HRM Book PDF

039 IBP Superior
Qualification
Table of Contents
Part 1 Introduction to HRM 7
Chapter 1: The HRM Framework

Introduction 8
Concept of HRM 8
Main components of the HRM system 10
Chapter 2: Role of HRM in Financial institutions

Introduction 12
Need for Human Resource Department (HRD) and HR
Management in Banks 13 Building efficiency in Banks
14
With The Help of HRM Human Resource Management
In Practice 14
Chapter 3: Global View of HRM

Introduction 19
What is The Global Village? 19
Workforce Diversity 21
The Implications for HRM 21
Changing Skills Requirements 22
Corporate Downsizing 23
The Rationale Behind Downsizing 24
The HRM Implications 26
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Part 2 Functions of HRM 25
Chapter 1: Functions of HRM Introduction 28 Selection

and Placement 28 Performance Appraisals 28
Compensation and Benefits 29 Training and
Development 30 Employee and Labor Relations 31
Safety and Health 31 Human Resource Research 31
:f Contents
The HRM Strategy 30
Part 3 Chapter 1: Planning and Budgeting

Human Resource Planning 33 The Demand for Human Resources
35 Forecasting Techniques 37 Human Resource Requirements 40
Human Resource Audits 42 Implementation of Human Resource
Plans 45
Chapter 2: Setting the Budget

Introduction 49
How HR Programs Save Money 50
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Part 4 The HRM Process
Chapter 1: Preparation and Selection

Introduction to Collection of Job Analysis Information 54
Collection of Job Analysis Information 55
Application of Job Analysis Information 58
Overview of Job Design 59
Techniques of Job Redesign 60
Recruitment and Selection 61
The Recruitment Process 61
Channels of Recruitment 62
Constraints on and challenges of recruitment 65
The Selection Process, 66
Steps in The Selection Process 70
Chapter 2: Development and Evaluation

Introduction to Orientation and Placement 84 Introduction to
Performance Management 95 Past-Oriented Appraisals 101
Future-Oriented Appraisals 108 Implications Of The Appraisal
Process 109 HR Management Feedback 111 Career Planning 112
Career Planning And Employee Needs 114 HR Department And
Career Planning 114 Career Education 115 Career Counseling 116
Career Development 116
m Human Resource Manaaement and Orcianizational Behavior I Reference Book 2

Chapter 3: Compensation and Protection
Protection 118 Compensation Management
123 Wage and Salary Surveys
131
130
Pricing Jobs
Incentives and Gain Sharing
133
Incentive System 135 139
Gainsharing Approaches
Chapter 4: Employee Relations and Assessment

Employee Relations ChaI lenges 142 Union-
Management Relations Introduction 152 Labor Unions
and HR Management 154
Why Are Unions Formed? 158
Chapter 5: Employee Skill Management

Introduction 163 Training 163
164
The Approach to Learning and Learning Styles
Why Training Should Be Carried Out 167
Part 5 HRM Challenges
Chapter 1: Workplace Diversity

Workplace Diversity 173
Employee Engagement 174
Talent Management 177
Succession planning
181
Chapter 2: Motivational Approaches

What is motivation? 182
Three Different Approaches to Motivation 182
Maslow’s Hierarchy of Needs 183
Implications of Maslovv’s Theory For Organizations 184
Herzberg’s Two Factor Theory 185
McClelland’s Theory 186
The Complex Man View or Process Theories 188
Porter and Lawler’s Expectancy Theory 188
Practical Applications of Motivation 189
"3Die of Contents
5
Chapter 1: Business Ethics
Introduction — What is Ethics? 192
6 Business Ethics and Organizational Codes of Conduct
Business Ethics 194
Levels of Accountabi I ity 195
Fiduciary Responsibility 196
Ethical Standards in a Global Economy 196
197
Social and Eth ical Objectives of Companies
Ethical Stance 198
Absolutism and Relativism 199
Conflicts of interest 201
Chapter 2: Organizational Code of Conduct

Codes of Practice, Conduct and Ethics 207
Safeguards 209
Codes of Practice, Conduct and Ethics Work? 211
Corporate Codes 211
7 Organizational Behavior Concepts
Chapter 1: Organizational Behavior Concepts

Introduction 215 Vision and Mission 216
Developing an OB Model 219 Decision Making 224
Leadership 230
233
Leadership and Interpersonal Relationships
Human Resource Management and Organizational Behavior | Reference Hook 2

Part 1
Introduction to HRM
e ^r is Part
Chapter 1: The HRM Framework
Introduction Concept of HRM
Main components of the HRM system
Chapter 2: Role of HRM in Financial Institutions
Introduction
Need for Human Resource Department (HRD) and HR

Management in Banks
Building efficiency in Banks With The Help of HRM
Human Resource Management In Practice
Chapter 3: Global View of HRM
Introduction
What is The Global Village?
Workforce Diversity
The Implications for HRM
Changing Skills Requirements
Corporate Downsizing
The Rationale Behind Downsizing
The HRM Implications

Part 1
The HRM framework ToKÂssrasssseemsexnMassaTSSR-.
Chapter 1
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Learning Outcome By the end of this chapter you should be able to:
* Explain the concept of the HRM framework in an organizational setup
■ List and briefly explain five most important components of the HRM
framework
Introduction
Human Resource Management (HRM) is the organization and control of a firm’s employees. An
organization’s success is dependent on the effective management of its human resources. For success, it
is prudent that personnel policies and procedures of the firm are in line with and contribute greatly to
the achievement of the firm’s corporate goals and strategic plans.
A company’s culture, values, its environment and managerial behavior

stemming from its culture affect the firm’s operational excellence greatly.
Therefore, an organization’s culture and values must be revised, reinforced,
improved and implemented to achieve excellence, with the efforts of every
member of the firm from top to bottom. HRM involves integration where
every member of the organization works to achieve a common goal.
HRM is an approach that manages, develops, trains and motivates an organization’s human resource. It
Concept of HRM
creates a proper corporate culture, ensures the company’s success and brings out programs reflecting
the organization’s core principles. HRM is proactive and believes in immediate actions in handling
employee relation problems and other tasks that come under HRM (recruitment, training). Manpower
planning, performance appraisal, selection, salary administration, management development and other
personnel management related functions are included in the implementation techniques of HRM and
will be executed through special programs designed to improve communication system, commitment
and productivity.
Human Resource Manaoempnt anH .

Briefly, the concept of HRM has three connotations:
1. Manpower of an organization is highly valuable for a corporation’s proper

functioning thus making it important to devote time and effort in their
development.
2. Human resources cannot be treated like material resources as they have

special characteristics. The strategy is to make an organization more
humanistic by establishing human values in it.
3. Human resource also highlights the social realities, units and processes in
an organization of an employee apart from him being an individual. This
incorporates the roles of an employee in the organization, the dyadic unit-
includes the person and his superior, many teams in which people work,
inter-team processes and the entity of the entire organization.
Apart from being the most innovative and excelling approach of managing ihc
people in workplace, and apart from being the best qualitative approach for the
improvement of human beings, HRM is a broader and a comprehensive version
of behavioral sciences and personnel management. It is a persistent cycle that
enables the employees to enhance their potential and skills in performing their
present as well as future roles in the organization, thus more efficiently
fulfilling the objectives of the organization and the needs of the employees.
HRM Model, beinga personnel managementproduction model approach, is an

employee oriented approach where motivation, development and
■ increased involvement ofemployees leads to high levels of commitment
_ ,jr ' towards the company’s strategic goals. Being an asset to be valued and
to be used to its fullest capacity, it concentrates on both the structure of I i-'cc ,
it the work and the employee practices required for performing that work.
— v . rustic HRM is not solely about the Human resources, but the management of
people and their work, thus committing to managing people in both collective
and individual basis. Traditional personnel management is non-strategic,
short-term, reactive, separate from business and constricted by its limited
dealings with mostly unionized or low level employees. HRM being more
preventive focuses on the development of -*■— people and their expertise
w^hile traditional personnel function being
curative only focuses on personnel management.
HRM, with its differentiating role of strategic management, attempts to ^ fulfill

and carry out the functions traditional personnel management
Jf does not. Structures and roles like performance appraisal, potentiality appraisal and
development, career planning, training and development, organization
development, research and systems development, rewards, employee welfare
and quality of work life, industrial relations, and
Human Resource Management and Organizational Behavior I Reference Book 2

human resource information are integrated into one major super set of HRM. Under HRM, the
following major assumptions are taken into account, which are different from traditional approach of
personnel management:
1. An organization's members are considered the occans of untapped ^resources.
2. These resources have immeasurable development capacity.
3. It is more fruitful to groom oneself from the inside (self development) than from the outside.
4. The organization side by side goes through development with overall benefits and with development
of the members.
1. The culture the corporation develops majorly focuses on synchronized superior-subordinate

relations, cooperation, and collaboration among different groups of individuals, open
communication, and most importantly, incorporation of the goals of the organization with the needs
of the employees.
2. Top management takes the initiating step for HRM, devises crucial procedures and tactics and
finally creates an environment required for the implementation of those plans.
MaijLComponents of
An efficient HRM is a combination of flourishing partnership among line managers,
The HRM System
senior?nanagem^frt-arrd HR function and suitable HR policies, procedures and recruitment
Li. strategies. The following precisely highlights why these components are important:
i&KsC'.Y
One of the most crucial and prudent components is line managers as they are practically involved
in all the HRM processes and lead a few as well.
Senior management consists of Executive Directors and members of the Management Team. They provide
both organizational leadership and management and act as role models for line managers and employees.
Their job involves making key HRM decisions which includes appointment and promotions related
decisions that majorly affect others in the organization.
HR Function includes regional HR advisers, their units and the HR staff. This needs to have HR
Professionals with the frame of mind, skills, structure and systems that collaborate and go in line with HR
policies and strategies and they should be more of client-oriented in order to effectively provide HR
services.
HR’s regulations, policies and tools should be rational, simple and consistent with the organization’s
values according to its contending commitment and should support the wider organization strategy.
Staffing/recruitment strategy provides a structure that ensures that the right staff is available at the right
place in the right quantity and follows the organization’s strategic priorities. It ensures that the workforce
hired is suitable, competent and possesses the skills required according to the needs of the organization.

2SSSS>:«iCOT7
Part 1
Chapter 2
Role of HRM in financial
institutions
■ Describe the role of HRM in a financial institution setup
■ Explain how the role of HRM in a financial institution differs from its
role in other organizations
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Introduction As Human Resources represent the wealth of a country, they are the most
important natural resource for the economy and play a vital role in the
banking system. For a bank to be successful, efficient Human Resource
Management is essential. Human Resource Management is the employment
of human resources with proper strategic selection, training and
development.
Due to the major overall transformations in the world economy and in the
financial structure of economies, since rgyos, a large change has been seen in
the w'avs banks contend, shape their corporations and administer their
human resources. Banks, based on the new situation now' are revising its role.
The financial sector in various countries is now analyzing with deregulation
and liberalization, a collection of external and internal forces causing the
competition of the sector to build up, thus causing rivalry in the sector.
The essential reformation in the division of labor and the latest stress on the
decentralization of functions and administrative responsibilities are some of
the demands created by the pressures of external forces of change and the
means with which financial functions are presented to customers. Therefore,
it is generally observed that banks all around the world invest more in HRM
problems and school the employees to commence a wide range of errands,
especially the employees more inclined towards service delivery aiming to
provide their clients a high quality service to satisfy their needs.
The external forces of change have resulted in a classical response of

geographic and customer segment specialization. Bringing into lime light the
concept of specialization, external pressures have led to the weakening of the
liaisons' financial role. Currently, the major decision that the banks face today
is the choice between universal banking and specialization. Due to these
developments, large finance firms have gone
Human Resource Management and Organizational Behavior | Reference Book 2

through some changes in their rankings country wise and globally- taking
into consideration both the performance and turnover. On the other hand, in
certain situations the major players of a market remain the same but their
position in the significant markets have drastically changed.
HRM is an approach that manages, develops, trains and motivates an

organization's human resource. It creates a proper corporate culture, ensures
the company’s success and brings out programs reflecting the organization’s
core principles. HRM is proactive and believes in immediate actions in
handling employee relation problems and other tasks that come under HRM
(recruitment, training). Manpower planning, performance appraisal,
selection, salary administration, management development and other
personnel management related functions are included in the implementation
techniques of HRM and will be executed through special programs designed
to improve communication system, commitment and productivity.
Need for ->uman

For the growth and competitive performance of a firm, it is necessary that its
Resource Apartment
HR department functions efficiently, especially in case of banks.
(HRD) z - R
Following are the reasons why the need of an effective HRD is of vital
Management in Banks
importance for banks:
Due to the increasing new entries of private sector banks in the financial
market and the emerging global developments, the banking pattern has gone
through various qualitative changes thus making it prudent for banks to
recruit, train and organize people at all the stages of an organization for a
V .J/Q more effective performance and success. This function is what HRD is all
about and is derived from HRM.
rr Recently, the political scenario and situation has drastically changed, causing
the banking industry to anticipate heavy changes in the near future. After all
v
the mergers and amalgamations, only a few banks will be left behind in the
banking sector. This change will not only be seen in the Pakistani market but
also in the world market having a global affect.
For banks. Human Resource Management has become a crucial need due to
the emergence of new private banks, disintermediation, competition and self-
direction in supervision of banking.
: i of HRM in Financial Institutions

H

Building Efficiency A protracting and ongoing upsurge of skills, knowledge, education and
in Banks With The attitudes among people working in the banks, especially the frontline staff
Help of HRM and employees of the branches of the bank, are some of the most essential
factors for triumphant banking.
■ Building efficiency in banks through HRM is achievable by bringing in

professionalism in an organization which is an internal part of HRM. In
order to achieve personal growth and contribute to the overall
organization’s growth, it is. vital to motivate and encourage staff to adopt
professional practices thus encouraging the prevalence of professionalism.
■ A preeminent selection process implemented by the HR department is the

key to building efficiency in banking. To successfully manage an already
available HR, it is vital that skills are developed within an organization.
■ The fundamental role of HR is the effective management of the numerous

disciplines like technology, law, operations, foreign exchange,
administration, etc., in which the immense human resources available to
the bank specialize, for its continuing success.
The following processes are followed by the HRM in banks for further
development:
■ Focus pn job description and job assignment
■ Response to prospective risks and perils.
Human Resource A Case Study of State Bank of Pakistan

Management In By: Dr. Ishrat Husain
Practice Chief Guest address at the National Conference on Human Resources held at
Karachi on October iS, 2003
‘Without being self serving, I would like to share the lessons we have learnt
during the last four years in bringing about changes in the HR policies and
practices at the State Bank of Pakistan (SBP). I hope that these will provide
food for thought for all of you.
First, Human Resource Management should be derived from the vision, mission
.'O'
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statement and Strategy andflowfrom the business plan of the organization. In
absence of such integration and flow there is bound to be a tension between the
achievement of business objectives and optimal utilization of human resources.
In the SBP, the vision. mission statement, values and business plan were
formulated collectively through a bottom-up approach. This has led to
f/ie assumption of the ownership of the change program by the rank and file,
thus improving the chances of successful implementation of the new Human
Resource policies and programs.
Second, the management responsibilities for Human Resource management in

SBP have been given to a group of highly motivated and qualified HR
professionals. The practice of manning these departments with rejects from the
core departments have done a great deal of disservice to the nurturing of human
resources. We have, therefore, brought in experts from outside to assist us,
train the younger officers in the tools and techniques of HR management and
also strengthened the department by attracting the talent from the core
departments. The respectability and acceptance of this department by the staff
will reinforce credibility in the system.
Third, the attraction, retention and motivation of high caliber persons are key to
,vJ Li L success. SBP recruits 50 young men and women from all over Pakistan out of
11,0 applicants through a highly competitive process. Middle
V.
level managers and professionals such as Chartered Accountants have also been
inducted in the organization. New skills for which there is emerging demand are
C-A appointed on fixed-term contracts and external advisers and consultants are hired for
short durations to set up systems and train the staff. The retention and motivation of
the staff is a difficult challenge as the market offers higher remuneration to those who
have acquired experience at the SBP.
Fourth, a process of continuous trainine and skill up-eradation has been put in place whereby all
yr officers receive post-induction, foundation, intermediate, advanced training in
central banking, management and soft skills. About 300 officers out of 800 have
'.W so far been sent abroad for overseas training, attachment, study tours,
seminars, etc. On their return, each participant is expected to share and disseminate his learning
with the larger group to which he/she belongs. Liberal policies for study leave, deputation, advanced
degree courses encourage the staff to acquire knowledge and keep themselves abreast of
developments in their professional fields.
Fifth, the Performance Management System (PMS) has been completely revamped incorporating a
competencies based model in which achievements, behavior, professional growth and assessment of
.A potential are the essential ingredients for measuring uejformance and career progression
path. The \p appraisal is carried out by two supervisors on the basis of an objective scoring
A \y)
^ model and the findings aredfsafssed with the staff member. The PMS is utilized
5
^ for the individual’s development plan in which the training needs are identified
A*
and planned.
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Sixth, the compensation policies have been revised to reflect the comparator norms and
A
align closely with the market practices. Although as a public sector
organization, we cannot pay as much as the private sector does, the relative security and prestige
of thinking at the Central Bank do, to some extent, make up the shortfall. A reward and recognition
system has also been put in place which ranges from a simple thank you note to a monetary reward
for innovative ideas, product development and process re-engineering.
Seventh, a pro-active succession-planning program has been introduced under which managerial
jobs are internally posted and applicants are screened, interviewed and short-listed. Those who
make the final list are sent for on-the- job training, rotational assignment and managerial training.
The successful candidates from this process are then given management positions. This plan is
essential for preparing the managers of the future.
Eighth, the SBP has a severance package for early retirement that allows the individuals to exit the
organization with full monetary benefits. This package enables us to recharge the organization
with new skills that are needed and to let go those whose skills are no longer in demand. This
continuous rebalancing of skills will keep the organization in good shape in responding to new
challenges.
Ninth, an HR audit was carried out by an externaljconsulting firm under which job descriptions
were prepared for each job describing the content and competencies required. This was followed by
the preparation of an inventory of skills present in the SBP. Jobs and skills were matched and
mismatches identified. .4 rotation policy has attempted to reduce these mismatches but a more
aggressive policy can result in disruption of the Bank’s business and operational activities.
Tenth, each organization has to develop and practice its own value system. The SBP staff has
adopted integrity, trust, teamwork, openness, courage, commitment to excellence and problem
solving approach as its rallies and each staff member is committed to practice these values in every
day work. But for these values to sink in, the top leadership has to demonstrate the role model
behavior which can than be followed down the line. If there is a disconnect between the values and
behavior of the Head of the organization. the results are an abandonment of the value system by
the staff and reversal of the change process.
Eleventh, it is incumbent upon the head of the organization to keep in touch with the staff on the
shop floor and communicate with them at regular intervals. I meet with the staff of every
department each quarter, listen to their problems, issues, grievances, suggestions and respond to
their questions, concerns and reservations. I try to explain to them the rationale and logic behind
the decisions taken or policies adopted. At the same time, any staff member can send me an email
or come and see me. The easy accessibility of the top leader to the ordinary staff member, even if it
is not used, reinforces confidence and trust in the organization. Internal stakeholder surveys are
conducted every year to ascertain the views of the staff members in a more systematic manner.
Twelfth, we have delegated powers to various tiers of the organization and institutionalized
decision-making process. A Corporate Management Team (CMT), with the Governor as its
Chairman, meets every Monday morning, considers and makes decisions on policy matters and the
minutes of the Meeting are posted on the internal electronic notice board for the information of all
staff. Similarly, Group Management Teams and Departmental Management Teams act as the
collective decision making vehicles at the lower tiers. Individual discretion has, therefore, been
curtailed and consensus building given more scope.
Thirteenth, regular monitoring of policy implementation, business plans and other decisions taken
by the organization does provide a strong feedback to the managers and enables them to take
corrective actions. The CMT meets at six-monthly intervals to monitor the progress in the
implementation of business plans while the CMT and Heads of Departments meet once a month. A
Change Management Conference is held every year at which the managers take stock of the
progress and set the goals for the next year.
Fourteenth, the use of information technology across the spectrum has improved the efficiency of
our operations. There was no PC with any of our staff members in /999- Today, we have at least
Soo workstations with desktops. E-mailing and access to internet, use of website and electronic
data have become the ordinary tools of business. When data warehousing is completed, the banks
will no longer have to send thousands of pages of reports and returns to the SBP. Data acquisition
will be done electronically and the required variables will be downgradedf rom the data marts to
generate the reports. The real time on-line surveillance of banks will improve the enforcement
capability of SBP and detect weaknesses and variances promptly.
Finally, we had to remodel our offices to upgrade the physical environment in which the staff
spends most of their day. Almost all the floors of the SBP will be remodeled by end of December this
year. The staff who has occupied the new floors report that their morale has gone up and they
eagerly look forward to coming to work.
The above cataloging of changes that have been introduced in the last few years, by no means,
suggests that we have reached the state of perfection. We have a long way to go in changing the
organizational culture that is strongly entrenched in history and traditions but the human beings
are quite rational in thinking and approach. /15 long as they are convinced that the change is in
their larger interest the resistance breaks down and a slow and gradual movement begins. This
Case Study of SBP shows that, contrary to the popular belief that
m
the public sector organizations are hard to turn around, it is possible to bring about transformation
- structural and behavioral - provided there is a broad- ftased ownership.
We would like the human resource practitioners to look at the SBP and make suggestions as to how
we can do a better job.'
m
Global view of HRM
By the end of this chapter you should be able to:
• Explain the global view of HRM
■ Explain the impact of changing global human resource practices on

day to day HRM activities
All over the world, organizations arc going through immense operational
changes. The most common changes experienced are deregulation,
internationalization and the prevailing use of information technology.
-
Business conformation and other aspects ranging from the production of
services to customer support, sales and product development experience
sweeping implications of the changes mentioned above. Such functions stress
on the continuous restructuring in the division of labor together with the
focus on decentralization of functions and decision making power. However,
the capability of a corporation's human resources in dealing with and
promoting internal change is the key to a firm’s capacity in effecting changes
and striving in such a wavering environment.
What is The Due fo increasing multinational and transnational corporations, new Global
7
Village? requirements of Human Resource Managers have come under the

limelight, thus explaining the term “Global Village" as a reflection of the
global situation of businesses. An example can be the requirement for HR
Managers to ensure that the employees responsible for global assignments
must possess suitable abilities for the efficient handling of the task.
The employees thus need to be trained by HR to face the various perils of the
global village. Primarily, the language barrier should be removed by providing
language training to the employees, making them learn the language of the
place they will work in. There have been many problems faced due to
language differences, major one being misinterpretation of message thus
creating embarrassing situations and loss of important business deals.
Communication programs for employees stems from the language

requirements of the employees. For effective communication, it is
ME i*:oal View ot HRM
19
prudent that the message is understood completely thus ensuing the necessity
of learning the required languages. When employing a person apt in communication, it must be made
sure that he\she can speak and understand the required foreign languages for effective „ N global
r w
communication. Moreover, if a foreigner possessing the required •yf \^V skills for a job is
employed, HR must make sure that they are assisted
in learning the local language. For more effective communication, ^ messages
sent to employees must be in more than one language and in
the languages spoken and understood by the employees ensuring the 5
message seeps through.
^-
Every country has a different culture, values, laws, customs and moral
U'
standards. For employees of a company going overseas, it is crucial that
^ 'V' they understand and know the culture of the host-country. This is highly
/ X* essential as the employees would need to be aware of their cultural
/ issues,
?> ^. 1 taboos, their rules, regulations and how their society functions in order
y \» to comfortably work in that environment. This training would help
J
NJ y increase the adaptability of employees. It is also prudent that human
-r
V. i
. r\ n/.- resource managers must understand how the host country would react to
these mobile emplovees.
2 O' jJS.
v'- . .\P Therefore, successful global businesses are highly dependent on cultural
[f considerations. However, we do not expect to provide the complete range
<-!
\j of cultural issues addressed enabling an employee to go to any country,
^ but we do admit that there are certain likenesses. Through research,
a
^ 'A \ we were able to make sets of countries according to the variables like
O' /V/
^ status differentiation, societal uncertainty, and assertiveness. They help

in understanding the way a country deals with its people and how do the
people see themselves. For instance an individualistic society shows that
people are concerned only with their family, while in a collective society,
people take care of everyone around them. Managers going abroad must
possess the qualities of flexibility and adaptability, thus making it essential for
those in human resources to understand the working environments and
global social system for the counseling of administration and problems over
the national frontier.
For multicultural individuals to effectively work in collaboration, HRM ■ H iK>

' "^should develop certain mechanisms. As the custom and age differences
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f\ widen within the employees of an organization, conflict arising becomes ^ '
L
înevitable. To eradicate this problem, FIRM must accustom different . *
groups with each other and discover methods to form teams.
. h The final point related to globalization stems from the following idea.
\J> K y
JL As already mentioned, the key to an organization's operational success
.. ."o' is the understanding of cultural environments. However, to achieve the
x
desired results, training employees in understanding these environments
Human 20 Resource Management and Organizational Behavior | Reference Book 2

is not enough. Companies like Engro Corporation, Pfizer, and Hewlett- Packard to eradicate this
problem are hiring nationals of the countries in which they operate. The one benefit this has is the
readymade supply V-- of employees already well accustomed to their home countries culture and
language. Another benefit is the spillover effect through training as individuals from different
backgrounds work together, learning JN differences between themselves and their cultures. In
compliance to this strategy, managers need to be taught flexibility as they will have to deal with
workers from different nationalities, race, colors and cultures etc; this will help them to keep a
r
flexible attitude and ways of dealing w ith staff Thus training managers to recognize differences in
workers and celebrate, acknowledge those differences according to the workers’ many
requirements based on different cultural backgrounds, customs, and work schedules. A positive
outcome can be achieved through compulsive training for identifying these differences and
changing the way managers think about people unlike themselves.
Forty years back, human resource management was a simple task considering
the available homogenous workforce available at that time. Human resource
management was then a simple task of getting the employees in the door,
signing them up, informing them about the uniform benefit program and
workforce
organizing the corporation’s annual function. At the time of
Diversity
retirement, HRM was responsible to present the retiring
-■ employee a gold watch at its gala event. However, with time,

the type of workforce changed.
1
..r
.Si* J The rigorous government policies related to employment
discrimination
r
are the major cause of the changes that occurred in the workforce. These laws
resulted in a path to open up for minorities, females and immigrants. Since
then, these groups have taken up the majority of the workforce with its fast
growth and thus have become the most important sector to look after for
human resource managers. An enormous rise in the workforce in local firms
has been projected due to this diverse group and its development.
plications Due to an increase in the organization’s female workforce, and them for HRM becoming
the dominant part of the workforce, HRM had to change its practices and struggle
harder to maintain and appeal a diversified workforce. This can be achieved
through the corporation’s benefit bundle that incorporates the HRM offerings of a
family-friendly organization. This is a type of an organization that provides
flexible working conditions and other employee benefits to workforce like
childcare. For these groups to be productive and remain committed to an
organization, family-friendly benefits are necessary, even in organizations that
use part time workers.
Age differences in the workforce apart from nationality and gender also donate
diversity and ought to be recognized by HRM. Our workforce can be divided
into four groups:
1. Mature workers: They are committed to work ethics and are security-
oriented. They are conventionally considered the basis of the workforce.
However, young generation considers them to be inflexible and have
obsolete expertise.
2. Baby Boomers: This is the largest group of the workforce. The organizational
growth during the commencing years of baby boomers’ employment was
unparalleled reflecting the rapid advancement in their careers, thus making
them career-climbers. Despite this, they are considered workhorses and are
said to have naive views.
3. Generation X: This generation came into being after the Western post
Second World War baby boom ended. With them came some new
perceptions into the workforce. They were less committed, less rule-bound,
more into self fulfillment and personal gratification and prejudiced towards
baby boomers and their attitudes.
4. Generation Y: This is the current generation. They arc said to be the children
of baby boomers. The individualities ofthis generation differ according to the
region, liable to the social and economic conditions. On the other hand they
are more accustomed to communications, media and digital technologies.
Additionally, the increase in a neoliberal methodology towards economics
and politics has largely affected the upbringing of this generation.
Thus, HRM, being a successful associate in blending in these groups together,

reflects that HR would need to train these groups on how to efficiently cope up
with each other and how to celebrate and accept diverse ideas and opinions of
each other.
On the other hand, when in such situations work attitude conflict occurs, due to
the diverse views, participative approach to FIRM is the most effective as it helps
keep the problem to the minimum.
Changing Skills
Every discussion of the changing world of work focuses on the problems
Requirements
related to the skill requirements. In the early stage of this world, our ancestors
worked hard on the lands growing food for themselves and

the community. With time, technology entered the world. During the
industrial revolution, commencement of machine power, assembly lines and
mass production led the people to move into cites and work in factories. For a
few generations, the economies flourished with high quality production by
workers. Now, machines have replaced humans up to a great extent being
more cost effective and the economy is more prevalent towards the use of
services rather than manufacturing.
According to the jobs of the twenty-first century, the workforce available

lacks the required skills. In some cases, the new entrants are not
adequately prepared. The high-school alumnae applying for the high-
tech jobs at present are at some times deficient in the required reading,
.Writing and mathematic skills for the jobs. Additionally, other members
i ■»
of the workforce are computer illiterate. Visualize a future aerospace ^ engineer who
is unable to decipher a blue print and elucidate how the wind icing affect lifts an
airplane. This could have severe consequences and connotations for many of the
industries and public services future operational safety and efficiency.
A massive loss experienced by an organization due to poor work quality, lower

productivity and rising employee accidents which further stems into customer
complaints and finally loss of customer is called Skill deficiency. This is a
massive problem that needs to be addressed as it can lead to a loss of billions
of dollars and would need more than one entity to other than the
organization itself. The remedy for the eradication of functional illiteracy is
the collaborative use of the companies’ and the gove rn men t ageneies^-resou
rces.
---
An instance explaining this situation is the course offered by ABC Life for the
inner city residents for enhancing their clerical and mathematic skills, just to
ensure a productive workforce. ABC Life states that this implementation of
the course has led to significant improvement in the productivity of its
employees. However, considering that a substantial portion of training budget
is allocated for training the functionally illiterate, this program is quite
expensive.
Corporate Downsizing is the reorganization, economization and de-layering Downsizing

activity where corporations decide or are imposed on to undertake in order to
remove certain superfluous jobs. Organizations have been strained to prune
the inefficient parts of their ranks due to deregulation in majority of
industries, foreign competition and increasing mergers and takeovers. Alas,
development patterns exemplified Pakistani industries prior to the 2007
changes. Hiring of people was disorganized, jobs were frequently ill-defined
and swarming middle-management
wm
positions were produced. The cost of these measures was transferred to the consumers in the
form of hidden cost additions who took them for granted. However, the changed corporate
industry milieu can now be seen due to wavering world economies, increasing inflation at
home and reducing profit levels. This compelled the organizations like NAFA, PTCL and
Indus Motors to reduce the number of jobs and reassign 'employees for efficient functioning
of their firm.
The Rationale Behind

An organization performs de-layering in order to achieve
higher Downsizing levels of efficiency. Efficiency exemplifies the
foundation of downsizing as it means getting maximum output from minimum input. Main
purpose of downsizing is reducing the number of employees taken in the organization.
However, recently downsizing is majorly being practiced on the managerial positions despite
the fact that workers producing the goods and services are not impervious to layoffs as well.
Organizations began this practice after taking into consideration the additional value to
productivity contributed by management and how contracted management affects the
organization’s level of productivity, thus reflecting the organizations’ use of a greater span of
control.
Span of control is the amount of employees a manager can efficiently handle. A simple related
assumption could be that an efficient manager is apt at handling a greater number of
employees. Figures 3-1 and 3-2 highlight two types of span of control-prior economization and
post downsizing. Figure 3-1 shows a span of control of four employees showing that four
employees come under each manager’s control, thus making it six layers of management,
total 1,365 managers and 4096 employces-people producing goods and services. However, this
indicates an inefficient span of control as can be seen through the managers to employees’
ratio, thus signifying the company’s decision to double the span to eight.
V,CC Pres it enl

Figure 3-1: Span of Control before Downsizing , * 2S6
Middle Management
1024 First-line Supervisors
4096 Employees
The result of downsizing has been shown in Figure 3-2. After downsizing, the organization has
four layers of management, with 585 managers controlling 4,096 employees. This helped the
company cut down two layers of management and reduce 780 positions. Moreover,
considering an average pay scale of PKR 600,000, the company successfully saved more than
PKR 468 million in direct pay. This massive reduction in cost is an immense achievement and
relief for a company facing financial ill-health.
Figure 3-2: Span of Control after Downsizing
t, President ^ Vice President 64 Middle Management S12 First-line Supervisors
4096 Employees
Although downsizing helps the organization in cost saving, it brings out certain issues with it
as well. Downsizing has caused the job of the managers to double as now the managers who
prior th is change handled four employees now have eight employees under their
responsibility. Moreover, downsizing does not only affect the managers but also influence the
employees. Consequently, it is plausible that majority employees nowadays are expected to
generate an output equal to the output produced by three employees in the past. So,
restructuring of the organization (downsizing) without proper revamping of jobs and training
of employees is more of an expense increaser than a cost saver, resulting in failure to achieve
the goal of cost saving. Moreover, this change is implemented by Lhe companies without
considering the interests of the people working.
What about the people who had been let go? How have they been compensated for being let
go? Were they already informed about this decision or were they grouped into a place,
informed and ushered out of the organization there and then? Was the organization prepared
to handle the reaction of the remaining employees over their dismissed friends? Did the
r
employees fear their own expulsion from the organization? W ould the remaining employees
undergo high levels of stress from the extra work now imposed on them? These are the
common issues that the human resource management goes through while the restructuring of
the organization.
So how can The HRM Human Resource Management make downsizing
successful? Human Implications resources should provide their input into the downsizing
process if they are related to the organization's premeditated direction.
Appropriate communications should be ensured during this period. They should ensure the
minimization of negative effects caused by rumors and the availability of all the related factual
information to the people. Moreover, HRM must also handle the actual layoffs and should
conduct and commence programs for helping the employees been laid off. For instance, when
employees are delivered the news of their lay off, they usually face the aroma of uncertainty
and are struck with the concern of coping with this change. In such a situation, anticipating
the answers of the following questions might help the organization in achieving and
implementing such assisting programs successfully:
■ Will they be paid any compensation and in what form?
■ How will the health insurance plan be handled?
■ Will they be given any retirement benefits and in what form?
In short, neither can an organization ignore human resource management when conducting
the downsizing discussion nor can it abandon its obligation towards employees. However,
when human resource managers are themselves influenced by the cutback, this becomes
difficult to happen. Despite being susceptible to this action, HR managers should remain
poised during the whole process.
Although downsizing has been quite rampant in the past years, it is still anticipated that
significant reduction in this cutback policy will be seen in the future. In fact, certain
organizations, after the current progress in economic conditions, have hired some employees
back due to the profound implementations by the corporations of this cutback. Although not
across the board, the new positions arise in the service sector organizations and contain
professional-level skilled jobs. In such a situation, employing full-time staff for accomplishing
the organization’s goals and employing without any deleterious effects on the company’s
productivity becomes crucial. This can then ensure the re-hiring of the lost jobs on the
condition that these positions are efficient enough to achieve the company’s goals. To
conclude, the executive body of the organization must ensure to entice and retain highly
capable and dedicated employees.

