Human Resource Management - M.B.A.: Prince

Human Resource Management – M.B.A.
PRINCE
RajaRao Pagidipalli Page 1

Human Resource Management – M.B.A. PRINCE
I - UNIT
INTRODUCTION TO HRM
Introduction:
According to Leon C. Megginson, the term human resources (HR) can be thought of as
“the total knowledge, skills, creative abilities, talents and aptitudes of an organization’s
workforce, as well as the value, attitudes and beliefs of the individuals involved.” The
term human resources can also be explained in the sense that it is a resource like any
natural resource. It does mean that the management can get and use the skill,
knowledge, ability etc., through the development of skills, tapping and utilizing them
again and again by developing a positive attitude among employees. The aspect of
‘attitude’ among the human resources aspects gained significance along with
globalization. Managing of these human resources deals with the above areas and also
provides an answer to the question referred above. Now, we shall discuss the meaning of
human resources management (HRM) and other areas.
Meaning and Definition of HRM
In simple sense, human resources management means employing people, developing

their resources, utilizing, maintaining and compensating their services in tune with the
job and organizational requirements with a view to contribute to the goals of the
organization, individual and the society. Michael J. Jucius defined Personnel
Management as “the field of management which has to do with planning, organizing,
and controlling the functions of procuring, developing, maintaining and utilizing a
labour force, such that the:
ü Objectives for which the company is established are attained economically and
effectively,
ü Objectives of all levels of personnel are serve to the highest possible degree, and
ü Objective of society are duly considered and served.”
According to Pulapa Subba Rao, human resources management (HRM) is managing

(planning, organizing, directing and controlling) the functions of employing, developing,
compensating and utilizing human resources, resulting In the creation and development
of human and industrial relations which would shape the future policies and practices of
human resource management, with a view to contribute proportionately (due to them)
to the organizational, individual and social goals.

Differences between Personnel Management and Human Resources

Management:
Personnel Management is different from Human Resources Management. Personnel

means persons employed. Hence, personnel management views the man as economic
man who works for money or salary. Human resources management treats the people as
human beings having economic, social and psychological needs. Thus, HRM is broader
in scope compared to personnel management. John Storey differentiated personnel
management from human resources management.
Functions of HRM
The functions of HRM can be broadly classified into two categories:
Managerial functions and Operative functions.
I.Managerial Functions: Managerial functions of personnel management involve

planning, organizing, directing and controlling. All these functions influence the
operative functions.
v Planning:
It is a predetermined course of action. Planning pertains to formulating strategies
of personnel programmers and changes in advance that will contribute to the
organizational goals. In other words, it involves planning of human resources,
requirements, recruitment, selection, training etc.
v Organizing:
An organization is a means to an end. It is essential to carry out the determined
course of action. In the words of J.C. Massie, an organization is a “structure and a
process by which a co-operative group of human beings allocates its task among
its members, identifies relationships and integrates its activities towards a
common objective.”
v Directing:
The next logical function after completing planning and organizing is the
execution of the plan. The basic function of personnel management at any level is
motivating, commanding, leading and activating people. The willing and effective
co-operation of employees for the attainment of organizational goals is possible
through proper direction.
v Controlling:
After planning, organizing and directing various actives of personnel
management, the performance is to be verified in order to know that the
personnel functions are performed in conformity with the actual with the plans,
identification of deviations if any and correcting of identified deviations.

II. Operative Functions: The operative functions of human resources management

are related to specific activities of personnel management - Employment, Development,
Compensation and Relations. All these functions are interacted with managerial
functions. Further, these functions are to be performed in conjunction with
management functions.
1. Employment: It is the first operative function of HRM. Employment is concerned

with securing and employing the people possessing required kind and level of human
resources necessary to achieve the organizational objectives. It covers the functions such
as job analysis, HR Planning, recruitment, selection, placement, induction and internal
mobility.
Job Analysis: It is the process of study and collection of information relating to

the operations and responsibilities of a specific job. It includes collection of data,
information, facts and ideas relating to various aspects of jobs including men,
machines and materials.
Human Resources Planning: It is a process for determination and assuring

that the organization will have an adequate number of qualified persons,
available at proper times, performing jobs which would meet the needs of the
organization and which would provide satisfaction for the individuals involved. It
involves estimation of present and future requirements and supply of human
resources based on objectives and long range plans of the organization.
Recruitment: It is the process of searching for prospective employees and

stimulating them to apply for jobs in an organization. It deals with identification
of existing sources of applicants and creation/identification of new sources of
applicants.
Selection: It is the process of ascertaining the qualifications, experiences, skills,

knowledge etc., of an applicant with a view to appraising his/her suitability to a
job. This function includes:
ü Framing and developing application blanks.

ü Creating and developing valid and reliable testing techniques.
ü Formulating interviewing techniques.
ü Checking of references.
ü Placement:
ü Counseling the functional managers regarding placement.

ü Conducting follow-up study, appraising employee performance in order to

determine employee adjustment with the job.
ü Correcting misplacements, if any.
ü Induction and Orientation: Induction and orientation are the techniques by

which a new employee is rehabilitated in the changed surrounding and
introduced to the practices, policies, purposes and people etc., of the
organization.
II. Human Resources Development:
It is the process of improving, and changing the skills, Knowledge, creative ability,
aptitude, values, commitment etc., based on present and future job and organizational
requirements. This function includes:
ü Performance Appraisal: It is the systematic evaluation of individuals with

respect to their performance on the job and their potential for development. It
includes: Developing policies, procedures and techniques.
ü Training: It is the process of imparting to the employees technical and

operating skills and knowledge. It includes: 1. Identification of training needs of
the individuals and the company. 2. Developing suitable training programmes.
ü Management Development: It is the process of designing and conducting

suitable executive development programmes so as to develop the managerial
and human relations skill of employees. It includes: 1. Identification of the areas
in which management development is needed. 2. Conducting development
programmes.
ü Career Planning and Development: It is the planning of one’s career and

implementation of career plans by means of education, training, job search and
acquisition of work experiences. It includes internal and external mobility.
ü Internal Mobility: It includes vertical and horizontal movement of an

employee within an organization. It consists of transfer, promotion and
demotion.
ü Transfer: It is the process of placing employees in the same level jobs where
they can be utilized more effectively in consistence with their potentialities and
needs of the employees and the organization. It also deals with:
1. Developing transfer policies and procedures. 2. Guiding employees and line

management on transfers.
ü Promotion: It deals with upward reassignment given to an employee in the

organization to occupy higher position which commands better status and/or
pay keeping in view the human resources of the employees and the job
requirements.
ü Demotion: It deals with downward reassignment to an employee in the

organization.
ü Retention and Retrenchment Management: Employers prefer to retain

more talented employees while they retrench less talented employees.
Employers modify existing human resource strategies and craft new strategies
in order to pay more salaries provide more benefits and create high quality of
work life to retain the best employees. And managements pay less to the less
talented employees and plan to retrench the misfits as well as unwanted
employees depending upon the negative business trends.
ü Change and Organisation Development: Change implies the creation of

imbalances in the existent pattern or situation. Organisation development is a
planned process designed process designed to improve organizational
effectiveness and health through modifications in individual and group
behaviour, culture and systems of the organization using knowledge and
technology of applied behavioural sciences.
III. Compensation:
It is the process of providing adequate and fair remuneration to the employees. It

includes job evaluation, wage and salary administration, incentives, bonus, fringe
benefits, social security measures etc.
v Job Evaluation: It is the process of determining relative worth of jobs.

• Select suitable job evaluation techniques.
• Classify jobs into various categories.
• Determining relative value of jobs in various categories.
v Wage and Salary Administration: This is the process of developing and

operating a suitable wage and salary programme. It covers:
• Conducting wage and salary survey.
• Determining wage and salary rates based on various factors.

• Administering wage and salary programmes.

• Evaluating its effectiveness.
v Incentives: It is the process of formulating, administering and revising the

schemes of financial incentives in addition to regular payment of wages and
salary.
It includes:
• Formulating incentive payment schemes.
• Helping functional managers on the operation.
• Review them periodically to evaluate effectiveness.
v Bonus: It includes payment of statutory bonus according to the Payment of

Bonus Act, 1965 and its latest amendments.
v Fringe Benefits: These are the various benefits at the fringe of the wage.
Management provides these benefits to motivate the employees and to meet
their life’s contingencies.
These benefits include:
ü Disablement benefit.
ü Housing facilities.
ü Educational facilities to employees and children.
ü Canteen facilities.
ü Recreational facilities.
ü Conveyance facilities.
ü Credit facilities.
ü Legal clinics.
ü Medical, maternity and welfare facilities.
ü Company stores.
v Social Security Measures: Managements provide social security to their

employees in addition to the fringe benefits. These measures include:
¶ Workmen’s compensation to those workers (or their dependents) who

involve in accidents.
¶ Maternity benefits to women employees. Sickness benefits and medical
benefits.
¶ Disablement benefits/allowance.
¶ Dependent benefits.
¶ Retirement benefits like provident fund, pension, gratuity etc.

IV. Human Relations: Practicing various human resources policies and programmes
like employment, development and compensation and interaction among employees
create a sense of relationship between the individual worker and management, among
workers and trade unions and the management. It is the process of interaction among
human beings. Human relations is an area of management in integrating people into
work situations in a way that motivates them to work together productively, co-
operatively and with economic, psychological and social satisfaction. It includes:
¶ Understanding and applying the models of perception, personality,

learning, intra and inter-personal relations, intra and inter-group relations.
¶ Motivating the employees.
¶ Boosting employee morale.
¶ Developing the communication skills.
¶ Developing the leadership skills.
¶ Redressing employee grievances properly and in time b means of a well
formulated grievance procedure.
¶ Handling disciplinary cases by means of an established disciplinary
procedure.
¶ Counseling the employees in solving their personal, family and work
problems and releasing their stress, strain and tensions.
¶ Providing a comfortable work environment by reducing fatigue, monotony
boredom and industrial accidents.
¶ Improving quality of work life of employees through participation and
other means.
V. Industrial Relations: The term ‘industrial relations’ refers to the study of

relations among employees, employers, government and trade unions. Industrial
relations include:
ü Indian labour market
ü Trade unionism
ü Collective bargaining
ü Industrial conflicts
ü Workers’ participation in management and
ü Quality circles.
VI. Recent Trends in HRM: Human Resources Management has been

advancing at a fast rate. The recent trends in HRM include:
¶ Quality of work life

¶ Total quality in human resources
¶ HR accounting, audit and research and

¶ Recent techniques of HRM.
SEOPE OF HUMAN RESOURCES MANAGEMENT
The scope of human resources management in the modern days is vast. In fact, the
scope of HRM was limited to employment and maintenance of and payment of wage and
salary. The scope gradually enlarged to providing welfare facilities, motivation,
performance appraisal, human resources management, maintenance of human
relations, strategic human resources and the like. The scope has been continuously
enlarging.
The scope of Human Resources Management includes:

ÿ Objectives of HRM
ÿ Organisation of HRM
ÿ Strategic HRM
ÿ Employment
ÿ Development
ÿ Wage and salary administration/compensation
ÿ Maintenance
ÿ Motivation
ÿ Industrial relations
ÿ Participative management and
ÿ Recent developments in HRM.
IMPORTANCE OF HUMAN RESOURCES MANAGEMENT
Human resources play a crucial role in the development process of modern economics.
Arthur Lewis observed, “there are great differences in development countries which
seem to have roughly equal resources, so it is necessary to enquire into the difference in
human behaviour.” It is often felt that though the exploitation of natural resources,
availability of physical and financial resources and international aid play prominent
roles in the growth of modern economies, none of these factors is more significant than
efficient and committed manpower. It is in fact said that all development comes from
the human mind. Human Resources in the Nation’s Well-being
A nation with abundance of physical resources will not benefit itself unless human
resources make use of them. In fact, human resources with right attitude are solely
responsible for making use of national resources and for the transformation of
traditional economies into the modern industrial and knowledge economies. Man Vis-à-

vis Machine Most of the problems in organizational sectional sections are human and
social rather than physical, technical or economic. No industry can be rendered efficient,
so long as the basic fact remains unrecognized that it is principally human. It is not a
mass of machines and technical processes but a body of men.
HRM and General Management: Management of an organisational in modern

economies is not only complex and sophisticated but it is also vital influencing the
economic growth of a country. One of the fundamental tasks of management is to
manage human resources in the service of the economic objectives of the enterprise.
Successful management depends not solely, but significantly upon the ability to predict
and control human behaviour.
Role of HRM: Human Resources Management plays the most crucial role in the
management of an organization. Human resources play crucial role in the conversion
process of inputs. Product design, quality maintenance, rendering services etc., depend
upon the efficiency of human resources. Similarly, human resources plays critical role in
marketing the products and services. Human resource also plays significant role in
managing finances and managing information systems.
Objectives of HRM: Objectives are pre-determined goals to which individual or group

activity in an organization is directed. Objectives of HRM are influenced by social
objectives, organizational objectives, functional objectives and individual objectives.
Institutions are instituted to attain certain specific objectives. The objectives of the
economic institutions are mostly to earn profits, and that educational institutions are
mostly to impart education and/or conduct research so on and so forth. However, the
fundamental objective of any organization is survival. Organizations are not just
satisfied with this goal. Further, the goal of most of the organisations is growth and/or
profits.
The objectives of HRM may be as follows:

µ To create and utilize able and motivated workforce, to accomplish the basic
organizational goals.
µ To establish and maintain sound organizational structure and desirable working
relationships among all the members of the organization.
µ To secure the integration of individual and groups within the organization by co-
ordination of the individual and group goals with those of the organization.
µ To create facilities and opportunities for individual or group development so as to
match it with the growth of the organization.
µ To attain an effective utilization of human resources in the achievement of
organizational goals.

µ To identify and satisfy individual and group needs by providing adequate and
equitable wages, incentives , employee benefits and social security and measures
for challenging work, prestige, recognition, security, status etc.
HRM Objectives at Wipro

ü To respect the individual, as people are the greatest assets.
ü To govern individual and company relationships with the highest
standard of conduct and integrity.
ü To be close to the customer through employees.
ü To achieve and maintain leadership in people management.
HRM Policies, Procedures and Programmes:
After the establishment of objectives of HRM, human resources policies are to be

formulated Policies are general statements that guide thinking and action in decision-
making.
Definition of HRM Policy: A Policy is a plan of action. Brewster and Richbell defined
HRM policies as, “set of proposals and actions that act as a reference point for managers
in their dealings with employees”. “HR polices constitute guides to action. They furnish
the general standards or bases on which decisions are reached. Their genesis lies in an
organisation”s values, philosophy, concepts and principles”. HR policies guide the
course of action intended to accomplish personnel objectives.
What is HRM Procedure?

Policies are general instructions whereas procedures are specific applications. A
procedure is a well thought out course of action. It prescribes the specific manner in
which a piece of work is to be done. Procedures are called “action guidelines.” They are
generally derived from policies. Where policies define a broad field, procedures show a
sequence of activities within that area. The emphasis is on chronological, step-by-step
sequence of required actions. For instance, a student is required to complete several
itemized steps in order to register himself to complete several itemized steps for courses
in a university. The basic purpose of a procedure is to spell out clearly the way one is to
go about doing something.
Role of HR Manager:
Human Resources Manager plays a vital role in the modern organization. He plays
various strategic roles at different levels in the organization. Te roles of the HR Manager
include roles of conscience, of a counselor, a mediator, a company spokesman, a
problem solver and a change agent.

µ The Conscience Role: The conscience role is that of a humanitarian who

reminds the management of its morals and obligations to its employees.
µ The Counsellor: Employees who are dissatisfied with the present job approach
the HR manager for counseling. In addition, employees facing various problems
like marital, health, children education/marriage, mental, physical and career
also approach the HR managers. The HR Manager counsels and consults the
employees and offers suggestions to solve/overcome the problems.
µ The Mediator: As a mediator, the HR manager plays the role of a peace-maker.
He settles the disputes between employees and the management. He acts as a
liaison and communication link between both
µ The Spokesman: He is a frequent spokesman for of representative of the
company.
µ The Problem-solver: He acts as a problem solver with respect to the issues
that involve human resources management an overall long range organizational
planning.
µ The Change Agent: He acts as a change agent and introduces changes in
various existing programmes.
JOB DESIGN
Job design is defined as the process of deciding on the content of a job in terms of duties
and responsibilities of the jobholders; on the methods to be used in carrying out the job,
in terms of techniques, systems and procedures and on the relationships that should
exist between the job holder and his superiors, subordinates and colleagues. Factor
affecting job design include organizational factors, environmental factors and
behavioural factors. Two important goals of job design:
µ To meet the organizational requirements such as higher productivity, operational

efficiency, quality of product/service etc., and
µ To satisfy the needs of the individual employees like interests, challenges,
achievement or accomplishment etc. Finally, the goal of the job design is to
integrate the needs of the individual with the organizational requirements.
Approaches to job Design: There are three important approaches to job design viz.,
¶ (i) engineering approach
¶ (ii) human approach and
¶ (iii) job characteristics approach.
i. Engineering Approach: This approach which studies the work

scientifically is based on scientific management principles. These principles
seem to be quite rational and appealing as they point towards increased

organizational performance.
ii. Human Approach: Human relations approach to job design recognizes the
need to design the jobs which are interesting and rewarding.
iii. Job Characteristics Approach: This approach assumes that employees

will work hard when they are rewarded for the work they do and when the
work gives them satisfaction. Therefore, motivation, satisfaction and
performance should be integrated in the job design. Jobs with skill variety,
task identity, task significance, autonomy and feedback are called core job
dimensions. Core job dimensions will motivate the employees and result in
job satisfaction and high performance.
Job Rotation:
Job rotation refers to the movement of an employee from one job to another. Jobs
themselves are not actually changed, only the employees are rotated among various
jobs. An employee who works on a routine/respective job moves to and works on
another job for some hours/days/months and backs up to the first job. This measure
relieves the employee from boredom and monotony, improves employee’s skills
regarding various jobs, prepares the competent employees and provides competitive
advantage to the company These measures also improves worker’s self-image and
provides personal growth. However, frequent job rotations are not advisable in view
of their negative impact on the orgsnisation and the employee.
Job Enlargement:
Job enlargement means adding more and different tasks to a specialized job to
provide greater variety. This process is called horizontal job loading or horizontal job
enlargement. Job enlargement is a horizontal slice of the organization. It tackles
dissatisfaction and reduces monotony by increasing the variety and scope of tasks.
This technique leads to specialization, it improves worker satisfaction, quality of
production and overall efficiency of the organization.
Job Enrichment:
Job enrichment loads the job vertically. Job enrichment means adding duties and
responsibilities that will provide for skill variety, task identity, task significance,
autonomy and feedback on job performance. It tries to deal with dissatisfaction by
increasing job depth as work activities from a vertical slice of the organizational unit
are combined in one job. As work becomes more challenging and worker
responsibility increases, motivation and enthusiasm also increase. Dale S. Beach has
suggested specific action steps for designing enriched jobs. They are:

ü Creation of natural or logical work units,

ü Combining several duties, requiring various skills into each job,
ü The employee should have direct contact and knowledge about the people for
whom his product is meant,
ü Vertical job loading is to incorporate some planning and controlling duties into
the job and
ü Feedback information should be provided to employees to correct and improve
their performance.
JOB ANALYSIS
Procurement is the first operative function of personnel management,

which can be sub-divided into various sub-functions like human resources
planning, recruitment and selection. Management should determine the kind of
personnel required for a job and the number of persons to be employed. The
organization should also find out the right man for the right job in the right time.
The knowledge of the job is essential to perform these functions. In addition,
establishment of the scientific standard in advance is comparing the applicants
with the job and to select the suitable personnel. This standard stipulates the
minimum acceptable qualifications, skills and qualities required for adequate job
performance. Stipulating the standard requires the knowledge regarding job
design, study of the job duties and responsibilities, requirements of the job,
human abilities and qualities etc. job analyst is needed to know all these
functions and to perform various functions of HRM.
¶ Job Terminology: Description of technical terminology is highly necessary in

order to facilitate the study of a job analysis. So, it is desirable to define the terms
related to job analysis like task, position, job, occupation, job analysis, job
description, job specification and job classification.
¶ Task: A task is an action or related group of action designed to produce a definite

outcome or result.
¶ Position: A position is a group of similar tasks and responsibilities assigned to

one individual. The term is used in this narrow technical sense to facilitate more
precise discussion of the job analysis technique.
¶ Job: A job is “a group of positions that are similar as to the kind and level of
work.” In some instances, only one position may be involved, simply because no
other similar position exists. For example, in the small firm the position of
personnel manager also constitutes a job since there is only one personnel

manager position in the organization. Further, there may be six employees, “all of
whom are classified under the same title, yet each may perform slightly different
work.” For example, there may be five or six cashiers in a large commercial balk
branch who may do different work.
Occupation: An occupation “is a group of jobs that are similar as to the kind of
work land are found throughout an industry or the entire country.” An
occupation is la category of work found in many firms.
¶ Job Analysis: The U.S. Department of Labour defined job analysis 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 of the skills, knowledge, abilities and
responsibilities required of the worker of a successful performance and which
differentiate one job from all others.”
The aspects of job analysis include job description and job

specification.
¶ Job Description: A job description is “an organized, factual statement of the

duties and responsibilities of a specific job.” In brief, it should tell what is to be
done, how it is done and why? It is a standard of function, in that it defines the
appropriate and authorized content of a job.
¶ Job Specification: A job specification is “a statement of the minimum

acceptable human qualities necessary to perform a job properly.” In contrast to
the job description, it is a standard of personnel and designates the qualities
required for acceptable performance.
¶ Job Classification: A job classification is “a grouping of jobs on some specified

basis such as the kind of work or pay.” For example, a clerk, a teacher, an
engineer, a chemist etc.
Process of job Analysis

Job can be analysed through a process, which consists of seven basic steps. These steps
consist of strategies, a collection of background information, selection of background
information, selection of job to be analysed, collection of job analysis data, developing a
job description, job specification and employee specification.
¯ Strategies: The strategies of the company are the basis for any organizational
activity including job analysis. If the strategy implementation needs innovative
skills and autonomy, they should be included in the job analysis.

