Mejia et
al., 2001). It enables employees with in a particular work area have
the ability to perform a variety of tasks and will move from one to
another at various times within the working day or working week.
Employees need to flexible enough to undertake task of various skill
levels (Herry and Noon, 2003).
Quality circle: It is a voluntary group of people who meet together
on regular basis to identify, analyze and solve, productivity, cost
165
9.
10.
11.
12.
reduction, safety and other problems in their work area, leading to

improvement in their performance and enrichment of their work life
(Quality Circle forum of India, 1990).
Reward system: Reward is otherwise known as incentive. A reward
refers to all the plans that provide extra pay for extra performance in
addition to regular pay for a job (Rao, 2003). Effective reward
systems in organization provide employees with opportunities to
achieve higher targets and keep them motivated all the time.
Organizational development(OD): It is a planned effort , initiated by
process specialists to help an organization develop its diagnostic
skills, coping capabilities, linkage strategies in the form of temporary
and semi-permanent system and a culture of mutuality (Pareek and
Rao , 2010, p-363).
Quality of working life (QWL): Organization requires designing the
work according to the needs and suitability of the workers at large.
Quality of work life is ensured when members of an organization are
able to satisfy their important personal needs through experience in
the organization (Aswathappa, 2009, p-399). It includes dimensions
like open communication, equitable reward system, job security, skill
development, reduction of job stress, participation in job-design and
cooperative labour management relations (David and Newstrom,
1988). A healthy work life for the workers can be ensured by fair
compensation, safe and healthy working conditions, immediate
opportunity to use and develop human capacities, future
opportunity for continued growth and security, constitutionalism in
the work organization and the social relevance of the work life
(Nadler et al., 1982).
Human resource planning: It is understood as the process of
forecasting an organizations future demand of supply of human
resource (Aswathappa, 2009, p-74). HRP ensures that it has the right
166

number and right kind of people, at the right place, at the right time,
capable of effectively and efficiently completing those tasks that will
help the organization achieve its overall objective. It provides
essential information for designing and implementing personnel
functions such as recruitment, selection, personnel moments
(transfer, promotions and layoffs) and training and development
(Terry and Michael, 1990). Planning for human resources fulfills the
organizational demand for manpower to meet the supply criteria.
13. Recruitment, selection and placement: Recruitment refers to the
process of receipt of applications from job seekers. The term is used
to describe the entire process of employee hiring. It provides a pool
of potentially qualified job candidates to meet the present and
future requirement of the firm (Aswathappa, 2009, p-144). Selection
is the process of differentiating between applicants in order to
identify and hire those with a greater likely hood of success in a job.
Placement includes initial assignment of new employees and
promotion, transfer or demotion of present employees (Mahesh,
1993).
HRD Climate Variables or HRD Process
HRD Climate variables include elements of OCTAPACE Culture.
OCTAPACE Culture stands for openness, confrontation, trust, autonomy,
pro-action, authenticity, collaboration and experimentation (Rao, 1999).
OCTAPACE culture helps individual employee, dyads and team to acquire
a set of values which helps in the organizational process to achieve
objective.
a) Openness: The dictionary meaning of openness is frankness,
outspokenness. In organizational context it represents freedom of
employees to express ideas or views. Human beings are social
animals and therefore cannot work in isolation or fear. Openness
167

cultures make the employees to express their ideas, views and
thoughts without fear or pressure. It gives the organization a
congenial work environment for growth and development.
b) Confrontation: The dictionary meaning appeared as war of words,
conflict, dispute, disagreement. It means strength of employees
to encounter conflict or dispute. Organizational outcomes are based
on finding practical solutions to given problems. Confrontation
culture makes employees to deal with problems rather than to avoid
it. It is problem solving approach by employees. This culture provides
organizational strength by solving problems through decision
making.
c) Trust: It means faith, belief, reliance. Employees in organization
are dependent on one another and work performance depends on
the climate of trust. Trust is not an inbuilt culture but comes through
gradual experience. India is a land of diversity where employees
come from different background with different values, beliefs, norms
and tradition etc. The complexity of organizational relationship can
be overcome by atmosphere of trust, friendliness and
supportiveness. The climate of trust builds employee relationship,
fearless organizational atmosphere, helpful and supportive
environment and open organizational communication.
d) Autonomy: It refers to freedom, independence, self-governance or
self-rule. Freedom to work enables employees to work
independently with self-governance. Every individual has his
personal approach of fulfilling responsibilities. Autonomy culture
fulfills the willingness to exert power without fear, and help others
do the same. But the act of independence is confined within the
boundaries imposed by their roles and the duty of the superior is to
encourage the creativity of the employees in achievement of the
objective.
168