Functions of HRM
Chapter 1: Functions of HRM
Introduction Selection and Placement Performance Appraisals
Compensation and Benefits Training and Development Employee
and Labor Relations Safety and Health Human Resource Research

Part 2
Functions of HRM
Chapter 1
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■ List and explain

the functions of HRM &/ssEJiaasariBEsusi£!/f3Bf&8mx(SBSittiat£SSuz.
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Introduction An HR department is responsible for the provision and maintenance of a suitable

workforce for the organization. Selection and placement, training and
development, compensation and benefits, employee and labor relations,
performance appraisals, safety and health, and human resource research come
under the functions of HR department. Given below is a brief synopsis of the
following functions:
Selection and The HR department is responsible for enticing the qualified candidates for a job
Placement
with the required skills through job postings and different types of advertising as
well as screening the resumes of those candidates and short listing the candidates most suitably
qualified for the interview. l ine managers usually take the final employment decision of the
candidates. Planning of the new and changing positions and evaluating the current job analysis
and job description to make sure that they precisely reflect the current position are some other
continuing recruitment responsibilities.
For staff selection process, job specifications and job descriptions are the most
useful tools. The need to employ a new worker is identified by someone (like
the department manager) or by some event (like resignation of an employee)
within an organization. Large corporations carry out this process by
submitting an employee requisition to the HR department mentioning the job
title, the department and the date the employee is required. This requisition
can then be helpful in creating the job description which can be referred for
the specific job-related qualifications for advertising the details of the position
both internally and externally.
Performance Another role of HRM after the employment ofthe suitable candidates is to create a
Appraisals
motivating and acknowledging environment, where employees’ exemplary
performance is rewarded. The employee performance is
28 Human Resource Management and Oraani/ntirmat

/ •'J
evaluated firstly by a formal periodic review, usually annually, which ' jailed
performance appraisal. Customarily, line managers conduct :nese assessments as
they are in continuous contact with the employees 'in daily basis and thus are best
evaluators. Subordinates, peers, group, ind self or a combination of one or more of
these are some of the other employee performance evaluators. Depending on the
job being assessed, irious appraisal methods can be used.
Following are a few appraisal systems used by corporations:
1. Group ranking of all recruits
2. Above average, average and below average performance assessed using rating
scales
3. Critical incidents-recording of favorable and unfavorable performance
4. MBO-Managing By Objectives
Various roles are played by performance appraisals:
1. Conducting human resource actions like hiring, firing and promoting
2. Presenti ng bonuses, promotions and other such rewards to employees
3. Providing feedback and criticism and highlighting areas for improvement
4. In order to enhance an individual’s job performance, classifying the

.individual’s training and development needs
5. To assist human resource planning, providing job-related information
Compensation (hourly wage and annual salary payment) and benefits •eaefits
insurance, pensions, vacation, modified workweek, sick leaves, stock options, etc.)
can have a major influence on a personnel’s performance. When an employee is
satisfied with his/her pay scale, believes that he/ she gets enough benefits and are
to some extent intrinsically satisfied good work environment, interesting work,
etc.), it is considered an ideal situation. Compensation must be authorized and
ethical, passable, encouraging, just and impartial, cost-effective, and able to offer
employment security.
Performance appraisals perform two functions; it helps establish

compensation and benefits and it helps individuals discover the various methods of improving
their current positions as well as prepare for future prospects and opportun
Training and
ities. Training and development programs are now highly required as
Development
the organizations go on to changing their corporations’ structure through
downsizing. One of the elements of the HRM function of training and development is the
facilitation of developing new skills or enhancing the existing skills.
The difference between training and development can be explained in the following way: major
focus of training is learning the skills, knowledge and attitudes needed for the initial
performance of a job or improving one’s performance in the current position. On the other
hand, development focuses on broadening the employees’ horizons and is not job related.
Training and development also includes education acquired to learn new skills, knowledge and
attitudes to be used in future works.
As current jobs are the major highlight here, we will discuss only training and development.
Training can be utilized in the following
ways:
1. Orienting and informing recruits
2. Developing desired expertise
3. Safety training for preventing accidents
4. Providing technical and professional education
5. Supplying managerial training and executive education

All the methods mentioned above not only benefit the employees but also benefit the
organization. Lessening the learning time for new recruits, educating employees about the
proper usage of updated technology and how to use it, trimming down the costs of accidents as
employees are well aware of how to use the machines properly, providing improved customer
service, improving quality and quantity of output produced and making management
participation prudent in the training process are some of the benefits of training. Managers’
participation in training reflects their serious attitude towards training goals and their
commitment to human resource development.
The learning material, the time period learners have and the financial resources available reflect
the type of training employees will go through. Training concentrates on the current job while
development’s main focus is on providing the employees with activities that help them enhance
their current knowledge and facilitate growth. Some of the
30
types of development opportunities are mentoring, career counseling, management and
ious supervisory development, and job training.
for
ams
heir Workers within an organization may create groups called union.' v
Employee and -
ts of communicate and resolve employee related problems in the same way as
abor Relations
in of HR developers ensure proper employee training. People join unions for
two reasons; to increase salaries and/or to exterminate unjust working conditions. Improved
medical plans, augmented wages and extended vacation time are a few ending products of
lined
union involvement. HR managers handle the contracts, collective bargaining issues, along
skills,
with the responsibility to deal with the unions. This contract covers aspects like compensation
a job
and benefits, working conditions, job securit;.. disciplinary procedures, individuals’ rights,
other
management’s rights, and contract length. Collective bargaining is a peaceful resolution of
is
employee related issues before the employees retaliate or besiege and or the management
and
administer a shut out.
catio
n sed
in
s
only
lowin
g
-salth An organization is responsible for providing a safe and healthy working

environment along with the protection of the employees’ rights. Safety here
means safeguarding the employees from the injuries caused in work related
accidents while health means keeping employees away from physical and
emotional sickness.
Effects of smoking, alcohol and drug/ substance abuse, AIDS, stress. and
burnout are some of the problems experienced at the workplace. .According
to employee assistance programs (EAPs), emotionally distressed employees
_
r ;.rr? are given as much attention as physically disabled employees.
done for '
updated
•esource Organizations not only identify workplace perils but also track health- Isscarch
accidents
related and security problems and report the findings to the suitable sources.
[property,
Every single detail stemming from evaluating the company'; high turnover
i quantity i
and identifying the present number of workers in the corporation and
pruden:
leading to making the statistics of the percental of women, minorities and
Managen
other demographic characteristics in th organization is with the human
Is training
resource department of the firn thus rightfully calling HRD the warehouse of
a company’s histon The research data can be collected from various sources
e financial like survey questionnaires, observations, interviews and case studies. The
will go
elopment's
help then:
>me of the
researc thus assists an organization to anticipate the recurring trends o:
future as well as make educated and pertinent decisions when r. 'in
candidates.
Part 3
The HRM Strategy
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In This Part
Chapter 1: Planning and Budgeting
Human Resource Planning The Demand for
Human Resources Forecasting Techniques
Human Resource Requirements Human
Resource Audits Implementation of Human
Resource Plans
Chapter 2: Setting the Budget
Introduction
How HR Programs Save Money

Planning and Budgeting
Outcome
■ Explain the concept of demand as applied in HR
■ Measure the HR demand in a particular organization
■ Evaluate different HR sourcing alternatives in a given situation
Resource
Human resource planning (HRP) involves the methodical anticipation of the
Planning
organization’s definite future demand and supply of employees. The HR
department’s plans of recruitment, selection, training, career planning, and
other activities are highly dependent on the estimation of the number and type
of employees required by the organization. The human resource planning
permits the organization to employ the most appropriate people required at the
right time. An efficient HRP system not only helps the organization to achieve
their affirmative targets but also assists the HR department’s capability to
proactively respond to the various challenges it faces.
However, the organization’s plans may turn out to be a failure if the people
hired are not the right type and in the right number. Some other foundation
plans for an organization's appropriate strategy planning are the production,
marketing and financial plans. Thus, majority of the managers agree that well-
envisaged HRPs are the foundation stone as competent people can make the
accomplishment of any area's goals easier with efficient plans. For instance,
high technology firms like IBM and Motorola when decide to develop a new
product or enter a new market highly consider the availability of qualified
technical and support people. The prospective markets can be lost to
organizations with more competitive and appropriate workforce if ample
engineering talent is not available.
A company commences its strategic business planning with its policy

committee establishing top-down revenue and profit objectives. After this, the
managements of different business areas work upon the tactics, product thrusts
and sales volumes required in order to achieve the policy committee’s
established aims. Stemming through these goals, the company forms well-
designed strategies for development, manufacturing, marketing, and service for
its national and international
divisions. The responsibility of developing functional plans into divisional plans
is upon the line managers. On the other hand, HR is responsible to oversee
these divisional plans before they are sent to the final corporate division.
Despite the line managers’ broad latitude of tackling with the human resource
problems, the proactive experts who work closely and directly with the
divisional managers press the necessity of human resource involvement in
business plans. This is because the business plan before being finalized is
reviewed for HR purposes.
Preferably, human resource planning should be used by organizations to

discover their short-run and long-run employee needs. Short range plans
highlight the vacancies that should be filled within the upcoming year. While
long-range plans estimate the future human resource conditions in the next
two, five or traditionally ten years.
Human resource planning is prevalent in large organizations as it helps them

to:
1. Utilize the available human resources efficiently
2. Effectively match personnel activities with the organization’s anticipated

goals
3. Achieve large scale production benefits in the employment of new workers
4. Enlarge the base of personnel management programs for helping other

organizational entities and some other personnel activities
5. Successfully make key demands on local labor markets
Synchronize variable personnel management programs like employment needs

and affirmative action plans.
This same range of benefits can be enjoyed by small corporations as well.

However the effectiveness of these benefits is relatively less as the situation is
less intricate. Considering different situations experienced by a small and large-
city government, it can be concluded that the gains of human resource
planning experienced by small firms do not substantiate time and costs.
In Karachi, one of the fast food chains recruits 20 workers and is expanding at a
rate of 10 percent annually, meaning the addition of two new employees every
year. On the other hand, the contending franchise employs around 8000
employees and is growing at a rate of 5 percent, meaning 400 new employees in
addition to the surrogates of leaving workers. Considering that hiring one usual
employee costs around 5000 rupees, the local restaurant for hiring 2 new
employees will spend
10,0 rupees. So for just adding new employees, the franchise will
spend around 2,000,000 rupees. Therefore, detailed planning efforts for 2.500
rupees cannot he rationalized by the local food chain manager if the
employment planning saves 25 percent. On the other hand, the organization
can still afford an expert for 500,000 rupees and after removing the planning
expenses can still save a large amount of money.
/
Yet for HR specialists, human resource planning is still crucial in both the small
and large organizations. HRP shows small employers the importance of human
resource consideration in case they expand rapidly. For large organizations,
HRP is beneficial as it helps organizations like IBM, which struggles to avoid
layoffs, to identify the different ways of making personnel function more
efficient. This chapter focuses on two aspects of human resource planning;
starting from the ways organizations find and identify future job opportunities
and concluding with the way FIR experts recognize the prospective sources of
employees to match with the vacancies available.
Analysis offuture demand of employees is one of the major components of

*-T«£-:d for human resource planning. Majority organizations, without considering the
Sescurces supply of employees, anticipate the future requirements of employment
(formally and informally). The forecasting methods of this demand and the
risks in determining it are worth a small review.
Causes of demand
The crucial challenges affecting the human resource demand include the
changing environment, organization and workforce. These factors not only
affect the short-range plans but also influence long-range plans of employment.
Moreover the organization is able 10 manage some of these factors while is
unable to handle the others.
External challenges
The anticipation by HR specialists of an organization’s environmental
developments is hard in the short run while sometimes immensely impossible
in the long run. On the other hand, the estimation of other economic
developments is difficult yet has obvious affects. Examples of such
developments are inflation, unemployment and interest rates that restrain
construction and the relative need of construction workers.
In contrast, social, political and legal challenges have rarely clear connotations
while are easily predictable. For better understanding and elucidation of these
challenges, majority organizations have affirmative action plans and
compliance departments.
Technological changes are hard to anticipate and assess. For example, people
believed the technology to be replacing people. However, now
I
ive can see that information technolog)’ is the fastest growing industry and
employs a huge number of employees both directly and indirectly.
Technology makes human resource planning intricate as it tends to reduce
employment in one department (like bookkeeping) while i ncrcase
employment in another department (1 ike computer operations).
One other external challenge that influences the organization’s demand for
human resources is competitors. Foreign competition is partially responsible
for hardly any growth in employment in the automobile and steel industries.
However, electronic industries experience lower prices, larger markets and
increasing employment due to competition.
Organizational decisions
The demand for human resources is largely affected by major organizational
decisions. The corporation’s strategic plan is the most prominent in this area
as it helps the organization achieve its long-range objectives like growth rates
and new products, markets or services. The type and number of employees
required in the future are anticipated using these objectives. In order to
achieve the long-term objectives, HR experts need to develop long-range
human resource plans in order to accommodate and match the strategic plan.
Planners have discovered that strategic plans operate in the form of budgets
in short run. The
W* Vwi W&an Te'sovvcce requirements are
budget increases and cuts
Sales and production forecasts help identify the short-run changes faster
despite the fact that they are not as accurate as budgets.
An HR manager discovered a significant fall in the sales due to the recession

in his nationwide furniture chain outlets. The manager in reaction to this
dismissed the current short-run FIR plan and impeded and halted the
employment plans on all its outlets.
An organization when fail to accommodate to the changed employment

demand might need to cut down its workforce and layoff workers.
Changing human resource demands stem from a new venture. The planners
might produce a short-run and long-run employment plan in the lead time at
the very beginning of the project. However new ventures formed by mergers
and acquisitions may instantly modify human resource demands and may
lead to a new corporation and job design. After the merger or acquisition,
restructuring the organization will bring a drastic change in human resource
needs. In the same way, the revamping of jobs would alter the required
expertise for future employees. During the continuous change in the
organization’s structure, caused by obtaining, merging, and spinning off
divisions, entering new businesses, and leaving old ones, the administration
must
keep the foundation of its strategic decisions on the HR considerations which

may include the matching of skills with jobs, keeping key personnel after a
merger, and solving the human problems that arise from introducing new
technology or closing a plant.
Workforce factors
Employee actions like retirement, resignation, termination, death, and annual
leave causes the human resource demand to change. Past experience is a very
powerful tool that can be used as a trainer when an organization has a huge
workforce. Although, this means that HR officials using this tool might be
susceptible to changes that caused disruption in the past.
f*r?cisting The organization’s efforts of anticipating the future demand of "♦S-TT- cues
employees is called human resource forecasts. As shown in Figure 3-1, the
forecasting techniques range from informal to sophisticated and proper
techniques. However, the sophisticated needs are not always precise and are
thus considered estimations. Majority of the firms carry out estimations in an
informal way. The organizations may possibly use more sophisticated
techniques (if they can use specialized staff) using their experience of
forecasting human resource needs. The forecasting methods mentioned in
Figure 3-r are explained below.
Figure 3-1: Forecasting Techniques for Estimating Future Human Resource

Needs
EXPERT OTHER
■ Informal and instant decisions ■ Extrapolation ■ Budget and planning analysis
• Formal expert survey » Indexation ■ New venture analysis
• Nominal group technique • Statistical analysis • Compuier models
• Delphi technique
Expert forecasts
People who are erudite in identifying the future human resource
requirements pass judgments based on which expert forecasts are carried out.
Human resource planners must identify the employment needs of the line
managers as they pass the final employment decisions. The operations
directors or the personnel managers are fully equipped with this information
in small organizations. While in large organizations, 'urveys are conducted as
these managers arc the most knowledgeable about their department’s future
employment needs.
As:
A survey can be in various forms; it can be an informed poll, a written questionnaire or a
nominal group technique (NGT) being used for a focused discussion. NGT is a technique that
presents a group of managers with a problem statement, for instance “What will result in a
change in our future staffing needs?” After this all the members write down the answers to this
question that he/she can think of. Following this, these ideas are presented in front of everyone
in a round-robin manner until the written ideas and the newly discovered ideas are recorded.
These ideas are further discussed and categorized by getting the five most important ideas
voted by the members in the meeting.
In case the nominal group technique turns out to be a failure, the organization could add more
classiness to the survey by using the Delphi technique. This technique implores estimation
from a group of professionals, typically managers. After this the H R department planners act as
intermediaries, abridge the numerous responses and report the discoveries back to
connoisseurs. The experts are surveyed again even after the receiving feedback from employees.
These summaries and surveys are continuously conducted until the experts consent with the
idea of future development (mostly four or five surveys) for instance, HR might continuously
survey production supervisors and administrators until they sign an agreement on the number
of substitutes required in the coming year.
Trend projection forecasts

This is the most rapidly fast anticipation systems for projecting the past trends or patterns.
Extrapolation and indexation are the two uncomplicated methods for this purpose.
Extrapolation is the expansion of the past gradient into the future. For instance, an
organization usually hiring 20 workers into the organization when extrapolate this rate into the
future would append approximately 240 new employees in the coming year.
Indexation, on the other hand, involves approximating the future employment needs by
bringing employment growth in line with some type of index. The usually example of this
matching is the ratio of employees to sales. For instance, planners may identify the production
department’s need of ten new assemblers on every million dollars increase in sales.
These two methods are just basic estimations in the short run on the assumption that the
causes of demand, like external, organizational and workforce factors, remain unchanged,
which happens rarely. However, these methods are not suitable for long-ranged human
resource projections. More sophisticated statistical analysis creates a situation for changing
basic and core foundations of demand.
Other forecasting methods

Planners can estimate the future demand for human resources with many other methods, one
of which is through budget. Human resource planning is required by the organizations with
comprehensive budgets and long-range plans. Studying the department brings into light a need
for financial agreement for more employees. The human resource needs can be estimated for
short-run using these forecasting methods and extrapolation of workforce changes. For long-
term estimates, departments and divisions long-range plans can be utilized.
Planners use the new-venture analysis technique in the situations where employment planning
is made complex by new ventures. New-venture analysis allows an organization to estimate its
future human resource demand by comparing the organization with other firms carrying out
'imilar operations. For instance, a petroleum company opening up a coal mine can estimate its
employment needs by looking at other coal mining firms.
Computers make the forecasting techniques more sophisticated and intricate. This is because
computer models contains a string of formulae that can be used for estimating the future
employment needs and attempt to do this by concurrently using extrapolation, indexation,
survey results, and estimates of workforce changes. The real changes in human resource
demands are update the computer formulae as time passes by.
Human resource forecasting involves four levels of intricacies summarized in Figure 3-2. These
stem from informal discussions and eadingto the use of largely complex computerized
forecasting systems. Large organizations with a huge human resource planning experience the
most sophisticated and intricate techniques. While small firms or firms just beginning to
estimate human resource requirements mostly begin with stage 1 and then progress to further
stages as planners attempt to achieve precision.
• '.'hen used in foreign arena, these techniques must be implemented

■ ith great care. Cultural differences might lead to completely different
♦•
— itations. For instance, Arabic nations avoid employing women in certain jobs and work
environment. It would be inappropriate to produce ^rkforce projections on the grounds of
North American women’s roles end participation rates. On the other hand, in countries like
India, the ;is:e system contracts the options of the type of work a person might idopt. Even
though this may sound out of place, a country’s culture
and religion is usually profoundly surrounded by country specific limitations. So, human
resource plans that are unable to consider and include these changes are useless.
Figure 3-2: Stages of Complexity and Sophistication in Human Resource Forecasting
HH STAGE« m
Managers discuss goals, Annual planning and
HHHHI
Using computer-
stage tv m
Online modeling and
plans, and the type and budgeting include generated analyses, computer simulation
number of people needed human resource needs examine causes of of talent needs, flows
in short term
problems and future trends and costs to aid in a continuing
regarding the flow of talent process of updating and
projecting needs, staffing plans,
career opportunities, and thus
program plans
Highly informal and Specify quantity and Use computer to relieve Provide best possible
subjective quality of talent needs as managers of routine current information for
far as possible managerial decisions.

forecasting tasks (such as
vacancies or turnover)
Identify problems Exchange data with
requiring action: other companies and
individual or general
government (such as
economic, employment and
social data)
Human Resource
Requirements
A summary of the major considerations taken into account when anticipating

the demand for human resources can be seen in Figure 3-3. It donates that the forecasts define
the causes of demand as statement of needs in the short and long-run. Thus, essentially, the
long-run plans created using these statements are general statements of expected needs.
Certain numbers are completely deleted while certain are estimated as the planners are not apt
at this process and are low in accuracy. However, as the planners get acquainted with the
causes of demand and forecasting techniques, accuracy in the estimation of human resource
demand increases. Short-range plans can be described as a staffing table and are more definite.
Staffing table is responsible for listing down the future employment needs of every type of job.
WsM
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ticure 3-3: Components of the Future Demand for Human Resources
MSiik ->
111
Ofgnni;3lionai Trend Demand For
Expert
Cteman'd - Human
Resources
;; ' Long Range

'•v* . \ '■>
:
Other
iilSMI ’
sMNi
Considering the accuracy of the fundamental forecast, the recording of the human resource
needs may be in a form of a specific number .T a particular range. Staffing tables are not
considered completely accurate and reliable, they are simple estimations. However these help
~ matching the short-range supply and demand of employment, assist me operating
departments to carry out its functions efficiently and help -'.prove HR department’s image.HR
officials will be more positive and rganized if then approximations of human resource needs
are explicit.
The Supply of Human Resources

7re next step of HR department, after the identification of prospective cemand of human
resources is to fill up the vacancies created with this ccmand. There are two sources of supply,
external and internal. Internal - urces include employees who are currently working in the
organization _ can be promoted, transferred, or demoted to fill expected openings.
instance, the vacancies in a police department can be filled with

■ ■employees of another city who want to transfer to police work from \-.r:r present jobs.
This is internal supply. In contrast, external supply ".eludes people who do not work for the
city like the unemployed or _ —.?!oyees of another organization.
Estimates of internal supply

Estimation of internal supply is not only the counting of the number
- employees required. As can be seen in Figure 3-4, planners in order analyze the workers
abilities and skills audit the present workforce.
• can assist the planners in seeing which vacancies can be filled with
■ r._ current employees and can be documented on a substitution chart.
-crucial to take into consideration existing employees for future job ~ ::.ncies if workers
are committed to have lasting careers with their : ~ r : yers rather than going into the blind
alley of unemployment.
Human Resource Human resource aud its and replacement charts are some other i mportant Audits
information sources that have been added for HR department’s assistance. HR
department can plan out activities like recruiting, training, and career
Figure 9 -4: Factors that determine the future supply of Human Resources
planning more effectively with greater knowledge of the employees. By finding
internal applicants for the job vacancies, this knowledge can help employees
achieve and implement their affirmative action plans. Audits and replacement
charts are crucially essential for the proactive personnel work and thus are
expla ined below. Human resource audit is responsible for summarizing every
employee’s skills and capabilities. Skills inventories are the audit of non-
managers while management inventories are the audit of managers. Ibis
signifies that the inventory catalogues the skills and capabilities of employees.
The summary helps the planners comprehend the potential of an
organization's workforce.
jaffer Ahmed, after working hours, “moonlighted’ by assisting his brother in

performing maint enance work in a large pavnt factory. Ihis experience helped
[after disc :over his talent and he completed various courses in plumbing and a
ir conditioning. The HR manager at the National Bank was unawan ; of Jaffer’s
1
skills as the full-time employer barely updated its skills i nventory on
employees. After looking for the maintenance worker for several weeks, he
employed a worker from outside the organiz ation’s present workforce. Bank
incurred an expenditure of 80,000 ru pees to find this worker. Jaffer was
justifiably upset when he found out .
ft is prudent to update the management inventories every so often as they are

used for vari< JUS key HR decisions. Indeed, some employers use the same form
of managers and non-managers. In case of different forms, management i
nventory asks for information about management activities.