According to William P. Anthony the companies have to make four strategic

choices viz.
ü The extent of employee involvement in job analysis
ü The level of details of job analysis
ü Timing and frequency of analysis and
ü Past-oriented vs. future-oriented job analysis.
¯ Collection of Background Information: Background information consists

of organization charts class specifications and existing job descriptions.
Organization charts show the relation of the job with other jobs in the overall
organizations. Class-specifications describe the general requirements of the class
of job to which this particular job belongs. The existing job description provides
a good starting point for job analysis.
¯ Selection of Representative Position to be analysed: It would be too

difficult and too time consuming to analyse all the jobs. So, the job analyst has to
select some of the representative positions in order to analyse them.
iv. Collection of job Analysis Data: This step involves actually analyzing a job by
collecting data on features of the job, required employee behaviour and human
requirements.
¯ Developing a job Description: This step involves describing the contents of

the job in terms of functions, duties, responsibilities, operations etc. The
incumbent of the job is expected to discharge the duties and responsibilities and
perform the functions and operations listed in job description.
¯ Developing a job Specification: This step involves conversion of the job

description statements into a job specification. Job specification or job
requirements describe the personal qualities, traits, skills, knowledge and
background necessary for getting the job done.
¯ Developing Employee Specification: This final step involves conversion of

specifications of human qualities under job specification into an employee
specification. Employee specification describes physical qualification,
educational qualifications, experience etc., which specify that the candidate with
these qualities possesses the minimum human qualities listed in the job
specification.
Job Description:
Job description is an important document which is basically descriptive in nature and
contains a statement of job analysis. It serves to identify a job for consideration by other

job analysts. It tells us what should be done, why it should be done, and where it should
be performed.
Characteristics of Good job Description: Earnest Dale developed the following

hints for writing the job description:
µ The job description should indicate the scope and nature of the work including all
important relationships.
µ (ii) The job description should be clear regarding the work of the position, duties
etc.
µ (iii) More specific words should be selected to show
ü (a) the kind of work,
ü (b) the degree of complexity,
ü (c) the degree of skill required,
ü (d) the extent t which problems are standardized,
ü (e) the extent of worker’s responsibility for each phase of the work and
ü (f) the degree and type of accountability.
Action words such as analyse, gather, plan, confirm deliver, maintain, supervise and
recommend should be used.
µ (iv) Supervisory responsibility should be shown to the incumbents.
Brief and accurate statements should be used in order to accomplish the purpose.
µ (v) Utility of the description in meeting the basic requirements should be checked
from the extent of understanding the job by reading the job description by a new
employee
The Content of Job Description
The job description normally contains the information on the following lines:
¯ Job title
¯ Organizational location of the job
¯ Supervision given and received
¯ Materials, tools, machinery and equipment worked with
¯ Designation of the immediate superiors and subordinates
¯ Salary levels: Pay , D.A., other allowances, bonus, incentive wage, method of
payment, hours of work, shift and break
¯ Complete list of duties to e performed separated according to daily, weekly,
monthly and casual, estimated time to be spent on each duty
¯ Definition of unusual terms
¯ Conditions of work: location, time, speed of work, accuracy, health hazards
and accident hazards
¯ Training and development facilities and
¯ Promotional chances and channels.
JOB SPECIFICATION

It is a written statement of qualifications, traits, physical and mental characteristics that

an individual must possess to perform the job duties and discharge responsibilities
effectively.
Job Specification Information:

The first step in the programme of job specification is to prepare a list of all the jobs in
the company and where they are located. The second step is to secure and write up the
information about each of the jobs in a company. Usually, this information includes:
ÿ i. physical specifications,
ÿ ii. mental specifications,
ÿ iii. emotional and social specifications and
ÿ iv. behavioural specifications.
¶ Physical specifications: Physical specifications include the physical

qualifications or physical capacities which vary from job to job. Physical
qualifications or capacities include physical features like height, weight, chest,
vision, hearing, ability to lift weight, ability to carry weight, health, age, capacity
to use or operate machines, tools equipment etc.
¶ ii. Mental specifications: Mental specifications include ability to perform,

arithmetical calculations to interpret data, information blueprints, to read
electrical circuits, ability to plan, reading abilities, scientific abilities, judgment,
ability to concentrate, ability to handle variable factors, general intelligence,
memory etc.
¶ iii. Emotional and social specifications: Emotional and social specifications

are more important for the post of managers, supervisors, foremen etc. These
include emotional stability, flexibility, social adaptability in human relationship,
personal appearance including dress, posture, poise, features and voice required
by the job.
¶ iv. Behavioural specifications: Behavioural specifications play an important

role in selecting the candidates for higher level jobs in the organizational
hierarchy. This specification seeks to describe the acts of managers rather than
the traits that cause the acts. These specifications include judgments, research,
creativity, teaching ability, maturity (capable of accepting responsibility) trial of
conciliation, self-reliance (self-starter sticks to own decisions), dominance (giving
orders in a personal way) etc.
Meaning & Objectives of HR Planning:

In simple terms, human resource planning means deciding the number and type of the
human resources required for each job, unit and the total company for a particular
future date in order to carry our organizational activities. E.W. Vetter viewed human
resources planning as “a process by which an organization should move from its current
manpower position to its desired manpower position. Through planning management,
strive to have the right number and right kind of people at the right place at the right
time, doing things which result in both the organization and the individual receiving
maximum long-run benefit.”
Objectives of Human Resources Planning: The important objectives of manpower

planning in an organization are
Ø (i)to recruit and retain the human resources of required quantity and quality.
Ø (ii) to foresee the employee turnover and make the arrangements for minimizing
turnover and filling up of consequent vacancies.
Ø (iii) to meet the needs of the programmes of expansion, diversification etc.:
Ø (iv) to foresee the impact of technology on work, existing employees and future
human resource requirements.
Ø (v) to improve the standards, skill, knowledge, ability, discipline etc.
Ø (vi) to assess the surplus of shortage of human resources and take measures
accordingly;
Ø (vii) to maintain congenial industrial relations by maintaining optimum level and
structure of human resources;
Ø (viii) to minimize imbalances caused due to non-availability of human resources
of the right kind, right number in right time and right place;
Ø (ix) to make the best use of its human resources and
Ø (x) to estimate the cost of human resources.
Benefits of HR Planning:
¶ Human Resources Planning (HRP) anticipates not only the required kind and
number of employees but also determines the action plan for all the functions of
personnel management. The major benefits of human resources planning are:
¶ It checks the corporate plan of the organization.
¶ It offsets uncertainty and change. But the HRP offsets uncertainties and changes
to the maximum extent possible and enables the organization to have right men
at the right time and in the right place.
¶ It provides scope for advancement and development of employees training,
development etc.
Factors Affecting HR Planning:

Several factors affect HRP. These factors can be classified into external factors and
internal factors.
External Factors: External Factors include:

Ø (i) Government Policies: Policies of the government like labour policy, industrial
relations policy, policy towards reserving certain jobs for different communities
and sons-of the-soil etc.,
Ø (ii) Level of Economic Development: Level of economic development determines
the level of HRD in the country and thereby the supply of human resources in
the future in the country.
Ø (iii) Business Environment: External business environmental factors influence
the volume and mix of production and thereby the future demand for human
resources.
Ø (iv) Information Technology: Information technology bought amazing shifts in
the way how do businesses operate? These shifts include business process
reengineering, enterprise resources planning and supply drain management.
Ø (v) Level of Technology: Level of technology determines the kind of human
resources required.
Ø (vi) International Factors: International factors like the demand for and supply
of human resources in various countries.
Internal Factors : Internal Factors affecting HRP include:
ü (i) Company strategies: Company’s polices and strategies relating to expansion,

diversification, alliances etc. determine the human resources demand in terms of
quality and quality.
ü (ii) Human resources policies: Human resources policies of the company
regarding quality of human resources, compensation level, quality of work life
etc. influence human resources plan.
ü (iii) Job Analysis: Fundamentally, human resources plan is based on job analysis,
job description and job specification. Thus, the job analysis determines the kind
of employees required.
ü (iv) Time horizons: Companies with a stable competitive environment can plan
for the long run, whereas firms with and unstable competitive environment can
plan for only short-term range. Exhibit 4.2 presents the degree of uncertainty and
length of the planning period.
ü (v) Type and quality of information: Any planning process needs qualitative and
accurate information. This is more s with human resources plan. Exhibit 4.3
presents HRP information.

ü (vi) Company’s production/operations policy: Company’s policy regarding how

much to produce and how much to buy from outside to prepare a final product
influences the number and kind of people required.
ü (vii) Trade unions: Influence of trade unions regarding the number of working
hours per week, recruitment sources etc., and affect HRP.
The Human Resource Information System (HRIS)
The Human Resource Information System (HRIS) is a software or online solution for
the data entry, data tracking, and data information needs of the Human Resources,
payroll, management, and accounting functions within a business. Normally packaged
as a data base, hundreds of companies sell some form of HRIS and every HRIS has
different capabilities. Pick your HRIS carefully based on the capabilities you need in
your company.
The Human Resource Information Systems (HRIS) provide:
þ Management of all employee information.
þ Reporting and analysis of employee information.
þ Company-related documents such as employee handbooks, emergency
evacuation procedures, and safety guidelines.
þ Benefits administration including enrollment, status changes, and personal
information updating.
þ Complete integration with payroll and other company financial software and
accounting systems.
þ Applicant and resume management.
The HRIS that most effectively serves companies tracks:

þ attendance,
þ pay raises and history,
þ pay grades and positions held,
þ performance development plans,
þ training received,
þ disciplinary action received,
þ personal employee information, and occasionally,
þ management and key employee succession plans,
þ high potential employee identification, and
þ applicant tracking, interviewing, and selection.
An effective HRIS provides information on just about anything the company needs to
track and analyze about employees, former employees, and applicants. Your company
will need to select a Human Resources Information System and customize it to meet
your needs. With an appropriate HRIS, Human Resources staff enables employees to do

their own benefits updates and address changes, thus freeing HR staff for more strategic
functions. Additionally, data necessary for employee management, knowledge
development, career growth and development, and equal treatment is facilitated.
Finally, managers can access the information they need to legally, ethically, and
effectively support the success of their reporting employees.
Strategic HR Planning:
Strategic HR planning is an important component of strategic HR management. It links

HR management directly to the strategic plan of your organization. Most mid- to large
sized organizations have a strategic plan that guides it in successfully meeting its
mission. Organizations routinely complete financial plans to ensure they achieve
organizational goals and while workforce plans are not as common, they are just as
important.
Strategic HR management is defined as: Integrating human resource management

strategies and systems to achieve the overall mission, strategies, and success of the firm
while meeting the needs of employees and other stakeholders.
The overall purpose of strategic HR planning is to:

ü Ensure adequate human resources to meet the strategic goals and operational
plans of your organization
ü the right people with the right skills at the right time
Keep up with social, economic, legislative and technological trends that impact
on human resources in your area and in the sector
Remain flexible so that your organization can manage change if the future is
different than anticipated.
ü Strategic HR planning predicts the future HR management needs of the
organization after analyzing the organization’s current human resources, the
external labour market and the future HR environment that the organization will
be operating in.
The strategic HR planning process: The strategic HR planning process has four
steps:
þ Assessing the current HR capacity
þ Forecasting HR requirements
þ Gap analysis
þ Developing HR strategies to support organizational strategies
þ Assessing current HR capacity
Based on the organization’s strategic plan, the first step in the strategic HR planning
process is to assess the current HR capacity of the organization. The knowledge, skills

and abilities of your current staff need to be identified. This can be done by developing a
skills inventory for each employee.
Forecasting HR requirements: The next step is to forecast HR needs for the future
based on the strategic goals of the organization. Realistic forecasting of human
resources involves estimating both demand and supply.
Gap analysis: The next step is to determine the gap between where your organization
wants to be in the future and where you are now. The gap analysis includes identifying
the number of staff and the skills and abilities required in the future in comparison to
the current situation
Developing HR strategies to support organizational strategies: There are five

HR strategies for meeting your organization’s needs in the future:
¯ Restructuring strategies
¯ Training and development strategies
¯ Recruitment strategies
¯ Outsourcing strategies
¯ Collaboration strategies
Restructuring strategies: This strategy includes:

ü Reducing staff either by termination or attrition
ü Regrouping tasks to create well designed jobs
ü Reorganizing work units to be more efficient
Training and development strategies: This strategy includes:

ü Providing staff with training to take on new roles
ü Providing current staff with development opportunities to prepare them for
future jobs in your organization
Recruitment strategies: This strategy includes:

ü Recruiting new staff with the skill and abilities that your organization will need in
the future
ü Considering all the available options for strategically promoting job openings and
encouraging suitable candidates to apply.
Outsourcing strategies: This strategy includes:

ü Using external individuals or organizations to complete some tasks

ü Many organizations look outside their own staff pool and contract for certain
skills.
ü This is particularly helpful for accomplishing specific, specialized tasks that don’t
require ongoing full-time work.
Collaboration strategies: Finally, the strategic HR planning process may lead to

indirect strategies that go beyond your organization. By collaborating with other
organizations you may have better success at dealing with a shortage of certain skills.

II - UNIT
RECRUITMENT & SELECTION
Introduction to Recruitment:
Once the required number and the kind of human resources are determined, the
management has to find the places where required human resources are/will be
available and also work out strategies for attracting them towards the organization
before selecting suitable candidates for jobs. This process is generally known as
recruitment. Some people use the term ‘recruitment’ for employment. These two are not
one and the same. Recruitment is only one of the steps in the entire employment
process. Some others use the term recruitment for selection. These two terms are
different. Technically speaking, the function of recruitment precedes the selection
function and it includes only finding, developing the sources of prospective employees
and attracting them to apply for jobs in an organization, whereas the selection is the
process of finding out the most suitable candidate to the job out of the candidates
attracted(i.e., recruited).
Recruitment Definition:
Recruitment is defined as “a process to discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for attracting
that manpower in adequate numbers to facilitate effective selection of an efficient
workforce.” Edwin B.Flippo defined recruitment as “the process of searching for
prospective employees and stimulating them to apply for jobs in the organization.”
These definitions can be analyzed by discussing the processes of recruitment through
systems approach.
Objectives of Recruitment: The objectives of recruitment are:

i. To attract people with multi-dimensional skills and experiences that suit the
present and future organizational strategies,
ii. To induct outsiders with a new perspective to lead the company,
iii. To infuse fresh blood at all levels of the organization,
iv. To develop an organizational culture that attracts competent people to the
company,
v. To search or head hunt/head pouch people whose skills fit the company’s
values,
vi. To devise methodologies for assessing psychological traits,

vii. To seek out non-conventional development grounds of talent,

viii. To search for talent globally and not just within the company,
ix. To design entry pay that competes on quality but not on quantum,
x. To anticipate and find people for positions that does not exist yet.
Employee Recruitment Methods: Recruitment can be in two different ways

¯ Internal recruitment is when the business looks to fill the vacancy from within
its existing workforce.
¯ External recruitment is when the business looks to fill the vacancy from any
suitable applicant outside the business.
Internal Recruitment Sources:

They include those who are employed in the organisation or those who were in the past
employ (but quit voluntarily or due to retrenchment) and would return if the
organisation likes to re-employ. The advantage in looking for internal resources is that
they provide opportunities for better deployment and utilisation of existing human
resources through planned placements and transfers. It will also motivate people
through planned promotions and career development when vacancies exist in higher
grades. The law provides preferences to retrenched employees when vacancies arise in
future.
Internal recruitment methods are not only cost efficient, they also support employee
satisfaction and moral. Before looking outside of the company for talent, take the time to
look at the current employees. Nothing causes more dissatisfaction than having
someone new take the position that an employee has been working to get promoted to.
Promoting within requires less training and transition. Here are two ways to accomplish
this:
Job postings – post open positions for employees to apply for before external hires are
considered.
Skills inventory – have HR keep a record of employee skills. Review the inventory to
identify any employees that might qualify for the job. Invite them to apply.
Internal Recruitment – Advantages

1.Cheaper and quicker to recruit
2. People already familiar with the business and how it operates
3. Provides opportunities for promotion with in the business – can be motivating
4. Business already knows the strengths and weaknesses of candidates
Internal Recruitment - Disadvantages :

1.Limits the number of potential applicants
2.No new ideas can be introduced from outside the business

3.May cause resentment amongst candidates not appointed

4.Creates another vacancy which needs to be filled
External Recruitment
The External Recruitment is the source of the fresh blood for the organization. As
a very critical HR Process, the external recruitment process has to be set up very
carefully. The external recruitment is a process, which is very sensitive to changes on the
external market and the managers are very sensitive about that as well.
The most popular ways of recruiting externally are:
Job centres – These are paid for by the government and are responsible for helping
the unemployed find jobs or get training. They also provide a service for businesses
needing to advertise a vacancy and are generally free to use.
Job advertisements – Advertisements are the most common form of external

recruitment. They can be found in many places (local and national newspapers, notice
boards, recruitment fairs) and should include some important information relating to
the job (job title, pay package, location, job description, how to apply-either by CV or
application form). Where a business chooses to advertise will depend on the cost of
advertising and the coverage needed (i.e. how far away people will consider applying for
the job
Recruitment agency – Provides employers with details of suitable candidates for a

vacancy and can sometimes be referred to as ‘head-hunters’. They work for a fee and
often specialise in particular employment areas e.g. nursing, financial services, teacher
recruitment
Personal recommendation – Often referred to as ‘word of mouth’ and can be a

recommendation from a colleague at work. A full assessment of the candidate is still
needed however but potentially it saves on advertising cost.
Unsolicited applicants – most business will have unsolicited resumes. Make sure
these resumes are kept and filed. Review these before beginning to advertise. The right
candidate might very well be in that file.
Events – job fairs, open houses. These are costly to run but can produce excellent
results. The number of positions available can best determine if it is worth the
investment.