e) Proaction: It refers to planning in advance, state of alertness or
taking early initiative. Organizations future needs are
unpredictable. Proaction culture help employees to take initiatives in
advance, it makes them more action oriented in anticipating issues
and acting with respect to the future requirements. It prepares
organization to face future challenges and achieve targets.
f) Authenticity: It refers to genuine, factual, legitimate, actual,
valid. Authenticity is the practice of lawful or genuine method to
accomplish individual or organizational goal. It emphasizes on actual
process of working rather than degree of achievement.
Authenticity culture enhances the reputation and status of
organization for being lawful and ethical.
g) Collaboration: It refers to cooperation, participation, teamwork,
association. Working together brings success. Team effort and
collaboration of employees with sharing of skills, experience and
expertise makes the work easier. Collaboration culture induces a
common feeling among the employees and makes the organization
to achieve objective with less cost and time.
h) Experimentation: It refers to testing or making a trial. There is a
popular saying more risk more gain. Taking chances to experiment
new things brings new method of working. Experimentation culture
provides employees to try out innovative ways of doing things and
experimenting with new ideas.
The above cultural dimensions can be grouped into four
different categories which an act as a corner stones of HRD culture (Rao,
2007, p-150). Openness and confrontation can be grouped together,
autonomy and collaboration, Trust and authenticity, Proaction and
experimentation can be put together as pairs. When these cultures are
practiced in organization, they become an integral part of employees
life, which helps to search out the best, out of the employees.
169

HRD Outcome Variables
Prevalence of good HRD climate in organization results in desired
organizational outcomes. It can help in creation of a complete set of
organization where people are competent, motivated, committed and
can identify better developmental role to perform their job. It also
results in enhancement of ability in the form of problem solving skills,
better understanding, and team work which contributes to optimum
utilization of Human resources. This overall factor helps in the creation
of sound organizational health where people derive more satisfaction
from their job, duties and responsibilities.
Organizational Effectiveness
Success of organization depends on strong HRD system prevalent
in the organization. It ensures smooth and long term performance and
ensures planned growth in organization. Factors like technology,
resource availability, favorable environment etc. can be artificially
created with the help of financial aid. But effective and efficient
manpower cannot be instantly brought or purchased; rather it is to be
made with the help of sound governance of HRD system. A true practice
of HRD Climate variables leads to HRD outcome variables, which in turn
results in organizational effectiveness. Organizational effectiveness can
be measured in terms of higher productivity, higher growth, business
diversification, reduction in overall cost of production, higher company
profits, good employee employer relationship, favorable work
environment, better image in the market, creation of brand personality
etc.
170

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assessment, Job evaluation, Wage administration, Industrial Relations

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Human Resource Management Introduction

Introduction to Human Resource Management

Human Resource Management Introduction

employees to achieve their objectives. (Milkovich& Boudreau,

Human Resource Management Introduction

Human Resource Management Introduction

Human Resource Management Introduction

Human Resource Management Introduction

It prepares the personnels for taking higher responsibilities and

Human Resource Management Introduction

Human Resource Management Introduction

Human Resource Management Planning and Job Analysis

Meaning or Definition of Manpower Planning or Hrp

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Fig. 2.1 Human Resource planning Process

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Fig. 2.2 Delphi Technique

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Fig. 2.3 Components of Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Planning and Job Analysis

Human Resource Management Selection Process in Organization

Introduction:In todays business context Human Resource Management is

Human Resource Management Selection Process in Organization

Human Resource Management Selection Process in Organization

1. Recruitment refers to the

1. Selection is concerned with

Human Resource Management Selection Process in Organization

Human Resource Management Selection Process in Organization

Human Resource Management Selection Process in Organization

Human Resource Management Selection Process in Organization

Human Resource Management Selection Process in Organization

Human Resource Management Selection Process in Organization

Human Resource Management Selection Process in Organization

Human Resource Management Selection Process in Organization