Regular topics are:
* Nu mber of workers super v ised
■ Total budget handled
■ Responsibilities of subord i nates
■ Types of employees supervised
■ Management training received
■ Previous management duties Replacement charts
Replacement charts is a visual illustration of who will replace whom when certain job openings arise.
Human resource audit provide the information needed to construct the charts. An ordinary
replacement chart might demonstrate only certain jobs’ status in administration. Usually these charts
include minimum information despite the fact that different firms might summarize different
information in their replacement charts. Just like an organizational chart, this chart represents various
jobs and shows the status of probable employees.
Two variables are highlighted in replacement; present performance and promotion. Supervisory
evaluations are the major component in determining present performance. Views of other managers,
peers and 'ubordinates also donate to the evaluation of present performance. Present performance
and the approximations by a superior of the future success in a new job are the key pillars of future
promotions. Psychological tests, interviews, and other methods of assessment may be used by the HR
department to contribute to these estimates.
A claim of age discrimination can be made if the replacement charts nclude the ages of the
candidates. This has caused the omission of this ietail from the charts. For HR and management
decision makers, these charts supply a quick reference. Due to its limitation of containing imited
information, HR experts have developed replacement -cmmaries as supplements to replacement
charts. These supplements provide a list of probable replacements for each job and specify their -
:rengths and weaknesses. These help the decision makers to make more
• rowledgeable decisions as they provide a considerably greater amount of information than the
replacement charts.
Yost sophisticated companies that use detailed human resource planning usually computerize their
personnel records, including reman resource inventories. This helps planners update and assemble
replacement summaries when required. They also help the companies 'ce uhat positions lack human
resource backups.
For instance, a convenience store chain-one of-thuse'"that made exceptionally quick career progress -
computerized its search for fast trackers. The managers of the store semi-annually file the names of
the employees most worthy of promotion. By consolidating the reports on a computer, “we find out
whether there will be a deficit of people coming up through the ranks,” says the manager of HR
research. A separate development program assists in producing career development plans,
pinpointing weaknesses and suggesting solutions (for instance university courses, in-house training, a
different job, or a special assignment).
With the help ofth is, in long run, HR department motivates its employees to enhance their abilities
and be prepared for future vacancies. In short- run, in case a suitable job replacement is not available
for the vacancy that has arisen, people belonging to the external labor market arc hired. The
information of whether replacement charts and summaries are used while hiring from an external
source is confidential. This confidentiality helps safeguard the privacy of employees as well as avoid
disappointment for people not immediately promotable.
Estimates of external supply

It is obvious that every job vacancy cannot be filled with current employees as companies cannot
possibly have replacements available for every job. Additionally, some jobs are entry-level jobs. These
are newly introduced jobs that employ people who are not current employees of the organization. In
such a situation where the job created is an entry- level job and has no replacements, the organization
uses external supplies of human resources.
External needs
The requirement of the external supply of human resources is mainly determined by the employer
growth and efficiency of HR department. Growth mainly determines the number of entry-level job
vacancies, particularly in case the company promotes the job vacancies to be filled from within the
organization. The ability of the HR department to help the employees enhance their skills and
capabilities is one factor affecting the number of non-entry-level jobs available. If the organization
does not encourage its employees to enhance their abilities, lesser amount of replacements will be
available for future jobs, thus creating a necessity to fill these jobs externally.
Labor market analysis

The skills of the human resource department employment experts and the labor market determine
the success of finding new appropriate employees. The required expertise of a particular job
determines the appropriate labor ma rket. Yet the entire country would serve as a relevant labor
market for highly skilled jobs. In contrast, local community serves
the appropriate labor market for unskilled jobs. It is seen that many 5 : I led
jobs are hard to fill regardless of the employment rates offered. For instance,
during a recession, the classified section of the newspaper denotes the fact
that many jobs go unfilled every week. The national _nemployment rate in
short run is a good measure of estimating the difficulty of finding suitable
employees for jobs. Nevertheless, the HR experts believe and understand that
this rate varies among different uroups, different regions and different cities.
Some researchers believe that a scarcity of managerial talent which -cmewhat

might be due to the attitudes of the workforce. Regardless J: the high or low
levels of unemployment, an organization will face 'hortage of managerial
talent if the prospective managers are not committed to the hierarchal
organization structure.
An organization can successfully meet external needs if they aim to irtract

employees who work for others, even if the unemployment rate ' high. The
labor markets are influenced majorly by local developments community
growth rates and attitudes) and demographic trends in the long run. For
instance, many mid-western farm towns face a declining population. When
investing in these towns, the organizations due to the rear of facing a future
shortage in local labor market decide not to open up businesses there and
thus go elsewhere. One more reason of people leaving the labor markets is
the deficiency of jobs. In contrast, employers '.r more prospective growth in
sun-belt cities as they see large future labor markets.
Demographics
These trends are long-term development trends that influence the availability
of external supply of employees. Luckily, the planners are aware of these
trends way before they actually strike.
1 :r America and Europe, the “baby boonr’ during the late 1940s and 1950s r-
rought with it huge increases in population after the low birth rates e
rerienced in 1930s and early 1940s. The 1930s low birth rates created a
'Irortage of college professors when the Post World War II babies began :heir
college in 1960s. These demographic trends were already in motion r;. 1950.
The demographic development sensitive long-range human resource
planning could have predicted soon enough this shortage for r " ■'active
colleges to take remedial measures.
r:£iire 3-5 represents a summary of the main conccpts of this chapter. At the left side,
the figure highlights the external, organizational, "ass : id workforce factors, which are
the major causes of human resource uemand. Experts, trend data, and other methods
anticipate these
causes of demand to define the long-range and short-range demand for human
resources. This demand is fulfilled either internally with existing employees or
externally with new comers. Replacement charts, based on the audits of the
organization’s human resources, show the internal supply. While the analysis of the
relevant labor market shows the externa! supply. Results present the short and long-
range HR plans fulfilled by internal and external employment procedures.
After the estimation of the employee supply and demand, there might be a need for
adjustment. In case the internal supply of workers exceeds the demand of employees in
a firm, it is said to have human resource su rplus. This causes the employers to adopt
the h i ring freeze which helps them fill in the vacancies with existing employees by
reassigning their jobs and avoid external supplies. Voluntary departures, called
attrition, slowly reduce the surplus. The continuation of this trend'encou ragesthe leave
of absence. For instance, after a summer holiday season, airlines provide their
employees leaves of absence on their request. This practice helps to reduce the
workforce during winter season and slack fall.
Figure _9-5: Supply and Demand Considerations in Human Resource Planning

Employers motivate employees to take on early voluntary retirements in situations
where surpluses are expected in the future. If the surplus is still not eliminated,
employees are la id-off. This strike of this bitter action can re compensated for by
carrying out outplacement process for helping the employees find new jobs in other
firms. This program might include practices like office space, secretarial services, use
of photocopying machines, long-distance phone calls, counseling, instructions in how
to ;.,ok for work, and even invitations to competitors to meet employees.
On the contrary, when the internal supply is unable to fulfill the organization's .needs,
a human resource shortage is crcated. in short run. planners are uliable to operate
flexibly and thus require conducting external staffing process for finding new
employees. The responses of nianners can be more flexible in the long run. In this case,
planners redouble the existing workers’ responsibilities in order to sharpen and
enhance necessary knowledge, skills and attitude for filling these vacancies.
It is prudent for planners to consider their affirmative action plans regardless of the
fact that staffing needs were met externally or internally. This plan mainly ensures that
past discrimination is stopped and future discrimination is avoided through a strategy.
The decisions
- hiring internal and external candidates for filling in job openings rrust be in line
with the goals and timetables in the affirmative action r an. The HR plan also signifies
whether the firm’s affirmative action roals are met. For instance, even unpretentious
goals like increasing the minority representation in the company cannot be achieved if
■ re company’s human resource plan shows that the company will be ■■-ducing
its number of employees through attrition instead of hiring new employees.
Tnere is more to the human resource plan than only the anticipation of :he probable
success of the affirmative action plan. HRP is an integral rart of the organization’s
human resource information system. The ~formation in the human resource plan
assists and directs recruiters, :ra ners, career planners, information system and other
human resource specialists. Personnel specialists, operating managers, and .-.dividual
employees, using the organization’s knowledge of internal and external employment
requirements, can put in more efforts and :hem to the achievement of the firm’s future
employment needs. ~ order to prepare their employees for future openings, managers
:_r _room their employees through training and development efforts, idual employees
can groom themselves for future job openings as
- :hrough education and other self-help efforts. However, according
■ :re HR department, the human resource plan is only a single part
47
mem-
of the human resource information system. One other crucial part of this system is
the details about the specific jobs in the organization. The way in which HR officials
learn the content of their jobs is covered later. The HR professionals, after being
equipped with the knowledge of job vacancies (through human resource planning)
and the content of the job (through job analysis) can begin the employment process
in a proficient, effective and proactive manner.
Significant time, staff, and financial resources are required for human resource
planning. Large organizations use human resource planning very frequently.
However, the return on investment of this planning for small firms is not sufficient
enough to cover the expenditures.
îvl rimani7atinn^l Rrihavinr I PpfprPHCG Book 2

Setting the Budget
B. the end of this chapter you should be able to:
• Name the components of the HR budget
• Relate HR budgeting to overall financial budgeting
The HR budget is the operational budget within the Human Resources department.
Adequate investment in human resources of a company’s ncome is absolutely
necessary when compiling the budget. All the rferent components of labor costs
have to be taken into consideration: -aiaries, social security fees, fringe benefits and
reimbursement of . oenses, allowances for travel and transfers, training,
kindergartens for children of employees, cafeterias, etc.
Generally, the HR budget includes the following major items:
. Overhead Costs
j
* Salaries Overtime
■ Allowances
■ Bonuses
* Increments ; Recruitment and
Selection Costs
- 7-aining and Development Costs —-
Welfare Costs
1
* Transportation Accom modation
■ Uniforms
■ Medical facilities
:
* Group insurance Allowances -
Car, Petrol etc.

* Employee events e.g. Family Day or Annual Dinner
■ Sports Club
* Employee Subsidies and loans
The budget will be based on the overall objectives and business targets of the
organization for the coming year. If there are no such specific objectives or targets,
next year’s budget can be based on the current year’s budget, with 20-30% increase.
However, depending on the HR functions of different companies, the HR budget may

also include other items, such administration costs. The HR budget can impact on the
organization’s financial budgeting both directly and indirectly. HR needs to work
alongside the financial management to accurately budget and forecast “hard” and
“soft” costs and demonstrate the value of staff investment. HR managers need to be
attuned to the financial language and demonstrate both capability am: foresight in
supporting organizational objectives.
It is extremely important to establish the link between organizations, finance and HR

budgets. The HR budget must be aligned with corporate strategy and the overall
company objectives. Investment in HR results directly in the productivity and growth
of the organization. This has huge implications for how the HR budget is planned. If
proper!;- planned, it will lead to surpassing the goals the organization has set for itself.
If it is not planned properly, this can lead to actual loss for the organization, financially
and otherwise.
How HR Programs
HR programs enable companies to avoid potentially devastating costs Some of the
Save Money
costs HR activities save companies are direct costs — :cc example the cost of hiring
outside consultants to perform HR tasks surras recruiting, at possibly a higher rate and
r
without inside knowledge : the company’s workforce.
But direct costs are just the tip of the iceberg. Most of the savings H» generates result
from enabling companies to avoid indirect costs contingent liabilities. For example,
every rupee spent on HR sala~ enables a company to avoid having to spend money in
litigation ce and wrongful dismissal liabilities in the months or even years a Similarly,
money spent on programs to retain and educate staff is investment that yields major
dividends later by enabling the comr' to retain key talent and avoid the considerable
costs of recruiting - retraining new staff.
m Human Rpsourrp Management and Orcianizational Behavior | Reference

These indirect cost savings more than offset any short-term savings achieved by cutting
or outsourcing HR staff, programs and functions, although those savings may be harder
for CEOs to see on the financial ?:atements and attribute directly to HR investments.
The HR budgeting process becomes critical to ensure that the right : mount of
investment is made in the right areas for the long-term vision : the company.
Part 4
The HRM Process
In This Fart
Chapter 1: Preparation and Selection
Introduction to Collection of Job Analysis Information
Collection of Job Analysis Information
Application of Job Analysis Information
Overview of Job Design
Techniques of Job Redesign
Recruitment and Selection
The Recruitment Process
Channels of Recruitment
Constraints on and challenges of recruitment
The Selection Process
Steps in The Selection Process
Chapter 2: Development and Evaluation
Introduction to Orientation and Placement Introduction to
Performance Management Past-Oriented Appraisals
Future-Oriented Appraisals Implications OfThc Appraisal
Process HR Management Feedback Career Planning
Career Planning And Employee Needs HR Department And
Career Planning
Career Education Career
Counseling Career
Development
Chapter 3: Compensation and Protection
Protection
Compensation Management Wage and Salary Surveys
Pricing Jobs
incentives and Gain Sharing Incentive System Gainsharing
Approaches
Chapter 4: Employee Relations and Assessment
Employee relations challenges Vnion-Management
Relations Introduction _ibor Unions and HR Management
Why Are Unions Formed?
Chapter 5: Employee Skill Management
' ~:roduction
Twining
1
The Approach to Learning and Learning Styles Training
Should Be Carried Out

!![H _____ Preparation and Selection
Chapter 1
* Describe the process of collection of job analysis information
* Define the concept of job design
■ List the techniques of job redesign
■ Define the concept of job description
* Differentiate between job design and job description
* Define and describe the recruitment process and its importance
* List the channels of recruitment
■ Identify the challenges and constraints of the recruitment process
■ Discuss the responsibilities of a recruitment manager
* Define the selection process
* List and describe the inputs and challenges of the selection process
■ List the eight steps involved in the selection process
■ Recall the best practice in each of the steps involved in the selection
process
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Introduction to
Before an HR department was created, line managers handled all HR
Collection of Job
matters. Since line managers are familiar with the job, they genera!;;, do not
Analysis
require job information. They can identify the characteristics- standards, and
Information
human abilities required to do a job. With the growth in the scope and
complexity of HR activities, many of these duties, such as recruiting and compensating, are delegated to
the Human Resourc; Department. However, HR employees do not usually have sufficien: detailed
knowledge of the jobs in the other departments. Therefore the;, need to conduct job analysis in order to
collect the relevant information
Job analysis is a technique for systematically collecting, evaluating and

organizing information about jobs. These actions are mostly done b;.
specialists called job analysts, who gather data about each job but nc: about
every person. The major HR management actions that rely on jot analysis
information are:

1. Evaluate how environmental challenges affect individual jobs
2. Eliminate unneeded job requirements that can cause discrimination in

employment
3. Discover job elements that help or hinder the quality of work life
4. Plan for future human resource requirements v Match job applicants and job
openings
6. Determine training needs for new and experienced employees Create plans
to develop employee potential
5. Set realistic performance standards
9. Place employees in jobs that use their skills effectively
10. Compensate jobholders fairly
order to understand the nature of the job, the analysts first study :he
organization - its purpose, design, structure, inputs (workforce, ~iterials and
procedures) and outputs (products or services). They also re\ ew the company,
industry and government reports related to the job has to be analyzed. On the
basis of the general understanding of the r^nization and its functions, the
analysts:
Identify the jobs to be analyzed
2. - Develop a job analysis questionnaire
Collect job analysis information

ob Identification
: err organization has several departments and every department --'forming a
different job. The analysts first identify the different
• -- before they collect job information. The process of collecting job i"’.'"mation
is simple in small organizations, but the process becomes ~ re jomplex and time
consuming for larger companies due to the vast i i~e:y of jobs. The analysts may
have to construct lists of jobs from
- records, organization charts, or in discussion with workers and -7-=t
:?ors. If job analysis has been done before, analysts may be able to rrevious
records to identify the jobs of a similar nature.
I .estionnaire Development
rier to study jobs, analysts generally develop checklists or . r . n a i r e s
that arc sometimes referred to as “job analysis K*-ei_.es~. These forms seek to
collect job information uniformly. The .— - -n a ires disclose the duties,
responsibilities, human abilities, and performance standards of the jobs
investigated. It is important to use the same questionnaire for similar jobs. The
Human Resource Management and Organizational Behavior | Reference £

purpose is to seek for variations in job information to differentiate one job from
another, not differences in the questions asked.
The major components in developing a questionnaire are as follows:
1. Status and identification

ll is important to know how current the information is in describing the job.
Without these entries, users of job analysis data may reh on out-of-date
information or apply it to the wrong job. Since most jobs change over time,
outdated information may mislead other HR activities.
2. Duties and responsibilities

A job summary is the most important component of the questionnaire as it
provides a quick overview of the job. The specif.: duties and responsibilities
listed in detail help in understanding the position of the job. The questions
on job responsibility can be significantly expanded when developing a
checklist for manager; jobs. More questions can be added on decision
making, controlling, organizing, planning and other management functions.
3. Human characteristics and working conditions

Apart from information about the job, the analysts need data aboj~ the skills
and expertise required to perform this particular job. Th - section of the
checklist covers the knowledge required, skills ar.c abilities, level of training,
education, experience and other salicr: characteristics that the job holder
should possess. Information ahr~_: the environment and working conditions
also hold importance a.' they may explain the need for particular skills,
training, knowledge etc. Knowing about potential environmental hazards,
for example, allows the HR department to redesign the job or protect wor
through training and the provision of safety equipment. Unic_c working
conditions influence hiring, placement and compensative decisions.
4. Performance standards
The job analysis questionnaire also seeks information about :-r standards
that are used to evaluate performance. This information 5 collected on jobs
with obvious objective standards of performance. Where such standards are
not immediately apparent, job anal;.-ni may ask supervisors or industrial
engineers to develop reasonre standards of performance.
Data Collection
There is no one way to collect information found on the job analysis
questionnaire. Therefore, analysts must evaluate trade-offs between : me. cost
and accuracy associated with the various methods explained 7:’ow that are used
to collect data. Analysts can also use more than one :e;hnique for data collection,
if required.
Interviews
Face-to-face interviews are an effective way to collect job information. The
analysts have a job checklist guide but more questions can be added.
Although conducting interviews is expensive and time consuming, the
interviewer can ask for explanation or clarification if required. The analyst
often talks with a limited number of workers first and then verifies the
answers with the supervisor. This technique usually produces accurate
results.
2. Jury of experts
A jury of experts consists of senior job incumbents and immediate
supervisors. This group represents considerable knowledge and experience
of the job. The analyst conducts interviews with this croup and obtains
answers to the questions that he/she may not .zet from interviewing an
individual. This technique, again, is time consuming and expensive but it
helps the analyst to clarify what is expected in the duties of the job among
the workers and supervisors . . ho are on the jury.
> Mail questionnaires

’.'ailing questionnaires to the employees involved is a faster and c-.eaper way
of collecting information about the job. This approach 2hows many jobs to
be studied at once and at little cost. The analysts may forward the completed
questionnaires to the supervisors for .er.fication. However, this technique
lacks accuracy as the questions not be clear or may be misunderstood,
responses may be : -complete, and some questionnaires may not be
returned.
— Employee log
^-ether approach is to use an employee log. Workers periodically :_~Tiarize
their tasks and activities in the log. If entries are made er ;he entire job cycle,
the diary can prove to be quite accurate. It even be the only feasible way to
collect job information, when :.~er techniques fail to capture the information
about a complex ioh.

5. Observation
Observation is the most time consuming, costly and less accura:e method
to collect job information, although it is the most preferred method in
certain situations. Observation can be used to confirm or remove any
doubt after collecting data using any other technique.
Application of The information collected by analyzing the job can be used to formulate job
Job Analysis descriptions and job specifications and in setting job standards. The
Information usefulness of these applications is explained below.
job Descriptions
This is an outline, in general terms, of the activities, tasks are responsibilities
involved in a job. It is a written statement of job con ter: The job specification
normally adds to this information on the methoof of performing the job and
the skills and knowledge required. It ai>: specifies the purpose of the job, its
nature and responsibilities, where the position is located and to whom the
individual is responsible.
Job Specifications
The difference between a job description and a job specification is ore
perspective. A job description defines what the job is about, therefore r can
be said to be a profile of the job, whereas a job specification describe^ what
the job demands of employees who do it and the human required to perform
the job.
Job specification requires experience, training, education, and ph>> and

mental capabilities. Since the job description and the job specifics, both
have the same focus, i.e. job requirements, they are often comb into one
document under the heading of Job Description. The r used to compile
specifications also come from job analysis informa collected using a
questionnaire or a checklist.
Job Performance Standards

Job performance standards serve two functions. First, they bee targets for
employee efforts. The challenge or honor of mee objectives may serve to
motivate employees. Once standards are employees may feel
accomplishment and achievement. This outc contributes to employee
satisfaction. Without defining standarc>- employee’s performance may
suffer.
The second function is that standards are criteria against which success is
measured. These standards are indispensible to HR mans who attempt to
control work performance. Without standards, performance may not be
evaluated.
5. Observation
Observation is the most time consuming, costly and less accura:; method to
collect job information, although it is the most preferred method in certain
situations. Observation can be used to confirm or remove any doubt after
collecting data using any other technique.
Application of The information collected by analyzing the job can be used to formulate job
Job Analysis descriptions and job specifications and in setting job standards. The usefulness of
Information these applications is explained below.
Job Descriptions
This is an outline, in general terms, of the activities, tasks ar: responsibilities
involved in a job. It is a written statement of job contem. The job specification
normally adds to this information on the methc-a- of performing the job and the
skills and knowledge required. It al>c specifies the purpose of the job, its nature
and responsibilities, where the position is located and to whom the individual is
responsible.
Job Specifications
The difference between a job description and a job specification is one
perspective. A job description defines what the job is about, therefore can be
said to be a profile of the job, whereas a job specification descr:, what the job
demands of employees who do it and the human s' required to perform the
job.
;
Job specification requires experience, training, education, and phy and
mental capabilities. Since the job description and the job specific;, both have
the same focus, i.e. job requirements, they are often comb into one document
under the heading of Job Description. The d used to compile specifications
also come from job analysis informa collected using a questionnaire or a
checklist.
Job Performance Standards

Job performance standards serve two functions. First, they be; targets for
employee efforts. The challenge or honor of mee objectives may serve to
—
motivate employees. Once standards are employees may feel
accomplishment and achievement. This outc contributes to employee
satisfaction. Without defining standard employee’s performance may suffer.
The second function is that standards are criteria against whicr success is
measured. These standards are indispensible to HR ma who attempt to
control work performance. Without standards, performance may not be
evaluated.

The appropriate structuring of job is very critical as it can affect the productivity
and quality of work life. The only link between the organization and an
employee is the job itself hence a thorough review of the characteristics of the
:
job is essential. While designing a ob, three major elements are needed to be
taken into consideration: Organizational elements, environmental elements and
behavioral elements. The management involved in designing the job needs to --
“.sure that the elements are included to make job more productive and
satisfying.
JO
Organizational Elements
The organizational elements of job designed are linked with efficiency.
’ ose jobs that are designed to increase efficiency for highly motivated capable
employees generally result in output maximization. This > achieved when
employees are made to do repetitive tasks. Hence oecialization” is a key element
in the design of such jobs.
Environmental Elements
E-.-.ironmental elements are also very essential in job design. The
environmental externalities cannot be overlooked as HR specialists and ~laagers
need to consider the ability and availability of prospective c~rioyees.
Considerations about efficiency must be balanced against :be abilities and the
availability of the workers. If an employee is not iSc to do an assigned task, the
task will definitely not be completed .ciently.
Behavioral Elements
r designers heavily rely on behavioral research to provide the working r~
ronment that can help individuals in fulfilling their needs. Higher- : ■ r needs
are of utmost importance to every employee. Research --’-csts that people with
strong desire to satisfy high-order needs rm their best when placed on jobs that
were high on certain : — ensions such as
* Skill Variety
• s the degree to which a job requires a variety of different activities
> :he workers can use a number of different skills and talent.
» Task identity
h s the degree to which a job requires completion of a whole and :. mifiable
piece of work.
■ Task significance
- :~e degree to which a job has a substantial impact on the lives or ■** :rk
of other people.
• Vjtonomv
Human Resource Management and Organizational Behavior I Referer:; a

It is the degree of independence and discretion the employee has -
scheduling the work and in determining the procedures to be used in
carrying it out.
■ Feedback
It is the degree to which carrying out the work activities required r a job
results in the individual obtaining direct and clear informat cc about the
effectiveness of his or her performance.
Techniques of job Jobs are often redesigned to decrease boredom that may arise due t; repetitive
Redesign _
tasks or to make the job more challenging, stimulating a c interesting, jobs are
often redesigned to assess whether a particular ;cos should have higher or lesser
specialization. Job redesigning technic-r- give more autonomy to the employee
and help in increasing employee* motivation and productivity. Some of the ways
to implement or redesigning techniques are:
Job Rotation
If employees suffer from an overly routine type of work, one altemat e is to use
job rotation (or what many now call cross-training). Job rota: :r is the periodic
shifting of the employee from one task to anotre: When an activity is no longer
challenging, the employee is rotate: to another job, usually at the same level. The
organization beneoes because workers become more competent by learning and
perform various tasks. Knowing a variety of jobs helps the employee’s self intiTz.
provides personal growth, and makes an employee more valuable to tbe
organization.
Job Enlargement
Job enlargement, also known as horizontal loading, increases : number and
variety of tasks that an individual performs, resulting jobs with more diversity.
Instead of only sorting the incoming rr by department, for instance, a mail
sorter’s job could be enlarge: include physically delivering the mail to the
various departments running outgoing letters through the postage meter. The
differ between job rotation and job enlargement may seem subtle. Hov._ in
job rotation, jobs are not redesigned. Employees are simply from one job to
another, but the nature of the work remains the SJ Job enlargement, however,
involves actually changing the job.
Job Enrichment
Job enrichment refers to the vertical expansions of jobs. It incr the degree to
which the employee controls the planning, exer_~ and evaluation of the work.
1
An enriched job involves the orgar of tasks so as to allow the employee to do
a complete activity, inc
■“e employee’s freedom and independence, increases responsibility, and
provides feedback so that individuals will be able to asses and correct their own
performance.
The phrase “recruitment and selection” is often used with the inference :~.at
both of these words mean the same. However, there is some i -Terence in
meaning between the terms “recruitment” and “selection”:
• Recruitment refers to the analysis of a job and the features the organization
will look for in a potential employee, attracting candidates - which could be
internal, external, or a combination of "oth - to apply, and the offering of
various terms and conditions of employment to a chosen potential
employee.
• Selection refers to the assessment of candidates in order to choosc the most

suitable person and describes a smaller part of the total
process.
■ ecru it men t is therefore the process of finding and attracting potential -- iates
for employment and selection is the step ahead of recruitment
-ere an employer chooses from the list of recruits the “best fit” for ■-
organization. Hence the recruitment and selection process are "reconnected. If
the company fails to recruit the right people for the
■ r : will result in selection of the wrong person.
__
e rrocess of recruitment and selection begins with human resource
• .--ms which concentrates on those aspects of corporate strategy . -cerned with
manpower. The human resource plan indicates areas
e organization where there are likely to be shortages of people and ■- ; - -
mber of people to be recruited to meet anticipated employment teis. This can be
due to planned corporate change, redeployment, -=■ -.~ent. career progression,
management development or people i:- the organization for alternative
employment. The human ■- _rce plan will also consider external factors such as
population technological advances, projected governmental policies and
variations.
:
- crge organizations recruit almost continuously, their Human - - _rce
departments use specialists in the recruiting process called .. ■ - :~:ent
managers, who work to find and attract capable applicants.
the job opening is identified, the recruitment manager then T . — • . rat each job
requires by reviewing the job analysis information,
- .. arly the job descriptions and job specifications. The job
analysis information helps the recruitment manager to understand the
characteristics of the job and the person who will be sought to fill the position. If
the information is not sufficient, the recruiter can learn more about the job’s
requirements from the relevant manager. The flow of the recruitment process is
illustrated below:
Figure 4-1: An Overview of the Recruitment Process
Recruitment managers use various channels to find or approach

]ob
R
„fsou,ce * analysis
informatio
n
Affirmative
Satisfacto
Plans ry pool
* of
Specific recruits
Managers
Requests comments
of
*
Managers
Channels of potential candidates for the job. In reviewing the most common Recruitment
channels, recruitment managers must be aware of the constraints in each approach, and the
need for creativity if the recruiting effort is to be effective and efficient. The most widely used
channels by applicants anc recruitment managers are discussed below:
Walk-ins and Write-ins

One way of recruiting applicants is through screening the resumes tha: are
sent by the applicants themselves or by asking the applicants who visit the
organization to apply for the job.
Employee Referrals
Employee referral is one of the most effective channels of recruitment in
which an employee may refer or endorse an applicant to the HR department.
The biggest advantage of employee referrals is th=t employees acquiring
specialized skills would know the people in :he same field.
Advertising
Advertising is another effective method of screening recra 3. Advertisements
can help in reaching a w'ider audience than employes referrals or unsolicited
walk-ins, therefore many recruitment mana;.~ use this channel as a key part
of their efforts.
Private Placement Agencies

Private placement agencies have gained popularity in recent times.
-
organizations save their recruiting cost by outsourcing their recru;:~: r I
ities to these agencies. Placement firms take an employer's request
■ 7 recruits and then solicit job seekers, using the various channels :~it any regular organization
may use for recruitment. Candidates are
— 7:;hed with employers’ requests and are told to report to the employer’s HR department for
an interview. The matching process conducted r private agencies varies widely. Some of them
carefully prescreen -7? icants, while others may simply provide a stream of applicants to :~e HR
department.
Professional Search Firms

_
~ ::essional search firms are much more specialized than placement ;---7;ies. Search firms recruit
only specific types of human resource for : :ee paid by the employer. For instance, some research
_
firms specialize executive talent.
Educational Institutions
_:ational institutions are suitable if the employer is targeting to ~zzrj.it fresh graduates. Several
_
universities, colleges, and vocational >: .ools offer placement assistance to their current students
-
and . ni. Distributive education programs, counselors and vocational . _. er> may also provide
recruitment managers with leads to desirable .-■e dates in local educational institutions.
Professional Associations
• regional associations can also be a source of job seekers. Several . 7:10ns conduct placement
activities to help new and experienced 7- eîonals to get jobs, especially at job fairs during meetings
and . ~ .-'tions. Professionals belonging to appropriate associations are deredmore likely to remain
informed about the latest developments
■ . - respective fields; therefore, this channel of recruitment may lead *-7 * gher quality
applicants.
.a--or Organizations
;
Tment managers in the organizations seeking candidates with i~-7: :11s can contact the local
labor unions or labor organizations. ~organizations maintain rosters of members who are looking
for -~ 7 -nent. The local union of plumbers, for example, keeps a list ar - - —?ers who are seeking
jobs. In the construction industry, many . " -77075 get skilled labor from the local labor
organization. Since c r_-i7tors hire on a project basis, a union hiring hall is a convenient for
attracting large number of potential recruits for new
I: • ^-rment-Funded Training Programs

~ - --:::ment institutes a variety of programs that train unemployed 7 Government concern stems
from the belief that some
unemployment is structural in nature. Structural unemployment occurs when
people are ready, willing and able to work, but their skills do not match the
jobs available. Through government-sponsored training and retraining
programs, unemployed workers are given skills to make them employable in
today’s labor markets.
International Recruiting
Recruitment in foreign countries presents recruitment managers with special
Human Resource Management anri nmanWat^r,-.!

challenges. In advanced industrial nations, recruitment managers will find
many of the same channels that exist in their own locations, but it may be
more problematic to source potential employees in countries where such
structures do not exist or are not developed to the same degree. Additional
help can sometimes be found by contacting local professional, business or
industrial unions or associations.
Open House
A relatively unusual technique of recruiting involves holding an open house.
People in the adjacent community are invited to see the company facilities,
have refreshments, and perhaps view a film about the company. This method
has proved to be successful in recruiting clerical workers when people with
office skills are in short supply.
Figure 4-2: A summary of the recruiting process
- iV-
Huma
n
Resour
ce
Affirmativ
e
Action
Plans
Specific
Requests
Of
Manager
s
M Organizational Policies
** rânizational policies are incorporated to achieve uniformity, .. nomies, public
relations benefits, or other objectives that might not
- - related to recruiting. However, certain policies can be a potent source
constraint. Some of those policies that may hinder recruitment rrocess are:
-romote-from-within policies
v
Tr.rse policies aim at filling any job opening in an organization by - j-:ng
it first to the current employees. Such policies ensure employees term
growth within an organization and help in retaining . mpetent
employees.
Irmpensation policies
- _ most common yet the most critical constraint recruitment manager
' the pay policy. The HR department designs the compensation according to the
level of the job. Recruitment managers seldom . the authority to alter the
compensation package, therefore, they 'ucceed in finding a promising
candidate but may fail to recruit
■ m her if the candidate is looking for a higher salary package or
thinks ■' r ray being offered is not at par with the market rate.
L—pioyment status policies

- ■ e companies hire part time and temporary employees. Although *_■ - re > a
growing interest in hiring these types of workers, such policies
cause recruitment managers to accommodate only those seeking _ me work.
Limitations against part-time and temporary employees the pool of potential
applicants, considering the fact that this : crrt has been growing at a good pace.
r-ernational hiring policies

policies may require foreign job openings to be staffed with ix- :::izens.
- .man Resource Plans

: iienge for recruitment managers is to comply with the human _-;e plan which outlines
which jobs should be filled by recruiting
- : - J _ y and which are to be filled internally. A little foresight by
rment managers can lead to considerable economies for the
- ~ mative Action Plans

:. ’- -.-;ruitingfor any position, the recruitment manager would want sr • the firm’s
affirmative action plan for guidance. Affirmative . r. r i-.s may alert the recruitment
manager to the need to recruit a
- heo •.-.orktbrce. Therefore, when affirmative action needs suggest
- - .. m m'.ance in the mix of employees, recruitment managers must
Human Resource Management anri nmanWat^r,-.!

adjust their plans accordingly. If not implemented appropriately, the
employer may be held guilty of discrimination as it will reflect biased
recruitment policies.
Habits of Recruitment Managers

The recruitment manager's successful career may make him/her ignore the
mistakes made in the past. Even though recruitment managers require
1
positive and negative feedback, they must guard against self imposed
constraints in the form of habits.
Environmental Conditions
Leading economic indicators
The leading economic indicators such as GDP, inflation, unemployment rate,
among others, suggest the future course of the national economy. If these
indices signal a sudden downturn in the economy, recruiting plans may have
to be altered.
Predicted vs. actual sales