Campus Placements – co-op programs and job placement programs are a great way
to bring in new employees. Contact local colleges or universities to see if there is an
opportunity to work together.
Modern Sources of Recruitment: A number of modern recruitment sources are
being used by the corporate sector in addition to traditional sources.
ÿ Employee Referrals: Present employees are well aware of the qualifications,

attitudes, experience and emotions of their friends and relatives. They are also
aware of the job requirements and organizational culture of their company. As
such, they can make preliminary judgment regarding the match between the job
and their friends or relatives. Hence, the HR managers of various companies
depend on the present employees for reference of the candidates for various jobs.
This source reduces the cost and time required for recruitment. Further, this
source enhances the effectiveness of recruitment. HR managers offer various
incentives/rewards including cash incentives to the current employees for
referring the best candidates.
Modern external sources include: Walk in and consult in, head-hunting, body-
shopping, mergers and acquisitions, tele-recruitment and outsourcing.
Ï Walk-in: The busy organizations and the rapid changing companies do not find
time to perform various functions of recruitment. Therefore, they advise the
potential candidates to attend for an interview directly and without a prior
application on a specified date, time and at a specified place. The suitable
candidates from among the interviewees will be selected for appointment after
screening the candidates through tests and interviews.
Ï (ii) Consult-in: The busy and dynamic companies encourage the potential job
seekers to approach them personally and consult them regarding the jobs. The
companies select the suitable candidates from among such candidates through
the selection process.
Ï (iii) Head-hunting: The companies request the professional organizations to

search for the best candidates particularly for the senior executive positions. The
professional organizations search for the most suitable candidates and advise the
company regarding the filling up of the positions. Head-hunters are also called
‘search consultants’.
Ï (iv) Body shopping: Professional organizations and the hi-tech training

institutes develop the pool of human resources for the possible employment. The
prospective employers contact these organizations to recruit the candidates.

Otherwise, the organizations themselves approach the prospective employers to

place their human resources. These professional and training institutions are
called ‘body shoppers’ and these shopping is also known as employee leasing
activity. The leasing firms employ the people and lease them for the use by
various needy companies for payment of a commission.
Ï (v) Mergers & Acquisitions: Business alliances like acquisitions, mergers,

and take-overs help in getting human resources. In addition, the companies do
also have alliances in sharing their human resources on ad-hoc basis.
It does mean that the company with surplus human resources offers the services
of their employees to other needy organizations.
Ï (vi) E-Recruitment: The technological revolution in telecommunications

helped the organizations to use internet as a source of recruitment. Organizations
advertise the job vacancies through the World Wide Web (www). The job seekers
send their applications through e-mail using the Internet. Alternatively, job
seekers place their CVs in the world wide web/internet, which can be drawn by
the prospective employers depending upon their requirements.
External Recruitment Sources: Organisations may look for people outside it. Entry
level jobs are usually filled by new entrants from outside. Also in the following
circumstances organisations may resort to outside sources:
Ï a. when suitably qualified people are not available.
Ï b. when the organisation feels it necessary to impart new blood for fresh ideas.
Ï c. when it is diversifying into new avenues and
Ï d. when it is merging with another organisation.
External Recruitment – Advantages

¯ Outside people bring in new ideas
¯ Larger pool of workers from which to find the best candidate
¯ People have a wider range of experience
External Recruitment - Disadvantages :

Longer process
More expensive process due to advertisements and interviews required
Selection process may not be effective enough to reveal the best candidate

Recruitment Strategies: The recruitment strategies formulated by the companies

include:
In-sourcing or Outsourcing: Companies recruit the candidates, employ them, train
and develop them and utilize the human resources of these candidates. This strategy is
called ‘in-sourcing’. Companies formulate and implement this strategy when the
company’s growth is stable. Some organizations employ and develop the candidates
with a view to provide the human resources to other companies which concentrate on
manufacturing, servicing and such other activities. Some manufacturing and service
companies depend for their human resource requirements on such external
organizations whose core business is to provide human resources. This strategy is called
‘outsourcing’. Most of the IT companies follow this strategy. Even manufacturing
companies also depend on outsourcing for the running the non-core business like
canteens, hospitals, office maintenance, security, house-keeping, plant maintenance etc.
outsourcing strategy is more suitable for both the fast growing and diversifying
companies.
Vast and Fast Source: The fast developing IT industry and high technology oriented
industry invariably require vast human resources within the short span of time. The best
strategy to get vast human resources immediately is through internet.
Recruitment Policy: Recruitment policy of any organization is derived from the HR

policy of the same organization. In other words, the former is a part of the latter.
However, recruitment policy by itself should take into consideration the government’s
reservation policy, policy Regarding sons of soil etc., HR policies of other organizations
regarding merit, internal sources, social responsibility in absorbing minority sections,
women etc. recruitment policy should commit itself to the organization’s HR policy like
enriching the organization’s human resources or serving the community by absorbing
the weaker sections and disadvantaged people of the society, motivating the employees
through internal promotions, improving the employee’s loyalty to the organization by
absorbing the retrenched or laid-of employees or casual/temporary employees or
dependents of present/former employees etc.
Limitations for Recruitment – Challenges:

Child Labour (Prohibition and Regulation ) Act, 1986: This Act replaces
the Employment of Children Act, 138, and seeks to prohibit the engagement of
children below 14 years of age in certain employment and to regulate the
conditions of work of children in certain other employment. Penalties for
contravening the provisions are fine and imprisonment.
2. The Employment Exchanges (Compulsory Notification of Vacancies) Act,
1959: The Act requires all employers to notify vacancies (with certain

exemptions) occurring in their establishments to the prescribed employment

exchanges before they are filled
3. The Apprentices Act, 1961: The Act seeks to provide for the regulation and
control of training apprentices and for matters connected therewith. The Act
provides for a machinery to lay down syllabi and prescribe period of training,
reciprocal obligations for apprentices and employers etc. The responsibility for
engagement of apprentices lies solely with the employer. An apprentice is not a
workman.
4. The Contract Labour (Regulation and Abolition) Act, 1970: This Act
seeks to regulate the employment of contract labour in certain establishments
and to provide for the abolition in certain circumstances. The Act applies to every
establishment / contractor employing 20 or more persons.
5. Bonded Labour System (Abolition) Act, 1976: This Act seeks to provide
for the abolition of bonded labour system with a view to preventing the economic
and physical exploitation of the weaker sections of society.
6. The Inter-state Migrant Workmen Act, 1979: This Act safeguards the
interests of the workmen who are recruited by contractors from one state for
service in an establishment situated in another state and to guard against the
exploitation of such workmen by the contractors.
7. The Factories Act, 1948, the Mines Act, 1952, etc. : Certain legislation,
like the Factories Act and the Mines Act prohibit employment of women (in night
work, underground work etc.) and children (below 14 years of age) in certain
types of jobs.
8. Reservations for Special Groups: In pursuance of the constitutional
provisions, statutory reservations and relaxed norms have been provided in
education and employment to candidates belonging to Scheduled Castes and
Scheduled Tribes in central and state services including departmental
undertakings, government corporations, local bodies and other quasi –
government organisations. Most state governments have issued policy directives
extending the reservations to notified backward communities also.
9. Sons -of -the-Soil: The question of preference to local population in the
matter of employment has become more complex toady than ever before. The
Govt. of India has recognised the main elements of the arguments on behalf of
the sons of the soil and laid down certain principles in the matter of recruitment
to its public sector projects, whose implementation, however, is left to the
undertakings themselves.
10. Displaced Persons: Whenever major projects are set up, large tracts of
land are acquired for the purpose, displacing several hundred households in each
case. Payment of compensation for land was at one time considered a sufficient
discharge of obligation towards persons who are dispossessed of land. This alone
did not solve the question of earning livelihood.

Realistic Job Preview:
A Realistic Job Preview is an approach that enables the communication of aspects of a

job to prospective applicants before the applicant accepts the offer of a position.
For a RJP to be effective, it is critical to allow employees to obtain a balanced view of the
positive and negative aspects of the position. Discrepancies between the applicant of the
position and the actual operational requirements of the job role may lead to lower
commitment levels and increased turnover. A RJP works by providing applicants with
information that clarifies their expectations and allows them to have a more realistic
perspective of the role. By providing a well designed and consistent RJP process to all
potential employees, the organization can reduce turnover and increase commitment by
allowing the employer to match job requirements with the applicant’s qualities and the
applicant to match their personal needs with the position requirements and the
organizational culture.
Research on the effects of utilizing a RJP has demostrated cost savings due to increased
performance and job survival; decreased levels in turnover by better meeting employee
expectations, improving their ability to cope, providing a perception of honesty for the
organization and allowing them to self-select themselves for the position. In addition,
there is also increased post-employment job satisfaction by giving them preparation to
cope with the demands of the position and making them feel that the employer has been
honest in their recruitment process.
Using Realistic Job Previews for recruitment

By providing applicants with an insight into the job vacancy – both the attractive and
less attractive aspects of the role – many candidates decide for themselves that the job is
not for them. The Realistic Job Previews (RJP) helps the applicant to really think
through whether the new role is for them – whether they will fit into the organisation
and enjoy the role.
The Realistic Job Preview should be used to: Help unsuitable applicants withdraw
themselves before the formal recruitment process takes place. Ensure such ‘self-
elimination’ is seen in a positive, brand aligned and advisory way. These applicants may
also be customers and it is important to treat them with dignity.
The benefits of Realistic Job Preview

Realistic Job Previews can help with volume recruitment by removing around 15% of
applicants through clarifying and clearly stating the job requirements, thereby
increasing the quality of applications received. It also reduces resignation rate of

recruits and ensures candidates finally selected are likely to align well with the values
and culture of the organization.
Selection:
Selection is a process of measurement, decision making and evaluation. The goal of a
selection system is to bring in to the organisation individuals who will perform well on
the job. To have an accurate and fair selection system, an organisation must use reliable
and valid measures of job applicant characteristics. In addition, a good selection system
must include a means of combining information about applicant characteristics in a
rational way and producing correct hire and no-hire decisions. A good personnel
selection system should add to the overall effectiveness of the organisation.
Organisations vary in the complexity of their selection system. Some merely skim
applications blanks and conduct brief, informal interviews, whereas others take to
resting, repeated interviewing, background checks and so on. Although the latter system
is more costly per applicant, many benefits are realised from careful, thorough selection.
An organisation needs to have members who are both skilled and motivated to perform
their roles. Either such members can be identified by careful selection or attempts can
be made to develop them after hire by extensive training. Thus cursory selection may
greatly increase training and monitoring costs, whereas spending more on the selection
process will reduce these post-hire expenses.
Selection procedure:
Selection procedure employs several methods of collecting information about the
candidate’s qualifications, experience, physical and mental ability, nature and
behaviour, knowledge, aptitude and the like for judging whether a given applicant is
suitable or not for the job. Therefore, the selection procedure is not a single act but is
essentially a series of methods or stages by which different types of information can be
secured through various selection techniques. At each step, facts may come to light
which are useful for comparison with the job requirement and employee specifications.
Steps in Scientific Selection Process
(i) Job Analysis, (ii) Recruitment. (iii) Application Form, (iv) Written Examination, (v)
Preliminary Interview (iv) Business Games (vii) Tests. (viii) Final Interview. (ix) Medical
Examination (x) Reference Checks. (xi) Line Manager’s Decision. (xii) Job offer (xiii)
Employment.
Job Analysis: Job analysis is the basis of selecting the right candidate. Every
organization should finalize the job analysis, job description, job specification and
employee specifications before proceeding to the next stop of selection.

Human Resource Plan: Every company plans for the required number of and kind of
employees for a future date. This is the basis for recruitment function.
Recruitment: Recruitment refers to the process of searching for prospective employees
and stimulating then to apply for jobs in an organization. It is the basis for the
remaining techniques of the selection and the latter varies depending upon the former.
It develops the applicants’ pool.
Development of Bases for Selection: The Company has to select the appropriate
candidates from the applicants’ pool. The company develops or borrows the appropriate
bases/techniques for screening the candidates in order to select the appropriate
candidates for the jobs.
Application Form: Application Form is also known as application blank. The

technique of application bank is traditional and widely accepted for securing
information from the prospective candidates. It can also be used as a device to screen
the candidates at the preliminary level. Many companies formulate their own style of
application forms depending upon the requirement of information based on the size of
the company, nature of business activities, type and level of the job etc. Information is
generally required on the following items in the application forms: Personal background
information, Educational attainments, Work experiences, Salary , Personal details and
References.
Written Examination: The organizations have to conduct written examination for

the qualified candidates after they are screened on the basis of the application blanks so
as to measure the candidate’s ability in arithmetical calculations, to know the
candidates’ attitude towards the job, to measure the candidates’ aptitude, reasoning,
knowledge in various disciplines, general knowledge and English language.
Preliminary Interview: The preliminary interview is to solicit necessary information

from the prospective applicants and to assess the applicant’s suitability to the job. This
may be conducted by an assistant in the personnel department. The information thus
provided by the candidate may be related to the job or personal specifications regarding
education, experience, salary expected, aptitude towards the job, age, physical
appearance and other physical requirements etc. Thus, preliminary interview is useful
as a process of eliminating the undesirable and unsuitable candidates. If a candidate
satisfied the job requirements regarding most of the areas, he may be selected for
further process. Preliminary interviews are short and known as stand-up interviews or
sizing-up of the applicants or screening interviews. However, certain required amount of
care is to be taken to ensure that the desirable workers are not eliminated. This
interview is also useful to provide the basic information about the company to the
candidate.

Business Games: Business games are widely used as a selection technique for
selecting management trainees, executive trainees and managerial personnel at junior,
middle and top management positions. Business games help to evaluate the applicants
in the areas of decision-making identifying the potentialities, handling the situations,
problem-solving skills, human relations skills etc. Participants are placed in a
hypothetical work situation and are required to play the role situations in the game. The
hypothesis is that the most successful candidate in the game will be the most successful
one on the job.
Group Discussion: The technique of group discussion is used in order to secure

further information regarding the suitability of the candidate for the job. Group
discussion is a method where groups of the successful applicants are brought around a
conference table and are asked to discuss either a case study or a subject-matter. The
candidates in the group are required to analyses, discuss, find alternative solutions and
select the sound solution. A selection panel then observes the candidates in the areas of
initiating the discussion, explaining the problem, soliciting unrevealing information
based on the given information and using common sense, keenly observing the
discussion of others, clarifying controversial issues, influencing others, speaking
effectively, concealing and mediating arguments among the participants and
summarizing or concluding apply. The selection panel, based on its observation, judges
the candidates’ skill and ability and ranks them according to their merit. In some cases,
the selection panel may also ask the candidates to write the summary of the group
discussion in order to know the candidates’ writing ability as well.
Test: Psychological tests play a vital role in employee selection. A psychological test is
essentially an objective and standardized measure of sample of behavior from which
inferences about future behavior and performance of the candidate can be drawn.
Objectivity of tests refers to the validity and reliability of the instruments in measuring
the ability of the individuals. Objectivity provides equal opportunity to all the job
seekers without any discrimination against sex, caste etc. standardization of test refers
to uniformity of the total behavior of the prospective employee on the job.
Types of Test: Tests are classified into six types. They are Aptitude tests, Achievement
tests , Situational tests, Interest tests, Personality tests and Multidimensional testing.
Aptitude tests: These tests measure whether an individual has the capacity or latent
ability to learn a given job if given adequate training. Aptitudes can be divided into
general and mental ability or intelligence and specific aptitudes such as mechanical,
clerical, manipulative capacity etc.
Emotional Quotient (EQ): Most of the organizations realized that emotional

involvement and commitment of the employees determine their contribution to the

company rather than their intelligence quotient. As such, emotional quotient (EQ) is
used as important criteria in the employee selection process.
Achievement Tests: These tests are conducted when applicants claim to know
something as these tests are concerned with what one has accomplished. These tests are
more useful to measure the value of a specific achievement when an organization wishes
to employ experienced candidates. These tests are classified into: (a) Job knowledge
test: and (b) Work sample test.
Situational test: This test evaluates a candidate in a similar real life situation. In this
test, the candidate is asked either to cope with the situation or solve critical situations of
the job.
Interest tests: These tests are inventories of the likes and dislikes of candidates in
relation to work, job, occupations, hobbies and recreational activities. The purpose of
this test is to find out whether a candidate is interested or disinterested in the job for
which he is a candidate and to find out in which area of the job range/occupation the
candidate is interested. The assumption of this test is that there is a high correlation
between the interest of a candidate in a job and job success. Interest inventories are less
faked and they may not fluctuate after the age of 30.
Personality Tests: These tests prove deeply to discover clues to an individual’s value
system, his emotional reactions and maturity and characteristic mood. They are
expressed in such traits like self-confidence, tact, emotional control, optimism,
decisiveness, sociability, conformity, objectivity, patience, fear, distrust, initiative,
judgment dominance of submission, impulsiveness, sympathy, integrity, stability and
self-confidence.
Cognitive Ability Tests: These tests measure mathematical and verbal abilities.
Popularly known tests of this category include Graduate Record Examination (GRE) and
Scholastic Aptitude Test (SAT).
Wechsler Adult Intelligence Scale: this is a comprehensive test including general

information, arithmetic, similarities, vocabulary, picture completion, picture
arrangement, object assembly and similar items.
Wonderlic Personnel Test: This test includes perceptual, verbal and arithmetic.
Polygraph Tests: The polygraph is an instrument that records changes in breathing,
blood pressure, pulse and skin response associated with sweating of palms and plots
these reactions on paper.

Multi-dimensional Testing: However, the need for multi-skills is being felt by most
of the companies’ consequent upon globalization, competitiveness and the consequent
customer-centred strategies. Organization have to develop multi-dimensional testing in
order to find out whether the candidates possess a variety of skills or not, candidate’s
ability to integrate the multi-skills and potentiality to apply them based on situational
and functional requirement.
Employment Interview: Final interview is usually followed by testing. This is the

most essential step in the process of selection. In this step, the interviewer matches the
information obtained about the candidate thorough various means to the job
requirements and to the information obtained through his own observation during the
interview.
Various Types of interviews: 1.Priliminary Interview 2.Core Interview 3.Decision-

Making Interview
Priliminary Interview: Informal Interview & Unstructured Interview
Ï Informal Interview: This is the interview which can be conducted at any place
by any person to secure the basic and non-job related information. the
interaction between the candidate and the personnel manager when the former
meets the latter to enquire about the vacancies or additional particulars in
connection with the employment advertisement is an example of informal
interview.
Ï Unstructured Interview: In this interview, the candidate in given the freedom
to tell about himself by revealing his knowledge on various items/areas, his
background , expectations, interest etc. Similarly, the interviewer also provides
information on various items required by the candidate.
Core Interview: It is normally the interaction between the candidate and the line
executive or experts on various areas of no knowledge, skill, talent etc. this interview
may take various forms like: Background Information Interview, Job and Probing
Interview, Stress Interview, Stress Interview, Group Discussion Interview, Formal and
Structured Interview, Panel Interview & Depth Interview.
Background Information Interview: This interview is intended to collect

the information which is not available in the application blank and to check that
information provided in the application blank regarding education, place of
domicile, family, health, interests, hobbies, likes, dislikes and extracurricular
activities of the applicant.