Since human resource plans are partially based upon the firm's forecasted
sales, the difference between actual and forecasted sales ma\ force the
recruitment manager to change the human resource plans accordingly.
Job Requirements
A study by the Committee for Economic Development surveyed 438 large
businesses and 6000 small ones to identify what contributes to job success.
The study found that a stronger academic background is more crucial than
specific vocational skills. In addition, responsible attitudes toward work,
command of English language and the capacity to learr were regarded to be
important.
Cost
There is a cost associated with identifying and attracting recruits.
Recruitment managers are assigned a budget therefore they have to be very
careful when planning. Smart recruitment managers can minimize the
recruiting expense through recruiting for multiple jor openings
simultaneously. However, the best solution to avoiding the cost of recruiting
is by using proactive HR practices to reduce employee turnover. Furthermore,
evaluating the quantity, quality and costs x applicants helps to ensure that
recruiting is efficient and cost-effective
The Selection A series of steps are involved in choosing suitable candidates from i. Process pool
of potential recruits. This involves a series a time consuming steps that lead on to the decision to
hire a particular applicant. This is an
mportant aspect, but its nature is such that can result in frustrating applicants as well as the
Human Resource Management and Organizational Behavior | Reference Ec:* 1

organization.
Many HR departments combine the recruiting and selection process, renaming it the
“Resourcing”. For large HR departments, this function is :he responsibility of the employment
manager. In smaller departments, HR managers handle the recruiting and selection
responsibilities. Employment is often assumed to be the primary reason for the HR department's
existence.
' — proper selection can cause HR departments to fail at achieving their set targets and can also
negatively affect candidate self-esteem and violate employment laws. Subsequent HR process
can lose their effectiveness :ue to improperly selected workers. Thus, recognizing recruitment as
:e~:ral to the success of a HR department is no exaggeration.
Trends in recent times, make employers fear that they may be held re-ronsible for the unlawful
acts of the employees they hire. This failure ■: recruit the right employees may leave the
_
employer at risk in the ear future. Ensuring the employment process is effective is one of the
— : -t important aspects of a HR department, and it may be one of the
— important decisions made by a line manager. No organization can re—brm better than the
people it employs, and if the recruitment and '■■i ererion process proves ineffective, the
company may be exposed to
-: _re financial and legal damage.
~ puts to Selection
HR uses the selection process to find new workers. As Figure 4-3 ■.__ests. this process relies
on three helpful inputs.
r analysis information provides the description of the jobs, the -.man specifications, and the
performance standards each job
requires.
: Human resource plans tell employment managers the job openings :~a: are likely to occur.
These plans allow selection to proceed in a _ cal and effective manner.
:
e: ru its are necessary so that the HR manager has a group of people
■ choose from.
Figure 4~3-
Figure 4-3: Dependency of HR management
activities on the Selection Process
Inputs
Challenges HR Activities
job analysis
labor supply Etfticsl

considerations Organ izaUoha!
Human practices Equai employment isws v Selection
Process
resource plans -> j imitjiatiQff-ahd Naturalization "7
Service rules Other legal constraints
Recruits
These largely determine the effectiveness of the selection process. As long as

these are aligned, the Hr will achieve its targets. The management must
however, also take into consideration many other challenges - such as,
limited labor supply, ethical considerations, organizational policies, equal
employment laws, etc.
Supply Challenges
Despite the nature of some vacancies, it is pivotal that there be a fitting list of
applications for each vacancy. Low-skilled jobs and extremeh specialized roles
are examples of positions with small selection ratios. A selection ratio is the
relationship between the number of applicants hired and the total number of
applicants available. A large selection ratio is 1:25. whereas a small selection
ratio is 1:2. This, a small selection ratio implies there are fewer applicants
from which to select. It may also mean a relatively low quality of recruits.
Ethical Challenges
It must be ensured by the HR that no unethical decisions are taker. Hiring
acquaintances or accepting bribes challenge not only their morals and ethics
but also the recruitment process as a whole.
Credential Distortion
Farhad Khan had been working for a multi national audit firm for almo'*. 3
years. He claimed to have a management degree from I BA - one of the top
business schools in Pakistan. When investigated in further detail. : was
discovered that was all false. The firm had to immediately termini:; Farhad’s
employment with them.
This is a classic example of embarrassment to the HR, due to the lack their
thorough investigation into checking the credentials of all prospeet recru its.
Credential distortion is a frequent occurrence for the human resource-?

department. When applying for a position, it is a known fact tr_t applicants
tend to brush up their resume to make their experien.:
Human Resource Management and Organizational

Behavior | Reference £:: 2
-"■car better and more suitable than other candidates. To do this., often . -
udemic details arc enhanced, as are job experience and existing salary
packages.
Organizational Challenges
T -. selection process should not be seen as an end in itself it is a process
- which the organization achieves its objectives. However, there are
— e limitations - legal, financial and resource - that organizations
-_'i impose. The recruitment process must be cost effective and the . : ~tion
made must be suitable to return back to the organization by ‘ hard work all
the investment that was made in their recruitment
- - -c''. There are also certain restrictions set by organizational policies
may further hinder the process. All of these prove to add on further
;nges for HR specialists.
"ernal pressures, such as time constraints and urgent requirements ::: on to

the recruitment mix. Line managers are also known to specify -:_'-ng
requirements only when there is an immediate need. They -~en require the
vacancy to be filled promptly with the most suitable :_-'.iidate.
7- .---ally, vacancies are internally posted to allow existing employees a to

apply, liven if a candidate is selected, times may pass before that n can be
released from their present position to fill the opening. ~e:e there are no
internal applications, the general recruitment : •: is initiated.
::uel Employment Challenges

:
: : y of employment opportunity is an ongoing challenge for all HR ■'-
:v;es. All steps in the selection process must be scrutinized to ensure
• ~: ire free from bias. Bias can also be unintentional - such as aptitude
- : a particular nature.
” ■. HR department may be very careful to not have any disparity at any s :

recruitment. However, if its processes indicate disparity, then
■ must the recruitment process be revised, but there is probably . -
imbalanced workforce that requires correction.
: Legal Challenges
.re several other legal obligations that may constrain the
• sent process. For example, a female employee for a local
• • . - -i —utical attempted to sue the employers for not taking any SLZ:< -
_::cr she was raped by a fellow employee. Although eventually I": : "r^ny did
not incur any financial loss, this incident did lead to r-..£.: e';. affecting their
repute. Had they psychologically screened tre r re at the time of recruitment,
the situation could have been
avoided altogether. If not careful, legal challenges may also arise when a HR
department tries to thoroughly scrutinize current employees or potential
candidates.
The selection process comprises several steps through which all candidates are taken through. These
Steps in The steps help determine the most suitable applicant for the position, by
Selection Process eliminating out the rest. When used to fill openings internally, the process
becomes a lot simpler and more affective.
At Citibank, these steps electronically match present employees with internal

openings. The “Job Match” selection system contains profiles of all employees,
as well as the job description for the vacancy. The current abilities of the
employees are scanned, and a list of potential matches is then determined by
the system for consideration. This system does not consider whether or not
the employee is actually interested in the vacancy.
To ensure all relevant factors are considered, all HR departments adopt a

more involved procedure when recruiting internally, as shown in Figure 4-4■
When selecting internally, preliminary checks - employment test, reference
verification or medical evaluation - are skipped. However, all the steps are
generally applicable when recruiting from an external pool of candidates.
Figure 4-4: Stgps in Selection Process
Preliminary Reception of applications

This is the initiation of the application to the vacancy by each prospect/ t
candidate. On the basis of this, both the applicant and the organization form
an opinion about the interaction. Research shows that an applicant ?
perception of the organization tends to influence their availability foe
r.terviews and further interaction. Normally, an informal ‘courtesy’ ~:erview
is done to form an initial rapport. This helps the recruiters '.'reen out
unsuitable candidates from those who should be taken \ r.vard in the
recruitment process. Applicants are evaluated on their '-liability, relevant past
experience and their personality.
Employment tests
E~ plovment aptitude test helps to assess the suitability of all applicants " the
ongoing recruitment. Based on the vacancy’s requirements, tests are derived
to check the applicant’s knowledge and grasp of v ~at they would generally be
encountering in the position. Tests are
- used more frequently when recruiting for hourly paid jobs than
permanent openings, because hourly jobs usually have a limited
~-Tiber of skills or activities that may be easily examined.
*V -en aptitude tests are conducted for management position, they tend : re
complex and more situation-based. This helps understands that ■' ~ —is and
processing abilities of all candidates. Research shows that -7 :: 40% of hiring
and promotion decisions are made based on the -1'-' of these tests. Also,
when testing foreign nationals or international -■? ;ants, it must be ensured
that no local slang is used that makes the . ■ 7 :ncult for them to
comprehend. It must also be checked whether . • their home country allows
such testing methods to be used.
~Z5~. Validation
- 77 gained momentum during the times of the World War 1 when
• ■e gence tests were given to army recruits. Since then, tests have been . . _
extensively for employment purposes, but many of these tests were . - ried to
be valid without sufficient proof. For results to be relied on,
- : ■ ■ -.ould be declared as valid. Validity means that the context of the
■- ' 7, a:es to key elements of the job it is conducted for. The stronger t ■ -
relationship is, the more effective the test is as a selection tool.
Lr 7 - approaches to test validation relate test scores with a job- r. ;-;terion. If

the test does measure a relevant criterion, the two rave a positive correlation
between o and 1.0. The higher the QB r~e a: on is. the better the match.
: _
■ -ei.::ive validity is determined by testing a group of applicants, 7 7 —
easuring their performance once they have been employed ar.: trained
into the job. This measurement and the test score are ther . orrelated.
_
- ~:_ rent validity tests present employees and correlate these oore^-
with measures of their performance. There tends to be mo between the
hiring phase and their mastering their jobs ~e-r_:7ements.
Rational When there aren’t too many applications to process, it is more feasible
Approaches to use a rational approach in lesting. These approaches aim to validate content
and construct validity.
■ Content validity is when the applicant on the skills that are needed to
successfully perform the job. For example, a speed typing test for an
applicant to a typist position validates content.
■ Construct validity establishes the link between performance and other

characteristics pivotal for successfully performing the tasks required in
the job. For example, intelligence and scientific knowledge test would
construct validity if they were used to hire researchers for a chemical
company.
Testing Tools and Limitations

There is a wide range of employment test options, but each one has it>
limitations. The Lesting purpose of each one, its design, its format and
applicative uses are all recorded for later reference. The tests reliability and
validation results are also recorded. All Human Resources department should
develop and conduct their own studies to plan out tests for different uses.
Psychological Tests
Involving measuring personality tend to be the least effective :n churning out
reliable results. This is because there tends to be a ve~ vague and fuzzy link
between personality and performance.
Knowledge Test
These tests are more dependable because they determine the levels ct one’s
level of knowledge. This is helpful as it adds on to their ab:.;t-r to being ability
to perform well in their tasks. However, it should rc ensured that only the
ability and awareness needed for the job are testri.
Performance Tests
Measures the aptitude ofapplicants to perform some important elemerri of
their work. It is declared valid when the test includes a represents: ; sample of
the work the applicant is to do upon being hired.
Graphic response Tests

These tests are a recent development seeking to test physiol changes
within people as they respond to questions. The polygraph ' detector) is
the most common, with over a fifth of all firms in one reporting its use.
The background is that when a person exaggerr.r? lies, the conscience
usually causes involuntary physiological reir that are detected by the
polygraph. However, there are serious qu
72 Human Resource Management and Organizational Behavioi I Ref???-

jt the ability of most lie detector operators interpreting results, as r " as the ethical
standing on their use.
-::itude Tests
L>ed to learn about people’s attitudes with regards to work related ~_::ers. They test their
values, moral characteristics and what they are
• - to contribute into the work environment.
v edical Tests
~'t>es are recently gaining popularity. Through medical checks and c screening, the presence
of drugs and other substances can be Testing for genetic defects or predispositions has
become
- - — .callv and financially feasible. This may also alert employers —--ding candidates who
may have higher chances of developing
•7r::nc diseases. Careful monitoring also helps keep them informed . - the health and safety
shortcomings in work environment.
- :roversies over the use of such modern technological tools confront

- • specialists with ethical and moral obligations. They do help -••r ers assess and determine
an ideal workforce, but they can also be
■ ..L to errors and bias. In some countries, those diagnosed with the
- IS irus are protected by new laws intending to provide them equal
- to employment.
- >: such extensive testing is not always feasible. Some positions may
even justify the amount of money involved in carrying out such : 'r-.iive testing. Even
when being used, there needs to be flexibility; i" fj should only be implemented if and when
deemed appropriate.
^ ier the comments of an experienced HR manager for a chain of -- stores.
"Many HR managers in other industries use testing only after other steps
in the selection process. In the grocery business you must test first. Why
waste time interviewing a grocery clerk who doesn’t know that three for
90 rupees is 30 rupees a piece? Besides, when we take applications on
Tuesdays, we may have 300 f them. Interviews would take 75 hours a
week, and my staff consists of a clerk and myself. But through resting, we
can test the entire group in an hour. Then we interview only those who
score well."
See:* :n Interview
■; employment testing is only one of the several steps involved ■: *--'_;:ment process, and
possesses limitations as it cannot always
m
taken into consideration all personal factors that can be brought into a position by each
candidate.
The selection interview is a formal, in-depth meeting that helps employers to evaluate the
applicants’ ability and knowledge; keeping in mind the requirements of the vacancy. The
interviewer looks for answers to three broad questions: Can the applicant do the job? Will the
applicant do the job? How does the applicant compare with others who are being considered
for the job?
This method is one that is most commonly used in recruitment. It is a very flexible method and
can be adapted to suit each position that is being recruited for. It also allows for a two-way
interaction, where both the employer and candidate can gain further information. Its
limitations raises questions on reliability and validity. Reliability means that results of this
process should not vary from interviewer to interviewer, but different interviewers are likely to
form different opinions about eacr potential candidate. This can be improved when the exact
questions are and interviewers are trained to record all responses.
Further validation of interviews is needed because they may relate more to personal features of
candidates than to the candidates’ potentt.il performance. For example, one study reported
that two of the mcsc important variables that influence an interview are fluency of spees and
composure. Based on this, interview results are based more c-tt personal impressionable
factors and not potential performance.
Types of Interviews
_
Interviews are commonly conducted as a one-on-one between : - interviewer and the
applicants. Group interviews are sometimes £>: made use of.
One mode of group interviews is having each applicant meet a p of interviewers. This allows
all of them to simultaneously evaluate - candidate on the same questions, eliminating its
initial limitation, interview can also comprise having two or more applicant in toget More
like a group discussion, this not only saves time, but also jail: for immediate comparison.
In any adopted format, there are still different ways of conductir: interview. Questions can
be structured, unstructured, mixed, pro: solving, or stress-producing. The mixed format is
most comme* practice, although each of the others has an appropriate role to pi:
Unstructured Interviews
The unstructured interview allows interviewers to ask question' is interview proceeds. The
interviewer goes into more detail on tot
Human Resource Management and Organizational Behavior | Refe'e' 3

: - arise, in a more friendly conversation. Unfortunately, this method ' in terms of reliability
because each applicant is asked a different srri es of questions, and there can be no level of
comparison determined.
may actually even overlook pivotal areas of the applicant’s skills or ra.kground.
;:'jctured Interviews
'•.r-_;tured interviews are based on a set of predetermined questions,
-. eloped to suit the relevance of the vacancy. They are developed '■e: re the interviews
commence to be asked to each applicant, .---cssing all they key areas that are necessary to be
addressed. This .rrroach improves the reliability of the process, but does not allow the
■■.r'viewer to follow up on unusual responses. In conclusion, this is . ■ J and mechanized
procedure that may not bring out the best of rrronses from the applicants.
v ted Interviews
T- - s the method that is most commonly used, whereby interviewers . ■; :■ blend of
structured and unstructured questions. The structured --:~.ions provide a general base that
allows comparisons between . - ■; gates, while the unstructured questions make the interview
more
> and spontaneous. This allows interviewers to understand a zta\ more about
the candidates, and makes comparison a lot more ~-.e~.ient.
r
: em-solving Interviews ■ : -"-solving interviews focus on situations or problems for which
. _ giies are expected to give solutions to. This is an approach that
- :he applicant to be evaluated on a set of relevant skills that may •-i -rj-ired
within the context of the vacancy’s job description. The are evaluated based on the
background and approach used by ;-g:Jate in reaching to the conclusion. This technique has a
very scope. and is only suitable to a limited list of positions.
' . : ' ' more likely if the hypothetical situations are similar to those in. . the job. The actual
interview might consist of various questions SET eiîupJe:
l- _ had to decide between two candidates/or a promotion. Candidate A

Ipir ; verative, punctual, and hard-working. Candidate B is a complainer jrg 5 j-.- and
discourteous, but is the best producer in your department.
-i you recommend for promotion to supervisor? Why?
r received and the answer given is made noted by the r- -n evaluate the
;
applicant. Such interviews also produce help understanding
how the applicant would perform
Stress interviews- In jobs that involve being in stressful situations, such interviews help
determine how the applicant copes under pressure. This concept was originally developed
during the times of World War. to see how recruits would react to stress when faced by the
enemy. For example, applicants for police work are sometimes put through a stres? interview
to see how they might react to problems they encounter in the streets.
The process is in itself intense and distant, with the candidate bein£ faced with a constant
string of questions. This format should however be used alongside other formats, to avoid
negative reactions from the respondents. Reliability and validity are hard to demonstrate since
tre stress on the job may differ from the stress posed in the interview.
Beyond the different types of interviews, the interview process h:- sequential steps that should
be followed.
The Interview Process

The five stages of a typical employment interview are listed * Figure 4-5. These stages are
interviewer preparation, creation of rapp ~. information exchange, termination, and
evaluation. They are discu>sec to illustrate how the actual interview process occurs.
Figure 4-5; Stages of a Typical Employment Interview
Interviewer preparation
Interviewer Preparation Before any interview process is initiated, the interviewer mu-:
a specific list of questions. These must address all key -^T-e. need to be evaluated
about the individual, and it is the refr these questions that will decide whether or not
the applies be taken any further. Since they use the interview to per-
Human Resource Manaaement and nmani7niinn;.i o„h,.,;~r

irpiicants to accept subsequent job offers, interviewers must also be i ~.e to
comprehensively explain job duties, performance standards, pay. renefits, and other areas
of interest.
The questions are intended to achieve responses that allow an u-.ierstanding of the
applicant’s interests, attitudes, and background. -'Trdfic questions are added on to
determine their suitability with ~:cards to the vacancy. Reviewing the job description will
help the ~:er\ iewer prepare these particular questions.
How do you spend your spare time? What are your hobbies?
What community or school activities have you been involved in?
Describe your ideal job. In what type of work are you interested?
4- Wh. do you want to work for ou r company?
W hat were your favorite classes? Why?
a. Do >ou have any geographic preferences?
■ h\ did you select your college major?
ft W - at do you know about our company’s products or services?
4. Describe the ideal boss.
Hc often do you expect to be promoted?
is your major weakness? Strength?
iNi - do you think your friends like you?
Ic- _ rian to take additional college courses? Which ones?
K * ' obs have you had that you liked the most? Least?
Describe your least favorite boss or teacher.
i-e your career goals?

;ould go back five years, what would you do the same? IPMLL. ,;U?
d\>uld you be hired by our company?
~ r-e your last job.
ssany ~ours do you think you will have to work at your job?
pa: skills do you have?
is ravorite sport?
B
When preparing, the interviewer must be careful not to ask air discriminatory questions.
Questions asked from a protected gro_T but not from members of the majority are usually the
ones thit cause violations. Similarly, questions about gender, age, nationl origin, handicaps,
religion, race, or color are likely to be consider: discriminatory.
The interviewer should also review a blank application form, for a further understanding of
what exactly they are looking for. Research shows thz. the quality of the interviewer’s decision
is significantly better when application blank is present. Regardless, interviewers take between
to to ten minutes to reach a conclusion. The longer the interview lasts ini the more potential in
the candidate, the longer it takes the interviews to reach a decision.
The average cost of hiring new employees is estimated to Fee PKR 40,000/-, and more for
highly skilled positions, the interview* should aim to make the interview process efficient and
constructive.
—
The interviewer is likely to be the first person the applicant faces :':: the organization, and
that is where the impression of the company v.-M also be formed.
Creation of Rapport
This is also a task for the interviewer, as they must initiate conversation and establish a
comfort level. This can be done by init:; the interview with friendly questions like, “Did you
have any pari problems?” Simultaneously, non-verbal communication can also made use
oftoxonnect with the applicant.
Information Exchange
The whole interview process is basically an exchange of informa To help establish an initial
-
rapport while learning about the canc: some interviewers begin by asking the interviewee if he
or she ■* any questions. This establishes an interactive ambience and allows ~ interviewer to
start his evaluation of the candidate.
Interviewers aim to ask question that will allow them to learn as as possible about the
candidate. Questions that begin with ‘how'. w- 'why’, ‘describe’ or ‘could you tell me more
about’ are more likely an open and detailed response.
Interviewers tend to terminate the session by inviting any questions conclusion. They will also
inform the applicant of the next stage oc process, and when should they expect to be informed.
There shoe e indication of how the interviewer found the candidate to be. as *
may still be more candidates to interview and the opinion might change it the time of the final
selection.
E. aluation
As soon as the interview is concluded, the interviewer should record their general opinion
about the candidate. Using a checklist is an effective i> of recording where exactly the
particular interviewee stands in the ■•-.ole process.
nterviewer Errors
7.tere are still some limitations of the whole process, primarily due to human error. These add
onto lowering the effectiveness of the whole
- • ;ess. If an applicant is judged according to the halo effect or personal : ises. the results of the
interview are misinterpreted. Applicants can be ;::epted or rejected for irrelevant reasons that
will in no way have any it ition to their actual performance in the job.
ng questions and an indication of answers will also now allow the -terviewer to learn anything
new about the applicant. This will also the reliability of the whole process. Regardless of what
the errors ft. it brings down the validity of the whole process and results in time
- - : resources being wasted.
V evaluating international applicants, interviewers expect similar language, expressions,

and behaviors. For example, if an applicant
- not look the interviewer directly it is interpreted as lacking self- . ^ “ience. However, in
some cultures, direct eye contact from someone
- _ subservient position (such as an interviewee) is seen as highly -.rrropriate.
Wr;- such cultural and behavioral differences affect the interviewers .: :n. a potentially capable
candidate might be lost out on for no
ii_ t ?f their own.
!■'=*. iewee Errors

e.vees make errors too. Some errors may be made to covcr up i *-■; -ted weaknesses. Others
may emerge due to nervousness. While
e. fers, especially those in the human resource department, may : -. _r. hundreds
of job interviews in a year, most applicants never
- :*e-ence that many in a lifetime. The five common interviewing T - _ • e-s made by job
candidates are playing games, talking too much,
* . ■- not listening, and being unprepared.
- - __mes, such as acting nonchalant, are often taken at face value

-
i -. " that the candidate is not interested. Although the candidate a - :•: ted or nervous, talking
too much, especially about irrelevant XT -.-as sports or weather, may entertain the interviewer,
but is
A Summary of HALO Effect Typical Interviewer Interviewers make use of restricted information
about an applicant :o Errors bias their evaluation on the rest of their characteristics.
Examples:
■ An applicant who has a pleasant smile and firm handshake bl considered a
leading candidate before the interview begins.
■ An applicant who wears blue jeans to the interview is rejected mentally.
Leading Questions
Interviewers who indicate the desired response lose out on further insight
into the applicants mind.
Examples:
■ Do you think you’ll like this work?
* Do you agree that profits are necessary?
Personal Biases
Interviewers who harbor prejudice against specific groups are exhib a
personal bias.
Examples:
■ I prefer sales personnel who are tall
* Some jobs are for men and others for women Interviewer Domination
Interviewers may dominate the conversation, by bragging about *
successes, or carry on a social conversation instead of an interview guilty
of interviewer domination.
Examples:
■ Spending the entire interview telling the applicant about com plans or
benefits
* Using the interview to tell the applicant how important interviewer’s job is
not appropriate. Instead applicants should stick to the subject at h-

Likewise, boasting also is a common mistake. Of course applicants to
“sell” themselves, but distorting credentials, even if just ember r" about
responsibilities and accomplishments or simply braggirt- much, can turn
off the interviewer’s interest. Failure to listen ma> from anxiety about
the interview. Unfortunately, it usually r missing the interviewer’s
questions and failing to maintain r^rr
Human Resource Management and Organizational Behavior I Referer:; a

Being unprepared means asking poorly thought-out question? :-.nd even
conveying disinterest, neither of which is likely to land the ■ h being sought.
References and Background Check

What type of person is the applicant? Is the applicant a good, reliable worker?
Arc the job accomplishments, titles, educational background, and other facts on
the resume or application true?
As a response to these questions, background and reference checks are made

use of. These checks are of immense importance as they help validate the
information gained about the applicant throughout the process.
Many people remain uncertain of the use of these checks and their credibility.
Personal references attesting the applicant’s character are often provided by
friends or family, in which case their reliability remains questionable.
Employment references tend to differ, as they are more focused on discussing

the applicants past work and educational background. As privacy legislation
continues to expand, many supervisors and HR departments are growing less
willing to provide employment references because they fear potential lawsuits.
Even though supervisors or HR specialists are protected under what the law
calls qualified privilege, that protection ends if there are any doubts about the
truth of the recommendation.
This uncertainty has caused most process to remove this step almost entirely
from the selection process. It has also been substituted at times with telephone
referencing, which is faster and more cost-effective. It is also more likely to
indicate how certain the referee is about their answers with regards to the
applicant.
it compan)
A study reveals that 48 percent of reference checks are used to verify application
information and 30 percent are used to gather additional data.
Medical Evaluation
The process may also include a medical examination of the applicant before the
hiring decision is made. Normally, this is done making use of a health checklist
that gathers health and accident information. This questionnaire may be
complimented with a physical examination by a company doctor.
The medical evaluation may:
■ Entitle the employer to lower health or life insurance rates company-

paid insurance
■ Be required by state or local health officials, particularly in fcvo- handling

operations where communicable diseases are a danger
* Be useful to evaluate whether the applicant can handle the ph>' or mental
stress of a job
Many employers no longer make use of medical examinations w'

recruiting because of the high costs associated with the process. A .
existing health condition may be considered a disability, but a reje;~ in
the process due to that may be marked as a discriminatory ac If a
medical evaluation is needed, it can be scheduled after the hi decision.
Supervisory interview
The line manager is ultimately responsible for newly hired won therefore
they are allowed to have a final say in the selection pr They are
considered to be the best judge of the capabilities of respondent, and can
also best address any concerns that the cand may raise.
As a result, one study reported that in over three-fourths of organizations

surveyed the supervisor has the authority to make final hiring decision.
When it is the line manager who is makir_' final decision, the human
resources must ensure they produce a well qualified and relevant applicant to
be chosen from.
In some companies, the final decision is left to be made by the h resources,

especially when applicants are hired into a training pr instead of a specific
;
job (for example, Management Trainee posi‘
If supervisors constantly reject particular groups of applicants, the

department may then be given final hiring authority to avoid fu charges
of discrimination.
Regardless, the most insight from a candidate is obtained wher interact

with the supervisor, who attempts to assess their compet and their
overall suitability into the position.
Also, when the supervisor makes the decision upon an indiv becomes a moral
obligation on their part to ensure they fit mar: into the organization.
Realistic job Reviews
-
“c-P: the supervisory interview also comprises a realistic job preview. I 5 ;> to
allow the candidate to understand the job and the environment t • ruld be
based in, to see how well they manage to fit in.
7 ■ ' > done to help prevent job dissatisfaction and de-motivation once
■ 'c employee has been taken onboard. It works towards addressing
concerns that either the line manager or the applicant may have.
:
_.."t y hired employees who have had a realistic job preview are less •; > to be
shocked by the job and are more likely to easily settle in as 'tart working.
Research has shown that employee turnover tends
■ re higher if realistic job previews are not used. As two researchers ;:rr; _ded:
"Telling prospective employees about unpleasant working

conditions may improve the probability that they will
remain on the job in comparison to those who are not
told about the conditions. However those who are told
about less pleasant conditions will be no more satisfied
with them once they are experienced than will those who
are not told. To improve satisfaction and the quality of
work, ultimately some changes must be made in those
aspects of the work environment with which employees
are dissatisfied.’'
- - -,g Decision
■--- the final decision is made, assuming the job offer is accepted,
i the selection process. To prevent any negative reactions, all . ■ -
ite—ful applicants should be notified and encouraged to apply for
f. _ nancies. Unsuccessful applications, that may be suitable for any
—
- ■. positions are generally kept on record.
T': _rr .ration form begins the employee’s personnel file and contains
ii str.: r personal and confidential information.
Part 4
Development and Evaluation
Chapter 2
Learning Outcome
■ List the obstacles faced in optimal placement
■ Explain the importance of orientation programs
■ Describe the concept of employee placement
■ Identify the issues encountered in placement
■ Describe the concept of separation
■ List the elements of the performance appraisal system
■ List the performance appraisal challenges
• Define what are "past-oriented appraisals"
■ Define what are "future-oriented appraisals"
■ Describe what are the implications of an appraisal process
• Explain the importance of feedback for the human resource fur:-
• Define career planning
■ Explain the role of the human resource department in the proc:

career planning
■ Differentiate between career planning and career development
Introduction to
Orientation and Orientation and Placement

Placement
Human Resource management comprises a lot more than jur: ~ The
idea is to take the employee along the path of becoming ?_ in their
position once they join the organization. Since a lot of* money has been
invested into finding the right employee. :h= must now be nurtured to
perfectly fit into the role.
Since the investment has already been made by the organize is now
expected off the employee. But first, the newcomer assisted into
overcoming the hesitancies and anxieties of being one. Initial jitters,
although natural, C3n hinder their abi:::;- and adapt and will thus affect
their initial satisfaction level?. T*
Human Resource Management and Organizational Behavior

—pression and employee satisfaction is the next goal to achieve on the -■ of
objectives for the human resources department.
Obstacles to productivity
- major barrier to achieve this is that employees are more likely
■ quit during their first few months than at any other time in their
rloyment. This is not an uncommon phenomenon, and might even
;“efit the organization is there really was no fit between it and the . —rioyee.
Realistic job previews work as a means of reducing such
■ virilities, by allowing potential candidates to preview what their
- •. ill be all about. Then, on their first few days at work, there is not
— _;r. of a difference between what they expected and what it really is. ~~ -
difference between what one expects and what one finds is called . - - :ive
dissonance. If this dissonance is too high, people take adverse .- - In this
situation, it could also be translated as a resignation.
" * tre can also be other causes of dissonance other than the job itself.
~r reople might not like the policies and work environment, some ~ _ not get
along well with the rest of the department, so might not _ able to fit in due
to cultural differences. All of these are concerns r:: ::nnot be addressed until
the employee actually starts work. And : • 5 •.-.here the HR must be proactive
and prepared to help resolve all
- nitial concerns.
£ -rrendent on the HR to initiate the process of socialization, through