Job and Probing Interview: This interview aims at testing the candidate’s job
knowledge about duties, activities, methods of doing the job, critical/problematic
areas, methods of handling those areas etc.
Stress Interview: This Interview aims at testing the candidate’s job behaviour
and level of withstanding during the period of stress and strain. The interviewer
tests the candidate by putting him under stress and strain by interrupting the
applicant from answering, criticising his opinions, asking questions pertaining to
unrelated areas, keeping silent for unduly long periods after he has finished
speaking etc. stress during the middle portion of the interview gives effective
results. Stress interview must be handled with utmost care and skill. This type
interview is often invalid, as the interviewee’s need for a job and his previous
experience in such type of interviews may inhibit his actual behaviour under such
situations.
Group Discussion Interview: There are two methods of conducting group

discussion interviews, viz. group interview method and discussion interview
method. All the candidates are brought into one room, i.e., the interview room
and are interviewed one by one under group interview. This method helps a busy
executive to save valuable time and gives a fair account of the objectivity of the
interview to the candidates. Under the discussion interview method, one topic is
given for discussion to the candidates who assemble in one room and they are
asked to discuss the topic in detail. This type of interview helps the interviewer in
appraising certain skills of the candidates like initiative, interpersonal skills,
dynamism, presentation, leading, comprehension, collaboration etc. Interviewers
are at ease in this category of interview because of its informality and flexibility.
But it may fail to cover some significant portions of the candidates’ background
and skills.
Formal and Structured Interview: In this type of interview, all the

formalities, procedures like fixing the value, time, panel of interviewers, opening
and closing, intimating the candidates officially etc. are strictly followed
arranging and conducting the interview. The course of the interview is
preplanned and structured, in advance, depending on job requirements, the
questions for discussion are structured and experts are allotted different areas
and questions to be asked. There will be very little room for the interviewers to
deviate from the questions prepared in advance in a sequence.
Panel Interview: A panel of experts interviews each candidate, judges his

performance individually and prepares consolidated judgment. This type of

interview is known as panel interview. Interviews for middle level and senior
level managers are normally conducted by the panel of experts.
Depth Interview: In this interview, the candidate would be examined

extensively in core areas of job skills and knowledge. Experts test the candidate’s
knowledge in depth. Depth interviews are conducted for specialist jobs.
Information technology brought significant developments in the selection process
of employees. The vital development is on-line interview.
Decision-Making Interview:
After the candidates are examined by the experts including the line managers of the
organization in the core areas of the job, the head of the department/section concerned
interviews the candidates once again, mostly through informal discussion. The
interviewer examines the interest of the candidate in the job, organization,
reaction/adaptability to the working conditions, career planning, promotional
opportunities, work adjustment and allotment etc. the Personnel Manager also
interviews the candidates with a view to find out his reaction/acceptance regarding
salary, allowances, benefits, promotions, opportunities etc.
The head of the department and the personnel manager exchange the views and then
they jointly inform their decision to the chairman of the interview board, who finally
makes the decision about the candidates’ performance and their ranks in the interview.
Most of the organizations have realized recently that employees’ positive attitude
matters much rather than employees’ skills and knowledge. Employees with positive
attitude contribute much to the organization. Hence the interviewers look for the
candidates with the right attitude while making final decision.
Medical examination: – Applicants who have crossed the above stages are sent for a
physical examination either to the company’s physician or to a medical officer approved
for the purpose.
Reference checks: – The applicant is asked to mention in his application form the
names and addresses of two or three persons who know him well.
Final approval: – The shortlisted candidates by the department are finally approved
by the executives of the concerned department. Employment is offered in the form of
appointment letter mentioning the post, the rank, the grade, the date by which the
candidate should join and other terms and conditions in brief.
HR Interview

The goal of an HR interview is to determine the potential job performance of an

applicant based on the answers that they give to questions. The HR interview is
excellent for jobs that will require applicants to have communication skills. It will also
allow the company to obtain important information that is related to the client. During
the HR interview, the applicant will be able to demonstrate how much they know about
a particular task.
The HR interview is designed to make sure the best candidates are selected. The
interview will also allow the human resources department to determine if the
applicant can work well with the other employees. However, there are a number
of disadvantages to the HR interview process. The evaluations that are made by
the HR department will often be subjective. The decision on whether or not they
will hire the applicant is generally made during the first few minutes of the
conversation. The rest of the interview is used by the HR department to
determine if the decision is valid.
Ï There are a number of ways that can be used to make the HR interview more
successful. The use of stereotypes should be reduced as much as possible. Sex and
race should not play a role in the selection process of the company. Studies have
shown that interviewers who do not have an advanced knowledge of the job are
much more likely to use stereotypes than those who do understand the job
requirements.
ÿ The questions that are asked during the interview should always be related to the
job. When applicants are asked questions which are not related to the job, this
can damage the credibility of the company. To solve these problems, it is
important for a company to make sure they train their employees, especially
those who will be interviewing applicants. The interviewer must have
interpersonal skills. They should not make quick decisions about those they
interview, and they should never use stereotypes. The emphasis should never be
placed on any one characteristic, especially if the job requires the applicant to be
skilled in multiple areas.
¯ Reliability of the Interview: In the interview context, reliability is consensus,

or agreement, between two interviewers on their assessment of the same
candidates. This is called Interrater Reliability. Research shows that it is rather
weak.
¯ Similarity Error: Interviewers are positively predisposed to candidates who
are similar to them (in hobbies, interests, personal background). They are
negatively disposed to candidates who are unlike them.
¯ Contrast Error: When several candidates are interviewed in succession, raters
tend to compare each candidate with the preceding candidates instead of an

absolute standard. Thus an average candidate can be rated as higher than average
if he or she comes after one or two poor candidates and lower than average if he
or she follows an excellent candidate.
¯ First Impression Error: Some interviewers tend to form a first impression of
candidates rather quickly, based on a review of the application blank or on the
first few moments of the interview. Thus, this impression is based on relatively
little information about the candidate. Nevertheless the initial judgment is
resistant t change as more information or contradictory information is acquired.
In addition, the interviewer may choose subsequent questions based on the first
impression, in an attempt to confirm the positive or negative impression.
¯ Traits Rated and Halo Error: Halo error occurs when either the interviewer’s
overall impression or strong impression of a single dimension spreads to
influence his or her rating of other characteristics. For instance, if a candidate
impresses the interviewer as being very enthusiastic, the interviewer might tend
to rate he candidate high on other characteristics, such as job knowledge, loyalty
and dependability.
Placement: Placement refers to assigning rank and responsibility to an individual,
identifying him with a particular job. If the person adjusts to the job and continues to
perform per expectations, it means that the candidate is properly placed. However, if the
candidate is seen to have problems in adjusting himself to the job, the supervisor must
find out whether the person is properly placed as per the latter’s aptitude and potential.
Usually, placement problems arise out of wrong selection or improper placement or
both. Therefore, organizations need to constantly review cases of employees
expectations / potential and employee related problems such as turnover, absenteeism,
accidents etc., and assess how far they are related to inappropriate placement decisions
and remedy the situation without delay.
Induction: Induction refers to the introduction of a person to the job and the
organization. The purpose is to make the employee feel at home and develop a sense of
pride in the organization and commitment to the job. The induction process is also
envisaged to indoctrinate, orient, acclimatize, and acculturate the person to the job and
the organization. The basic thrust of Induction training during the first one or few weeks
after a person joins service in the organization is to:
þ introduce the person to the people with whom he works

þ make him aware of the general company policies that apply to him as also the
þ specific work situation and requirements,
þ answer any questions and clarify any doubts that the person may have about the
job and the organization ……and
þ provide on-the-job instructions, check back periodically how
the person is doing and offer help, if required.

III – UNIT
TRAINING & DEVELOPMENT

AND PERFORMANCE APPRAISAL
Introduction: Organization and individual should develop and progress

simultaneously for their survival and attainment of mutual goals. So, every modern
management has to develop the organization through human resources development.
Employee training is the most important sub-system of human resources development.
Training is a specialized function and is one of the fundamental operative functions for
human resources management.
Meaning: After an employee is selected, placed and introduced in an organization

he/she must be provided with training facilities in order to adjust him to the job.
Training is the act of increasing the knowledge and skill of an employee for doing a
particular job. Training is a short-term educational process and utilizing a systematic
and organized procedure by which employees learn technical knowledge and skills for a
definite purpose. Dale S. Beach defines the training as”….. the organized procedure by
which people learn knowledge and skill for a definite purpose”. In other words, training
improves changes and moulds the employee’s knowledge, skill, behavior and aptitude
and attitude towards the requirements of the job and the organization. Training refers to
the teaching and learning activities carried on for the primary purpose of helping
members of an organization to acquire and apply the knowledge, skills, abilities and
attitudes needed by a particular job and organization.Thus, training bridges the
differences between job requirements and employee’s present specifications.
Training and Development: Employee training is distinct from management

development or executive development. While the former refers to training given to
employees in the areas of operations, technical and allied areas, the latter refers to
developing an employee in the areas of principles and techniques of management,
administration, organization and allied areas.
Importance of Training and Development: Optimum Utilization of Human

Resources – Training and Development helps in optimizing the utilization of human
resource that further helps the employee to achieve the organizational goals as well as
their individual goals.
Development of Human Resources – Training and Development helps to provide

an opportunity and broad structure for the development of human resources’ technical

and behavioral skills in an organization. It also helps the employees in attaining

personal growth.
Development of skills of employees – Training and Development helps in

increasing the job knowledge and skills of employees at each level. It helps to expand the
horizons of human intellect and an overall personality of the employees.
Productivity – Training and Development helps in increasing the productivity of the

employees that helps the organization further to achieve its long-term goal.
Team spirit – Training and Development helps in inculcating the sense of team work,
team spirit, and inter-team collaborations. It helps in inculcating the zeal to learn within
the employees.
Organization Culture – Training and Development helps to develop and improve the
organizational health culture and effectiveness. It helps in creating the learning culture
within the organization.
Organization Climate – Training and Development helps building the positive

perception and feeling about the organization. The employees get these feelings from
leaders, subordinates, and peers.
Quality – Training and Development helps in improving upon the quality of work and
work-life.
Healthy work environment – Training and Development helps in creating the

healthy working environment. It helps to build good employee, relationship so that
individual goals aligns with organizational goal.
Health and Safety – Training and Development helps in improving the health and
safety of the organization thus preventing obsolescence.
Morale – Training and Development helps in improving the morale of the work force.
Image – Training and Development helps in creating a better corporate image.
Profitability – Training and Development leads to improved profitability and more

positive attitudes towards profit orientation.
þ Training and Development aids in organizational development i.e. Organization
gets more effective decision making and problem solving. It helps in
understanding and carrying out organisational policies

þ Training and Development helps in developing leadership skills, motivation,

loyalty, better attitudes, and other aspects that successful workers and managers
usually display.
Training Objectives: Generally, line managers ask the personnel manager to

formulate the training policies. The personnel manager formulates the following
training objectives in keeping with the company’s goals and objectives.
ü (i) To prepare the employee, both new and old to meet the present as well as the
changing requirements of the job and the organization.
ü (ii) To prevent obsolescence.
ü (iii) To impart the new entrants the basic knowledge and skills they need for an
intelligent performance of a definite job.
ü (iv) To prepare employees for higher level tasks.
ü (v) To assist employees to function more effectively in their present positions by
exposing them to the latest concepts, information and techniques and developing
the skills they will need in their particular fields.
ü (vi) To build up a second line of competent officers and prepare them to occupy
more responsible positions.
ü (vii) To broaden the minds of senior managers by providing them with
opportunities for an interchange of experiences within and outside with a view to
correcting the narrowness of outlook that may arise from over-specialization.
ü (viii) To develop the potentialities of people for the next level job.
ü (ix) To ensure smooth and efficient working of a department.
ü (x) To ensure economical output of required quality.
ü (xi) To promote individual and collective morale, a sense of responsibility, co-
operative attitudes and good relationships.
Training Methods: As a result of research in the field of training, a number of

programs are available. Some of these are new methods, while others are improvements
over the traditional methods. The training programs commonly used to train operative
and supervisory personnel are discussed below. These programs are classified into on-
the-job off-the-job training programs.
On-the Job Training Methods: This type of training, also known as job instruction
training, is the most commonly used method. Under this method, the individual is
placed on a regular job and taught the skills necessary to perform that job. The trainee
learns under the supervision and guidance of a qualified worker or instructor. On-the-
job training has the advantage of giving first hand knowledge and experience under the
actual working conditions. While the trainee learns how to perform a job, he is also a
regular worker rendering the services for which he is placed on rendering services in the

most effective manner rather than learning how to perform the job. On-the-job training
methods include job rotation, coaching, job instruction or training through step-by-step
and committee assignment.
Job Rotation: This type of training involves the movement of the trainee from one job
to another. The trainee receives job knowledge and gains experience from his supervisor
or trainer in each of the different job assignments. Though this method of training is
common in training managers for general management positions, trainees can also be
rotated from job to job in work-shop jobs. This method gives an opportunity to the
trainee to understand the problems of employees on other jobs and respect them.
Coaching: The trainee is placed under a particular supervisor who functions as a coach
in training the individual. The supervisor provides feedback to the trainee on his
performance and offers him some suggestions of his burden. A limitation of this method
of training is that the trainee may not have the freedom or opportunity to express his
own ideas.
Job Instruction: This method is also known as training through step by step. Under
this method, the trainer explains to the trainee the way of doing the jobs, job knowledge
and skills and allows him to do the job. The trainer appraises the performance of the
trainee, provides feedback information and corrects the trainee.
Committee Assignments: Under the committee assignment, a group of trainees are

given and asked to solve an actual organizational problem. The trainees solve the
problem joint6ly. It develops team work.
Internship: Internship is one of the on-the-job training methods. Individuals entering

industry in skilled trade4slike machinist, elect6ician and laboratory technician are
provided with thorough instruction though theoretical and practical aspects. For
example, TISCO, TELCO, and BHEL select the candidates from polytechnics
engineering colleges and management institutions and provide apprenticeship training.
Apprenticeship training programs are jointly sponsored by colleges, universities and
industrial organizations to provide the opportunity to the students to gain real-life
experience as well as employment. Exhibit presents the benefits of apprenticeship
training.
MAKE INTERNSHIPS BENEFICIAL: Most of the Universities and Colleges

encourage students for internship as part of the curriculum, as it is beneficial to all
concerned.
Benefits to Students:

þ Practical knowledge and exposure

þ Higher initial salaries
þ Faster promotions
þ Quick job orientation
Benefits of Universities:
þ Touch with market place
þ Improvement in recruitment chances
þ Improvement in attraction of quality students
Benefits to Potential Employers:

þ Competent assistance
þ Opportunity to evaluate potential employees
þ No obligation to continue relationship at the end of internship
þ Reduce recruitment expenses.
Off-the-Job Methods: Under this method of training, the trainee is separated from
the job situation and his attention is focused upon learning the material related to his
future job performance. Since the trainee is not distracted by job requirements, he can
place his entire concentration on learning the job rather than spending his time in
performing it. There is an opportunity for freedom of expression for the trainees.
Companies have started using multimedia technology and information technologies in
training off-the-job training methods are as follows:
Vestibule Training: In this method, actual work conditions are simulated in a

class room, material, files and equipment which are used in actual job
performance are also used in training. This type of training is commonly used for
training personnel for clerical and semi-skilled jobs. The duration of this training
ranges from days to a few weeks. Theory can be related to practice in this method.
Role Playing: It is defined as a method of human interaction that involves

realistic behavior in imaginary situations. This method of training involves
action, doing and practice. The participants play the role of certain characters
such as the production manager, mechanical engineer, superintendents,
maintenance engineers, quality control inspectors, foremen, workers and the like.
This method is mostly used for developing inter-personal interactions and
relations.
Lecture Method: The lecture is a traditional and direct method of instruction.
The instructor organizes the material and gives it to a group of trainees in the
form of a talk. To be effective, the lecture must motivate and create interest
among the trainees. An advantage of the lecture methods that it is direct and can

be used for a large group of trainees. Thus, costs and time involved are reduced.
The major limitation of the lecture method is that it does not provide for transfer
of training effectively.
Conference or Discussion: It is a method in training the clerical professional

and supervisory personnel. This method involves group of people who pose ideas,
examine and share facts, ideas and data, test assumptions and draw conclusions,
all of which contribute to the improvement of job performance. Discussion has
the distinct advantage over the lecture method, in that the discussion involves
two-way communication and hence feedback is provided. The participants feel
free to speak in small groups. The success of this method depends on the
leadership qualities of the person who leads the group.
Programmed Instruction: In recent years, this method has become popular.

The subject-matter to be learned is presented in a series of carefully planned
sequential units. These units are arranged from simple to more complex level of
instruction. The trainee goes through theses units by answering questions or
filling the blanks. This method is expensive and time consuming.
The Training Procedure: The training procedure discussed below is

essentially an adoption of the job instruction training course, which has been
proved to have a great value. The important steps in the training procedure are
discussed below:
Preparing the Instructor: The instructor must know both the job to be taught
and how to teach it. The job must be divided into logical parts so that each can be
taught at a proper time without the trainee losing plan. For each part, one should
have in mind the desired technique of instruction, that is, whether a particular
point is best taught by illustration, demonstration or explanation.
A serious and committed instructor must:

• Know the job or subject he is attempting to teach.
• Have the aptitude and ability to teach.
• Have willingness towards the profession.
• Have a pleasing personality and capacity for leadership.
• Have the kno2wledge of teaching principles and methods.
• Be a permanent student, in the sense that he should equip himself with the latest
concepts and knowledge.
Preparing the Trainee: As in interviewing, the first step in training is to attempt to

place the trainee at east. Most people are some what nervous when approaching an

unfamiliar task. Though the instructor may have executed this training procedure, many
times he or she never forgets its newness to the trainee. The quality of empathy is a
mark of the good instructor.
Getting Ready to Teach: This stage of the program is class hour teaching involving
the following activities:
• Planning the program.

• Preparing the instructor’s outline.
• Do not try to cover too much material.
• Keep the session moving along logically.
• Discuss each item in depth.
• Repeat, but in different words.
• Take the material from standardized texts when it is available.
• When the standardized text is not available, develop the program and course content
based on group approach. Group consists of employer, skilled employees, supervisors,
trade union leaders and others familiar with job requirements. Group prepares
teaching material.
• Teach about the standard for the trainee like quality, quantity, waste or scrap, ability
to work without supervision, knowledge or procedure, safety rules, human relations
etc.
• Remember your standard, before you teach.
Ï Presenting the Operation: There are various alternative ways of presenting

the operation, viz. explanation, demonstration etc. an instructor mostly uses
these methods of explanation. In addition, one may illustrate various points
through the use of pictures, charts, diagrams and other training aids.
Ï Try Out the Trainee’s Performance: As a continuation of the presentation

sequence given above, the trainee should be asked to start the job or operative
procedure. Some instructors prefer that the trainee explains each step before
doing it, particularly if the operation involves any danger. The trainee, through
repetitive practice, will acquire more skill.
Ï Follow-up: The final step in most training procedures is that of follow-up.

When people are involved in any problem or procedure, it is unwise to assume
that things are always constant. Follow-up cab be adopted to a variable
reinforcement schedule as suggested in the discussion of learning principles.
Every training program should have follow-up otherwise the training programs in
the future cannot be improved.

EVALUATION OF TRAINING PROGRAMME
The specification of values forms a basis for evaluation. The basis of evaluation and the
mode of collection of information necessary for evaluation should be determined at the
planning stage. The process of training evaluation has been defined as “any attempt to
obtain information on the effects of training permance and to assess the value of
training in the light of that information”. Evaluation leads to controlling and correcting
the training program. Hamblin suggested five level at which evaluation of training can
take place, viz, reactions, learning, job behavior, organization and ultimate value.
¶ Positive Attitudes Make an Organisation

¶ Determine training needs through job description, performance appraisal forms
and potential appraisal discussions.
¶ Prepare a training calendar in discussion with managers.
¶ Training programs should be well defined specific objectives.
¶ Nominate the employees for training based on a need for training.
¶ Trainers should be qualified and experienced, and preferably internal.
Ï Reactions: Training program is evaluated on the basis of the trainee’s reactions

to the usefulness of coverage of the matter, depth of the course content, method
of presentation, teaching methods etc.
Ï Learning: Training program, trainer’s ability and trainee ability are evaluated
on the basis of quantity of content learned and time in which it is learned and the
learner’s ability to use or apply the content he learned.
Ï Job Behavior: This evaluation includes the manner and extent to which the
trainee has applied his learning to his job.
Ï Organisation: This evaluation measures the use of training, learning and

change in the job behavior of the department/organization in the form of
increased productivity, quality, morale, sales turnover and the like.
Ï Ultimate Value: It is the measurement of the ultimate result of the

contributions of the training program to the Company goals like survival, growth,
profitability etc., and to the individual goals like development of personality and
social goals like maximizing social benefit.
MANAGEMENT DEVELOPMENT INTRODUCTION
What is Management Development?