• ' _r. employee begins to understand and accept the values, norms, r-e :-fs
held by others in the organization. This process helps the ration attain a
more productive workforce, while enabling the T-* rloyee to get over initial
hesitance.
N - -Employee Turnover
:~ r HR helps employees meet their personal objectives, their SB acrion levels
tend to improve, which may benefit the organization
- wavs — lower turnover costs, as well as a productive recruit rrr*
Turnover is extremely expensive, because of all the costs
. -'ti •. ith it. These go beyond the recruiting and selection expenses,
- is ~:ludes the cost involved in creation of new employee records,
stration, training that was provided and any equipment that
- - have been given to them.
- are not recorded as turnover expenses, but are part of the : for
the various departments they may be affected. It is r . - ; determine
the exact cost per employee, but it can vary based on the job role as
well as how soon after joining did
At a local electronic appliances company, the orientation program that was
implemented comprised all new employees gathering into a lar_'; room where
they arc quickly told about the company and its frir.^r benefits. They filled
out relevant forms, and were then dispatched to their supervisors to start
working. Barely was any time ever dedicates t.» introduce the new employee
to the rest of the team. The supervisor the" delegated them to a work station
with nearby workers helping him e_t in case of any problems.
And as can be expected in such an environment, the experiertr' workers have

a little ritual for newcomers to go through - Ragging. T~c new employees
were told of them unfair treatments the workforce ris to endure, and how the
supervisor was the worst of them all. All or’
-
did nothing but add on to the already anxious newcomer, resulti^ them not
-
even wanting to fit in and probably making the decisio quit soon after.
In reaction to this situation, the HR department employed an e - larger

number of new employees to offset the high initial turnover, looked into, the
whole orientation process was then revamped. N_ employees were now given
a proper orientation session, that exp.: the background and HR policies of the
company. Some forms had be filled at the session, but objective of the session
-
was to create a r positive attitude about the organization among the recently
hired.
The new employees were informed of how likely they were to successful at
their jobs, and were then taken into a secluded a:t. the cafeteria to have lunch
with their future supervisors. Towards end of the day, their supervisors would
take them to their r departments and introduce them to the rest of the team.
Even t the other employees tried to pull them down, their initial ex with the
organization was so positive that it made settling in a lot
This new approach also led to some significant changes at the c

- initial turnover rates dropped significantly, and the new reenrt- also
able to learn their jobs a lot more quickly. All of this u:> J how initial
anxieties amongst the employees were resolved. at ease they became
with their work environments. They proba? more relaxed and more
motivated to stay with the organizatk r_ seems to explain why they
mastered their jobs sooner than t the shorter and more superficial
orientation.
Socialization Process
For a successful orientation process, the employees must get to
quickly. This is important because it helps understand the

- ues of the rest of the workforce, and helps answer some ot the -v ons that
might be making the new recruits anxious.
. 2-1 depicts the socialization process as the meeting of the ration's culture
and the individual’s personality.
r
v j- : The Socialization Process
Process
_
atsn =nc .? Individual's ’
l=s personality
f- . on programs are a very effective socialization tool that can . -sh rr used for
new employees. As in most cases, newcomers tend to tjtt ;'-.e desire to be
accepted, this process can ensure they actually learn
- - rrvrm the desired behavior. During this process, the person gets
elements of the organizations values, beliefs, and traditions. •V . - _-.dergoing
such a process, acceptable levels of satisfaction, Jr r_a: t\. and stability of
employment become highly likely.
A? . 2-2 suggests, a new employee’s capabilities are seldom enough x* :he

_
demands of the job. To enhance them, orientation and _ard training
are pivotal. This chapter discusses how orientation ■-'r- the placement
t of employees into productive roles within the -: n. The following section
outlines the content, responsibilities, ■. ~c~ts of orientation programs.
The last section of the chapter
■ her issues in the placement of human resources within the ion.
- Balance between New-Employee Capabilities and Job Demands

Orientation Programs
The orientation program is usually dependent on the HR department and the
immediate supervisor(s). This is because all the issues that an orientation
attempts to address are either - general topics of interest u most new
employees and specific, job-related issues of concern only to specific
jobholders.
Figure 2-3 shows the common topics in an orientation program. Thc'_ labcled
“organizational issues” and “employee benefits” are genera concerns to
practically every new employee, and are so explained ?y representatives from
the HR department. Sophisticated oriental:, - programs may include films or
video-tapes about the company’s hist. —r as well as videotaped greetings
from key executives. However, the bu % of the information comes from the
HR department representative.
Figure 2-3: Topics often covered in employee orientation programs
Human Resource Management and 0mani7aiinnal Rohavinr

Orientation Follow-Up
ensure the orientation was a success, follow up procedures are added
- This is vital because new employees will not admit to not recalling
- mat was taught to them in the initial orientation session. So the HR mply pre-schedules a time
with the new recruits and runs through
■ r ;> about which an employee needs more information. This also er.es as feedback for the HR to
identify the strong and weak elements ' : ~e orientation session.
_m supervisors believe they follow up with the new employee quite —muently, but this interaction
is often not perceived as a follow- -r It could be due to the supervisor’s body language, for example.
A .rervisor may ask, “Is everything OK? Let me know if you have any memions.” But if this is stated
as the supervisor continues to walk past '. employee, the body language received by the employee is,
-
“My s-r-emisor really doesn’t want to stop and talk.’ So instead of actually
- -g up concerns or questions, the employee is more likely to ■t-mond with a quick “Ok”.
1' >: me situations, the supervisor may not be able to come up with an . ■ • e~ to the employee’s
question and must refer them on to someone : : A :hough, this may be done with good intentions,
for the employee . - d translate into the supervisor not really caring about the problem.
- :m be made even worse when the supervisor says “I’ll find out” ire ~ever gets back to the
employee - That is indifference.
fi' : ional orientation should especially include an additional degree •’ /.-up. Once in a foreign
country, further assistance may be :h local customs, housing, shopping, and/or schooling.
Sac : .ee Placement
r is me assignment or reassignment of an employee to a new or
_
- - on. It comprises initial assignment for new employees and fee : :r.ion/transfer of present
employees. Regardless of their status
■me organization, all employees must be recruitcd, selected and m before they can be placed
in different positions. However, me activities are not as elaborate, when recruiting internally,
reemse the HR department already has employee records with
- mi application, references, and work history. This makes -IT:-: of internal candidates is
easier, particularly if employee nave been recorded and computerized. Time and effort is . ..
~en in orienting internal recruits, as they do not really need
- m m me basic values and beliefs of the organization.
r
’ m-. decisions are made by immediate supervisors, along with ? _m* - magement. The role
of the HR is to communicate with the r.- - - i formalize the new contract.
The human resource department works to review human resource planning and staffing
decisions, orientation planning, and all placemen: decisions. Mergers and acquisitions require a
-
different set of orientatic and placement activities.
Another important aspcct of placement decisions is the growth dual-career families. With both
the husband and wife pursuing the * careers, a placement decision involving a geographic
-
relocation involves more than just the employee; the spouse is affected too. This prohe can be
tackled by HR. because they tend to be well connected with ~ a local network that gives them
access to other professionals in other companies. A suitable role for the spouse can thus be
_
found, by ui: z these informal channels of communication. In certain cases, the ~e i recruit might
actually be offered a higher salary to compensate for :t loss of income of the spouse.
With these constraints in mind, there are three major classes af placement decisions: promotions,
89
transfers and demotions.
Promotions
A promotion is when an employee js moved from one job to anedao| It is generally, higher in
pay, responsibility, and position. It is ach ; as a result of one’s past performance and future
potential. In : where promotion is mostly a “reward” for past efforts and successes problems
may be encountered. One problem is whether decision rr. - can actually differentiate the
strong performers from the weak coes. is important that the decision reflects on one’s work
performance not on any other biases.
No such decisions should be allowed to be influenced by any t bias. Where promotion

decisions result from personal bia>r- organization ends up with a less competent person in a
higher insignificant position.
Another issue with merit-based promotions is the “Peter P: ir which states that in a hierarchy
people tend to rise to the:' k incompetence. This principle suggests that good performance in
a is no guarantee of good performance in another. For examrl; if engineers are hired by a
research firm that made major cost-sav: - . changes in a refinery hat would be an example of
superior per* >: However, suppose the engineer were promoted to supervisor. Ibe needed to
be an effective supervisor are very different from these to be a top engineer. As a result of
such a promotion, the comri.- gain an ineffective supervisor and lose a superior engineer.
Seniority-based promotions
m some situations it is senior most employees who get the promotion. The advantage of this
approach is that there can be no bias, as all that : required is to compare the seniority records of the
candidates to -r.crmine who should be promoted. Seniority-based promotions are _' jallv limited to
hourly employees. For example, a promotion from ~--manic second class to mechanic first class
may occur automatically r m-niority whenever an opening for mechanic first class occurs. Labor
rmnizations often seek this type of promotion to prevent employers
■ m discriminating among union members.
?t HR experts are concerned about the competency of those r* moted solely because of seniority,
since not all workers are equally . mmie. Under seniority-based promotions, the best person can
possibly imied the job unless the individual happens to be the most senior
* -<er as well. This approach to promotion causes HR departments to
their efforts on training senior workers to ensure that they are rmmred to handle future
promotions.
* a-'sfers and Demotions

7mrisfers and demotions are the other two major placement actions m: ;an be taken by the
organization. A transfer is when an employee moved from one job to another that is relatively equal
in pay,
. ■ nsibility, etc. Demotions occur when an employee is moved from
■- . ? to another that is lower in pay, responsibility, etc.
■ _ ~ -mrs may even be beneficial to jobholders. The transfer might just ... “to provide a person
with new skills and a different perspective, . ~is-’ed on experience. These may even add on to ones
motivation and
-mm on. especially when a person finds little challenge in the old «:<- 7 m new position, may
offer them new technical and interpersonal . m ermes. These can prove to be a growth opportunity
for the ~imferee.
Dfc- - "ns seldom hold positive outcomes for the individual. Usually m- associated with discipline
—the individual is demoted for
* x-- ? performance or for inappropriate behavior. A problem with
• : m is that the demoted employee may become demotivated or .— - - e towards those
responsible for the demotion decision. Besides m _ negative influence on the morale of others, this
person is B m a poor producer. Sometimes these can be an alternative to h employee who
cannot their present job rather than sever the
— ent relationship; a decision is made to retain the employee but J: - m level of
responsibility.
job Posting Programs
Job posting programs inform employees about unfilled job openings and qualifications. The
announcement of the opening invites qualified employees to apply to notices usually posted on
company bulletin boards or placed in the company newspaper. Then through self-nominations or
the recommendation others, employees who are interested in the posted opening report to the HR
department and apply.
Job posting is most common among lower-level clerical, technical. ar._ supervisory positions. When
lower-level jobs are filled without postir.i them, employees may believe that they should have been
allowed :: apply through the posting program.
Although most job bidders seek promotions, some self-nominations ire likely from those who seek a
transfer. Even self-nominated demotions art possible if the person is frustrated by their present job
or if the pers:' secs the demotion as a means to a job with more favorable promoticc possibilities.
Self-nominations may also be used by management trainees. M- organizations hire recent college
graduates that allow for little than an extended job rotation throughout each of several departme
Separation
A separation is a decision for the individual and the organization to It may be initiated by
disciplinary or personal reasons. Regardless c-r reason, the HR department’s role is to find the
most satisfactory met of conducting the separation. Separations can take several forms ?
attrition, layoffs, and termination.
Attrition
Attrition is the normal separation of people from an organization result of resignation,
retirement, or death. It is initiated by the ■ and not by the company. In most organizations, the
key compor attrition is resignation, and is a voluntary action
Voluntary departures simply create a vacancy that is not filled staffing level declines without
-
anyone being forced out of a job there is sufficient lead time, attrition can reduce or even elim:
projected surplus.
A special form of attrition is early retirement. It is one form of ser • that the HR department can
actively control. It is used to reduce levels and to create internal job openings. Early retiremerx
are designed to encourage long-service workers to retire b traditional retirement age of 60.
If the employer is anxious to reduce the number of senior workers, the early retirement provisions
may be supplemented so that there is no reduction in retirement benefits. The advantage of this
form of separation is that it can start a chain reaction of promotions for several layers of junior
workers. Moreover, senior workers tend to be the highest paid employees; when they resign, the
employer’s labor costs may decline.
Layoffs
Layoffs are the separation of employees from the organization for economic or business reasons.
This separation may last only a few' weeks : its purpose is to adjust inventory levels or to allow the
factory to retool for a new product. When caused by a business cycle, the layoffs may last
- much longer period.
■ ~en the layoffs are expected to be of a short duration, they may not re of the usual pattern of
forcing the most recent ly hired employee to -;;ept unemployment. If the senior worker w'ants to
accept the layoff,
- person collects unemployment money while less senior workers
• ::p their jobs. Senior workers are likely to accept layoffs of short
ration because they receive almost the same take-home pay without working.
'efmination
T—_ 0yees may also be separated by termination of the employment .v.onship. Termination is the
permanent separation of the employee
- — the organization for any reason. Sometimes, however, the employer ~ to separate some
employees for business reasons and has no plans xr- re them. In these cases, the employees may
receive severance pay .'. .replacement assistance.
. mn-ce pay isHuman

money0p<;niirrp
oftenMananpmpnt and OrnAnizatinnfll
equal to one or more week’s Rphavior - ?. that ft r ;r to employees who are
salary
being permanently separated. Many ; a: ions give severance pay only for involuntary separations and
prfc - employees who have been performing satisfactorily.
ement assistance
Miller, Inc., the world’s second largest manufacturer of . -- :ure. developed a novel approach to
r
severance pay, called I t: rarachute.” Unlike the “golden parachutes” offered only to : c: _::ves at
firms likely to be targets of a takeover, the “silver ■fcte-r extend to all 35,000 of the company’s
employees. “The jld be activated in the event of a hostile takeover, and the -_ld be pulled if a
worker’s job were eliminated, salary reduced ~ n d i t i o n s or benefits altered.”
This unusual form of severance pay would be paid in ten days :: terminations occurred. Those
employees with between one and fhe years would receive twice their previous twelve-month
compensation l.onger-service employees would receive 2.5 times their salary for the previous twelve
months. Besides assuring employees of severance p_- should they lose their job in a hostile takeover,
this benefit makes the company a less attractive takeover target.
Outplacement assistance includes efforts made by the employer throu_r a firm to help the recently
separated worker find a job. Althou_~ outplacement is a relatively new benefit, it gained widespread
support in the 1970s and early 1980s and is offered by 73.6 percent of employ according to one study.
Issues in Placement
Two placement decisions that are overriding concerns to a hur~^~ resource department are
effectiveness and prevention of separations
Effectiveness
The effectiveness of a placement decision depends on minimi' disruption to the employee and
the organization. To reduce disrur promotions and transfer decisions should be made in
accordance v. the selection steps. Likewise, all demotions should be well recorder - in
accordance to the rules and procedures.
Prevention of Separations
One of the more creative areas of HR management is the preve of separations. This is when HR
departments can prevent organizations from losing valuable human resources, the invested in
recruitment, selection, orientation, and training is no:
To reduce the loss of valuable human resources, HR department undertake a variety of actions.
Through proactive programs, er; losses through voluntary resignations, death, layoffs, and term: can
be reduced.
Voluntary Resignations
Voluntary resignations are reduced by a satisfying work envirer a challenging job, and
personal opportunities for growth. For e the HR department can play an especially powerful
role as an ad line managers who seek better ways to redesign the jobs they sur Realistic job
previews and orientation programs are two other v>~ department may reduce voluntary
turnover.
Equitable Life Assurance Society’s part-time program for re called “Retiree Talent Bank.”
Salaried employees who ha\e are used to staff temporary openings instead of hiring workers
temporary help providers or consultants.
... .. nmani 7» tinnal R p havjgr | k£ _

;
Death
Even death as a source of separation is a target for progressive HR departments. Sentry Insurance
Company, for example, installed a multi-million-dollar recreational complex in its western regional
office in Scottsdale, Arizona, USA. Part of the plan for this combination of weight rooms, jogging
tracks, tennis courts, and other athletic-oriented facilities is to encourage employees to maintain
better physical health in order to continue working longer.
Layoffs
Layoffs are minimized in some companies by careful human resource planning. By projecting
employment needs several years into the future, employers like IBM and State Farm Insurance
Company have avoided layoffs even during the worst recessions.
*rr:-: .ction to
Performance management is a feature in almost all organizations now, so you will almost certainly
"nance Mani-
have personal experience of this. While your organization will have its own framework, it is likely
gement
that the main components of the framework or system will not be markedly different from that in
other organizations. Also the '‘soft” skills that are necessary to help manage the performance of an
individual employee are the same across all organizations.
Information provided by a performance management system Performance management can be

T
used for the study of competences needed to perform a particular job to the required level. W hen
used in this context, documentation should include descriptions of good and poor performance
levels so that a person’s level of competence can be judged.
An effective performance management system should provide valuable ir'.d relevant information to
both the organization and the individual.
For the organization:

■ Information about employees for manpower decisions
• To reveal the adequacy of other HR procedures, such as selection and training; if there is a poor
match between people selected for a ,'b and the job itself, this will be revealed in the poor
performance :: the employee to indicate improvements in performance due to ning or development
programs
■ : .-“-end appraisals are used by some organizations as the basis for z.-;-mining salary reviews
and performance-related pay/bonuses
* To identify potential and lead to recommendations for the next job and training.
For the individual:

■ To provide information and feedback for the employee about his/her performance and future
potential with training recommendations
* This feedback should increase the motivation of the individual through a combination of praise
and suggestions for improvements.
Performance Appraisal
Performance appraisal is the process by which organizations evaluate job performance. It benefits
employees, their supervisors, the MR department, and, ultimately, the organization itself.
Employees working for a longer time period with an organization want positive feedback on their
good performance, although they may resent corrective feedback.
Figure 2-1: Uses of Performance Appraisal
Performance Improvement
Performance feedback allows the employee, manager, and HR specialist to intervene appropriate
actions to improve performance
Compensation Adjustments
Performance evaluations help decision makers determine who receives pay raises. Many firms grant
part or all of their pay increases and bonuses based up6n merit, which is determined mostly through
performance appraisals
Placement Decisions
Promotions, transfers and demotions are usually based on past or anticipated performance. Often
promotions are a reward for past performance
Training and Development Needs

Poor performance may indicate the need for retraining. Likewise, good performance may indicate
untapped potential that should be developed.
Career Planning and Development

Performance feedback guides career decisions about specific career paths the individual should
investigate.
Staffing process deficiencies

Good or bad performance implies strengths or weaknesses in the HR department’s staffing
procedures.
informational Inaccuracies
Poor performance may indicate errors in job analysis information, human resource plans, or other
parties of the HR management information system. Reliance on inaccurate information may have
led : ' inappropriate hiring, training, or counseling decisions.
job Design Errors

Poor performance may be a symptom of ill-conceived job designs. Appraisals help diagnose these
errors.
Equal Employment Opportunity
Accurate performance appraisals that actually measure job-related performance ensure that internal
placement decisions are not discriminatory.
Eternal Challenges
Sometimes performance is influenced by factors outside the work environment, such as family,
financial, health, or other personal matters. If uncovered through appraisals, the HR department
may be able to provide assistance.
order to overcome the problems of the old system, a new process -- :-d Performance Feedback and
Development was created by a task :c of senior HR managers and middle-management
representative. 7~,h required employee objectives to be set at the outset of the year and --proved by
a second-level manager.
.\ v 2-2 shows the elements of an acceptable appraisal system. The _:rr.'ach must identify
performance-related standards, measure those .- :tria, and then give feedback to employees and to
the human resource i apartment.
- - \ 2-2: Key Elements of Performance Appraisal Systems
“7feedback
jg Ts? H - s' / v Pei y Employee
s
formar.ee appraisal WmmSMm
1
* Performance
measures
Performance
related
standards
4^ *
The human resource department usually develops performance appraisals for employees in all
departments. This centralization is done to ensure uniformity, and to allow for comparisons
amongst similar groups of employees.
The employee’s immediate supervisor performs the evaluation. Although others may rate
performance, the immediate supervisor is often in the best position to make the appraisal. However,
multiple raters—including peers and even subordinates—offer additional perspectives.
Preparation Of Performance Appraisals

The appraisal should create an accurate picture of an individual’s job performance. To achieve this
goal, appraisal systems should be job related and practical, and should have standards and use
dependable measures. Job related means that the system evaluates critical behaviors that constitute
job success. These behaviors normally are identified as part of the job analysis process, described
earlier.
A practical system is understood by both evaluators and employees. A complicated, impractical

approach may cause resentment, confusion and non-use.
A standardized system within an organization is helpful because it allows uniform practices to be

established by the HR department. The method of identifying these elements would most likely be
through job analysis procedures. But whatever method is used there must be a record of the
standards.
Before specific approaches to performance appraisal can be examined, however, c6mmon elements
of most performance systems should be discussed. These include performance standards,
performance measures and rater biases.
Performance Standards
Performance evaluation requires performance standards. They are the benchmarks against which
performance is measured. To be effective, they should relate to the desired results of each job. They
cannot be set arbitrarily. Knowledge of these standards is collected through job analysis. As
discussed previously, job analysis uncovers specific performance criteria by analyzing the
performance of existing employees.
It is important that management carefully examine the characteristics of effective performance. Job
analysis, coupled with a detailed performance analysis of existing employees, should begin to
identify what characteristics are required by job and which of those are exhibited by “successful’'
employees.
From the duties and standards listed in the job description, the analyst can decide which behaviors
are critical and should be evaluated. V. hen this information is lacking or unclear, standards are
developed from observation of the job or discussions with the immediate supervisor.
Performance Measures
Performance evaluation also requires dependable performance measures. They are the ratings used
to evaluate performance. To be useful, they must be easy to use, be reliable, and report on the
critical behaviors that determine performance. For example, a telephone company supervisor must
observe:
■ Use of company procedures—staying calm, applying tariff rates for phone calls, and following
company rules and regulation
■ Pleasant phone manners—speaking clearly and courteously

Human Resource Mxin^nement and 0m^ni7^tinn^l Rphavinr I Pr>f^rpnrp Rnnk ?
■ Call-placement accuracy—placing operator-assisted calls accurately
These observations can be made either directly or indirectly. Direct observation occurs when the
rater actually sees the performance. Indirect observation occurs when the rater can evaluate only
substitutes for actual performance. For example, a supervisor’s monitoring of an operator’s calls is
direct observation; a written test on company procedures for handling emergency calls is indirect
observation.
To test how well operators might respond to emergency calls, an independent telephone company
developed a paper and pencil test. The test was intended to determine if each operator knew exactly
how to proceed when emergency calls were received for such requests as police, ambulance, or fire
equipment.
Another dimension of performance measures is whether they are objective or subjective. Objective
performance measures are those indications of job performance that are verifiable by others. For
example, if two supervisors monitor an operator’s calls, they can count :he number of misdialing.
The results are objective and verifiable since ea:h supervisor gets the same call placement accuracy
percentage. . -;:ally. objective measures are quantitative.
V. :r. more than 13 million workers using video-display terminals, new : - of objectively measuring
employee performance are emerging.
- ■ at one-third of these workers are in jobs that can be scrutinized
- - ■ — atically by computer.
--reservation computers, for example, closely measure how long a _a. clerks take to handle
each customer and the amount of time... -1 -r. calls.
99
Figure 2-3 compares the accuracy of objective and subjective measure-. It shows that subjective
measures are low in accuracy. When subjective measures are also indirect, accuracy becomes even
lower. For examp’;, measurement of an operator’s phone manners is done subjective/: supervisors
must use their personal opinions of good or bad manners. Since the evaluation is subjective,
accuracy is usually low even if the supervisor directly observes the operator.
Figure 2-y. Types and accuracy of performance measures

Types of Performance Me?sur « felatiye Decree of Accuracy
Direct Indirect
Objective Very high High
Subjective l.ovv Very low
Rater Biases
The problem with subjective measures is the opportunity for bias. This is caused by raters who
failed to remain emotionally unattached whi c they evaluate employee performance. The most
common rater biases include the following factors:
The Halo Effect

This occurs when the rater’s personal opinion of the employee sways the rater’s measurement of
performance. For example, if a supervisor personally likes or dislikes an employee, that opinion may
distort the supervisor’s estimate of the employee’s performance.
The Error of Central Tendency

Some raters do not like to rate employees as effective or ineffective, and so the performance rating
is distorted to make each employee appear re be average. They place their marks near the center of
the rating sheet . Thus the term “error of central tendency” has sometimes been applied to HR
departments unintentionally.
The Leniency and Strictness Biases

Leniency results when raters tend to be easy in evaluating the performance of employees. Such
raters see all employee performance as good and rate it favorably. The strictness bias is just the
opposite. It results from raters being too harsh in their evaluation of performance.
Cross Cultural Biases

Every rater holds expectations about human behavior based upon his or her culture. When people
are expected to evaluate others from different cultures, they may apply their cultural expectations
to someone who r i- _ different set of beliefs, in many oriental cultures like Pakistan, the . . are
treated with greater respect and are held in higher esteem
■ - ' n many western cultures. !f a young worker is asked to rate an et-ubordinate, this cultural
value of respect and esteem may bias the
radng.
-rsonal Prejudice
:
- rr=7 s dislike for a group or class of people may distort the ratings ’' rôple receive. For example,
some HR departments noticed ~ale supervisors give undeservedly low ratings to women who I* :
'Traditionally male jobs”. Sometimes raters are unaware of their :e. which makes such biases even
more difficult to overcome.
Human Resource Management and Organizational Behavior | Reference Boc* I
V r.eiess, HR specialists should pay close attention to patterns in b:*. ' that suggest prejudice.
lf<e -;cency Effect

H ' - ' ng subjective performance measures, ratings are affected ?y employee’s most recent actions.
Rccent actions—either jaacc - bad —are more likely to be remembered by the rater.
i flteb: ‘ g Rater Biases

subjective performance measures must be used, human E specialists can reduce the
distortion from biases through
srs. -Redback, and the proper selection of performance appraisal
• ■ . -r'. Training for raters should involve three steps. First, biases -c r ::jses should be
explained. Second, the role of performance : ; n employee decisions should be explained to
stress the need
- _ maiity and objectivity. Third, raters should be allowed to apply . performance
measures as part of their training.
of subjective performance measures move out of the

— i.nd into practice, raters should get feedback about their . n?s. When ratings prove
relatively accurate, or inaccurate, r ;.rs raters to adjust their behavior accordingly.
-- ~i~.cc of performance evaluations has led to the creation

— ethods to appraise past performance. Past-oriented b _ . : the advantage of
dealing with performance that has
— "cd and, to some degree, can be measured. The obvious
- that past performance cannot be changed, but by -71': performance, employees
can get feedback about their
has a different set of beliefs. In many oriental cultures like Pak:?z_.n. the
elderly are treated with greater respect and are held in higher esteem than in
many western cultures. If a young worker is asked to rate _ ~ older
subordinate, this cultural value of respect and esteem may bias the rating.
Personal Prejudice
A rater’s dislike for a group or class of people may distort the ratings those
people receive. For example, some HR departments noticed that male
supervisors give undeservedly low ratings to women who hold “traditionally
male jobs”. Sometimes raters are unaware of their prejudice, which makes
such biases even more difficult to overcome. Nevertheless, HR specialists
should pay close attention to patterns in appraisals that suggest prejudice.
The Recency Effect

When using subjective performance measures, ratings are affected strongly by
the employee’s most recent actions. Recent actions—either good or bad —are
more likely to be remembered by the rater.
Reducing Rater Biases

When subjective performance measures must be used, human resource
specialists can reduce the distortion from biases through training, feedback,
and the proper selection of performance appraisal techniques. Training for
raters should involve three steps. First, biases and their causes should be
explained. Second, the role of performance appraisals in employee decisions
should be explained to stress the need for impartiality and objectivity. Third,
raters should be allowed to apply subjective performance measures as part of
their training.
Once the use of subjective performance measures move out of the classroom
and into practice, raters should get feedback about their previous ratings.
When ratings prove relatively accurate, or inaccurate, feedback helps raters to
adjust their behavior accordingly.
Past-Oriented The importance of performance evaluations has led to the creation Appraisals of
many methods to appraise past performance. Past-oriented approaches have
the advantage of dealing with performance that has already occurred and, to
some degree, can be measured. The obvious disadvantage is that past
performance cannot be changed, but by- evaluating past performance,
employees can get feedback about their efforts.
IT.riopmen! and Evaluation

101
The most widely appraisal techniques that have past- orientation include: Rating Scales
Perhaps the oldest and most widely used form of performance appraisal is the rating scale, which
requires the rater to provide a subjective evaluation of an individual’s performance a long a scale
from low to high. The evaluation is based solely on the opinions of the rater, and in many cases,
the criteria are not directly related to job performance. Although subordinates or peers may use
it, the form is usually completed by the immediate supervisor, who checks the most appropriate
response for each performance dimension.
Disadvantages are numerous. A rater’s biases are likely to be reflected in a subjective instrument
of this type. Specific performance criteria may be omitted to make the form applicable to a
variety of jobs. T~e descriptive evaluations are also subject to individual interpretation 'ftvaWary
w&fhy, anti vvnen specific performance criteria are hard identify, the form may rely on irrelevant
personality variables dilute the meaning of the evaluation. The result is a standardized and
procedure that are not always job-related.
Checklists
The checklist rating method requires the rater to select state- words that describe the
employee’s performance and characte rater is usually the immediate superior. Without
the rater's the HR department may assign weights to different ite~: checklist, according
to each item’s importance. The result is weighted checklist. The weights allow the rating
to be quan total scores can be determined.
The advantages of a checklist are economy, ease of ad. limited training of raters, and
standardization. The disadvar* susceptibility to rater bias (especially the halo effect),
use oc criteria instead of performance criteria, misinterpretation - items, and the use
of improper weights by the HR departr disadvantage of approach is that it does not
allow the relative ratings.
Forced Choice Method

The forced choice method requires the rater to : descriptive statement in each pair
of statements about being rated. Often both statements in the pair are poi For
example:
I. Lea rns qu ickly — Works hard
Human Resource Management and Organizational ar

lation include: 2. Work is reliable and accurate — Performance is a good example to others
3. Absent too often — Usually tardy
anee appraisal e Sometimes the rater must select the best statement (or even pair of statements) from four
a subjective choices. However the form is constructed, HR specialists usually group the items on the form
■glow to high, into predetermined categories such as learning ability, performance, interpersonal relations, and
r. and in many the like. The effectiveness can be computed for each category by adding up the number of times
nee Although each category is selected by the rater. The results can be reported to show which areas need
npleted by the r further improvement.
response for The forced choice method has the advantages of reducing rater bias, because some employees
must be rated as superior to others. This approach is also very easy to administer and fits a wide
:o be reflected variety of jobs. Although practical and easily standardized, the general statements may not be
na~.;e criteria y specifically job-related. Thus it may limit usefulness in helping employees improve their
of jobs. The performance.
r:e*rretations Critical Incident Method

ire hard to The critical incident method requires the rater to record statements that describe extremely
variables that good or bad employee behavior related to performance. The statements are called critical
iarc ed form incidents. These incidents are usually recorded by the supervisor during the evaluation period for
each subordinate.
The critical incident method is extremely useful for giving employees job-related feedback. It
statements or also reduces the recency bias. Of course, the main drawback is that supervisors often do not
fcnr-istics. The record incidents that occur. Many start out recording incidents faithfully but lose interest, and
rs • nowledge, then just before the evaluation period ends, they add new entries.
terns on the Li::
Behaviorally Anchored Rating Scale
s called a n:
Behaviorally anchored rating scales are a family of evaluation approaches that identify and
r.ed so that
evaluate relevant job-related behaviors. Specific named behaviors are used to give the rater
reference points in making the evaluation. Since job-related behaviors are used, validity is more
“i strati on, likely than with adjectival rating scales or forced choice methods. The most popular approaches
nrafc> include are called behavioral expectation scales and behavioral observation scales.
or personality K
Behavioral expectation scales (BES) use specific named behaviors as benchmarks to help the
:: checklist re-:.
rater. This method attempts to reduce some of the subjectivity and biases found in other
Another rater
approaches to performance measurement.
to give
:>-• the most

the employee e
o: negative.
Behavioral expectation scales are expressed in terms with which the rater and the employee are
familiar. The rater, usually the supervisor, can review the identified behavioral anchors and
indicate those items the employee needs to improve. Since these scales are “anchored” by
specific behaviors within each category, the supervisor is better able to provide specific feedback
to each employee. One serious limitation is that raters only look at a limited number of
performance categories. Each of these categories has only a limited number of specific behaviors.
Behavioral observation scales (BOS) use specific named behaviors as bench-marks and require
the rater to report the frequency of these behaviors. These differences between the behavioral
expectation scales and the behavioral observation scales can best be seen by contrasting Figures
2-4 ami 2-5.
Figure 2-4: Behavioral Expectation Scale for a Hotel Manager
Performance Category Customer Relation

7 You can expect from ! his manager to heip customers in need.
Extremely Outstanding
Performance
Good Performance b
You can expect this manager to calm clown arguments before they erupt into rights.
Fairly Good Performance 5

You can expect t hi> manager to use discretion about whether to continue serving
troublesome customers who are with other patrons.

Acceptable Performance You cun expect this manager to stop catering to troublesome customers.
Fairly Poor Performance ?

You can expect this manager to make idle conversations with customers who are alone
Poor Performance 1
You can expect this manager to check identification of young customers on their first time
in the hotel
I
Extremely Poor Performance You can expect this manager to present the check to the customer at closing time even
ifthe manager even has not finished eating
In Figure 2-5, the anchors used in Figure 2-4 have been converted into frequency ranges.
One pair of researchers found that a year after BOS were installed in a company, senior
management reported satisfaction with this method. They believed it minimized personality
disputes, enabled raters to explain low ratings, led to comprehensive reviews, and improved
feedback between raters and workers.

Figure 2-5: Behavioral Observation Scales for a Hotel Manager
it the check to the customer at do* .ing time even if the customer has
iii You can expect not
IIMWI 1 HfH ' . 1 II V*%' ''/J.'
W
finished eating SSmsK&zisMzs-, -

Almost Never Almost Always
1 2 34 5
Field Review Method

Whenever subjective performance measures are used, differences in rater perceptions cause
bias. To provide greater standardization in reviews, some employers use the field review
method. In this method, a skilled representative of the human resource department goes into
the “field'’ and assists supervisors with the ratings.
The HR specialist solicits from the immediate supervisor specific information about the
employee’s performance, and then the expert prepares an evaluation based on this
information. The evaluation is sent to the supervisor for review, changes, approval, and
discussion with the employee who was rated.
limited number of )obs, performance appraisal mav be based ~ m a. tesfc. sVvWs,

T\\e \e.st tbs.
w\eX>5 cvc ■axv ol "Wvvs VvisX_
be reliable and validated to be useful. In order for the method to be job-related, observations
should be made under real circumstances likely to be encountered. Practicality may suffer
when the cost of test development is high.
Comparative Evaluation Approaches

Comparative Evaluation Approaches are a col lection of different methods that compare one
person's performance with that of coworkers. They are useful for deciding merit pay increases,
promotions, and organizational rewards because they can result in a ranking of employees
from best to ■•orst. Although these methods are practical and easily standardized, :ney are
subject to bias and offer little job-related feedback. Usually, they ere based on the raters
overall, subjective evaluation of the employee's r erformance.
Field Review Method Figure 2-5: Behavioral Observation Scales for a Hotel Manager
Whenever subjective performance measures are used, differences in rater perceptions cause bias.
To provide greater standardization in reviews, some
employers use the field review method. In this
method, a skilled representative of the human
resource department goes into the “field” and
assists supervisors with the ratings.
The HR specialist solicits from the immediate
supervisor specific information about the

employee’s performance, and then the expert
Almost Never Almost Always
prepares an evaluation based on this information. 1 2 3 4 5
The evaluation is sent to the supervisor for review, changes, approval, and discussion with the
employee who was rated.
Performance Tests and Observations

With a limited number of jobs, performance appraisal may be based upon a test of knowledge or
skills. The test may be of the paper-and- pencil variety or an actual demonstration of skills. This
test must be reliable and validated to be useful, in order for the method to he job-related,
observations should be made under real circumstances likely to be encountered. Practicality may
suffer when the cost of test development is high.
Comparative Evaluation Approaches

Comparative Evaluation Approaches are a collection of different methods that compare one
person’s performance with that of coworkers. They are useful for deciding merit pay increases,
promotions, and organizational rewards because they can result in a ranking of employees from
best to worst. Although these methods are practical and easily standardized, they are subject to
bias and offer little job-related feedback. Usually, the\ based on the raters overall, subjective
evaluation of the employee’s reribrmance.
Biases are reduced by using an elaborate group evaluation method as multiple raters are used,
and some feedback results when managers and professionals learn how they compared with
others on each critical factor. However, many of the comparative examples described in this
section offer employees little, if any, feedback.
Ranking method The ranking method has the rater place each employee in order from best to
worst. The HR department is generally aware of the certain employees who are better than
others. However, HR cannot measure how good an employee is at his or her work. The employee
ranked second may be almost as good as the one who was ranked first, or perhaps considerably
worse.
Forced distribution Forced distribution requires raters to sort employees into different
classifications. Usually a certain proportion must be put in each category. Figure 2-6 shows how a
rater m ight classi fy ten subordinates. The criterion shown in the figure is for overall
performance (but this method can be used for other performance criteria such as reliability and
control of costs). As with the ranking method, relative differences among employees are
unknown, but this method does overcome the biases of central tendency, leniency, and
strictness errors.
Figure 2-6: The forced distribution method of appraisal of ten subordinates
lillMlllli HI -
. llllilllls; / '
Best 10% of Next 20% of Middle 40% of Next 20% of Lowest 10%of
Subordinates Subordinates Subordinates Subordinates Subordinates
Ali Ahmed M.Arif Shuja Khan Sarah Lodhi Sabi h Yousuf
Abdul Sami Hira Sheikh M. Ali
Mahendar Gupta
Khalid Mir
Point allocation method The point allocation method requires the rater to allocate a fixed
number of points among employees in the group, as shown in Figure 2-7.
Good performers are given more points than poor performers. The advantage of the point
allocation method is that the rater can recognize the relative differences between employees.
Human Resource Management and Organizational Behavior | Reference Boc * I

Points ■A Employee Figure 2-7: The point allocation method of appraisal
17 Ali Ahmed
14 M.Arif
13 Abdul Sami
11 Sliuja Khan
10 Hira Sheikh
10 Mahendar Gupta
9 Khalid Mir
6 Sarah Lodhi
5 M. Ali
5 SabihYousuf
100
Instructions: Allocate TOO points to the entire workforce according to their relative worth. The
employee with maximum points is considered to be the best one
Paired comparisons Paired comparisons force raters to compare each employee with all other
employees who are being rated in the same group. An example of paired comparisons appears
in Figure 2-8. The basis for comparison is usually overall performance. The number of times
each employee is rated superior to another can be summed to develop an index.
Figure 2-8: The paired comparison method of evaluating employees
Employee 9 10
Ali Ahmed 1 1 4 1 1 1 1 9 1
M.Arif 3 4 2 2 2 2 9 2
Abdul Sami 4 3 3 3 3 9 3
Shuja Khan 4 4 4 4 9 4
Hira Sheikh 6 5 8 9 10
Mahendar Gupta 6 8 9 10
Khalid Mir 8 9 10
Sarah lodhi 9 10
M. Ali 9
SabihYousuf
107
_2tion
Instructions: Compare each employee on overall performance with every
other employee. For each comparison, write the number of the employee who
is best in the intersecting box. Each time an employee is found superior to
another employee, the better employee receives one point. Employees can
then be ranked according to the number of times each is selected as best by
the rater.
Future-Oriented Future-oriented appraisals focus on future performance by evaluating Appraisals

employee potential or setting future performance goals. Included here are four techniques which can
be used.
Self-Appraisals
Getting employees to conduct a self-appraisal can be a useful evaluation
technique if the goal of evaluation is to further self-development. When
employees evaluate themselves, defensive behavior is less likely to occur, thus
:
self improvement is more likely.
Management by Objectives
The heart of the management by objectives (M BO) approach is that both
employee and superior jointly establish performance goals for the future.
Ideally, these goals are mutually agreed upon, and can be measured
objectively. If both of these conditions are met, the employees are apt to be
more motivated to achieve their goals since they participated in setting them.
Moreover, since they can measure their progress, employees can adjust their
behavior periodically to ensure attainment of the objectives. However, in
order to adjust their efforts, employees most receive performance feedback
on a timely basis.
When future objectives are set, employees gain the motivational benefit of a
specific target to organize and direct their efforts. Objectives alsc help the
employee and supervisor discuss specific development needs cc the
employee. When done correctly, performance discussions focus or the job’s
objectives and not on personality variables. Biases are reduce-' to the extent
that goal attainment can be measured objectively.
Assessment Centers
Assessment centers are another method of evaluating future potent: but
they do not rely on the conclusions of one psychologist. Assessrr. centers
are a standardized employee appraisal that relies on mul types of
evaluation and multiple raters.
The process subjects selected employees to in-depth interv

psychological tests, personal background histories, peer ratings by
attendees, leaderless group discussions, ratings by psychologists
managers, and simulated work exercises to evaluate future potential
These activities are usually concentrated over a rev. d; - e :*;e: m physically removed from the
jobsite. During this time, the r?;. and managers who do the rating attempt to estimate the strengths,
weaknesses, and potential of each attendee at the center. They then pool their estimates to arrive at
some conclusion about each member of the group.
Assessment centers are both time-consuming and costly. Not only are the candidates away from
their jobs with the company paying for travel and lodging, but the evaluators are often company
managers who are assigned to the assessment center for short durations.
From the results obtained, a report is prepared on each attendee. This information goes into the
FIR management information system to assist human resource planning (particularly the
development of replacement charts) and other HR management decisions.
)fassessment centers are the sole determinant of future career progress in the organization, people
will see the assessment process as threatening. However, if it is used to appraise an individual’s
strengths and weaknesses and the person has a way of improving areas of deficiency, the center
can be a positive force for developing future talent within the organization.
Successful performance appraisal almost always depends on management involvement and

tions Of The support. For widespread understanding and support, training may be needed.
sal Process
Training Raters
Whether a simple comparative method or a sophisticated assessment CSXNSKX is \jse.(L>t.V\£
xve.e.d kwjvAedse of the system and its gucQOse.
Two major problems are rater understanding and consistency of evaluations. Some HR
departments provide raters with a handbook that describes the employer’s approach. Guidelines for
conducting the evaluation or for providing the rates with feedback are often included, as well as
definitions for key terms such as “shows initiative” or “provides leadership”.
The training workshops are usually intended to explain to raters the purpose of the procedure, the
mechanics of it, likely pitfalls or biases they may encounter and answers to their questions.
Typically, most companies do formal evaluations annually near the individual’s employment
anniversary. For new employees or for those having performance problems, evaluations may be
done more frequently as part of the HR department’s formal program or as the supervisor sees
‘ ■'■tp nt anH F vAliiT itinn 109

fit. Consider how the HR manager at an oil and gas company viev.ei implementation of his firm’s
program:
With the new appraisal process and related forms in place, the : major step was educating
managers and supervisors in the use program. Mandatory one-day training workshops were
-
given, pro , each manager with an opportunity to review, discuss, and under- the objectives of the
program. The appraisal forms were reviev. e_ detail with an explanation of how to use the various
sections :r. form. A videotaped appraisal discussion was presented to demor.-- how performance
appraisal worked. Finally, during the work>b managers were given role-play situations using the
new ap; forms. As a result, managers knew how to complete the forrr - few delinquencies
occurred. The human resource department a > valuable data that allow it to anticipate and
respond to training and employee concerns.
Once raters are trained, the appraisal process can begin. Howe\r~ results of the appraisal do little
to improve employee per:'.— unless employees receive feedback. This feedback process is f_
evaluation interview.
Evaluation Interviews
Evaluation interviews are performance review sessions i~z: employees feedback about their past
performance or future r The evaluator may provide this feedback through several ar. tell-and-sell,
tell-and-listen, and problem solving. The tel’-; approach reviews the employee’s performance and
tries to cor-, employee to perform better.
The tell-and-listen method allows the employee to explain excuses, and defensive feelings
about performance. It at* overcome these reactions by counseling the employee or. perform
better. The problem-solving approach identifies pro? are interfering with employee
performance.
Then through training, coaching, or counseling, goals for performance are set to remove these
deficiencies. Regardle^ •- approach is used to give employees feedback, the guided in Figure 2-9
can help make the performance review s effective. The intent of these suggestions is to make the
positive, performance-improving dialog. By stressing des.r.:- - of employee performance, the
evaluator can give the emplc;. re confidence in her or his ability to perform satisfactorily. T~m
approach also enables the employee to keep desirable anj _ performance in perspective because it
prevents the inc
■ :~3t performance review sessions are entirely negative. When
': - comments are made, they focus on work performance and not
‘ ; riividual’s personal ity.
r
BC Jf 2-$: Guidelines for Effective Performance Evaluation Interviews
hasize positive aspects of employee performance.
each employee that the evaluation session is to improve :: - :~iance, not to discipline.
“c-r.-iuct the performance review session in private with minimum nerruptions.

_
^ L e A performance formally at least annually and more frequently i ■ r .\ employees or those who
are performing poorly.
criticisms specific, not general and vague.
Sxus criticisms on performance, not personality characteristics.
5 .y ;e'.m and do not argue with the person being evaluated, fcr-rry specific actions the
employee can take to improve

7c—rrmance.
: ~ r - esize the evaluator’s willingness to assist the employee’s efforts : :c improve performance.
ETJ* evaluation sessions by stressing the positive aspects of the £— r : vee’s performance.
— c~:e appraisal serves as a quality control check. If the . . rrocess indicates that poor
performance is widespread, many <cr ;e- ere excluded from internal placement decisions. They
will "■ noted or transferred. In fact, they may be excluded from zetion through termination.
(Jnacceptably high numbers of . _ ,ers may indicate errors elsewhere in the HR management
c. — :• :re HR function is pursuing the wrong human resource . :: the appraisal system
itself may be faulty because of
resistance, incorrect performance standards or measures, . . constructive feedback.
Wherever the problem lies. HR si? to monitor carefully the results of the organization’s : ~ :e
eppraisal process. These results can serve as a barometer of
■ function
now promotions
■ Are ao l get ahead inaround
this company?
here based on seniority or on perform^n;-''
■ Why hasn’t my boss given me career counseling?
■ Don’t you think that most promotions are based on luck and knov. n the right people?
■ Do 1 need a degree for that job?
■ Do company training programs help my chances for a promotion.''
The answers to these questions help guide HR, the line managers, and the employees regarding
-
appropriate training and developme : guidelines. This understanding helps the employees sees how
relevant actions could benefit their career.
A career is the total number of jobs that are held by an individual during their working life. While
some people carefully plan out their career moves, for others it’s just a game of luck. People who fail
at establishing their careers lay responsibility on the shoulders of other influencers. like their line
manager or their organization. However, what they do not is that they themselves are unaware of
some very basic concepts, as described in Figure 2-10.
Figure 2-10: Selected Career Planning terms
■ Career A career is all the jobs that are held during one’s working life.
■ Career path A career path is the sequential pattern of jobs that forms one’s career.
■ Career goals Career goals are the future positions one strives to reach as part of a career. These
goals serve as benchmarks along one’s career path.
■ Career planning Career planning is the process by which one selects career goals and the path to
those goals.
■ Career development Career development is those personal improvements one undertakes to

achieve a personal career plan.

Without an understanding of career goals and objectives, planning out a career path is unlikely.
Although the HR can play a role in educating and informing the employee, it is they who remain to
ultimately be responsible for their career progression.
The HR department’s role is publicizing, and maintaining the career progression program through
training and information, but the main responsibility lies with the employee alone.
After graduation from college and three years in the Merchant Navy, Babar Ali joined National Bank
as a teller trainee. At that point in his career, his goal was to become a banking executive. He had no
idea of the career path he would follow, but Babar realized that his first step was to become a
supervisor. This career planning caused him to enroll in the bank’s management training program.
After being promoted to teller, he enrolled in other training programs and also took some non-
credit courses from the Institute of Bankers Pakistan. These programs were the first of many career
development actions that Babar undertook. He received two more promotions and at age 30 was
made head teller. After four years, Babar felt his career plan was stalled, and so he accepted a
transfer into the bank’s new account department. Although the transfer was not a promotion and
did not even include a raise, Babar knew that some diversification in his background would increase
his chances of becoming an assistant branch manager. In three years he was made assistant branch
manager for loans.
After three years as an assistant branch manager for loans, Babar again felt that his career progress
was too slow, and so he took educational leave and finished his Master of Business Administration
degree (M.B.A.). With the M.B.A., he returned to the bank as an assistant manager in a new branch.
A year later he was promoted to a branch manager’s job. To gain a wider breadth of skills, Babar
transferred to another branch as manager and then to the home office as a loan officer. After five
years he became chief loan officer, and then three years later he achieved his goal by accepting a job
as vice president in a competing bank. His success as an executive led to two more promotions
before he retired as an executive vice president at age 65.
Babar’s career plan involved well-timed transfers and educational leave. When Babar started as a
teller trainee at age 24, there was no way he could have predicted the career path he would follow,
but through periodic career planning, he reassessed his career progress and then undertook
development activities to achieve intermediate career goa‘>. such as becoming a supervisor.
Chapter: Development and Evaluation 113

Career Planning
During the forty years of Babar’s career, human resource derc in banks and in other large
And Employee
organizations gave little support :: planning. For additional human talent, HR chose to
Needs -
either tra. employees or hire new ones.
Today however, there are an increasing number of human experts who not only see career
planning as a viable way to meet :H staffing needs, but also actively promote it. And when the
eir.p encourage career planning, employees are more likely to set career _ and work toward
them.
But what do employees want? A study of one group of emr . revealed five factors of concern.
These include:
■ Career equity Employees want to perceive equity in organization’s performance and

promotion system with res pee career advancement opportunities.
a Supervisory concern Employees want their supervisors to p-i: ■ an active role in career
development and to provide timer, performance feedback.
■ Awareness of opportunities Employees want knowledge of the career advancement

opportunities that exist in their organization.
■ Employee interest Employees need different amounts of information and have different
degrees of interest in career advancement depending on a variety of factors.
■ Career satisfaction Employees, depending on their age and occupation, have different
levels of career satisfaction.
Effective career planning and development programs must consider these different perceptions and
desires of employees. Workers expectations from career programs developed by HR will vary
according to age, gender, occupation, education, and other variables.
HR Department
The I-IR department needs to take an active interest and play a role in employee career planning. It
And Career
is the HR’s future plan that is indicative of the organization’s future employment needs and related
Planning
upcoming career opportunities. In addition, HR experts are more likely to be aware of training and
other developmental opportunities, due to the various benefits involved:
■ Develops promotable employees Career planning helps to develop internal career planning
supplies of promotable talent.
114
• Lowers turnover The increased attention and concern for individual careers generate more
organizational loyalty and, therefore, lower employee turnover.
■ Taps employee potential Career planning encourages employees to tap more of their potential
abilities because they have specific career goals.
■ Furthers growth Career plans and goals motivate employees to grow and develop.
■ Reduces hoarding Without career planning, it is easier for managers to hoard key subordinates.
Career planning causes employees, managers, and the HR department to become aware of
employee qualifications.
* Satisfies employee needs With less hoarding and improved growth opportunities for employees,
an individual's esteem needs, such as recognition and accomplishment, arc more readily
satisfied.
■ Assists affirmative action plans Career planning can help members of protected groups prepare
for more important jobs. This preparation can contribute to meeting affirmative action
timetables.
l^-eer Education
Surprisingly, despite all of this many employees still know very little about career
planning. Either they are unaware of the need for and advantages of career planning, or they lack
the necessary information to plan their careers successfully.
Workshops and seminars on career planning increase employee interest by pointing out the key
concepts and gains associated with career planning. They help them set career goals, identify career
paths, and encourage a more fulfilling career for the employee.
When the HR department lacks the necessary staffto design and conduct educational programs,
public programs conducted by local colleges or consultants may help.
Information on Career Planning

Regardless of how HR wishes the guidance to be communicated, it should be providing its
employees with what they need to plan their careers. Much of this information is already a part of
the HR department's human resource information system.
Ifdifferent jobs require similar skills, they form job families. Career paths and progression within a
job family demands little additional training since the skills of each job are closely related, and the
basic skills are
rhantor- nm/olrmrn^nt and Fvalnation 115

r-d . dual Career Development
r_~ee: development begins with an individual, and them accepting the responsibility for their
actions towards career development and progression. Once this personal commitment is made,
several career development actions may prove useful. These actions involve:
job Performance
The most important action an individual can undertake to further his or her career is through
improving job performance.
Exposure Career
Progression is also fueled by exposure. Without exposure to the industry, good performers may not
get a chance at the opportunities needed to achieve their career goals.
Resignations
If an individual finds a better career opportunity and he/she is able to capitalize on it, then a
resignation may be the only way to acquire the desired job.
Organizational Loyalty
There are several people who prefer loyalty over career progression. Mentors and Sponsors
Mentors can help employees in career development. These are people in senior positions having a
vast experience who offer informal career advice to his or her protege. The mentor can guide the
junior worker and help him or her in finding out the most effective ways for career progression.
Key Subordinates
Successful managers rely on subordinates who aid the manager’s development and performance.
The subordinates may possess highly specialized knowledge or skills that the manager may learn
from them, or the employee may perform a crucial role in helping the manager achieve good
performance.
Growth Opportunities
When employees expand their abilities, they complement the organization’s objectives.
Chapter: Development and Evaluation 118

!!^ _____ Compensation and Protection
Chapter 3
Learning Outcome
■ Describe the importance of documentation for employers
■ Describe the significance of documentation for employees
■ Describe the role of regulators in documentation
■ List the types of employee agreements used by employers
* Define \he term "employee contract"
■ Define the term "contractual obligation"
■ Differentiate between the legal obligations of temporary and

permanent employees
■ Describe the usefulness of employee policies for employers and

employees
Protection
Proper documentation of employment is extremely important for both
employers and employees. The documentation contains details of all
employee activity from the time of hiring of the person and throughout their
time of employment with the organization. It is a valuable and necessary
practice to keep a record of both positive and negative outcomes of employee
activity as there will be examples to use in performance appraisal, and there
will be opportunities for the employer to provide recognition to talented
employees, as w'ell as evidence for use in disciplinary discussions.
A good documentation policy therefore helps the employer to maintain the

right level of employee performance and also to have access to reliable
information should any dispute arise. However, the documentation retention
policies may be irrelevant if the employer isn’t documenting correctly in the
first place.
What should be documented?

As a general ru le, the more documentation an employer is able to compile
and maintain regarding communications with, and actions taken toward, its
employees, the better. Anything that defines an employee’s duties or
responsibilities, details an action taken by an employer,
118 Human Resource Management and Organizational Behavior | Reference Book 2

possessed. If an HR department makes information about job families
available, employees can easily make sense of their career progression. These
paths can then be assessed by consulting with those who hold jobs in similar
positions. Also, with help from an HR specialist, a job progression ladder can
then be highlighted for them - This is a partial career path where some jobs
have prerequisites.
Career Counseling To help employees establish career goals and find appropriate career
paths, some HR departments offer career counseling. These could simply be
people who listen and understand the employee’s interests and guide them
towards job-related information. However, to be truly successful, career
counselors must encourage employees to assess themselves on their own, as
there is no better judge.
Employee self-assessment Career counselors realize that a career is only a part

of one’s life, and plays only a part in one’s life plan. A life plan is an ill-defined
series of hopes, dreams, and personal goals that each person carries through
his or her life.
Together all of these roles form one’s life plan. Ideally, a career plan is an
integral part of one’s life plan. Otherwise, career goals become ends rather
than means toward fulfilling a life plan.
Besides a life plan, self-assessment includes a self-inventory. If a career

counselor can get employees to complete a detailed and honest self-
evaluation, it helps to focus their thinking about themselves.
Environmental assessment A career plan that matches employee interests

with likely career paths may actually do a disservice to the employee if pivotal
environmental factors are overlooked. Regardless of the match between one’s
skills and the organization’s career paths, counselors need to inform
employees of likely changes that will affect their occupational choices.
Career counseling process One of the problems often encountered by career

counselors is employee reaction to the counseling process. Employees may
see only parts of some jobs that pay much better and think that they are
qualified.
Career The implementation of career plans requires career development Development generally
comprises personal improvements one undertakes to achieve a career plan. These actions can be
sponsored by the HR department, or they may be activities that employees undertake independently of
the department.
explains the decision-maker’s rationale in taking the action, or evidences communications between
supervisors and their subordinates can prove helpful. When things are documented, they are less
likely to be disputed by a current or former employee, and when they are challenged, they are much
easier to defend. Specifically, employers would be wise to document the following:
Initial Employment Records
Documentation should include records obtained from the employee at the outset of employment: the
application, any authorizations obtained from the employee (i.e., background check), and any benefit
election/ waiver forms.
Signed Acknowledgment
A critical piece of documentation that should be obtained at the inception of the employment
relationship is a signed acknowledgment from the employee stating that he/she received the
employer’s important policies and/or employee handbook. It is critical that certain policies such as the
company’s equal employment opportunity and harassment policy, the at-will employment policy and
the Family and Medical Leave policy he communicated to employees at the inception of employment.
Proof that employees received certain policies is essential in some kinds of employment cases and is
helpful in virtually every employment case.
Updated Acknowledgments
When policies or handbooks are updated and distributed, acknowledgments of receipt should be
obtained from existing employees and kept in the personnel files.
Training Documentation
Proof of attendance at key training events can be important in employment litigation. Employers
should document employees' attendance at harassment training, safety training and training on other
important aspects of an employee’s job.
Attendance
Attendance records should be accurate, current and maintained consistently for all employees who are
subject to a company’s attends r.ee policy. Unexcused absences should be documented as such.
Excused absences should be documented to ensure that they are not considered in connection with
discipline arising out of attendance issues.
Performance Evaluations
Make certain that managers consistently carry out employee evaluations at the scheduled intervals
and that those evaluations are maintained in the employees’ files.
Misconduct
Regardless of whether one thinks an employee’s isolated actions will lead to discipline, all misconduct
must be recorded. Documentation that is created contemporaneously with the event is more reliable
than documentation created after the fact.
Discipline/counseling Records
All oral and written discipline or counseling should be documented in the employee’s file. Employers
should document performance and discipline problems carefully, contemporaneously, consistently
and thoroughly. It is important to make certain that performance-related documentation in the
employee’s personnel file appears consistent with that of other, similarly-situated employees.
Employee Change Forms

Include records showing changes in title, responsibilities, pay, transfers and other terms and
conditions of employment in the employee’s file.
Investigations and Complaints

Document investigations and complaints relating to or rose by the employee. Employers should retain
Chapter: Compensation and Protection
documents that reflect the nature of the complaint, what action the company took in response, which
the witnesses were, and the ultimate disposition of the complaint or investigation. For minor issues,
maintaining related documents in the personnel file is acceptable. For more serious or sensitive
complaints or investigations, the employer should maintain a separate file.
Records Relating to Medical or Disability Issues:

It is important to maintain records containing medical information, but they should he maintained
separately from the personnel file and treated as confidential.
Post-termination Records
The employer should maintain a copy of the employee’s separation notice and a copy of any
correspondence or documentation relating to the return of company property.
The documentation of employee records is clearly useful for the employers; however, it also has a great
deal of significance for the employees. The foremost document is the employee contract.
A contract of employment is a category of contract used in labor law to attribute rights and
responsibilities between parties to a bargain. On one side stands an “employee” who is “employed” by
an “employer” on the other.
The contract of employment is a vital document as it regulates the terms and conditions of
employment between the employer and the employee.

It stipulates what the employer will provide in terms of benefits, and in terms of labor legislation, and
it specifies what the employee is entitled to receive in terms of company policy, company benefits, and
labor legislation.
It also regulates the behavior of the employee in the workplace, because all company policies and
procedures, as well as the disciplinary code, form a part of the employment contract.
An employment contract generally covers:
■ an overview of job responsibilities
■ reporting relationships
■ salary
■ benefits
■ paid holidays
■ paid vacation
■ paid sick leave
■ paid time off (PTO)
■ sales commissions
■ bonus pay potential and how bonus is determined
■ profit sharing and how profit sharing is determined
■ stock options and stock buy-back provisions
■ employment contract signing bonus
■ phone allowance
■ car mileage and travel allowance
■ moving and transition expenses
■ any additional negotiated perks
■ Details of employment termination including cause, severance package, and notice.
Many different types of employee agreements are used by organizations, some of which are:
Collective Bargaining Agreements

A collective employment agreement means an employment agreement between at least one union and
one employer. A union must be registered. A group of employees cannot be covered by a Collective
Chapter-. Compensation and Protection 121

Bargaining Agreement unless they are union members. There are mam minimum terms for Collective
Bargaining Agreements and specific requirements for the CEA bargaining process.
Individual Employment Agreements

An individual employment agreement (IEA) is an agreement between one employer and one employee
and does not cover union members. They are specific in their requirements and have bare minimum
terms.
Fixed Term Agreements

Fixed term agreements expire at a certain time, whether it is when a particular project ends, or at the
conclusion of a season, etc. They are only used in limited circumstances where there is a reason for
having the fixed term, for example, seasonal workers, farm workers and other employees who are
replaced from time to time.
The employer has to advise the employee of the reason for making the fixed term and they have to
explain why the employment will come to an end at a later date. These agreements cannot be used to
avoid obligations the employer has to an employee (in good faith). For example, an employer cannot
evade the responsibility of acting fairly and following through proper procedures in an employee
dismissal situation.
Probationary Period
Another type of contract is the probationary period during which the employer usually has more
rights. Even if an employee is under a probationary period, the good faith obligations for dismissal etc.
will still apply, and an employer has to comply. A probationary period does not mean, however, that an
employer cannot get rid of somebody without notice, or after consultation at the end of the period.
Casual and Part-timer

Employment agreements have to be in writing and this includes casual and part-time staff. The
minimum rights applying to all employees also apply to casual and part-time workers.
The contractual obligations of the employees differ according to the type of agreement. “Contractual
obligation” refers to the obligation on the employer or the employee as per the contract/agreement
signed by them. The obligations laid out in the contract are usually legally binding.
The legal obligations of temporary and permanent employees may differ based on their contracts.
Companies usually have lesser benefits for temporary employees while permanent employees enjoy
more benefits and perks.