Management development is a systematic process of growth and development by which

the managers develop their abilities to manage. So, it is the result of not only
participation in formal courses of instruction but also of actual job experience. It is
concerned with improving the performance of the managers by giving them
opportunities for growth and development, which in turn depends on organization
structure of the company.
Role of the Organisation: “The role of the company in management development is

to establish the program and the development opportunities for its present and
potential managers”. “Executive development is eventually something that the executive
has to attain himself. But he will do this much better if he is given encouragement,
guidance and opportunity by his company”.
Objectives of Management Development: The management development

programs are organized with a view to achieving specific objectives. They are:
¯ (i)To overhaul the management machinery.

¯ (ii) To improve the performance of the managers.
¯ (iii) To give the specialists on overall view of the functions of an organization and
equip them to coordinate each other’s efforts effectively.
¯ (iv) To identify persons with the required potential and prepare them for senior
positions.
¯ (v) To increase morale of the members of the management group.
¯ (vi) To increase versatility of the management group.
¯ (vii) To keep the executives abreast with the changes and developments in their
respective fields.
¯ (viii) To create the management succession that can take over in case of
contingencies.
¯ (ix) To improve thought process and analytical ability.
¯ (x) To broaden the outlook of the executive regarding h is role position and
responsibilities.
¯ (xi) To understand the conceptual issues relating to economic, social and
technical areas.
¯ (xii) To understand the problems of human relations and improve human
relations skills and
¯ (xiii) To stimulate creative thinking.
Evaluation of Management Development Programs: Management development

programs should be evaluated in order to find out whether the objectives of the

programs are achieved or not. The development programs would be effective, if they
contribute to the organizational group and individual goals. Management should
delegate the responsibility of evaluation to a senior manager in the HRD department.
The evaluation specialist should be clear of the objectives and goals against which the
evaluation is conducted. Evaluation should be a continuous process and specific. The
evaluation specialist should inform the trainees well in advance the content, objectives,
areas and the method of evaluation. Evaluation must be objective oriented. Evaluation
must be realistic in terms of direction, standards etc., The areas of evaluation include
different managerial skills, knowledge, technical skills and knowledge and conceptual
skills and knowledge. The areas should be specific for each MDP based on the content
provided. Further, the evaluation can also be conducted regarding the training
methodology, input/output/content, infrastructure and physical facilities, teaching aids
etc.,
Evaluation should not only immediately be after the completion of the programs but
also in specific intervals in the long-run in order to find out the impact of the MDP on
the job behavior and efficiency of the trainee. Further, their evaluation may also
measure the improvement in decision-making skill, interpersonal relation, strategy
making and implementation skills, role modeling skills etc., these areas depend upon
the content of each MDP. The evaluation results should be provided to the trainees,
their superiors, subordinates and HRD department of the organization. These results
can be used for further improvement of the future programs in the company.
Methods of Management Development: There are mainly two types of methods by

which managers can acquire the knowledge, skills and attitudes and make themselves
competent managers. One is through formal training and the other is through on-the-
job experiences. On-the-job training is of utmost importance as the real learning takes
place only when the learner uses what he has learnt. The saying ”an ounce of practice is
worth tons of theory” is true, whoever said it. But it should also be remembered that
class-room training or pedagogical techniques have also get their own importance in
learning new knowledge, learning new techniques and broader concepts.
Performance Appraisal
Performance appraisal is the process of obtaining, analyzing and recording information
about the relative worth of an employee. The focus of the performance appraisal is
measuring and improving the actual performance of the employee and also the future
potential of the employee. Its aim is to measure what an employee does. According to
Flippo, a prominent personality in the field of Human resources, “performance
appraisal is the systematic, periodic and an impartial rating of an employee’s excellence

in the matters pertaining to his present job and his potential for a better job.”
Performance appraisal is a systematic way of reviewing and assessing the performance
of an employee during a given period of time and planning for his future.
It is a powerful tool to calibrate, refine and reward the performance of the employee. It
helps to analyze his achievements and evaluate his contribution towards the
achievements of the overall organizational goals. By focusing the attention on
performance, performance appraisal goes to the heart of personnel management and
reflects the management’s interest in the progress of the employees.
Objectives Of Performance appraisal:

●To review the performance of the employees over a given period of time.
●To judge the gap between the actual and the desired performance.
●To help the management in exercising organizational control.
●Helps to strengthen the relationship and communication between superior –
subordinates and management – employees.
●To diagnose the strengths and weaknesses of the individuals so as to identify
the training and development needs of the future.
●To provide feedback to the employees regarding their past performance.
●Provide information to assist in the other personal decisions in the
organization.
●Provide clarity of the expectations and responsibilities of the functions to be
performed by the employees.
●To judge the effectiveness of the other human resource functions of the
organization such as recruitment, selection, training and development.
●To reduce the grievances of the employees.
Traditional Methods of Performance Appraisal
| Essay Appraisal Method: This traditional form of appraisal, also known as

“Free Form method” involves a description of the performance of an employee by
his superior. The description is an evaluation of the performance of any
individual based on the facts and often includes examples and evidences to
support the information. A major drawback of the method is the inseparability of
the bias of the evaluator.
| Straight Ranking Method: This is one of the oldest and simplest techniques of
performance appraisal. In this method, the appraiser ranks the employees from
the best to the poorest on the basis of their overall performance. It is quite useful
for a comparative evaluation.

| Paired Comparison: A better technique of comparison than the straight

ranking method, this method compares each employee with all others in the
group, one at a time. After all the comparisons on the basis of the overall
comparisons, the employees are given the final rankings.
| Critical Incidents Methods: In this method of Performance appraisal, the

evaluator rates the employee on the basis of critical events and how the employee
behaved during those incidents. It includes both negative and positive points.
The drawback of this method is that the supervisor has to note down the critical
incidents and the employee behaviour as and when they occur.
| Field Review: In this method, a senior member of the HR department or a

training officer discusses and interviews the supervisors to evaluate and rate their
respective subordinates. A major drawback of this method is that it is a very time
consuming method. But this method helps to reduce the superiors’ personal bias.
| Checklist Method: The rater is given a checklist of the descriptions of the

behaviour of the employees on job. The checklist contains a list of statements on
the basis of which the rater describes the on the job performance of the
employees.
| Graphic Rating Scale: In this method, an employee’s quality and quantity of

work is assessed in a graphic scale indicating different degrees of a particular
trait. The factors taken into consideration include both the personal
characteristics and characteristics related to the on the job performance of the
employees. For example a trait like Job Knowledge may be judged on the range of
average, above average, outstanding or unsatisfactory.
| Forced Distribution: To eliminate the element of bias from the rater’s ratings,
the evaluator is asked to distribute the employees in some fixed categories of
ratings like on a normal distribution curve. The rater chooses the appropriate fit
for the categories on his own discretion.
Modern Methods of Performance Appraisal
Assessment Centers: An assessment centre typically involves the use of methods like
social/informal events, tests and exercises, assignments being given to a group of
employees to assess their competencies to take higher responsibilities in the future.
Generally, employees are given an assignment similar to the job they would be expected
to perform if promoted. The trained evaluators observe and evaluate employees as they
perform the assigned jobs and are evaluated on job related characteristics. The major

competencies that are judged in assessment centres are interpersonal skills, intellectual
capability, planning and organizing capabilities, motivation, career orientation etc.
assessment centres are also an effective way to determine the training and development
needs of the targeted employees.
Behaviorally Anchored Rating Scales: Behaviorally Anchored Rating Scales

(BARS) is a relatively new technique which combines the graphic rating scale and
critical incidents method. It consists of predetermined critical areas of job performance
or sets of behavioral statements describing important job performance qualities as good
or bad (for eg. the qualities like inter personal relationships, adaptability and reliability,
job knowledge etc). These statements are developed from critical incidents. In this
method, an employee’s actual job behaviour is judged against the desired behaviour by
recording and comparing the behaviour with BARS. Developing and practicing BARS
requires expert knowledge.
Human Resource Accounting Method: Human resources are valuable assets for
every organization. Human resource accounting method tries to find the relative worth
of these assets in the terms of money. In this method the Performance appraisal of the
employees is judged in terms of cost and contribution of the employees. The cost of
employees include all the expenses incurred on them like their compensation,
recruitment and selection costs, induction and training costs etc whereas their
contribution includes the total value added (in monetary terms). The difference between
the cost and the contribution will be the performance of the employees. Ideally, the
contribution of the employees should be greater than the cost incurred on them.
360-Degree-Performance-Appraisal Method: 360 degree feedback, also known

as ‘multi-rater feedback’, is the most comprehensive appraisal where the feedback about
the employees’ performance comes from all the sources that come in contact with the
employee on his job. 360 degree respondents for an employee can be his/her peers,
managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors –
anyone who comes into contact with the employee and can provide valuable insights and
information or feedback regarding the “on-the-job” performance of the employee.
360 degree appraisal has four integral components:
1. Self appraisal
2. Superior’s appraisal
3. Subordinate’s appraisal
4. Peer appraisal.
Self appraisal gives a chance to the employee to look at his/her strengths and
weaknesses, his achievements, and judge his own performance. Superior’s appraisal
forms the traditional part of the 360 degree performance appraisal where the

employees’ responsibilities and actual performance is rated by the superior.

Subordinates appraisal gives a chance to judge the employee on the parameters like
communication and motivating abilities, superior’s ability to delegate the work,
leadership qualities etc. Also known as internal customers, the correct feedback given by
peers can help to find employees’ abilities to work in a team, co-operation and
sensitivity towards others.
360 degree performance appraisal is also a powerful developmental tool because when
conducted at regular intervals it helps to keep a track of the changes others’ perceptions
about the employees. A 360 degree appraisal is generally found more suitable for the
managers as it helps to assess their leadership and managing styles. This technique is
being effectively used across the globe for performance appraisals. Some of the
organizations following it are Wipro, Infosys, and Reliance Industries etc.
PROCESS OF PERFORMANCE APPRAISAL
Establishing Performance Standards: The first step in the process of performance

appraisal is the setting up of the standards which will be used to as the base to compare
the actual performance of the employees. This step requires setting the criteria to judge
the performance of the employees as successful or unsuccessful and the degrees of their
contribution to the organizational goals and objectives. The standards set should be
clear, easily understandable and in measurable terms. In case the performance of the
employee cannot be measured, great care should be taken to describe the standards.
Communicating the Standards: Once set, it is the responsibility of the management

to communicate the standards to all the employees of the organization. The employees
should be informed and the standards should be clearly explained. This will help them
to understand their roles and to know what exactly is expected from them. The
standards should also be communicated to the appraisers or the evaluators and if
required, the standards can also be modified at this stage itself according to the relevant
feedback from the employees or the evaluators.
Measuring the Actual Performance: The most difficult part of the Performance
appraisal process is measuring the actual performance of the employees that is the work
done by the employees during the specified period of time. It is a continuous process
which involves monitoring the performance throughout the year. This stage requires the
careful selection of the appropriate techniques of measurement, taking care that
personal bias does not affect the outcome of the process and providing assistance rather
than interfering in an employees work.

Comparing the Actual with the Desired Performance: The actual performance
is compared with the desired or the standard performance. The comparison tells the
deviations in the performance of the employees from the standards set. The result can
show the actual performance being more than the desired performance or, the actual
performance being less than the desired performance depicting a negative deviation in
the organizational performance. It includes recalling, evaluating and analysis of data
related to the employees’ performance.
Discussing Results: The result of the appraisal is communicated and discussed with
the employees on one-to-one basis. The focus of this discussion is on communication
and listening. The results, the problems and the possible solutions are discussed with
the aim of problem solving and reaching consensus. The feedback should be given with a
positive attitude as this can have an effect on the employees’ future performance. The
purpose of the meeting should be to solve the problems faced and motivate the
employees to perform better.
Decision Making: The last step of the process is to take decisions which can be taken
either to improve the performance of the employees, take the required corrective
actions, or the related HR decisions like rewards, promotions, demotions, transfers etc.
Purpose Of Performance Appraisal: Performance Appraisal is being practiced in

90% of the organisations worldwide. Self-appraisal and potential appraisal also form a
part of the performance appraisal processes. Performance Appraisal is aimed at:
þ To review the performance of the employees over a given period of time.

þ To judge the gap between the actual and the desired performance.
þ To help the management in exercising organizational control.
þ To diagnose the training and development needs of the future.
þ Provide information to assist in the HR decisions like promotions, transfers etc.
þ Provide clarity of the expectations and responsibilities of the functions to be
performed by the employees.
þ To judge the effectiveness of the other human resource functions of the
organization such as recruitment, selection, training and development.
þ To reduce the grievances of the employees.
þ Helps to strengthen the relationship and communication between superior –
subordinates and management – employees.
The most significant reasons of using Performance appraisal are:
þ Making payroll and compensation decisions – 80%

þ Training and development needs – 71%

þ Identifying the gaps in desired and actual performance and its cause – 76%
þ Deciding future goals and course of action – 42%
þ Promotions, demotions and transfers – 49%
þ Other purposes – 6% (including job analysis and providing superior support,
assistance and counseling)
Performance Appraisals as Career Development: Performance appraisal is a

part of career development. The latest mantra being followed by organizations across
the world being – “get paid according to what you contribute” – the focus of the
organizations is turning to performance management and specifically to individual
performance. Performance appraisal helps to rate the performance of the employees and
evaluate their contribution towards the organizational goals. Performance appraisal as
Career Development leads to the recognition of the work done by the employees, many a
times by the means of rewards and appreciation etc. It plays the role of the link between
the organization and the employees’ personal career goals.
| Potential appraisal, a part of Performance appraisal, helps to identify the hidden

talents and potential of the individuals. Identifying these potential talents can
help in preparing the individuals for higher responsibilities and positions in the
future. The performance appraisal process in itself is developmental in nature.
| Performance appraisal is also closely linked to other HR processes like helps to

identify the training and development needs, promotions, demotions, changes in
the compensation etc. A feedback communicated in a positive manner goes a long
way to motivate the employees and helps to identify individual career
developmental plans. Based on the evaluation, employees can develop their
career goals, achieve new levels of competencies and chart their career
progression. Performance appraisal encourages employees to reinforce their
strengths and overcome their weaknesses.
Performance Appraisal Feedback: Performance appraisal process is incomplete

without the feedback given to the employee about his appraisal and his performance.
But the way of giving as well as receiving the feedback differs from person to person and
their way of handling and their outlook towards the issue. Therefore, On the part of the
person receiving the feedback, the following points are important to be taken care of:
r The employee should have a positive attitude towards the feedback process
r He should listen to the suggestions of the appraiser calmly and try to incorporate
them in his plans.
r He should not hesitate to ask for the help of his superiors.
r Should have a co-operative attitude during the feedback meeting.

r Should take the feedback objectively.

r Should not judge the appraiser as a person on the basis of the feedback.
On the part of the appraiser or the manager / person giving the feedback, the following
points are to be taken care of:
r The appraiser should make the receiver feel comfortable during the feedback
meeting.
r The appraiser should make it a two – way conversation i.e. let the employee
speak.
r Listen to the employee and note his points, suggestions, problems etc.
r The appraiser should not adopt a confrontational approach towards the meeting.
The goal is not to criticize the employee.
r Provide a constructive feedback to the employee i.e. in a way which will motivate
him to perform better.
r Have a positive attitude towards the process
r Be fair and objective
r Prepare yourself for what to say and how to say.
r Make the appraisal feedback meeting useful and productive for the organization
and the employee.

IV - UNIT
COMPENSATION
SALARY & WAGE ADMINISTRATION
Compensation administration is essentially the application of a systematic approach to

the problem of ensuring that employees are paid in a logical, equitable and fair manner.
Wage: Wage and salary are often discussed in loose sense, as they are used
interchangeably. But Indian Labour Organisation (ILO) defined the term wage as “the
remuneration paid by the employer for the services of hourly, daily, weekly and
fortnightly employees. “It also means that remuneration paid to production and
maintenance or blue collar employees.
Salary: The term salary is defined as the remuneration paid to the clerical and
managerial personnel employed on monthly or annual basis.This distinction between
wage and salary does not seem to be valid in these days of human resources approach
where all employees are treated as human resources and are viewed at par. Hence, these
two terms can be used interchangeably. As such, the term wage and/or salary can be
defined as the direct remuneration paid to an employee compensating his services to an
organization. Salary is also known as basic pay.
Earnings: Earnings are the total amount of remuneration received by an employee

during a given period. These include salary (pay), dearness allowance; house rent
allowance, city compensatory allowance, other allowances, overtime payments etc.
Nominal wage: It is the wage paid or received in monetary terms. It is also known as
money wage.
Real wage: Real wage is the amount of wage arrived after discounting nominal wage by
the living cost. It represents the purchasing power of money wage.\
Take Home Salary: It is the amount of salary left to the employee after making
authorized deductions like contribution to the provident fund, life insurance premium,
income tax and other charges.
Minimum wage: It is the amount of remuneration which could meet the “normal
needs of the average employee regarded as a human being living in a civilized society.” It
is defined as the amount or remuneration “which may be sufficient to enable a worker to
live in reasonable comfort, having regard to all obligations to which an average worker
would ordinarily be subjected to”.

Statutoty Minimum Wage: It is the amount of remuneration fixed according to the

provisions of the minimum wages Act, 1948.
Objective of Wage and Salary Administration: The objective of wage and salary
administration is numerous and sometimes conflict with each other. The important
among them are:
Ï To acquire qualified competent personnel: Candidates decide upon their

career in a particular organization mostly on the basis of the amount of
remuneration the organization offers. Qualified and competent people join the
best-paid organizations. As such, the organizations should aim at payment of
salaries at that level, where they can attract competent and qualified people.
Ï To retain the present employees: If the salary level does not compare
favorable with that of other similar organizations, employees quit the present one
and join other organizations. The organization must keep the wage levels at the
competitive level, in order to prevent such quits.
Ï To secure internal and external equity: Internal equity does mean

payment of similar wages for similar jobs within the organization. External equity
implies payment of similar wages to similar jobs in comparable organizations.
Ï To ensure desired behaviour: Good rewards reinforce desired bahaviour

like performance, loyalty, accepting new responsibilities and changes etc.
Ï To keep labour and administrative costs in line with the ability of the
organization to pay.
Ï To protect in public as progressive employers and to comply with the wage

legislations.
Ï To pay according to the content and difficulty of the job and in tune with the
effort and merit of the employees.
Ï To facilitate pay roll administration of budgeting and wage and salary control.
Ï To simplify collective bargaining procedures and negotiations.
Ï To promote organization feasibility.

FACTORS AFFECTING WAGE/SALARY LEVELS
Generally, a large number of factors influence the salary levels in an organization.