Regulators play a vital role in employment documentation. Organizations in most of the countries in
the advanced world have to conform to employment legislation and regulation and devise forms and
documents that are specified as being necessary to be included in employee documentation. In
addition, industry-specific rules and regulations may apply to specific industries.
The documentation requirements by regulators ensure that employers are obliged to meet a certain
level and standard of documentation. This should lead to proper documentation being compiled and
maintained.
Compensation
Compensation is the way employees are rewarded for the work to do. It is vital that this aspect is
Management
managed well by the organization to ensure they retain a competitive and motivated workforce.
Objectives of Compensation Management

There are several objectives with regards to compensation that must be met:
Acquire Qualified Personnel

Compensation should be sufficient enough to acquire and retain the right caliber of employees. Since
all organizations are competing in the labor market, pay levels must be relevant to what is expected in
general. For some employees, who the organization specifically wants onboard, an additional
premium may be offered to attract them.
Retain Present Employees

If .the compensation is not competitive, present employees will find themselves better work packages
and will move on beyond the organization. To save this from happening, competitive pay rates must
be maintained for the right employees.
Ensure Equity
Pay rates in the work place must not only be externally competitive - that is, be in line with the
average expected in the labor market - but should also be internally aligned. Within the same
organization, the same level of jobs must be equally compensated for.
Reward Desired Behavior

The very concept of compensation is that it should be sufficient enough to trigger certain actions and
attitudes from all employees. It should be an incentive for increased performance levels, high
motivation, organizational loyalty and high productivity

Control Costs
If this is not correctly implemented, organizations may end up not correctly compensating its
employees. This could either result in a loss of all bright employees, as they gain better pay rates
elsewhere. It could also mean employees are being paid too much, and the firm is actually losing a lot
more money than they should be based on average market rates.
Comply With Legal Regulations

The HR department can actually face strong legal challenges if the compensation plan is not managed
as they claimed it would be. It must also be in line with all governmental regulations.
Further Administrative Efficiency

The plan should also be devised such that it can effectively and easily be managed and monitored by
HR. It should not only be efficient and effective, but must also not be excessively time consuming.
These objectives should be used as guidelines for the effective management of the compensation
element of recruitment. All jobs, salary expectations and labor market averages needs to thoroughly
be scrutinized in order to ensure optimal pay costs are incurred by the organization.
Job Analysis
This phase is about understanding jobs in more depth via surveys and meetings with members of the
actual workforces. This information is then used to design job formats and writing down their
description and specifications. Compensation is then derived based on this analysis.
job Evaluation
This procedure is undertaken to understand the worth of all the jobs that are to be done. This
evaluation helps determine what levels of compensation need to be given to the various different jobs
present in the organization. This task is carried out by a team of job analysts, who are primarily
responsible to determine compensation scales based on the working environment and the
responsibilities allotted to each of the job titles.
Job Ranking
Jobs are evaluated through this step. All job titles are analyzed and then ranked in accordance to their
importance when compared to the rest of the jobs. They are rated based on their responsibilities
attached, the skills required as well as the work environment.
This method is not said to be the most effective, as it may not give importance to all the substantial
factors. These rankings also don’t

differentiate between the relative importance with each of the jobs for an organization. Different jobs
may be significantly more important than those below them, but chances are they are not rated with
the precision that is needed in this method, and therefore do not benefit from the correct
compensation levels.
Job Grading
This method assigns a grade to each of the jobs within an organization. These grades are determined
by a specialized committee who focuses on understanding the significance of each of the roles within
the organization and then ranks them accordingly.
Factor Comparison
This method requires specialists to compare all the crucial elements that make up a job. By doing this
for all the jobs in consideration, each position is evaluated by a common set of factors — such as
responsibility, skill, work environment, etc. by doing so, all the positions are compared on an equal
scale and compensation plans can then be derived more effectively.
Figure 3-1: A job classification schedule for use with job grading method
Directions: To determine appropriate job grade, match standard description with job description
Toiil 5~
> W-
Xvlv
Grade
I•
Work is simple and highly repetitive, done under close supervision, requiring minimal training and little
responsibility or initiative.
Examples: Janitor, file clerk
II
Work is simple and repetitive, done under close supervision, requiring some training or skill. Employee is expected
to assume responsibility or exhibit initiative only rarely.

Examples: Clerk-typist I, machine cleaner
III
Work is simple, with little variation, done under general supervision. Training or skill required. Employee has
minimum responsibilities and must take some initiative to perform satisfactorily.

Examples: Parts expediter, machine oiler, clerk-typist 11
IV
Work is moderately complex, with some variation, done under general supervision. High level of skill required.
Employee is responsible for equipment or safety; regularly exhibits initiative.

Examples: Machine operator I, tool and die apprentice
V
Work is complex, varied, done under general supervision. Advanced skill level required. Employee is responsible for
equipment and safety; shows high degree of initiative.

Examples: Machine operator Ii, tool and die specialist

Step
The 1 comparison method involves the following five steps:
factor
Determine the critical factors elements across all jobs: The critical factors shown in Figure 3-2 arc the
ones most commonly used. Organizations tend to make use of different factors across different levels
of jobs for a more comprehensively understanding of each position.
Figure 3-2: The appointment of wages for key jobs

Kt;Y JOBS
Critical Factors Machinist Forklift Driver Secretary Janitor illHH

File Clerk
Responsibility
Skill
PKR 22.0
4.00
18.0
1.50
18.0
1.60
6.60
0.60
I
9.5
1.20
Mental effort 2.00 0.80 1.30 0.30 0.90
Physical effort 2.00 1.10 0.70 1.70 1.00
Working conditions 0.70 0.60 0.60 1.50 0.60
Total PKR 30.70 21.90 22.20 10.70 12.20
Wage rate PKR 30.70 21.90 22.20 10.70 12.20
Step 2
Determine key jobs: These are key positions that are commonly found across all organization, and are
also seen in the labor market. These jobs are used because it is easier to determine the demand and
supply rates for them in the market. They comprise a range of critical factors that need to be taken
into consideration.
Step 3 .
Apportion present wages for key jobs: Compensation plans are then allotted to each job, based on the
factors taken into consideration. The relative importance of each critical factor and its contribution
within each position is what determines the overall wage rate. For example, assuming a janitor
receives PKR 10.70 an hour. This amount is apportioned in Figure 3-2 as follows:
6.60 rupees for responsibil ity, 60 paisa for skill, 30 paisa for mental effort, PKR 1.70 for physical effort,
and 1.50 rupees for working conditions.
When determining the overall wage rate, the committee takes into consideration how the amount
allotted to each factor should reflect its importance when compared with other factors of the job. For
example, if PKR 4 is assigned to skill and PKR 2 is assigned to physical effort for a machinist, this
implies that the skill factor is two times as important as the physical effort. Also, the amount allocated
to a single factor should reflect its relative importance among the different jobs. For example, if

the responsibility of a secretary is three times that of a janitor, then the money allocated to a secretary
for responsibility (PKR18.0) should be three times that allocated to a janitor (PKR 6.60).
Step 4
Place key jobs on a factor comparison: After wage rates are assigned based on the importance factors
within each job, these positions are placed on a factor comparison chart. Key jobs are placed in the
columns according to the amount of wages assigned to each critical factor.
Step 5
Evaluate other jobs: Each job title in each column in the factor comparison chart serves as
benchmarks. Other jobs are then evaluated by fitting them based on relevance on the scale in each
column.
For the job of senior maintenance mechanic, the evaluation committee compares the responsibility of
the mechanic with the responsibility of other key jobs already on the chart. It is decided subjectively
that the mechanic’s responsibility is between that of the forklift driver and the file clerk. And since the
mechanic’s job requires about three-fourths of the machinist’s skills, the skill component of this job is
placed just below that of the machinist in the skill column. This procedure is repeated for each critical
factor. When the task is completed, the committee can determine the worth of the mechanic’s job,
which is:
R msihilitv PKR 14.5
Skill 3.00
Mental effort 2.70
Physical effort i.40
Working conditions 1.30
PKR 22.9
By using this same procedure, the committee can evaluate every other job in the organization. When
the evaluations are completed, the job evaluation committee can rank every job according to its
relative worth as indicated by its wage rate. These rankings should be reviewed by department
managers to verify their appropriateness.
Point System
Research has shown that this method has been made use of more than any other. It evaluates the
critical factors present within each of the jobs, but instead of using wages, it uses points. It is more
difficult to develop initially, but is actually more precise than the factor comparison method because it
can handle critical factors in more detail. This system requires six steps and is usually implemented by
a job evaluation committee or by an individual analyst.
Step 1
Determine critical factors: The point system tends to use the same factors as the factor comparison
method, but adds on to them by further breaking down all these factors into sub-factors. For example,
Figure 3-3 shows how the factor of responsibility can be broken down into (a) safety of others, (b)
equipment and materials, (c) assisting trainees, and (d) product and service quality.
Chapter: Compensation and Protection 127

Step 2
Determine levels of factors: The points system also creates several levels that are to be associated with
each factor, based on how they differ for each of the positions. Figure 3-3 shows four levels, although
more or fewer may be used. These levels help analysts to reward different degrees of responsibility,
skills, and other critical factors.
Figure 3-3: A Point System Matrix

LEVELS
CRITICAL FACTORS MINIMUM LOW II MODERATE III HIGH IV
s Responsibility H -W
j: yv■/ \
a. Safety of others 25 50 75 100
b. Equipment and materials 20 40 60 So
c. Assisting trainees 5 20 35 50
d. Product/service quality 20 40 60 So
pit ■H
, -k,n
a. Experience 45 90 135
m 180
b. Education/training 25 50 75 100
| Effort - •
A:4vv''
a. Physical 25 50 75 too
b. Mental 35 70 105 150
4 Working conditions
a. Unpleasant conditions 20 40 60 80
b. Hazards 20 40 60 80
Total points 1,000
Figure 3-4: A point manual description of “Responsibility: Equipment and Materials”
Responsibility: Equipment and materials. Each employee is responsible for conserving the company’s
equipment and materials. This includes reporting malfunctioning equipment or defective materials,
keeping equipment and

Astern rc
materials cleaned or in proper order.; and maintaining, repairing, or modifying equipment and materials
quire;
COrr according to individual job duties. The company recognizes that the degree of responsibility for
>rnitteeor
equipment and material varies widely throughout the organization.
Level I. Employee reports malfunctioning equipment or defective materials to immediate superior.
Level II. Employee maintains the appearance of equipment or order of materials and has responsibility for the security of such equipmem or materials.
“* «* same . V further
Level 111. Employee performs preventive maintenance and minor repairs on equipment or corrects minor defects in materials.
&
°TPk’ figure '"to (a;
Level IV. ' Employee performs major maintenance or overhauls of equipment or is responsible for deciding type, quantity, and quality of materials to be
-r*l levels and

used.
differ f0r
1
more or
de
grees Step 3
Allocate points to sub-factors: With the factors listed down one side of Figure 3-3 and the levels placed
across the top, the result is a point system matrix. Starting with level IV, the job evaluation committee
subjectively assigns points to each sub-factor. This allocation allows the committee to give very precise
weights to each element of the job. For example, if safety (100) is twice as important as assisting
trainees (50), then it is assigned twice as many points.
Step 4
Allocate points to levels: Once the points for each job element are assigned under level IV, analysts
allocate points across each row to reflect theimportance of the different levels. For simplicity, equal
point differences are usually assigned between levels, as was done for “safety of others” in Figvre 3-3. Or
point differences between levels can be variable, as shown for “assisting trainees.” Both approaches are
used depending on the importance of each level of each sub-factor.
Step 5
Develop the point manual: Analysts then develop a point manual. It contains a written explanation of
each job element, as shown in Figure 3-4, for responsibility of equipment and materials. It also defines
what is expected for the four levels of each sub-factor. This information is needed to assign jobs to
their appropriate level.
Step 6
Apply the point system: When the point matrix and manual are ready, the relative value of each job
can be determined. This process is subjective. It requires specialists to compare job descriptions with
the point manual for each sub-factor. The match between the job
Chapter: Compensation and Protection

description and the point manuai statement reveals the level and points for
each sub-factor of every job. The points for each sub-factor are added to find
the total number of points for the job. Here, for example, is the matching
process for a machine operator I:
The job description of a machine operator I states that the “operator is

responsible for performing preventive maintenance (such as, cleaning, oiling,
and adjusting belts) and minor repairs.” The sample point manual excerpt in
Figure 3-4 states, “Level III: Employee performs preventive maintenance and
minor repairs”. Since the job description and the point manual matches at
level III, the points for the equipment sub-factor are 60. Repeating with this
matching process for every subfactor yields the total points for the job of
machine operator I.
After the total points for each job are known, the jobs are ranked. As with the
job ranking, job grading, and factor comparison systems, this relative ranking
should be reviewed by department managers to ensure that it is appropriate.
Beyond the four job evaluation methods discussed in this section, many other
variations exist. Large organizations often modify standard approaches to
create unique in-house variations. Although other job evaluation approaches
exist, all effective job evaluation schemes attempt to determine a job’s relative
worth to ensure internal equity.
Wage and Salary job evaluations generally tend to result in a ranking of jobs based on Surveys their
contribution into the organization. This ensures jobs are paid according to the value attached to them
in general. The question now is how much should they be paid? And what seems like fair
compensation?
To determine fair wage rate, wage surveys are conducted. These are done to
understand what the average rate is like in the labor market. Generally, the
market surveyed is that within a commutable distance; where the firm is
likely to be hiring from. However, for some exceptional employees,
organizations will have to pay more competitive rate in order to have them on
board.
Consider how the president of one large university viewed the labor market:
“Our labor market depends on the type of position we are trying to fill. For
the hourly paid jobs such as janitor, clerk, typist, and mason, the labor market
is in the surrounding metropolitan community. When we hire professors, our
labor market is the entire country. We have to compete with universities in
other parts of the country to get the type of
Human Resource Management and Organizational Behavior | Reference Boo*. 2

faculty member we seek. When we have the funds to hire a distinguished professor,
i points
our labor market is the free world.”
“added
Sources of Compensation Data
^ is the
The wage survey data works as a benchmark that organizations tend to work with.
There are several ways to gain access to this data - It can be obtained from the
rator is government; who conducts similar surveys in all major areas. They can also be
waning, purchased from agencies that specialize in compiling such data. It can also be
‘ point attained from employer associations of which the organization is a member.
rforms
These surveys however, do not allow for comparisons between similar organizations.
ription
They are only provided as a benchmark based on which organization must
ipment
determine their own wage scales. However, sometimes even matching job titles can
ry sub-
be misleading. Some positions may have entirely different job descriptions, and so
pay rates must differ. Organizations must also keep an eye out for what other firms
Ed. As of their genre are doing in the labor market in order to remain competitive.
is. this
Survey Procedures
ensure
To overcome the limited use of obtained surveys, some organizations conduct their
own. These are generally done for key jobs only, and wage rates for the rest are then
acti derived from the results obtained. A sample of organizations is selected, who are
on, then contacted for information on pay scales. It is important that similar job roles
ind are contrasted and not only job titles, as the work that is required from a role is
ard what determines the wage rate.
er
In international scenarios, a survey may not be effective at all. as there are only
job
limited comparisons available. Most firms general;-, pay a similar wage rate for an
tem
overseas position adding on a relocation premium.
pt
Thus, all jobs are ranked according to their worth and surveys then help determine
pay scales for similar role in the labor market. What now remains is the final
element: the important aspect of compensation - pricing the jobs.
ed on
'■ paid
»ow is Pricing Jobs When setting wage rates - that is, the price of a job, it must be matched to its value in
ttion? the labor market.
e are Pay Levels

arfcet. It is the pay level for any job that reflects its worth. This is determined by its ranking
ance; set by a team of specialists and then by looking a: what similar jobs are being paid in
ional the job market.
ite in
labor
Tg
to
ason
,
took 2 Chapter: Compensation and Protection
Vhe
n fe
to
peof
To set the right pay level, the internal rankings and the survey wage rates are combined through the
graph called a Scattergram. As Figure 3-5 shows, the vertical axis is for pay rates. If the point system is
used to determine the ranking of jobs, the horizontal axis is for points.
This is created by plotting the total points and wage level for each key job. Thus, each dot represents
the intersection of the point value and the wage rate for a particular key job. For example, key job A,
in is worth 500 points, and is paid PKR 60 an hour. Through the dots that represent key jobs, a wage
trend line is drawn as close to as many points as possible.
The wage-trend line helps determine the wage rates for non-key jobs that are those jobs that have not
been surveyed for. To do so, a point value for the non-key job is located on the horizontal axis. A line
is then traced vertically to the wage-trend line, then horizontally to the rupee scale. The amount on
the vertical is the appropriate wage for the non-key job.
For example, non-key job B is worth 700 points. By tracing a vertical line up to the wage-trend line
and then across to the vertical (rupee) scale, it can be seen in Figure 3-5 that the appropriate wage
rate for job B is PKR 70 per hour.
Figure 3-5: The development of Wage - Trend line

Non-key Job Key Job ^ Wage Trend Line
100 200 BOO 400 500 600 700 800 900 Point Values
The Compensation Structure

Since most organizations tends to have over a hundred employees, some of whom don’t have any
significant differences in their workloads or pay scales, it would be extremely complex to determine
the pay rates for every single role individually.
Thus, what analysts generally do is group jobs together into classes. When grading jobs, they are then
awarded points and pay scales accordingly. Compensation analysts find it more convenient to lump
jobs together

into job classes. Thus, all jobs in the same class receive the approximately the same wage rate.
However, a problem with this approach is that exceptional performance cannot be rewarded. In order
to be able to do so, workers must be moved into a higher job class. This then also affects all other
employees working within the same class. A solution used is when organizations adopt a set of rate
ranges for each class.
These ranges are simple pay ranges within each job class. So this means, there is no single flat rate to
be paid to all employees within the same class, but there is actually a range based on which some can
outperform the rest and actually earn more based entirely on merit.
There is a range between which employees can compete, but once they reaches the top of the rate
range, no more wage increases will be forthcoming. It is at this point where the organization will
decide to reward them with either a promotion, or increase the range for the job class in general.
This is a method that employers use to link compensation with employee performance and its
contribution in the organization. The costs of compensation, bonus, etc all fluctuate
s and Gain
based on the organizations overall performance.
Sharing
Ahmed Electronics hasn’t laid off a worker in more than three decades. Even during the
severe recession of 2007, when the company’s sales plummeted by 40%, employment stayed steady.
Workers reduced their hours, and bonus payments fell from a total of PKR 25million in 2005 to PKR
io.2million in 2007. The combined result: the average production worker’s pay fell from PKR 50,000 in
2005 to 25,000 in 2007
Although it for allows a lot more flexibility in managing the cost of labor, there are still issues that
need considering before this method is adopted into the overall compensation plan. The HR should
taken into consideration the purpose, payout levels and the overall administration of this approach
Some of these issues are summarized in Figure 3.6 on the following page.
non and Protection 133

Figure 3-6: Key considerations in designing Incentives and Gainsharing approaches
Purpose of non- Why is non-traditional compensation under consideration?
traditional compensation What are the key goals of this non-traditional compensation program?
Eligibility Who will he covered under the non-traditional compensation program?
Coverage Where will non-traditional compensation be applied? All facilities?
Payout standard
What will trigger an incentive or gainsharing bonus? When will it be paid?
Administration
How will the program be administered? By HR department? By line management? Both?
Incentives Gain sharing are compensation approaches that reward specified outcomes. Incentives are
linked to individual performance and reward them accordingly. Gain sharing is meant to target
groups (or classes) of employees simultaneously, and reward them for their overall performance and
contribution.
Such methods have over the years boosted employee morale and motivation levels. They are also a
way to build upon employee loyalty. Many different incentive systems exist, and they take into
consideration several criteria before allowing employees to qualify for the additional benefits they
can receive as a form of compensation.
Other incentive methods that can be used are merit raises, piece-work, production bonuses,
commissions, maturity curves, pay-for-knowledge compensation, and non-monetary and executive
incentives.
Gain sharing is a means of sharing the additional earnings of the organization and a boost in its
performance by rewarding the employees who have contributed to it. These approaches include
production- and profit-sharing plans. Also popular are cost-reduction methods such as Scanlon,
Rucker, and Improshare.
The Purpose of Non-traditional Compensation

Incentive systems link compensation and performance and reward employees for their actual results,
and not for the hours they clock in and the years they have worked for. Employees then realize that is
their level of productivity and their performance that determines their income, it is a more efficient
and frequent way of boosting employee productivity, as rewards can be reaped on pay day every
month.
Since workers gets to see how they can improve their pay scales, they are bound to remain motivated
and productive. It is also beneficial for the employer, as rewards are given out when the organization
is performing better and not for extra hours worked, regardless of the outcome.
As one economist observed:
“With fixed wages individual workers also have little incentive to cooperate
with management or to take the initiative in suggesting new ideas for raising
productivity. At the level of the individual worker, higher productivity has no
immediate payoff as wages are fixed for the length of the contract. The
immediate effect of higher productivity is, in fact, negative. Less labor is
needed, and the probability of layoffs rises.”

The idea behind this method is improving employee performance and
increasing efficiency levels. However, it must also be understood by the
management what exactly they want to achieve and what are their reasons for
taking onboard this method of compensation. Does management seek to
increase sales? Reduce costs? Improve quality? Spur innovation?
Ahmed Electronics, for example, strives to be a low-cost, high-quality

producer. Piece rates for most hourly paid employees provide incentives for
fast, low-cost production. Quality is maintained by returning reworks to
those who produced defective products and adjusting the bonus ’’points”
earned by workers because of high or low quality.
Eligibility and Coverage

The management must also determine who exactly is eligible to qualify for
these forms of compensation. This is a crucial aspect as it will affect employee
motivation and productivity. Eligibility may differ for different incentives and
gain sharing programs, even in the same firm.
As is' the case at Lincoln Electric, hourly paid workers get individual
incentives (piece rates), while managers and workers share in the profits.
Individual incentives, such as sales commissions, work best with cooperation
and teamwork.
System Incentive methods are used in all types of job roles. They can either make up all
of the compensation that is earned, or a part of it in addition to salaries. The
more common incentives are discussed in the following pages.
Piece-Work
Piece-work rewards employees for every single unit of output produced. Wags
can then be rewarded by a fixed amount added on for each unit. Total wage is
that fixed rate multiplied by the total produced in a period.
Production Bonuses
These are additional wages that are rewarded to employees who produce over
the desired quantities that were expected off them.
me Protection 135
Commissions
In sales positions, a certain percentage of every sale made or a fixed amount is paid
to the sales person who makes the deal from every unit sold. This may or may not
make up the employees full wage for the period. Real estate agents and automobile
salespeople are often on this form of “straight commission.”
Maturity Curves
Some employees can end up reaching the top end of their rate range. In such
situations, they can either be promoted further as a form of reward or they can be
placed on a maturity curve. These make adjustments for people who are top of the
rate range in selected job roles. Employees are rated on productivity and
experience, and the best performers are placed on top of the curve, as shown in
Figure 3-7.
The relatively less outstanding workers are then placed below them, and so on. It
is by this method, that all high performers can be continuously rewarded for their
dedication and motivation even after reaching the top of their rate range.
Figure 3-7: Maturity curves for professionals with varying degrees of performance
Point Values
Merit Raises
The most commonly used form of reward in the incentive system is « merit raise.
These are pay rises given to employee based on a performance evaluation. These are
normally decided by the line manager, in consul'
with other members of the management. They are rewarded to high performing
individuals, but are not restricted to any standards or limits.
r
Their limitation is in their execution - w hich can be affected by bias. In such scenarios,
exceptional performance can go unrewarded, and average performance might just be
rewarded. It also communicates to the workers that instead of quality, quantity is what is
expected of them. Also, if almost the entire workforce is rewarded with a merit raise at
the same time, it loses its meaning and can be seen as a general pay rise instead.
Dissatisfaction by those who have not received a merit increase can also be a source of a
Human Resource Management and Organizational Behavior j Reference
problem, especially if it is due to bias.
Pay-for-Knowledge Compensation
This is mode of compensation that provides employees an incentive to learn more. For
each skill they master, or new task they learn, they are rewarded for the knowledge
gained. So it is not about what they do, it I more about what they know. These rewards
are beneficial to the employer, because those with a larger variety of skills can be moved
around flexibly based on the organizations requirements. This may also lead to a
reduction in the total workforce size, saving compensation costs to the firm instead.
The higher the pay rate is, and the more diverse each work role is, the lower
dissatisfaction is expected to be. There should also then be a low employee turnover rate
as well as decreased absenteeism, as employee morale is expected to be high.
ABC Station facility makes electronic assemblies for military radar. Each worker averages
12 assemblies a day, compared with a more traditional operation in Dadu where
employees average 1.5 assembly per day. Although part of the difference stems from ABC
Station plant’s investment in automated equipment and its use of teamwork, some of the
difference can be attributed to the plant’s pay-for-knowledge compensation system.
Under this site’s pay-for-knowledge approach, employees can increase their annual
salaries by 60 percent in three years, depending on how many jobs they master. As each
new job is mastered, the employee receives a pay increase.
Non-monetary Incentives
There can also be forms of incentive that are not tied with monetary compensation. This
can be in the form of employee recognition, sponsored holidays, giveaways and so on.
These are commonly used to motivate sales staff, besides the monetary compensation
that they may be receiving.
Some job roles are also popular because of the benefits associated with them. Beyond the
financial gain, there might be certain non-monetary
■®:~e‘5ation and Protection

“The new reward systems are being built around performance measures that will constantly
propel managers to obtain long-term benefits for the companies.”
According to compensation experts, a top manager’s salary should be based on:
■ Company size
■ Profitability
■ Return to shareholders of the company
■ The complexity and importance of the job
Due to the volatile nature of the stock market, incentives might be more effective if they
are linked to improvements in aspects of the organization that executives do control. For
example, weighted incentive systems reward executives on the basis of improvements in
multiple areas of business performance.
Deferred stock incentive systems award stock to executives over a period of time. This
not only acts as an incentive for the executive to stay onboard until the stock is owned,
but its value is also derived from what the executive has contributed in improving the
company’s performance during this time.
Gain sharing matches an improved company performance with some sort of financial
Gainsharing
distribution amongst the employees. For increased feelings of equality, gainsharing
Approaches
also tends to include supervisors and managers. Employers with gainsharing are also
much more likely to share their financial and non-financial information with employees,
thus making them feel more involved.
In recent times, the use of this method is rapidly increasing - as it can be customized
based on individual plans or specific groups. Most gainsharing tends to falls into four
broad categories:
Employee Ownership
This is the most motivating, as employees begin to own a share in the company they work
for. Many companies now have stock purchase plans that allow workers to purchase
shares in the company. This results in these employees “owning” a stake in the company,
and thus sharing in its achievements dividends and stock appreciation.
An approach that is now company used by organizations is called ESOP—employee stock

ownership plan. These can be formulated in several ways, with the main idea that
employees can buy or hold stock in
stion and Protection 139

the company. Stock may be “sold” to employees, who may “pay” for the stock by
accepting stock shares instead of pay or pay raises. Sometimes employees might just
buy stock as a way of helping a company pay off a debt.
ESOPs can be used in other ways that can be called creative financing. The ESOP as a
separate legal entity may:
Buy the stock with borrowed money secured by the stock and employee pledges
■ Buy the stock with the funds from a tax-deductible contribution made by the
company (an owner wanting to sell his or her interests may authorize a tax-
deductible contribution to the ESOP so it can buy the stock, leaving the owner
with cash)
* Create a new employee benefit when a company contributes new stock issues to
the plan
■ Make public companies private, spin off or divest subsidiaries, or even save failing
companies
Production-Sharing Plans
Production-sharing p\ans aWow groups of workers to receive bonuses when they go
beyond the levels of output that were expected of This is a short-term approach and
is quite restrictive in nature related to very specific production goals.
However, by using this plan, workers are motivated to act as a team collaborativdy
work towards improving overall productivity.
Profit-Sharing Plans
Profit-sharing plans are when an increase in company profits is with the work force.
Although this may result in a motivated work it may also mean that those who have
not contributed to the su~- are also reaping benefits from it. Some companies further
r the effectiveness of the incentive by diverting the employee’s share profits into
retirement pians. By doing so, its affect - of achieving ~ motivation levels, is lost and
becomes more subdued.
If this plan works out as envisaged by any organization, it can having a

positive impact on the overall organization, and can considerably on
employee dedication and morale.
One example comes from the XYZ Velvet Company, a leading of velvet.
Located in the rural seacoast town of Sindh, XYZ Velvet is largest

manufacturers of velvet cloth in Pakistan. Within a .
Human Resource Management and Organizational Behavic'

stable industry whose product and process have not changed substantially since
inception, XYZ Velvet has become a model of economic efficiency and effectiveness
through the development of a “people-oriented” organization. The company has
experienced great success through the mechanisms of a profit-sharing plan (on top of
high wages relative to the industry average) and open, sincere, personal communications
based upon a healthy and cooperative management-union relationship.
Cost-Reduction Plans
Group incentive plans are criticized to not always reward the employees’ efforts. If profits
decrease despite the contribution of the employees, - due to recession - it is the workers
who will suffer.
Another method that can be used is to reward workers for something they can control -
labor costs. The idea is to reduce costs, by allowing a committee of employees to be
formed that may facilitate the communication of new ideas. This also allows workers to
make a more involved contribution in the firm’s day-to-day operations.
The best and most popular approach to use is Scanlon Plan, which bases bonuses on
improvements in labor costs, as compared to past trends. Employees can work towards
reducing labor costs, and then have a share in the savings made. If employee productivity
increases, while labor cost decreases - this savings is then shared with the employees as a
bonus.
Rucker and improshare plans us a similar approach to Scanlon, but differs in how
bonuses are calculated. All of these methods differ from profit sharing as they focus on
labor cost reduction, which is something the employee can have influence over, instead
of that which can only indirectly affect overall profitability.
All of these methods aim to reduce costs, alongside gaining increased loyalty and
commitment from the workforce. Improshare, for example, focuses on reducing labor
hours as a means of reducing costs. Rucker seeks reduction in labor and material costs by
including these reductions in the calculations of gainsharing bonuses. The Scanlon Plan
focuses primarily on labor costs and quality of work.
SJ rcensation and Protection 141

Employee Relations and
Part 4
Assessment
Chapter 4
■ List and describe the employee relations challenges affecting

workplace productivity
■ Describe the role and importance of a union in any organization
Employee Relations Introduction

Challenges Intense competition in both local and international markets compels companies
to boost productivity. Practical and active managers and HR departments try
to find means for achieving this goal. Majority of these strategies focus on
employing new capital and advanced technology, however, some companies
look towards bringing improvement in employee and employer relations.
Capital investments, usage of technology and employee relations are factors

that hold sway over a company’s productivity. Capital and technology
strategies are the life blood of a company but employee relations is the next
most important issue that can help bring a change. HR departments strive to
foster better relations with employee to further their overall productivity.
For any worker comfortable/good work conditions, good supervision, suitable

salary, additional benefits, and nature of work, interesting and challenging,
make up the Quality of work life or QWL. Organizations aim at attaining
high QWL which would indirectly lead to greater productivity. Through their
efforts at high QWL companies ensure tha: employees would make effective
contributions to enhance company productivity. One way to do so is to give
employees a heightened sense of self worth by including them in the decision
making process.
In the past, organizations were used to tapping into the worker? energy and
sweat but did not attach any value to their brain power. J thus causing the
employees to attach little value to the firm’s success an failure resulting from
their unilateral decisions. In severe cases, where the rules are being devised
by the management and union as a collectr** bargaining agreement, the
outcome turns out to be an “us versus therrfl competition. Formal rules
substituted cooperation while teamwork ~*OB barely seen. However this
team work rarely bridged the gap between titf
142 Human Resource Management and Organizational Behavior | Reference

workers and the productivity suffered. Nonetheless a change :n dynamics, such as
international firms gaining a foot hold in : markets has forced organizations to
change their approach to er relations. Also the mind set of the labor became
revolutioniz new generation of workers had different work ethic, different mcfl and
different expectations from their managers. They were mon of their rights and
responsibilities and wanted greater know how the inner goings on of the firm.
Thus QWL gained greater signi in the world of business.
Role of the HR Department