Significant among them are:
þ (i) Remuneration in Comparable Industries;
þ (ii) Firm’s Ability to Pay;
þ (iii) Cost of Living;
þ (iv) Productivity;
þ (v) Union Pressure and Strategies; and
þ (vi) Government Legislations.
(i) Remuneration in Comparable Industries: Prevailing rates of remuneration in

comparable industries constituted an important factor in determining salary levels. The
organization, in the long-run, must pay at least equal to the going rate for similar jobs in
similar organization. Further, the salary rates for the similar jobs in the firms located in
the same geographical region also influence the wage rate in the organization. The
organization has to pay the wages equal to that paid for similar jobs in comparable
industries in order to secure and retain the competent employees, to follow the directive
of Courts of Law, to meet the trade union’s demands, to satisfy the employee’s need for
same social status as that of same categories of employees in comparable organizations.
Comparable industries constitute the organizations engaged in the same or similar
activities, of the same size in the similar type or management, i.e., public sector or under
the management of same owners, organizations located in the same geographical region
etc.,
(ii) Firm’s Ability to Pay: One of the principal considerations that weigh with the
management in fixing the salary levels is its ability to pay. But in the short-run, the
influence of ability to pay may be practically nil. However, in the long-run, it is quite an
influential factor. In addition, total cost of employees (salaries, allowances, cost of fringe
benefits etc.) should be taken into consideration in determining the ability to pay. Trade
Unions demand higher wages when the company’s financial position is sound. But they
may not accept wage reduction, when the company’s financial position is in doldrums.
Hence, the management has to take decisions judiciously. Further, certain incentives are
linked to the profitability. Thus, whatever the influence of other factors may be, the
organization cannot pay more than its ability to pay in the long-run.
(iii) Relating to Price-index: The cost of living is another important factor that
influences the quantum of salary. The employees expect that their purchasing power be
maintained at least at the same level, if not increased by adjusting wages to changes in
cost of living. In fact, in recent years, in advanced countries, “ a number f labour
agreements have ‘escalator’ clauses, providing for automatic wage and salary increase as

cost of living index raises. “Dearness allowance is an allowance granted to the employees
with a view to combating onslaughts of soaring prices.
(iv) Productivity: An interesting development in wage determination has been

productivity standard. This is based on the fact that productivity increase is also the
result of employee satisfaction and contribution to the organization. But wage
productivity linkage does not appear to be so easy since many problems crop up in
respect of the concept and measurement of productivity. But, although the wages are
not linked directly to the productivity in an organization, changes in productivity have
their impact on remuneration. This criteria received consideration of wage boards. “not
only because it constituted a factor in the fixation of ‘fair wage’ but also because it was
directly related to such questions as desirability of extending the system of payment by
result”.
(v) Union Pressure and Strategies: the wages are also often influenced by the
strength of Unions, their bargaining capacity and their strategies. Arthur M. Ross
concluded that “read hourly earnings have advanced more sharply in highly organized
industries than in less unionized industries. “Unions pressurize management through
their collective bargaining strategies political tactics and by organizing strikes etc. trade
unions influence maybe on the grounds of wages in comparable industries, firm’s
financial position, raised particularly in those industries where the wage level is below
that of other comparable industries”.
(vi) Government Legislations: Government legislations influence wage

determination. The two important legislations which affect wage fixation are: the
Payment of Wages Act, 1936 and the Minimum Wages Act, 1948. The important
provisions of the Payment of Wages Act, 1936 are: ensuring proper payment of wages ad
avoiding all malpractices like non-payment, underpayment, delayed and irregular
payment, payment in king and under-measurement of work. The Act covers all
employees drawing the wage up to Rs. 1,000 per month. The Act stipulates that the
organizations with less than hundred workers should pay the wage by the seventh and
the organizations with more than 100 employees should pay by the tenth of nest month.
Compensation: An Overview
v Compensation – Total of all rewards provided employees in return for services
v Direct financial compensation – Pay received in the form of wages, salaries,
bonuses, and commissions
v Indirect financial compensation – All financial rewards not included in direct
compensation
v Nonfinancial compensation – Satisfaction a person receives from job itself or
from work environment

Equity in Financial Compensation

v Equity – Fair pay treatment for employees
v External equity – Comparable salary for work performed by workers of
similar jobs in other firms.
v Internal equity – pay according to relative value of other jobs within same
organization
v Employee equity – Individuals performing similar jobs for same firm are paid
according to factors unique to employee, such as performance level or
seniority
v Team equity – More productive teams are rewarded more than less
productive groups
Compensation Policies
Ï Pay leaders – pay higher wages and salaries
Ï Market rate, or going rate – pay what most employers pay for same job
Ï Pay followers – pay below market rate because poor financial condition or
believe they do not require highly capable employees
Job Evaluation
¯ Firm determines the relative value of one job in relation to another
¯ Ranking
¯ Classification
¯ Factor comparison
¯ Point
Ranking Method
ÿ Simplest method
ÿ Raters examine description of each job
ÿ Jobs arranged in order according to value
Factor Comparison Method

¶ Mental requirements
¶ Skills
¶ Physical requirements
¶ Responsibilities
¶ Working conditions
Job Pricing
¯ Placing a dollar value on worth of a job

¯ Pay grades – Grouping of similar jobs to simplify pricing jobs

¯ Wage curve – Fitting of plotted points to create a smooth progression between

pay grades
¯ Pay ranges – Minimum and maximum pay rate with enough variance between
the two to allow for a significant pay difference
Employee –Determinant of Financial Compensation

¥ Performance-based Pay
¥ Skilled-based Pay
¥ Competency-based Pay
¥ Seniority
¥ Experience
¥ Membership in the organization
¥ Potential
¥ Political Influence
¥ Luck
Performance-Based Pay
¤ Merit pay – Pay increase given to employees based on their level of
performance as indicated in the appraisal
¤ Variable pay – Compensation based on performance (bonus)
¤ Piecework – Employees paid for each unit they produce
Skill-Based Pay
± Compensates on basis of job-related skills and knowledge
± Employees and departments benefit when employees obtain additional
skills
± Appropriate where work tends to be routine and less varied
± Must provide adequate training opportunities or system becomes a
demotivator Seniority
± Length of time an employee has been associated with the company,
division, department, or job
± Labor unions tend to favor seniority
Organizational Memberships
° Some components of individual financial compensation are given to
employees regardless of particular job they perform or their level of
productivity
° Intended to maintain a high degree of stability in the workforce and to
recognize loyalty

Compensation for Special Groups

É Team-based Pay
É Company-wide Plans
É Compensation for Professional
É Compensation for Sales Employees
É Compensation for Contingency Workers
Company-Wide Pay
É Profit sharing – distribution of predetermined percentage of firm’s profits

to employees
É Gain sharing – incentive payment based upon improved company
performance
É Scanlon plan – reward to employees for savings in labor costs resulting
from employees’ suggestions
Types of Executive Compensation

É Base salary
É Short-term (annual) incentives or bonuses
É Long-term incentives and capital appreciation plans
É Stock option plans
É Indexed stock option plans
É Executive benefits (Perks)
É Golden parachutes
Compensation Management Purpose
Compensation is a key factor in attracting and keeping the best employees and
ensuring that your organization has the competitive edge in an increasingly
competitive world. The Compensation Management component enables you to
differentiate between your remuneration strategies and those of your competitors
while still allowing flexibility, control and cost effectiveness.
It provides a toolset for strategic remuneration planning that reflects your

organization culture and pay strategies, and it empowers line managers within a
framework of flexible budget control. Compensation Management allows you to
control bottom-line expenditures and offer competitive and motivating
remuneration, be it fixed pay, variable pay, stock options, merit increases, or
promotion – in other words, total compensation. In brief, you can use this
component to perform:

ü Create centralized and decentralized budgets

ü Plan and administer compensation adjustments at the manager level
ü Plan and administer compensation adjustments within budget
ü Performing Job Pricing
ü Define pay grades and salary structures to identify the internal value of
jobs and positions in your organization
ü Administer long-term incentives
BUILDING COMPENSATION PLANS
During the process of establishing compensation plans, companies take into

consideration different employee types, such as a software engineer or a sales
representative, and establish the primary salary ranges based on the different grades
available for each position (e.g., Software Engineer I, Software Engineer II). Each
position can be assigned an associated salary or compensation range, which can be
further affected by other factors such as seniority, location, and market salary surveys.
Which factors are included and how much weight each factor has are easily configured
during the plan definition phase.
Compensation Planning includes all aspects of employee compensation, including

bonuses and long-term incentives such as stock options. Compensation plan definition
is extremely flexible. For instance, a plan can be applied to all employees or groups of
employees, different policies in a single plan may apply to all employees or a group of
employees, or an organization may cover all of its employees within one plan or within
multiple plans. Plans can be tested against the organization’s budget using simulations
to ensure that policies are practically applied.
MANAGERIAL COMPENSATION
There is a feeling among the trade union circles that executives get a very high salary
including perks. Hence, they view that the level of executive compensation should be
contained in view of the objectives of the socialistic pattern of society. However, the
existing provisions of managerial compensation would provide a clear picture. Section
198 of the Companies Act, 1956 says that the total managerial remuneration payable by
a public limited company to its directors, secretaries and treasures and managers in a
financial year shall not exceed 11% of the net profits of the company. Section 198(4) of
the Companies Act provides that in the absence or inadequacy profits, a maximum of
Rs.50,000 may be paid to Managing Director and all directors. In exceptional cases, the
Government may permit payment of higher salary. Section 309(4) of the Act stipulates
Certain ceilings on the remuneration payable.

The Government issued guidelines in November, 1978. According to these guidelines,

the overall salary was restricted to Rs. 72,000 per annum and perks were restricted to
Rs.60,000 per annum. Managers and organizations were highly critical about these
guidelines. They felt that they discourage initiative and hamper the skill of managers.
Peter F. Durucker . who was in India during November and December, 1978, thought
that such ceiling should cause migration of talent from India. He suggested that Indian
managers should not accept lower salaries and they should demand tax-free as is the
custom in Sweden. Ratio between the lowest and highest salary of managers in Sweden
is 1:5 But the tax free benefits are enormously granted to the executives.
In view of the criticism, the Government announced some liberalization to the

guidelines. Overall ceiling is as it was at Rs. 60,000 but it is increased to Rs. 62,700 in
case of Mumbai. Rates of house rent allowance to salary are raised to 45% in case of
Mumbai, 40% in case of Delhi, 35% in case of Kolkata and 30% in case of other places.
An allowance of 10% is allowed for cooking gas, electricity, gas etc. Expenditure of
pensionary benefits is increased upto 25% of the salary. Medical expenses allowance
equal to three months salary is allowed. However, the Gujarat High Court in May, 1980
and the Delhi High Court in August, 1980, struck down the guidelines of November 1978
as violative of Section 637-A of the Companies Act, 1956.
The Government in U.K. accepted fair remuneration for executives in the public sector
with a view to attracting whereas the Government in India reduced the managerial
compensation in the private sector with a view to equalizing them with those of the
public sector. Thus, the Government wishes to control its burden at the cost of talent
and skill.
Influences on Compensation: Factors Determining Pay Rates 1. Job needs 2. Ability

to pay 3. Cost of living 4. Prevailing rates 5. Unions 6. Productivity 7. State regulation
8. Demand and surplus of workforce
Job Evaluation: Job evaluation is a practical technique, designed to enable trained

and experienced staff to judge the size of one job relative to others. It does not directly
determine pay levels, but will establish the basis for an internal ranking of jobs.
The two most common methods of job evaluation that have been used are first, whole
job ranking, where jobs are taken as a whole and ranked against each other. The second
method is one of awarding points for various aspects of the job. In the points system
various aspects or parts of the job such as education and experience required to perform
the job are assessed and a points value awarded – the higher the educational
requirements of the job the higher the points scored. The most well known points
scheme was introduced by Hay management consultants in 1951. This scheme evaluates

job responsibilities in the light of three major factors – know how, problem solving and
accountability.
Job Evaluation Methods:

There are three basic methods of job evaluation: (1) ranking, (2) classification, (3) factor
comparison. While many variations of these methods exist in practice, the three basic
approaches are described here.
Ranking Method: Perhaps the simplest method of job evaluation is the ranking
method. According to this method, jobs are arranged from highest to lowest, in order of
their value or merit to the organization. Jobs also can be arranged according to the
relative difficulty in performing them. The jobs are examined as a whole rather than on
the basis of important factors in the job; and the job at the top of the list has the highest
value and obviously the job at the bottom of the list will have the lowest value. Jobs are
usually ranked in each department and then the department rankings are combined to
develop an organizational ranking. The following table is a hypothetical illustration of
ranking of jobs.
Array of Jobs according to the Ranking Method

Rank Monthly salaries
1. Accountant Rs 3,000
2. Accounts clerk Rs 1,800
3. Purchase assistant Rs 1,700
4. Machine-operator Rs 1,400
5. Typist Rs 900
6. Office boy Rs 600
The variation in payment of salaries depends on the variation of the nature of the job
performed by the employees. The ranking method is simple to understand and practice
and it is best suited for a small organization. Its simplicity, however, works to its
disadvantage in big organizations because rankings are difficult to develop in a large,
complex organization. Moreover, this kind of ranking is highly subjective in nature and
may offend many employees. Therefore, a more scientific and fruitful way of job
evaluation is called for.
Job Classification Method
According to this method, a predetermined number of job groups or job classes are
established and jobs are assigned to these classifications. This method places groups of
jobs into job classes or job grades. Separate classes may include office, clerical,

managerial, personnel, etc. Following is a brief description of such a classification in an

office.
ü Class I – Executives: Further classification under this category may be Office
manager, Deputy office manager, Office superintendent, Departmental
supervisor, etc.
ü (b) Class II – Skilled workers: Under this category may come the Purchasing
assistant, Cashier, Receipts clerk, etc.
ü (c) Class III – Semiskilled workers: Under this category may come Steno typists,
Machine-operators, Switchboard operators, etc.
ü (d) Class IV – Semiskilled workers: This category comprises Daftaris, File clerks,
Office boys, etc.
The job classification method is less subjective when compared to the earlier ranking
method. The system is very easy to understand and acceptable to almost all employees
without hesitation. One strong point in favor of the method is that it takes into account
all the factors that a job comprises. This system can be effectively used for a variety of
jobs.
The weaknesses of the job classification method are:

° Even when the requirements of different jobs differ, they may be combined into a
single category, depending on the status a job carries.
° It is difficult to write all-inclusive descriptions of a grade.
The method oversimplifies sharp differences between different jobs and different
grades.
° When individual job descriptions and grade descriptions do not match well, the
evaluators have the tendency to classify the job using their subjective judgments.
Factor Comparison Method:

A more systematic and scientific method of job evaluation is the factor comparison
method. Though it is the most complex method of all, it is consistent and appreciable.
Under this method, instead of ranking complete jobs, each job is ranked according to a
series of factors. These factors include mental effort, physical effort, skill needed,
supervisory responsibility, working conditions and other relevant factors (for instance,
know-how, problem solving abilities, accountability, etc.). Pay will be assigned in this
method by comparing the weights of the factors required for each job, i.e., the present
wages paid for key jobs may be divided among the factors weighed by importance (the
most important factor, for instance, mental effort, receives the highest weight). In other
words, wages are assigned to the job in comparison to its ranking on each job factor.
The steps involved in factor comparison method may be briefly stated thus:
Select key jobs, representing wage/salary levels across the organization. The selected

jobs must represent as many departments as possible.

Find the factors in terms of which the jobs are evaluated (such as skill, mental effort,
responsibility, physical effort, working conditions, etc.).
Rank the selected jobs under each factor (by each and every member of the job
evaluation committee) independently. Assign money value to each factor and determine
the wage rates for each key job. The wage rate for a job is apportioned along the
identified factors. All other jobs are compared with the list of key jobs and wage rates
are determined.
Merits of Factor Comparison Method:
Ï Analytical and objective.

Ï Reliable and valid as each job is compared with all other jobs in terms of key
factors.
Ï Money values are assigned in a fair way based on an agreed rank order fixed by
the job evaluation committee.
Ï Flexible as there is no upper limitation on the rating of a factor.
Demerits of Factor Comparison Method :
¥ Difficult to understand, explain and operate.

¥ Its use of the same criteria to assess all jobs is questionable as jobs differ across
and within organizations.
¥ Time consuming and costly.
Point method: This method is widely used currently. Here, jobs are expressed in
terms of key factors. Points are assigned to each factor after prioritizing each factor in
the order of importance. The points are summed up to determine the wage rate for the
job. Jobs with similar point totals are placed in similar pay grades. The procedure
involved may be explained thus:
¥ Select key jobs. Identify the factors common to all the identified jobs such as skill,
effort, responsibility, etc.
¥ (b) Divide each major factor into a number of sub factors. Each sub factor is
defined and expressed clearly in the order of importance, preferably along a scale.
The most frequent factors employed in point systems are:

± Skill (key factor): Education and training required, Breadth/depth of experience
required, Social skills required, Problem-solving skills, Degree of discretion/use
of judgment, Creative thinking;

± II. Responsibility/Accountability: Breadth of responsibility, Specialized

responsibility, Complexity of the work, Degree of freedom to act, Number and
nature of subordinate staff, Extent of accountability for equipment/plant, Extent
of accountability for product/materials;
± III. Effort: Mental demands of a job, Physical demands of a job, Degree of
potential stress.
Merits of the Point Method: The point method is a superior and widely used method
of evaluating jobs. It forces raters to look into all keys factors and sub-factors of a job.
Point values are assigned to all factors in a systematic way, eliminating bias at every
stage. It is reliable because raters using similar criteria would get more or less similar
answers. “The methodology underlying the approach contributes to a minimum of
rating error” (Robbins, p.361). It accounts for differences in wage rates for various jobs
on the strength of job factors. Jobs may change over time, but the rating scales
established under the point method remain unaffected.
Demerits of the Point Method: On the negative side, the point method is complex.
Preparing a manual for various jobs, fixing values for key and sub-factors, establishing
wage rates for different grades, etc., is a time consuming process. According to Decenzo
and Robbins, “the key criteria must be carefully and clearly identified, degrees of factors
have to be agreed upon in terms that mean the same to all rates, the weight of each
criterion has to be established and point values must be assigned to degrees”. This may
be too taxing, especially while evaluating managerial jobs where the nature of work
(varied, complex, novel) is such that it cannot be expressed in quantifiable numbers.
Compensation Strategy
Compensation Strategy is one of the most important strategies in the HRM Function as
it influences the costs of the organization and potential bad decision can lead to very
serious damages to the organization. The compensation and benefits strategy is derived
from the overall HRM Strategy and it has to be fully aligned. When the HRM Strategy
sets the main objectives for the HRM Function, the compensation and benefits strategy
has to follow. When the overall HRM Strategy states the low cost of services and
employees, the compensation and benefits strategy cannot target the highest salaries at
all levels.
The compensation and benefits strategy sets the general rules for the compensation and
benefits area in the organization and the owners and leaders of the area. In some
organizations, the compensation and benefits department is just a support department
for the line management. In other organizations the compensation and benefits
manager is a very powerful employee in the organization with the right “veto”.

The compensation and benefits strategy sets the position of the organization on the job
market and defines the items in the total cash in the organization and their role. The
role of different components of the compensation is very important as the role of the
compensation components can differ. For example, the role of bonuses can be primarily
in performance reward or the retention of the employees and the organization has to
decide.
The compensation and benefits strategy has to reflect the reality in the industry and the
surrounding job market. The compensation strategy can set the wish to pay the lowest
possible salaries, but the HRM Function and the organization have to respect the reality
on the job market.
The compensation strategy needs a strong support from the top management as it sets
strong limits to the daily operation of the line management and they usually do not fully
agree with all the aspects included in the compensation and benefits strategy.
International Compensation:
Developing international compensation policies requires that it be consistent with

overall corporate strategy, structure of a global corporation. The policy must be
competitive and take into account incentives for Foreign Service, tax equalization and
reimbursement of expenses. Other factors that determine whether or not the
compensation package will be acceptable to the potential expatriate are social security,
health and medical benefits, and cost of living factors in the foreign location. The main
components of an international compensation plan are base salary, Foreign Service
inducement, allowances and benefits. The base salary in domestic terms is the cash
compensation, bonus and benefits are in addition to this amount. For an expatriate the
base salary is a primary component of the compensation package, of which Foreign
Service inducement, cost of living allowance and other costs may be a percentage of this
amount.
Foreign Service inducement can vary from country to country. U.S. Department of State
has published hardship post differential guidelines to determine level of payment. While
the hardship guidelines may dictate a high differential cost the Cost of Living Allowance
(COLA) may tend to pull this figure down. It is difficult to determine the actual cost of
living in a particular country. One method to determine cost of living is according to
Philippe Lasserre, Purchasing Power Parity (PPP) which is for example, a cup of coffee
that cost $5.00 in New York City may cost €6.00 in France due to spot exchange rates
these would be identical in cost however, the housing in Paris may be more than in New
York City. To determination this can be quite extensive, housing costs must be
considered, as must the cost of entertainment and food. Another cost that should be
considered is education costs for children. The spouse may also decide to attend school

at the foreign location to fill in any gap in the employment record she may be
encountering due to her husbands foreign posting. Care should be exercised in the
selection of schools both for the children and the spouse as the accreditation of the
foreign school may not be acceptable in the home country. Most international schools in
Europe have an acceptable accreditation in the United States.
It is also not possible to defer these payments because this creates an excess
contribution and becomes a taxable event, for more information on 401k accounts
please see the Internal Revenue Service web site listed in the bibliography. Another
issue is the health and medical benefits and continuation of these benefits upon
repatriation into the expatriate’s home country. Socialized medicine in many of the
Western European countries has made this a non-issue while the expatriate is on
assignment in these countries, or if an expatriate is returning to Europe after an
assignment in another country. An assignment to the United States for example, the
expatriate and his family would require medical insurance. There are several methods
for determining the international compensation plan. The first is the going rate
approach which in effect, excluding allowances and benefits discussed above, would
make compensation similar to the host country nationals. This method of compensation
could make things difficult for the expatriate when returning to is home country. If the
going rate is considerably higher in the host country, the may be some adjustment upon
his return home in there will be a perceived pay cut. The preferred method of
compensation is the balance sheet method as defined by C. Reynolds as, “foreign
assignees should not suffer a material loss due to their transfer, and this is accomplished
via the balance sheet method of international compensation.” Taxation is also a concern
to expatriate personnel. Some form of tax equalization should be provided to the
expatriate employee. While on assignment for Ericsson the tax equalization was
provided by withholding taxes for the parent country and paying the taxes in the host
country. Centillium provided no such relief however, due to an existent tax treat
between the United Kingdom and the United States my tax burden was not doubled. For
further information on taxes and treaties it may benefit employers and employee to
discuss their individual situations with a global accounting firm such as Ernst & Young.

V - UNIT
INTEGRATION - QUALITY OF WORK LIFE
Introduction: There has been much concern today about decent wages, convenient
working hours, conducive working conditions etc. Their term “Quality of work life” has
appeared in research journals and the press in USA only in 1970s. There is no generally
acceptable definition about this term. However, some attempts were made to describe
the term quality of work life (QWL). It refers to the favourableness or unfavourableness
of a job environment for people. QWL means different things to different people. J.
Richard and J. Loy define QWL as “the degree to which members of a work organization
are able to satisfy important personnel needs through their experience in the
organization.”
Quality of work life improvements are defined as any activity which takes place at every
level of an organization, which seeks greater organizational effectiveness through the
enhancement of human dignity and growth … a process through which the stockholders
in the organization management, unions and employees — learn how to work together
better to determine for themselves what actions, changes and improvements are
desirable and workable in order to achieve the twin and simultaneous goals of an
improved quality of life at work for all members of the organization and greater
effectiveness for both the company and the unions.
Richard E. Walton explains quality of work life in terms of eight broad conditions of
employment that constitute desirable quality of work life. He proposed the same criteria
for measuring QWL. Those criteria include:
Ï Adequate and Fair Compensation: There are different opinions about adequate
compensation. The committee on Fair Wages defined fair wage as” . . . the wage
which is above the minimum wage, but below the living wage.”
Ï (ii) Safe and Healthy Working Conditions: Most of the organizations provide safe
and healthy working conditions due to humanitarian requirements and/or legal
requirements. In fact , these conditions are a matter or enlightened self interest.
Ï (iii) Opportunity to Use and Develop Human Capacities: Contrary to the
traditional assumptions, QWL is improved… “to the extent that the worker can
exercise more control over his or her work, and the degree to which the job
embraces and entire meaningful task” … but not a part of it. Further, QWL
provides for opportunities like autonomy in work and participation in planning in
order to use human capabilities.

Ï (iv) Opportunity for Career Growth: Opportunities for promotions are limited in
case of all categories of employees either due to educational barriers or due to
limited openings at the higher level. QWL provides future opportunity for
continued growth and security by expanding one’s capabilities, knowledge and
qualifications.
Ï (v) Social Integration in the Work Force: Social integration in the work force can
be established by creating freedom from prejudice, supporting primary work
groups, a sense of community and inter-personnel openness, legalitarianism and
upward mobility.
Ï (vi) Constitutionalism in the Work Organization: QWL provides constitutional
protection to the employees only to the level of desirability as it hampers workers.
It happens because the management’s action is challenged in every action and
bureaucratic procedures need to be followed lat that level. Constitutional
protection is provided to employees on such matters as privacy, free speech,
equity and due process.
Ï (vii) Work and Quality of Life: QWL provides for the balanced relationship
among work, non-work and family aspects of life. In other words family life and
social life should not be strained by working hours including overtime work, work
during inconvenient hours, business travel, transfers, vacations etc.
Ï (viii) Social Relevance of Work: QWL is concerned about the establishment of
social relevance to work in a socially beneficial manner. The workers’ self esteem
would be high if his work is useful to the society and the vice versa is also true.
Quality Circles:
Quality circles which have been popularized by Japanese firms are being used all over
the world because of the benefits that accrue to the firm. A quality circle involves
participation from a small group of employees doing the same type of work. They meet
regularly to identify, analyze and solve the problems that arise during the course of their
work and their association with the organization.
The basic objectives of quality circles are to develop and utilize human resources
effectively, to develop quality products, improve the quality of work life and sharpen and
utilize an individual’s creative abilities. There are different steps involved in the
development of quality circles from getting started to problem-solving. Communicating
the importance of quality circles to the employees is of prime importance.
The next step is the composition of a quality circle. Then the stage of initial problem
solving through which employee suggestions are presented, follows. The suggestions are
then evaluated and the best one, chosen by consensus, is implemented. Various
techniques like brainstorming sessions, fish bone diagram and sampling and charting

methods, are used in quality circles. Problems arise in the implementation of quality
circles because of lack of understanding regarding the concepts, low education levels
and training, delays in execution and operational problems. Most of these problems can
be resolved through effective training of employees and management support.
Industrial Relations: The concept of industrial relations means the relationship

between employees and the management in the day-to-day working of the industry. But
the concept has a wide meaning. When taken in the wider sense, industrial relations is a
“set of functional interdependence involving historical, economic, social, psychological,
demographic, technological, occupational, political and legal variables.” According to
Dale Yoder, industrial relations is a “whole field of relationship that exists because of the
necessary collaboration of men and women in the employment process of an industry.”
According to the international Labour Organisaton (ILO), “Industrial Relations deal
with either the relationship between the state and employers’ and workers’
organizations or the relation between the occupational organizations themselves.”
The concept of industrial relations has been extended to denote the relations of the joint
consultations between employers and people at their organizations. The subject there
fore includes individual relations of the joint consultations between employers and
people at their work place, collective relations between em0ployers and their
organizations and trade unions and the part played by the State in regulating these
relations.
Characteristics of Industrial Relations: Characteristics of industrial rations

include:
¤ i. Industrial relations are the outcome of employment relationship in an
industrial enterprise.
¤ ii. Industrial relations develop the skills and methods of adjusting to and co-
operating with each other.
¤ iii. Industrial relations system creates complex rules and regulations to maintain
harmonious relations.
¤ iv. The Government involves to shape the industrial relations through laws, rules,
agreements, awards etc.
¤ v. The important factors of industrial relations are: employees and their
organizations, employer and their associations and the Government.
Factors of Industrial Relations: Industrial relations are influenced by various

factors, viz., institutional factors, economic factors and technological factors.
1. Institutional factors: These factors include government policy, labour legislations,

voluntary courts, collective agreement, employee courts, employers’ federations, social

institutions like community, caste, joint family, creed, system of beliefs, attitudes of
works, system of power status etc.
2. Economic factors: These factors include economic organization, like capitalist,

communist mixed etc,. The structure of labour force, demand for and supply of labour
force etc.
3. Technological factors: These factors include mechanization, automation,
rationalization, computation etc.,
4. Social and cultural factors: These factors include population, customs and
traditions of people, ethnic groups, cultures of various groups of people etc.
5. Political factors: These factors include political system in the country, political
parties and their ideologies, their growth, mode of achievement of their policies,
involvement in trade unions etc.
6. Government factors: These factors include governmental policies like industrial

policy, economic policy, labour policy, export policy etc.
Objectives of Industrial Relations:
The primary objective of industrial relations is to maintain congenial relations between

employees and the employer. And the other objectives are:
þ i. To promote and develop congenial labour management relations;
þ ii. To enhance the economic status of the worker by improving wages, benefits
and by helping the worker in evolving sound budget;
þ iii. To regulate the production by minimizing industrial conflicts through state
control;
þ iv. To socialize industries by making the government as an employer;
þ v. To provide and opportunity to the workers to have a say in the management
and decision-making;
þ vi. To improve worker’s strength with a view to solve their problems through
mutual negotiations and consultation with the management;
þ vii. To encourage and develop trade unions in order to improve the workers’
strength;
þ viii. To avoid industrial conflict and their consequences and
þ ix. To extend and maintain industrial democracy.
DEFINITION OF A DISPUTE/CONFLICT
According to the Industrial Disputes Act, 1947, Section 2 (k), “Industrial dispute means
any dispute of difference between employers and employers, or between employers and

workmen or between workmen and workmen, which is connected with the employment
or non-employment or terms of employment or non-employment or with the conditions
of labour of any person.”
CAUSES OF INDUSTRIAL DISPUTES/CONFLICTS

It not easy to identify a single factor as a cause of industrial conflicts as multifarious
causes blended together result in industrial disputes. Deep seated and more basic causes
of disputes can be identified through in-depth probe, though surface manifestations
appear to be responsible for conflicts. The relative importance of these causes, when
more than one present, is often very difficult to gauge.
According to Mukherjee, “the development of capitalistic enterprise, which means the

control of the tools of production by the small entrepreneur class has brought to the fore
the acute problem of friction between management and labour throughout the world.”
Causes of industrial conflicts may be grouped into four categories, viz.:
1) Industrial factors;
2) Management’s attitude towards workers;
3) Government machinery and
4) Other causes.
TYPES OF INDUSTRIAL CONFLICTS: Industrial conflicts are basically two types,

viz. Strikes and Lock-outs.
Strikes: Strikes are the result of more fundamental maladjustments, injustices and
economic disturbances. According to Peterson, “strike is a temporary cessation of work
by a group of employees in order to express grievances or to enforce a demand
concerning changes in work conditions.Under Section 2(q) of the Industrial Disputes
Act, 1947, strike is “a cessation of work by a body of persons employed in any industry,
acting in combination or a concerted refusal under a common understanding, of a
number of persons who are or have bee so employed to continue to work or to accept
employment.”
However, prohibiting an individual employee, termination of employment of

retrenchment, termination of service of more than one person are not lock-outs.
Strikes are divided into primary strikes and secondary strikes. Primary strikes are
generally against the employer with whom the dispute exist. They take the form of stay
away strike, sit-in, sit-down, pen-down, tools-down, or mouth-shut strikes, go slow,
work-to-rule, token or protest strike, lightening or wildcat strike, picketing or boycott.
þ Primary Strikes:

Stay away strike: In this strike, workmen stay away from the work place. They
organize rallies, demonstrations etc.
Stay-in strike or sit-down shut strike: In this strike, workmen come to the place,
they stay at the work place but they don’t work.
Tools-down, pen-down or mouth-shut strike: In this strike, the strikers lay down
their tools in case of factory workers, lay down their pens in case of office workers and
shut their mouth in case of teachers.
Token or protest strike: It is a very short duration and in the nature of signal for the
danger ahead. In this strike, the workers do not work for an hour or a day.
Lightening or wildcat strike: In this strike, the strikers strike the work without any
prior notice or with a shortest notice.
Go slow: In this strike, the workers intentionally reduce the speed of work.
Work to rule/work to designation: In this strike, the strikers undertake the work
according to rules of job description.
Picketing: It is an act of posting pickets and implies machinery or patrolling of the

workmen in front of the premises of the employer.
Boycott: It alms at disrupting the normal functioning of the enterprise.
Gherao: It is a physical blockade of a target either by encirclement, intended to block

the regress and ingress for a limited period or up to the period of settlement of disputes.
Hunger strike: This type of strike is resorted to either by the leaders of the union or by
some workers all at a time or in small batches for a limited period or up to the period of
settlement of disputes.
Secondary strike: Secondary strikes are against a third party. These strikes are
sympathetic strikes.
Other strikes: These strikes are in the form of general, political strikes and bandhs.
SETTLEMENT OF CONFLICTS: The methods of the settlement of conflicts generally

include those mentioned in the figure below: They are dealt in detail in the following
paragraphs:

Investigation: This is conducted by a board or court appointed by the government. It

may be voluntary or compulsory. If the investigation is conducted on an application by
either or both the parties to the dispute, it is voluntary. If the Government appoints a
Court of inquiry to investigate into a dispute without the consent of the parties, it is
compulsory. Investigations do not aim at bringing about the settlement of disputes
directly, but by analyzing the facts, they aim at bringing about an amicable solution.
When the investigation is comp0ulsory, the strikes and lock-outs are required to be
stopped and employment. The result of investigation has no serious effect on the
disputes because the general public is least bothered to make note of the disputes.
Mediation: another attempt to settle disputes is mediation. In this method, an outsider

assists the parties in their negotiations. It takes place with the consent of both the
parties. The mediator performs the messenger’s job for both the parties and he neither
imposes his will nor his judgement upon them. The main aim of mediation is the
settlement of disputes by bringing about a voluntary agreement. There may be three
kinds of mediation:
Ï (i)The Eminent Outside;

Ï (ii) Non-Government Board; and
Ï (iii) Semi-Governmental Board.
If mediation is conducted skillfully and sympathetically along proper lines, it can bring
about the adjustment of differences tat might otherwise contribute to stoppage of work.
Conciliation: the main objective of a conciliation and arbitration is to reunite and
arbitration is to reunite the two conflicting groups in the industry in order to avoid
interruption of production, distrust etc. Conciliation is a process by which
representatives of both workers and employers are brought together before third party
with a view to persuading them to arrive at some sort of settlement. It is an extension of
collective bargaining with third party assistance. It is the practice by which the services
of a neutral third party are used in a dispute as a means of helping the disputing parties
to reduce the extent of their differences and to arrive at an amicable settlement or
agreed solution. It is a process of rational and orderly discussions of differences between
the parties to a dispute under the guidance of a conciliator. Conciliation machinery
consists of a conciliation officer and board of conciliations. The conciliator induces the
parties to a course of action. He plays the role of an innovator, protector, discussion
leader, stimulator, advisor, face saver. He acts as a safety valve and a communication
link. The task of conciliation is to offer advice and make suggestions to the parties to the
dispute on controversial issues.

Voluntary Arbitration: If the two parties to the dispute fail to come to an agreement,
either by themselves or with the help of a mediator or conciliator, who agrees to submit
the dispute to an impartial authority, whose decision, they are ready to accept. The
essential elements in voluntary arbitration are:
þ the voluntary submission of dispute to an arbitrator;

þ the subsequent attendance of witness and investigations and
þ the enforcement of an award may not be necessary.
Compulsory Arbitration/Adjudication: Where trade unions are weak, the method

of Compulsory Arbitration is used. Compulsory Arbitration is utilized generally when
the parties fail to arrive at a settlement through the voluntary methods.
In India, Compulsory Arbitration is enforced because collective bargaining was not used
for regulating wages and other conditions of employment.
GRIEVANCE PROCEDURE – Meaning/Definitions:
The concept ‘grievance’ has been defined in several ways by different authorities. Some
of the definitions are as follows: Beach defines grievance as “any dissatisfaction for
feeling of injustice in connection with one’s employment situation that is brought to the
notice of the management”, whereas Flippo indicates the grievance as “a type of
discontent which must always be expressed. A grievance is usually more formal in
character than a complaint. It can be valid or ridiculous, and must grow out of
something connected with company operations or policy. It must involve an
interpretation or application of the provisions of the labour contract.” Jucius defines
grievance as” …any discontent or dissatisfaction, whether exposed or not, whether valid
or not, arising out of anything connected with the company which an employee thinks,
believes or even feels to be unfair, unjust or inequitable.
Causes of Grievances: The causes of employee grievances include:
• Demands for individual wage adjustments;

• Complaints about the incentive system;
• Complaints about the job classifications;
• Complaints against a particular foreman;
• Complaints concerning disciplinary measures and procedures;
• Objections to the general methods of supervision;
• Loose calculation and interpretation of seniority rules and unsatisfactory
interpretation of agreements;
• Promotions;
• Disciplinary discharge or lay-off;

• Transfer for another department or another shift;

• Inadequacy of safety and health services/devices;
• Non-availability of materials in time;
• Violation of contracts relating to collective bargaining;
• Improper job assignment;
• Undesirable or unsatisfactory conditions of work;
• Victimization and
• Fines.
Grievance Procedure: The model Grievance Procedure suggested by the National

Commission on Labour has provided for the successive time bound steps each leading to
the next in case of lack of satisfaction. At the outset, an aggrieved worker shall approach
the foreman, inform his grievance orally and seek the redressal of his grievance. If it is
not redressed to his satisfaction, he approaches the supervisor who has to give a
decision to the complaint of the worker within 48 hours. If the decision (answer) is not
acceptable to the worker or if the superior does not give an answer, the worker can go to
the next step. At the third stage, the worker can, either in person or accompanied by his
departmental representative, approach the head of the department who has to give an
answer before the expiry of three days. If the department head fails to do so or if the
decision given by him is not acceptable to the worker, then the worker can resort to the
Grievance Committee which comprises of the representatives of employers and
employees. This Committee shall communicate its recommendations to the manager
within seven days of the grievance reaching it. If there are unanimous decisions, these
shall be implemented by the management. In case unanimous decisions have not been
arrived at, the views of the members of the Committee shall be recorded and all the
relevant records shall be placed before the manager for decision. The manager shall
communicate his decision within three days. The worker has got a right to appeal
against the manager’s decision. These appeals shall be decided within a week. If the
aggrieved desires, he can take along with him a union official for discussion with the
authority. In case a decision has not been arrived at, at this stage, the union and
management may refer the grievance to voluntary arbitration within a week of receipt of
the management’s decision by the worker.
GUIDELINES FOR GRIEVANCE HANDLING:

The primary purposes of a grievance procedure are to:
(1) channel conflict into an institutionalized mechanism for peaceful resolution;
(2) facilitate communication between labor and management regarding problems that
arise in a collective bargaining relationship;
(3) enable employees to complain with dignity knowing that there is a system of appeals
leading to an impartial decision-maker; and
(4) enforce compliance with the terms and conditions negotiated by the parties.

Handling Employee Grievance:
The following checklist is provided as guidance when an employee comes to you with a
complaint:
●Make sure that meetings with employees to handle complaints are held in accordance
with any contract provisions that regulate the time and/or location for such meetings.
Develop good listening and note taking skills.
●Be prepared to spend the time to get the evidence and testimony to support your case
and to refute management’s case. Treat all employees fairly and consistently.
●Do not make judgments about the case to the employee or anyone else until you get the
facts. Keep good records of all transactions, oral and written, that occur from the time a
complaint is brought to you until the case is resolved in the grievance procedure or in
arbitration.
INTERVIEW:
●Let the employee tell his/her story without interruption. Take notes. Review the
employee’s description of the case with him/her to make sure you have all the facts.
Make sure you get the answers to the questions who, what, when, where, why and how.
●Ask the employee for the names, addresses and telephone numbers of any witnesses.
Then ask the employee to tell you what he/she thinks each witness knows about the
case. Record this information. Try to clarify any uncertainties about what a witness is
supposed to know.
●Ask the employee to give you all of the evidence he/she has concerning the case. Make
copies so that no information is lost. Before the employee leaves, check one more time to
make sure you have all the facts, names of witnesses and evidence.
REVIEW:
●Refer to the grievance procedure in the contract to make sure the issue the employee
has raised is defined as a proper subject of a grievance. If you are uncertain, ask for help.
If the issue is not a proper subject of a grievance, the best thing to do is to tell the
employee and explain how this affects his/her case.
●Check to make sure that the procedural requirements set forth in the grievance
procedure have been complied with. If there is more than one witness who knows about
a given event, note which ones would be best able to present clear testimony under the
pressure of examination and cross-examination at an arbitration hearing.
●Verify name, address, telephone, work shift and location.

ANALYSIS:
After you have thoroughly reviewed all of these matters, you may find that a complaint
is not grievable/arbitrable or that the case lacks merit. One way to proceed is to explain
your findings to the employee and ask if there is any additional information he/she has
that might have a bearing on the case. If not, you should be guided by local or
international union policy and perhaps by counsel, in determining how to handle this
situation.
FILING:
Be sure to properly and timely complete the grievance form. This includes such items as:
names; dates; signatures; clear and accurate statement of the complaint; contract
clauses alleged to have been violated; and remedy requested. This is a checklist, not a
magic wand. It highlights key points to consider in handling employee complaints. This
task is time consuming and requires the application of a number of skills. There are no
real short cuts. If you take them, an employer will usually find them at some stage in the
grievance procedure or in arbitration. The result may be very damaging involving not
only loss of a case that might have been won, but also expenditures of time, other
resources and credibility that a union can ill afford.
EMPLOYEE COUNSELING
Employees face a variety of uncertainties, issues and problems both at the work and the
family. In fact, the problems are multi-faceted involving economic, social, physical,
psychological and religious considerations. Counseling is one of the efficient
interventions to find out work and family related employee problems that affect the
work negatively. Counseling is the process of helping other persons to find and act upon
a solution to their problems, anxieties, uncertainties and issues, the person conducting
counseling is called counselor and the person being counseled is called counselee or
client.
Concept of counseling: A counselor is mostly concerned with client rather than the
problem. The counselor helps the counselee to identify his/her own problem and
develop is/her own solution rather than imposing his/her solution. Counselor helps
counselee in reaching a solution. This style involves more listening than talking.
Counselor uses questions and exploring techniques and enable the client to find out
his/her own problem. The counselor further helps the client to learn the problem
solving techniques, processes and methods that helps them to solve their problems on
their own in the future. The counselor recognizes the emotions, feelings, psychological
issues involved in the process.
Counseling can assist the employee to resolve difficulties in a supportive and

professional setting. Whether a crisis or something that has been worrying the employee

for sometime, counseling can assist the employee to understand the problem, its impact
and to develop strategies to cope with it. As employees from time to time, we can
experience difficulties either in our work or personal life. At these times, work
performance and productivity can be affected. Counseling can result in quicker and less
stressful resolution of the problems with less disruption to the workplace.Counseling is
confidential and private. Generally, no information can be released without employee’s
written authority.
Counseling is provided for work and personal issues such as: Stress , Change,
Conflict, Career planning, Communication, Trauma, Depression, Relationship issues,
Family problems, Gambling, Grief and bereavement, Anxiety, Drug and alcohol problem
& Work satisfaction
Process of Counselling: Counseling is the process of helping other persons to solve

their problems. The person conducting the counseling is known as the counselor and the
one being counseled is referred to as the counselee or client.
There are four basic styles of counseling, viz., telling, manipulating, counseling and
advising. The counseling process includes various steps viz., identifying the needs for
counseling, communicating effectively, managing the counseling interview, controlling
emotions, and follow-up.
Identifying the needs for counseling: The manager of the department concerned
identifies the counseling needs of the employees. The couselling needs may be obvious,
based on permanent lateness, irregular attendance, absenteeism, poor quality of work,
breakages at the work etc. In addition, the manager can identify the possible and
prospective problems. Counseling needs or employee problems may be classified as
personality problems, work and organizational related problems and external problems
and external problems. Personality problems are related to the image people have of
themselves and others.
Communicating effectively: Counselling is mostly done through communication. In

other words, communication plays vital role in counselling. Counselor communicates
with the counselee by practicing a three step-process, which can be repeated in the
counseling interview process. These steps are questioning, listening and responding.
The counselor should use oral, written, verbal and non-verbal communication. The
counsellor’s posture and the counsellee’s posture matter much in the counseling
process.
Managing the counselling interview: The cousnellor and the counselee should be
prepared physically, socially and psychologically before counselling interview. The
manager of the employee might have developed good and comfortable relationship with

the staff. Therefore, the suggestions of the manager should be considered by the
counselor, if the manager is not acting as a counselor. The steps in the interview process
include:
1. setting up the interview

2. creating the right interview opportunity
3. starting the interview
4. encouraging the people to talk
5. reaching the core problem
6. discovering when to ask and what to ask
7. exploring the feeling problem
8. develop and provide the solution.
Controlling emotions: counselling mostly involves understanding the feelings of the

counselee. The counselor has to gain the confidence and trust of the counselee.
Counselling will result in change in the behaviour of the counselee, which causes pain.
The counselee can express his feelings freely when the interview environment is free and
harmonious. In addition, the counselor should also control his/her emotions and
feelings so that the counselee can express his/her feelings and emotions.
Follow-up: The counselor after offering his/her advice provides the methods and step-
by-step procedure to the counselee to practise the advice. The counselor has to get
feedback from the counselee and ascertain whether the counselee is improving or not. If
not, he /she has to modify the advice and follow-up further. Thus, the counselee should
ensure the permanent solution to the problem and improvement in the counselee.
DEFINITION OF COLLECTIVE BARGAINING

The phrase ‘Collective Bargaining’ is coined by Sydney and Beatrice Webb. According to
them, collective bargaining is a method by which trade unions protect and improve the
conditions of their members’ working lives. According to the Encyclopedia of Social
Sciences, “collective bargaining is a process of discussion and negotiation between two
parties, one or both of whom is a group of persons acting in consent. The resulting
bargain is an understanding as to the terms and conditions under which a continuing
service is to be performed. More specifically, collective bargaining is a procedure by
which employers and a group of employees agree upon the conditions of work.”
Functions of Collective Bargaining: Collective bargaining plays an important role

in preventing industrial disputes, setting disputes and maintaining industrial peace by
performing the following functions:

●Increase the economic strength of employees and management.

●Establish uniform conditions of employment.
●Secure a prompt and fair redressal of grievances.
●Lay down fair rates of wages and other norms of working conditions.
●Achieve an efficient functioning of the organization.
●Promote the stability and prosperity of the company.
●It provides a method of the regulation of the conditions of employment of those who
are directly concerned about them.
● It provides a solution to the problem of sickness in the industry and ensures ole- age
pension benefits and other fringe benefits.
●It creates new and varied procedures for the solution of the problems as and when they
arise-problems which vex industrial relations; and its form can be adjusted to meet new
situations. Since basic standards are laid down, the employee is assured that he will be
required to work under the stipulated conditions incorporated in the agreement and the
employer is protected from unfair competition by those who are engaged in a similar
industry.
●It provides a flexible means for the adjustment of wages and employment conditions to
economic and technological changes in the industry, as a result of which the changes for
conflicts are reduced.
●As a vehicle of industrial peace, collective bargaining is the most important and
significant aspect of labour management relations, and extends the democratic principle
from the political to the industrial field.
●It builds up a system of industrial jurisprudence by introducing civil rights in the
industry. In other words, it ensures that the management is conducted by rules rather
than by arbitrary decisions.
Collective Bargaining Process: There are two stages in collective bargaining, viz., (i)
the negotiation stage and (ii) the stage of contract
1. Negotiation
a) identification of problem: The nature of the problem influences the whole process-
whether the problem is very important that is to be discussed immediately or it can be
postponed for some other convenient time, whether the problem is problem is minor
that it can be solved with the other party’s acceptance on its presentation and does not
need to involve the long process of collective bargaining process etc.
b) preparing for negotiations: When it becomes necessary to solve the problem

through collective bargaining process, both the parties prepare themselves for
negotiations.

c) Negotiations of agreement; Usually, there will be a chief negotiator who is from

the management side. He directs and presides over the process. The chief negotiator
presents the problem, its intensity and nature and the views of both the parties. When a
solution is reached at, it is pt on the paper, taking concerned legislations into
consideration. Both the parties concerned, sign the agreement which, in turn, becomes a
binding contract for both the parties.
2. Contract Administration: Implementation of the contract is as important as

making a contract. Management usually distributes the printed contract, its terms and
conditions throughout the organization. The union takes steps to see that all the workers
understand the contract and implement it. From time-to-time depending on changing
circumstances, both the parties can make mutually acceptable amendments.
Causes for the Limited Success of Collective Bargaining in India: Though it is argued
that collective bargaining has grown in India due to statutory provisions, voluntary
measures, Industrial Truce Resolution of 1962 and the amendments to the Industrial
Disputes Act, 1947, its success is limited. The causes for its limited success are:
1. Problems with unions: Collective bargaining process mainly depends on the

strength of unions. But still there are not many strong unions in India. Unions are
marked with multiplicity, inter and intra-union rivalry, weak financial position and non-
recognition. Weak trade unions cannot initiate strong arguments during negotiations.
There is usually no unanimous decision among workers to be presented at the
negotiating table.
2. Problems from Government: The Government has not been making any strong
effects for the development of Collective Bargaining. The Government has imposed
many restrictions regarding strikes and lock-ours, which is an obstacle for the
development of collective bargaining process.
3. Legal Problems: Now adjudication is easily accessible. As such now collective

bargaining process is losing its importance.
Maintenance of HR: Organisation provide a variety of fringe benefits. Dale Yoder and
Paul D. Standohar classified the fringe benefits under four heads as given hereunder:
For employment security: Benefits under this head include unemployment insurance,
technological adjustment pay, leave travel pay, over for maternity, leave for grievances,
holidays, cost of living bonus, call-back pay, lay-off pay, retiring rooms, jobs to the
sons/daughters of the employees and the like.

For health protection: Benefits under this head include accident insurance, disability
insurance, health insurance, hospitalization, life insurance, medical care, sick benefits,
sick leave, etc.
For old age and retirement: Benefits under this category include: deferred income
plans, pension, gratuity, provident fund, old age assistance, old age counseling, medical
benefits for retired employee traveling concession to retired employees, jobs to sons
/daughters of the deceased employee and the like.
For personnel identification, participation and stimulation: This category

covers the following benefits: anniversary awards, attendance bonus, canteen, co-
operative credit societies, educational facilities, beauty parlour services,housing, income
tax aid, counseling, quality bonus, recreational programmes, stress counseling, safety
measures etc.
Employee Security: Physical and job security to the employee should also be
provided with a view to promoting security to the employee and his family members.
The benefits of confirmation of the employee on the job create a sense of job security .
further, a minimum and continuous wage or salary gives a sense of security to the life.
The Payment of Wages Act, 1936, The Minimum Wages Act, 1948, and the Payment of
Bouns Act, 1965, provide income security to the employees.
Safety and Health: Employee’s safety and health should be taken care of in order to
protect the employee against accidents, unhealthy working conditions and to protect
worker’s capacity. In India, the Factories Act, 1948, stipulated certain requirements
regarding working conditions with a view to provide a safe working environment. These
provisions relate to cleanliness, disposal of waste and effluents, ventilation and
temperature, dust and fume, artificial humidification, over-crowding, lighting drinking
water, public utility and spittoons. Provisions relating to safety measures include
fencing of machinery, work on or near machinery in motion, employment of young
persons on dangerous machines, striking gear and devices for cutting off power, self-
acting machines, easing of new machinery, probation of employment of women and
children near cotton openers, hoists and lifts, lifting machines, chains, ropes and lifting
tackles, revolving machinery, pressure plant, floors, excessive weights, protection of
eyes, precautions against dangerous fumes, explosive or inflammable dust, gas etc.
Precautions in case of fire, power to require specifications of defective parts of test of
test of stability, safety of buildings and machinery etc.
Welfare and Recreational Facilities: Welfare and recreational recreation include:

(a) Canteens: (b) Consumer societies: (c) Credit societies: (d) Housing; (e) Legal aid: (f)

Employee counseling: (g) Welfare organizations; (h) Holiday homes; (i) Educational
facilities; (j) Transportation: (k) Miscellaneous.
Old Age and Retirement Benefits: Industrial life generally breaks the family
system. The saving capacity of the employee is very low due to lower wages, high living
cost and increasing aspirations of the employees and his family members. As such,
employers provide some benefits to the employees after retirement and during old age,
with a view to create a feeling of security about the old age. These benefits are called old
age and retirement benefits, these benefits include: (a) Provident Fund; (b) Pension; (c)
Deposit linked insurance; (d) Gratuity and (e) Medical benefit.
Corporate social responsibility:
Corporate social responsibility is becoming an increasingly important priority for many

CEOs across the world, and HR has a vital part to play, writes Robin Kramar Corporate
social responsibility (CSR) and sustainable development is gaining increasing
prominence in the global business culture, as many businesses attempt to accommodate
the CSR agenda. The concept of corporate sustainable development is still the subject of
controversy and therefore the indicators used to measure CSR continue to be the topic
of debate. However, no matter what indicators are used, the notion of responsibility
includes responsibility for people in the collective sense (such as communities) and also
for individuals.
The criteria used to measure workplace practices relate specifically to HR practices. The
criteria include: employee involvement; fair and reasonable rewards and conditions; a
positive commitment to diversity and work-life balance; industrial relations
arrangements based on mutual respect; occupational health and safety arrangements;
executive remuneration that is fair and reflect the concerns of internal stakeholders;
independently verifiable performance measurement and evaluation systems and
training and development policies. These criteria indicate that an organisation that is
seen as socially responsible creates a culture that is perceived as open, fair and attractive
to potential and existing employees.
Research demonstrates CSR initiatives have a positive impact on employee morale,

motivation, commitment, loyalty, training, recruitment and turnover. Benefits in these
areas have been found to improve the bottom line of companies. Three surveys across
Europe, the USA and a survey involving 25 countries found employees felt greater
loyalty, satisfaction and motivation when their companies were socially responsible.
A recent survey of 257 CEOs by Korn/Ferry shows that 65 per cent of CEOs are taking
responsibility for managing company reputation. Almost three-quarters of the CEOs
regarded recruitment and retention as the main business objective of corporate

reputation and almost the same percentage identified the hiring and retaining of key
and talented people as one of the three top objectives of corporate and social
responsibility initiatives. These HR concerns were regarded as more important than
more commercial and business outcomes.
Therefore, corporate initiatives can contribute to the branding of organisations in the

labour market. These initiatives can make the organisation attractive to employees with
similar values and so assist the organisation to become an employer of choice for these
potential employees. And, if it lives out the values and initiatives on a daily basis it will
assist the retention of desirable employees.
Global HRM :
Global HRM refers to Human Resource Management practices that deal with managing
a diversity of workforce from all around the world.
The following challenges are being faced by HR managers in terms of globalization:
- Managing diversity of workforce.

- Managing pressures for more labor rights in third world countries.
- Managing Outsourcing of employees.
- More part-time and temporary work
- Managing productivity and Quality
- Downsizing the workforce
- Coping with flexible working hours
The globalization of Business has had a significant impact on human resource

management. Even though there has been large scale regional integrations, such as the
European Union, human resource manage across borders is very different and can be
quite difficult for a Human Resource Professional un-accustom to cross border
management. The purpose of this course is gain insights into employee relations from a
cultural and international perspective. One would tend to think that Human Resource
management in one country would be much like it is in another country. There are
similarities in the human resource function from one country to another however; due
to cultural differences the human resource function can also be quite different. We must
first define the Field of Human Resource Management. According to Peter Dowling in
International Human Resource Management, “Human resource management is those
activities undertaken by an organization to utilize its human resources effectively.”

These activities include but are not limited to, human resource planning, staffing,
performance management, training and education, compensation and benefits, and
labor relations. We must consider what, if any, changes to the above definition occur
when a company goes international or global. When the human resource activities are
spread across different countries therefore, different types of employees must be
considered. Employees from the parent company or Parent Company Nationals (PCNs),
this is the expatriate manager or technical professional assigned to a different country.
The next type of employee is the Host Country National (HCNs), this is an employee of
the company form the country which hosts the subsidiary. The last type of employee is a
Third Country National (TCNs), these employees are from a country that is neither the
host nor the parent country. This expatriate also may be from another subsidiary owned
by the parent company.
These multi-country nationals lead to issues generally not associated with Human
Resource Management (HRM), such as international taxation, international relocation,
administrative services for expatriates, and government relations. For example D.L.
Pinney discusses tax reimbursement for expatriates because expatriates are subject to
international tax and often have domestic tax liabilities; it is therefore incumbent on a
company to provide tax equalization. If there is no tax equalization much of the
incentive and motivation for the overseas assignments would be lost.

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Human Resource Management – M.B.A.

RajaRao Pagidipalli Page 1

Meaning and Definition of HRM

In simple sense, human resources management means employing people, developing

According to Pulapa Subba Rao, human resources management (HRM) is managing

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Differences between Personnel Management and Human Resources

Personnel Management is different from Human Resources Management. Personnel

I.Managerial Functions: Managerial functions of personnel management involve

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II. Operative Functions: The operative functions of human resources management

1. Employment: It is the first operative function of HRM. Employment is concerned

Job Analysis: It is the process of study and collection of information relating to

Human Resources Planning: It is a process for determination and assuring

Recruitment: It is the process of searching for prospective employees and

Selection: It is the process of ascertaining the qualifications, experiences, skills,

ü Framing and developing application blanks.

ü Counseling the functional managers regarding placement.

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ü Conducting follow-up study, appraising employee performance in order to

ü Induction and Orientation: Induction and orientation are the techniques by

II. Human Resources Development:

ü Performance Appraisal: It is the systematic evaluation of individuals with

ü Training: It is the process of imparting to the employees technical and

ü Management Development: It is the process of designing and conducting

ü Career Planning and Development: It is the planning of one’s career and

ü Internal Mobility: It includes vertical and horizontal movement of an

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ü Promotion: It deals with upward reassignment given to an employee in the

ü Demotion: It deals with downward reassignment to an employee in the

ü Retention and Retrenchment Management: Employers prefer to retain

ü Change and Organisation Development: Change implies the creation of

It is the process of providing adequate and fair remuneration to the employees. It

v Job Evaluation: It is the process of determining relative worth of jobs.

v Wage and Salary Administration: This is the process of developing and

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• Administering wage and salary programmes.

v Incentives: It is the process of formulating, administering and revising the

v Bonus: It includes payment of statutory bonus according to the Payment of

v Social Security Measures: Managements provide social security to their

¶ Workmen’s compensation to those workers (or their dependents) who

RajaRao Pagidipalli Page 7

¶ Understanding and applying the models of perception, personality,

V. Industrial Relations: The term ‘industrial relations’ refers to the study of

VI. Recent Trends in HRM: Human Resources Management has been

¶ Quality of work life

RajaRao Pagidipalli Page 8

¶ Recent techniques of HRM.

SEOPE OF HUMAN RESOURCES MANAGEMENT

The scope of Human Resources Management includes:

IMPORTANCE OF HUMAN RESOURCES MANAGEMENT

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HRM and General Management: Management of an organisational in modern

Objectives of HRM: Objectives are pre-determined goals to which individual or group

The objectives of HRM may be as follows:

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HRM Objectives at Wipro

HRM Policies, Procedures and Programmes:

After the establishment of objectives of HRM, human resources policies are to be

What is HRM Procedure?

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µ The Conscience Role: The conscience role is that of a humanitarian who

µ To meet the organizational requirements such as higher productivity, operational