Firms all over the world ensure that QWL and productivity effo: part and parcel of
their organizations work. However the way < degree to which they use the HR
department for this varies g, Some firms employ a separate executive to look after the
efforts person has a small group under his command and gets assistance the HR
department for things like formulating and conducting su about workplace attitude
or employee training. In other compank HR department is solely responsible for the
task.
Managerial support, particularly, top management’s suppoi absolutely necessary for

running a quality QWL program. Univen it is believed that without such help the HR
teams are able to do 1 to make the program a success. In the absence of complete sup
from all levels of management, departments document the succe: their efforts, in the
area, individually. The HR departments work their own to attain a higher percentage of
employee satisfaction. . other benefits for the organization such as, lower rate of turn
over; absenteeism, greater productivity and fewer accidents. By report their successes
periodically, the teams aim to win over all doubti managers.
A living example of this is Pakistan Telecommunication Limit (PTCL). The

organization’s successful program earned them better sa from phone installers, fewer
strikes, improved work place attitude of t employees and as a result improved
productivity. The documentation their efforts is perhaps the reason they have
continuous support of the higher ups.
The HR function is directly and in directly related to worfa satisfaction. The success of
their efforts is directly proportional to th level of employee’s job contentment. According
to figure 4-i orientatk* employee training programs, one to one or group meeting
employee, career planning and counseling bring manaeetf in "irec contact with their
workers. This provides the emplcsees a 5-enê o
Employee Relations and Assessment

belonging and worth hence greater motivation. The companies HR policies and practices also help create
an environment of motivation. Safety and health policies, compensation policies and other incentive
plans go a long way in either making or breaking a workplace where employees feel worthy and
contented, compensated enough to give their all. Proper safety measures/ policies take away the fear for
personal safety through accidents and industrial hazards, so workers work freely and comfortably.
Generous health policies in times of such inflation play a large role in keeping workers enthusiastic about
work. Liberal pay raise encourages and inspires workers to work whole heartedly, where as poor to no
incentive plans - low pay raises, salary freezes, no health coverage for hospitalization etc - have the
completely opposite affect. The level of employee satisfaction is a true estimate of the degree of success
the organization’s QWL program enjoys.
Motivation, a complicated concept is not easy to apply or use, especially in a work place with hundreds of
workers. What motivates an individual depends on their personality, unique feelings and individual past
experiences. Hence the difficulty that more than one or even two motivational approaches are required to
keep the staff of any firm motivated. Even psychologists have different ideas about motivation.
Organizations are forced to rely on some basic guidelines that can help in certain situations only.
Motivation is a desire to do something that comes from within a person, in other words a man does
something because he wants to not because he is compelled to. If an individual is pushed to take an
action, he or she does it only in reaction to the pressure, like companies are forced to lower prices due to
competition; they don’t want but have to. Motivation is when you encourage some one enough to awaken
a wish, a longing to do or achieve something. They do it because they feel that the action is important for
them and would satisfy some urge or need of theirs.
Figure 4-1: Influence of the FIR Function on Motivation and Satisfaction

Job satisfaction is about how much gratification or pleasure a worker derives from his or her work and like
motivation it is influences by the environment. Job satisfaction is based on job design, meaning jobs
providing greater behavioral gratification; such as more freedom or autonomy, greater task variety,
important tasks assigned, and pleasing feedback from the supervisor, are personally more satisfying or
fulfilling for a worker. Similarly, great importance is assigned to orientation, as being accepted by the
workgroup, is a source of great satisfaction for the worker. Each of the above mentioned factors either add to
or deprive the employee of the anticipated pleasure and fulfillment. Figure 4-1 also looks into level of job
satisfaction and employee is expected to get from the tasks. This is important for any firm as it directly
affects absences, turn over and other personal issues, like grievances or felicitous events. For gauging
employee satisfaction, firms and their HR specialists use some indices and also hold regular surveys. These
show the employees feelings and thoughts and also what could be done to heighten their sense of
satisfaction. However, it must be kept in mind that the way specialists carry out the surveys or handle
employees also influences their gratification levels.
HR departments that adhere to rules in a bureaucratic or over zealously religious fashion attract employee
discontent. However departments that run the program on a humanitarian basis are successful in garnering
contentment, motivation, growth and approval from the staff. This leads us to the question “Does
satisfaction lead to better performance or vice versa. What comes first?” Actually, the relationship between
the two is a bit intricate as they are interdependent. Studies have shown that high and low performance can
be linked to high and low level of satisfaction, but which causes which is hard to say. Studies also indicate
that this lack of knowledge about the cause is not strange as contentment and success are not the only
players; motivation also holds an important place in the equation. Satisfaction and motivation are two
different things. The fact that a worker is satisfied does not mean that he is motivated. He may be satisfied
because he does not have to commute to great distances, or because the tasks assigned are easy, or he is
comfortable in the workplace environment etc. Similarly, a hard working person may not be satisfied. The
reason he works hard could be his strong work ethic, fear of punishment or discipline or most importantly
his religious belief about honesty at work. Why is the relationship between performance and satisfaction so
undecided? The answer is another factor, REWARDS.
*f :ns and Assessment 145

Rewards
Reinforcement
Environmental System
job Itself Small Groups
Organization External
Performance Environment Satisfaction
Employer
Motivation Self
image Self-
Inner drives esteem
Self-expectations
Needs and desires
As the bottom of the figure shows, all employees come to their job with
certain expectations, needs and desires. If the rewards provided match the
employee’s expectations than satisfaction is achieved. When an employee
performs well he or she is rewarded, if the reward is viewed as just and fair
return for his/her efforts, then improved satisfaction is the result. Conversely,
if the employee feels the reward does not equal his effort level, it leads to
dissatisfaction. As, the rewards bestowed affect their self image so it also
influences his or her motivation level. If the employee feels appreciated and
worthy he would be motivated and would perform better. But if he feels
neglected or unappreciated he which get de-motivated leading to a dip in
performance level. The relationship of these factors is continuous and it’s
difficult to judge what affects what and how.
QWL through Employee Improvement

QWL uses a number of methods to enhance productivity but the most
commonly used one is ‘Employee involvement’ or (El). In this firms involve
them or take their input for various issues related to production, issues that
affect them and their relationship to the organization. El makes the employees
develop a sense of ownership and hence a heightened sense of responsibility
towards the company, its products and its policies, everything they
participated in. This is one feeling that ensures better performance from the
employee hence indirectly ensuring enhanced company productivity. But to
make full use of it companies should ingrain it into their organization’s culture
and the s ys o\V .
Human Resource
Management and
Organizational
Behavior | Reference
Boo*. 2
Workers today are far more intelligent and aware of their opportunities and
rights then they ever were in the past. They seem to have far more choices and
due to the increased awareness, they don’t take any order without question,
they decide for themselves if they would follow the order or not. In short
QWL has gained immense importance in the workers as well as an
organization’s life. QWL of a workplace can be judged by the feelings of the
employees for the organization. According to a study a long term hike in
productivity should be matched by an increased level of QWL, if the
management of the company wants it to flourish. However in short term,
some despotic firms manage to achieve higher productivity while leaving the
level of QWL in a continuous downward spiral. In the long term they suffer
for this as they are unable to maintain their productivity standard. The falling
standard of QWL leads employees to leave the company for better prospects.
This withdrawal contributes to an increase in absenteeism and turnover rate,
poor QWL rate. Even if an employee does not withdraw physically, he
withdraws emotionally and does not put in his hundred percent. In such cases
employees limit themselves to their assigned tasks and don’t bother with
anything extra, they stop caring and don’t share the company’s interests.
Eventually this results in falling productivity, thus proving that ‘Employee
Productivity and QWL go hand in hand.’
Another observation in the same study was that at times workers report
higher plane of QWL for their own satisfaction and create a false sense of
value. The reason, people want to make a contribution and want to know that
they made a difference. This should be an indication to the company
managers to create an environment where everyone is treated as an expert at
their jobs. Managers create the ‘Pygmalion effect’; share their high
expectations from individuals. The employer’s good opinion motivates the
employees and they do their best to fulfill those high hopes, thus increasing
employee productivity. If the management is clever about it they can take
advantage of this heightened motivation to upgrade not only QWL, employee
productivity but also the raise the level of ideas, decisions made in the firm.
This can be done by inviting ideas and opinions from workers, hence giving an
elevation to their sense of belonging and worth. Common approaches for
enhancing QWL, via El are given below.
Quality Circles
Quality circles’ were first started in Japan, to perk up the quality of products
produced in Japan, they were called, ‘Quality Control circles’. They are small
groups which comprise of a handful of employees and’an elected leader. The
employees schedule regular meetings with the leader to discuss and overcome
their work related problems.
N ations and Assessment 147

Origins of circles
In the after math of World War II, Japan faced a shortage of raw materials,
finance etc. the only thing they had in abundance was human resource. Up
until 1950 and 60s the term ‘Made in Japan’ carried no weight as it was of very
poor quality. The Japanese government had realized that to progress they
needed to export and for that they had to overcome the shortfall in raw
material and the only way to do that was to import it from abroad. This would
help them make products that were of a suitable quality and would be saleable
in the world market.
In 1960, based on behavioral research done in universities and factories,

Japanese, with the help of US experts, developed the concept of‘Quality circles’
which they applied in Japanese factories. They started using it as a means for
improving quality, but later became part of the routine procedures at most
firms. In 1980s most medium and large sized companies had started employing
them.
Unique characteristics
QC membership, for all, starts as a voluntary activity. The leaders, who are
usually supervisors, are briefed about them and are asked if they are interested
in starting a group. If yes, they then brief their (usually hourly) workers about
the group and again extend the invitation of membership. The leaders then go
through a two to three day workshop, where they are made aware of the
philosophy behind the group, small group dynamics are discussed and leader
ship skills are taught. A day is spent discussing the different approaches to
problem solving, brainstorming, cause-and- effect diagrams and other
techniques, as explained in Figure 4-3.
FIGURE4-3: Decision-Making Tools for the Quality Circle
Brainstorming
A topic is provided and the groups have an open ended discu session.
Some circles do request that members present their ideas in to ensure
that each one participates.
Pareto Analysis
Data about ‘types and causes of production problems’ is collected
presented in the form of a Bar chart. It is collected by the workers the
supervisor and provided to the workers. Workers arrange the problems in
descending order of frequency. The bar chart helf identify the most
pressing problems, and they are then listed in order.
Human Resource Management and Organizational Behavior | Refe-

Cause And Effect
A known probe or ‘a fish bone’ is selected and put in front of the workers.
They brainstorm causes and effects of these problems. It is called ‘Fishbone’
because of the structure of the diagram. After the possible causes have been
identified, the members collect the data and try to see if
there is a relationship
between them
Statistical Tools
Workers are taught statistical tools which they use to identify production
problems, objectively. Some of these preferred tools are random and
probability sampling, computation of arithmetical mean and variances.
___
One day is reserved for an intensive training program about the

abovementioned problem solving techniques. Also, the workers get :o know
about the role of their supervisor as their discussion leader and an explanation
of the concept behind Quality circles. Next step is for the employees to select a
problem they want solved. At times the management might saddest some
problems but even then the workers :hoose the one to tackle first. The
selection process does not involve voting, everyone has to agree for the
problem to be brought under consideration. Any urgent, pressing problems
the management has should be solved by the management itself. The group’s
purpose is not :: ~nd solutions for the company’s problems; its purpose is to
solve the v ■ r rkers troubles. That is why consensus is used, so workers can
work on : he >sues that bother them the most.
A lowing employees to select the problem also has other benefits, as i r such
as; it keeps them motivated, gives them a sense of belonging. £ enrually they
want to remain a part of the circle so they can solve rr important issues.
9C Process
We—r ;::on of the training then leads to weekly meetings of the circle. T5-:
ir_es the group is allowed to address are ones that are part of their IKS i: . ark.
They range from; Company pay policies to union contracts, iflt7i~~ent specific
issues. Personality issues are of no concern to the 03Lt is ‘hey are there to
decrease their work stress and make their job :■ But before they start some
basic ground rules for the discussion ta . j n by the team leader.
fecal solution is presented to the management as a suggestion for i BE the

issue and it is now up to the management to accept or n - ;ase of rejection
the management is suppose to explain the rthind and in case of
acceptance they give the circle a time
frame for implementing the solution. After this the circle shifts focus onto
another pressing matter. It is an ongoing cycle that continues until, either all
issues are resolved or the group decided to call it quits. Normally workers
disband the group when the leader becomes over bearing and starts ordering
them around, not listening to their suggestions. In short when the leader starts
acting as their boss. Also repeated rejection of suggested solutions from the
management tends to dishearten the workers and they decide to disband the
group.
Facilitators and Circle Coordination

In case an organization has more than one circle, a line manager or an HR
specialist is appointed to the post of‘Facilitator or coordinator’. This job entails
supervising all the groups, coaching supervisors and compiling reports of the
meetings and presenting them to the steering committee, which comprises of
the top management. But before all this the facilitator has to go through a
training session, which focuses on many things. Their training includes a
briefing about ‘What are Quality circles?’ how to administer a QC effort,
sessions on teaching and consulting skills, lectures on learning about group
dynamics and how to coach supervisors. IT is imperative that a facilitator have
exceller: interpersonal skills. Once the circles start their work the facilitator
can serve as an advisor for the supervisors in need of additional he'?. They also
help form a bridge between the circle and other personnd or experts in the
firm. This allows the circle access to expert advice information required for
solving problems.
Costs and Benefits of Quality Circles

The expenses incurred on the circle are limited. They indud| developing
material for teaching and training all related person supervisors, facilitators
etc. The largest chunk of this expend’ the salaries paid to the workers,
supervisors, and coordinators they are in training. However, managers
don’t consider the : in the hourly meetings, a loss or expense because these
work to complete the same amount of work in 39 hours that they hours. So
the circle meetings don’t interrupt or hinder their
The use of these circles tends to improve the relations between and
workers as they are meeting in a democratic enviroi of an
autocratic one. Thus in the long run QWL is improv these
employees learn to be more systematic in their work process. This
is because when solving a problem, they s> out or include solutions
and then work out the cost effe. proposed solution. These circles
also serves as employee program as the employees participation in
the ho'-irtoj managers spot and pick out potential future superv

Also companies see this as an opportunity to train these people by allowing
them to apply their newly acquired skills. This may lead to the formation of an
increasingly large group of managers and HR specialists with extraordinary
interpersonal skills.
Team Building Variations

Organizations used a variety of methods for team building and QC is one
effective method for that.
Socio-technical Systems
Such systems are used to further the QWL efforts by firms. They aim at
modifying the work environment and at times very radical changes are
witnessed, where this process is used. It is used to restructure the tasks, the
work group itself, and the relations between the worker and the technology
being used.
Indus Motors in the past used a traditional work environment for assembly of
electronic parts. There, workers performed a simple task repeatedly and spent
less than a minute on each unit or machine part. Now they have specially
designed ‘work islands’ where three to seven people work and they can not
only rotate jobs, hence avoiding boredom, but also socialize. This has lead to a
higher level of QWL.
Ergonomics is the study of the relationship between physical attributes of a

worker and the physical demands of his job. This study aims at reducing the
mental and physical stress of a job while heightening QWL. The automobile
industry uses it along with socio-technical systems to revolutionize assembly
line production. They have proven to be world leaders in using these systems
to lessen job dissatisfaction and boredom. Employees no longer have to waste
away after one mindless yet tedious task.
Little things such as raising or lowering the work stations, relocating handles
to an easily reachable height or place, and fixing parts bins that are slightly
tilted- to provide ease in extracting part- can help reduce a workers stress level
considerably.
Code Termination is a term that stands for Industrial Democracy. Formal

sessions are arranged where the workers meet the company management to
share concerns and decide worker related key issues through voting.
Autonomous Work Groups

El is encouraged by this rare method also. The term refers to work groups or
teams of workers that don’t have any company appointed team leader. In such
groups all issues are addressed by the team members
=nd Assessment 151

with mutual consensus and they often resolve problems that might have been
handled by a supervisor in a different approach.
They enjoy a high degree of self determination in the management of their

daily tasks and have a collective control over certain parts of their jobs, such
as, pace of work, distribution of tasks, organization of breaks, and even a say
in recruitment and training of new employees. Due to this more often direct
supervision of workers is not deemed necessary.
It is expected that QWL will improve in the years to come as the workers
today select jobs based on appropriate behavioral features. The new
workforce comprised of educated individuals is eager for jobs that are
challenging and offer some degree of autonomy. Also participation in
decision-making process of the company is extremely desirable for them.
However the slow birth rate in Industrial countries may lead to an increase in
the shortage of new workers.
Union- Sound HR practices and efficiently functioning HR departments don’t rely on

Management Labor Unions for their success in employee relations. Absence of unions does
Relations not signal the end of an organization, neither their existence guarantees
Introduction success. HR professionals and line manager? are always present to cater to
this area. However, in the presence of a union their roles change considerably,
as they have to comply with some rules dictated by the government and some
laws born of the union-management discussions. Due to all these constraints
some organizations prefer a union free environment.
Union is viewed by different firms in different light, some see tbeaf as

outsiders/strangers and others view them as an essential part or r company.
Increasingly fierce competition in domestic and worldir market compels firms
to remodel their union-management relatii making it more cooperative.
Before we shed light on this new treni cooperation, the major characters of
this union-management story be introduced. The affect of the union’s goals
on the HR manag and the role of the government along with its laws for the
will also be highlighted. Last but not the least will be an a the reasons, for
which workers join unions and a review of the organizing process.
There are in total three parties that contribute to the union-map

framework. They are: the workers and their representatives tke the
company’s management, and lastly the government re_
— i.e. judiciary, executives, and legislation makers.
functioning of the cycle requires all parties to do their
Human Resource Management and Organizational Behavic'

are all interdependent. For instance, the union is dependent on the company
for the successful running of the business and creating jobs for the workers. It
also relies on the government to shield and protect the rights of its members.
Government protection mainly prevents employers from firing workers just for
the fear of them joining or starting a union. The management relies on the
unions to fulfill their commitment with justice. They both depend on the
government for the fair enforcement of laws to which they are both subject. In
turn the government expects both parties to provide the buyers quality
products and services, to fulfill public’s needs.
Figure 4-4: The Interdependence of Unions, Management and Government
Nevertheless, all three parties can’t be considered equal, as obviously the

government holds sway over the other two due to its power to make or modify
existing laws. So, the corporations and union make the most of the situation
and try to coexist in harmony. For instance, a powerful union can get the
management to grant concessions, by holding a threat of a major strike over
their heads. Similarly, a powerful organization can get a weak union to kneel
down and desist from their demands. In this case chances of a damaging strike
may be non existent. Recently the balance of power has shifted in favor of the
corporations. The reason, tough competitions and import of foreign counter
parts of organizations products. This has lead companies to take a stand and
confront the union with the choices of:
1. Take whatever pay and benefit cuts the firm offers or,
2. See the firm go bankrupt or move their business elsewhere
As it is a lose-lose situation for the workers, so unions have been seen giving
up their hard-won work place rules and settle for limited gains
;!:ons and Assessment 153

or even pay cuts. The future state of this issue depends on increase or decrease
in competitive pressure, ability of unions to influence the government,
through national politics and the union’s internal cohesion. If they stay united
and put enough pressure on the government, the situation might improve.
Ups and downs and swing in the balance of power is pretty common, but it is
of note here that this structure of labor-management relation is very resilient.
The evidence being that it has been in existence since 1947. The look of this
structure has evolved and become refined as the partners have also advanced
overtime. This bond is also flexible enough to cope with and even out last
numerous legal, social and economic challenges.
Labor unions tend to change the whole dynamic of the relationship between
Labor Unions and employers and employees, also changing the work environment. They
HR Management specifically alter the roles played by the HR experts and supervisors, since their
level of freedom and day - to-day activities are limited by additional laws and
rules. However, the atmosphere remains same in some ways. For instance, the
responsibilities of the supervisors and HR professionals stay the same. Profit
objectives and budgetary goals are one area that is not discussed or bargained
on with the union. Neither does the union reduce the need for effective HR
procedures. In short, the management is still in charge of managing and
running the firm as well as the HR department, union does not affect them. To
understand the degree of the union’s influence their goals and structure should
be understood.
Union Goals and Philosophy

Like all other systems unions also are formed to achieve certain aims and
objectives. Their purpose and objectives are dependent on the ambition of
their leadership, the wishes of its members and its strength, both financial and
size based.
These were internal factors, but there are some external factors also that
influence them. These are a following:
* Financial condition of the employer
* The gains of rival unions
■ Inflation and unemployment rates and
■ Government policies role in swaying the union’s demands
No matter the changing condition of the factors, there exists a common core of
unmoving goals. These common goals are the purpose of the

formation of a union, namely protection of workers, increase in worker’s pay,
and improving working conditions. So in a way a union is a business which can
ensure its continued existence, only by providing the services it was created
for, this is known as, business unionism. If a union does not fulfill its core
purpose it might cease to exist, as it is useless. The union is also supposed to
take care of broader social and political issues that relate to their workers, or
the socio-economic concerns of its members. This is known as social unionism.
For this unions support or oppose government programs and even go as far as
striving to get a favored politician elected. Figure 4-5 explains the trade-offs.
For example, when the union trade-offs or bargains with the management, as it
wants high pa^ and good working conditions.
Figure 4-5: Trade-offs faced by unions under business and social unionism
Business Unionism Maximize number of Maximize pay and

OR
employed members benefits of members
Social Unionism Maximize welfare of Maximize welfare of

OR
members working people
However, higher cost per worker results in the organization cutting back on
job positions in the company; it may even fire workers, and increases their
reliance on mechanization. Trade offs made under the head of ‘social
unionism’ are less apparent. Here the labor organizations are under duress on
whether to maximize the benefits to all workers, hence minimizing the
benefits for the union’s members alone. HR departments and officials are
influenced by both business and social unionism goals, as most incentives
were borne out of the pressure exerted by the unions. Firms that do not have
a union in their midst, also give their employees benefits in order to stay in
the running of successful companies and more importantly delay
unionization.
Union Structure and Functions

Authors believe that the growth and expansion of a company results in loss
of contact between managers and workers. To make up and over this loss of
direct contact labor unions are formed. Unions help workers exercise or take
come degree of control over their jobs and work environment. When
employees face wage cuts they turn to the unions for assistance in ceasing
the cut. (This happened in the past. But today, such pressure from the
workers tends to start rifts and divide the union
•ee Relations and Assessment 155

into factions.) Earlier when the business world was made up of small
businesses, an effort to exert such control came from local town unions. Later
development and building of rail-roads extended the boundaries of the towns
merging them into cites and linking them to the entire country. Thus small
businesses grew into large firms. This expansion resulted in the formation of
r
national unions, comprising of members from the whole country. Now w hen
several national unions are affected by the decisions of a firm, they join
together and form multi-union associations.
Local Unions: HR administrations consider local unions to be the most

important of all unions. This is because the revenue, the labor force and power
of the entire union movement comes from them.
Local Unions are of three types:
1. Craft unions
2. Industrial unions
3. Mixed locals
Craft unions are organized on the basis of shared skill or trade among workers
of one geographical area. Industrial unions have both u nskilled and semi-
skilled workers where as local unions have a variety of people working in
different localities. At each location a different local union represents workers,
and they may be a combination of both semi and unskilled workers. A mixed
local union, which is a combination of unskilled, semi-skilled and skilled
workers, it exists today in the Electric utility industry.
The framework of a local union is depicted in Figure 4-6. Starting from the
ground level, we first have the steward, who is most often elected by the
workers. In a mixed or Industrial union any problem that the steward is unable
to handle is passed onto the grievances committee, who in turn present it to
the higher management or the HR department. For craft unions the process is
different. The steward-known as representative- himself reports the issue to a
full time employee of the union or their business agent. This process is called
grievance procedure. It tends to limit the power of the HR specialist and line
managers by questioning and challenging their decisions. A successful
complaint works as a model that helps the union limit any such decisions in
the future. Whether workers would come to the HR specialist with complaints
about the union depends on their experience with the union’s local
management and its image in the o the worker’s mind.
I
Grievance
Committee
iI Bargaining
committee
HMSIMSH

Figure 4-6: Organization Structure of a Typical local Union
A researcher surveyed 3000 members of 9 local unions. He summarizes his

findings saying:
“Local union members were largely satisfied at being a part of the local
union’s day-to-day affairs, with their contract’s terms and the
communications and informational materials given to them by the officials.
Moderate approval and satisfaction was granted to: the effectiveness of union
leadership, the overall worth of union meetings, and the administration of
grievances. The main problematic issues were: inadequacy of union training,
lack of willingness of the leaders to take action on the personal complaint of it
members, and uselessness of their meetings in addressing job related issues.
The union’s contract places the HR specialist and supervisor under even
greater pressure, the HR department has to depend on it for specific
guidelines and is restricted by its rules. This contract lists down the wages,
hours, working conditions, grievance procedures, safety standards,
probationary periods, and benefits of the employees. These are decided in
meetings between the bargaining committee of the unions and the HR or
industrial relations department.
National unions: These head or supervise all the local unions. The work of
these organizations is not only to look after the interests of its members but
also maintaining a staff to aide the local unions in legal matters, carrying out
negotiations, training local officers, grievance handling, and providing expert
advice. The local unions, in return, revert of their share to the national union
and also bound, legally, to
s ;tions and Assessment
follow its constitution and it is by laws. The national union heading the craft
unions often leaves some decisions up to the discretion of the locals.
However, industrial national unions involve themselves with all issues
pertaining to the native workers. An example being that the national union
orders that all bargained contracts are to be signed by it, to ensure equal
treatment of allworkers.
Multi-union associations: are a group of affiliated national unions and

include most unions as their members. Their goal: attain the social unionism
goal of organized labor. This type of union supports the new laws and social
changes that would have a positive impact on the workers as well as the HR
management.
Why Are Unions Unions do not form on their own accord. They are a reaction to an Formed?
unfair act or silence of the management on worker related issues. The
particular reasons for the formation of any union vary a lot as each area and
each industry has its own specific problems. The reason why an employee
joins a union is dependent on his own perception of his job and his particular
needs. However there is always some common ground, otherwise such an
organization would no exist.
Craft Unions
Craft unions offer workers opportunities to learn a craft or skill. They offer an
apprentice ship program that provides a job along with train Hence people
join this kind of union for practical reasons, for ins"' finding a job. For
instance, in construction industry workers are ta on a project by project basis.
After the job is done they are laid off the contractor and they approach the
union for recommendation other firms, in need of their services. Thus Craft
unions do the w job placement and have great benefit. They offer other
services, as such as, as health insurance, life insurance, and pension plans t'
financed through employer payments. Union
industrial Unions
These are formed when HR policies cause mistreatment. HR po’'
affect discipline, layoffs, compensation, job design, and comm are
especially important. When these policies are ignored employers are
acting indifferently to employee needs, a unier formed to bring
changes in the policies. First level manag who link employees and
management. If the supervisor unable to take care of the workers, a
union may be formed is easier to attract members for it. People who
are already put pressure on their peer to join the group. The peer p
superbly on new workers as they are there to make an im
1S8 Human Resource Management and Organizational Behavior

friends, and prove their worth. Pressure can also be used to sway wociers who are indifferent
to such efforts in the past. At times manage—en: may arrange ‘union shops’. Under this all
;
workers are supposes to o;n the union in 30 or 60 days.
Reasons why people avoid unions are also diverse. For instance, a person who wants to be a
manager may see this union membership as a hurdle in their way to the managerial post.
Others don’t view the union as a friend but as another boss, who wants them paying extra
costs. Someone may have heard of an incident that gave them a negative impression of
unions, so they might not be ready to risk it. Lastly the corporation might be so fair and just
in its HR dealing that workers don’t feel the need of establishing a union.
Professional Associations
A majority of professionals, instead of joining unions, link themselves to professional
associations, which help them further enhance their knowledge. The associations these
professionals belong to start functioning as unions when their members are employees. Such
unions are called ‘quasi unions’. Poor treatment at the hands of management has seen much
education associations and nurse associations turn into unions, to protect the interests of
their members. These result from unacceptable HR policies, supervisory practices etc.
Self employed professionals would receive little to no benefits from joining a union, so they
avoid it. Those who work under favorable work conditions see no need for it either.
Organizing a Union
Unions hire professional organizers for developing the frame work for the union; however
the union’s nature depends on the nature of its employees.
Union organizers cannot be blamed for making workers join unions because their purpose is
to provide guidance and assistance to workers. They do brief workers about the benefits of
joining a union. But their main focus is deciding how and by what means the union will
place the workers demands and needs in front of the management. This is done by
discussion about rules, discipline and compensation. Some unions also provide advisory
services to individuals.
Recently it has been noticed that most blue collar people tend to avoid such associations
hence the associations target are teachers, nurses and white- collar government personnel.
ncs and Assessment
Signs of Organizing Activity

By seeking proper signs, HR department can approximate the opportunity of union organizing. A
single set of signs is established in the work environment. An HR department could be prepared to
union activity with a set of questions mentioned in Figure 4-8. The more the yes answers to the
questions in the figure below, the more inevitable the occurrence of union activity. The external
factors mentioned in the figure are out of bounds for an organization and not under its control.
However, these external progresses can help and make the HR managers watchful and pay extra
attention to internal factors that are controllable by an organization.
Figure 4-8: Environmental Factors That May Lead to Unionization
External Factors
• Have any labor commandments influencing your industry changed lately causing the union
organizers’ interest to develop in your organization?
■ Has your company experienced an unexpected increase in the unionization activity?
* Is your organization preparing for an increase in workforce in order to arouse the union
organizers and motivate them to organize the corporation'prior to its expanding magnitude
making it difficult to organize?
Internal Factors
■ All through the increasing previous organizing efforts, has your organization been unsuccessful
in proper handling of the uni complaints?
■ Has the rates of turnover and absenteeism surpassed organization’s usual norms?
■ Has the company fallen short of carrying out the job satisfa surveys? If it has performed
this task, are the trends inclined tow dissatisfaction?
■ Have fringe benefits and rewards to employees plunged down the average industry, community,
or unionized firms rate?
■ Are the workers infrequent in implementing and fail to use company’s procedures for sorting
out employee complaints?
Another set of signs can be the changes in the employee behavior indicating a
union rise is in pipeline. Figure 4-9 mention the various types of behaviors
that FIR professionals and supervisors must look out for. As in case of internal
and external factors, the more the yes answers the more inevitable the
occurrence of unionization. Yet these are only hints not evidence.
A manager noticed some wary activities and reported to the manager.

However she was highly embarrassed on finding out that they were just
signing up her birthday card and presented her with a present. Seeing her
colleagues pass on the card, she thought they were signing up for a union.
Limits on Management's Response

Management’s retort during a union drive is limited in various ways. Unless
an employer is able to attest with evidence that a wrongdoer was
reprimanded in the same way as other employees normally are, the
regimented union supporters can produce devastating legal infringements.
Even an unplanned rise in employee benefits and wages is considered a
violation during an organizing drive as the employer is seemed to be buying
the support of employees.
Figure 4-9: Employee Behavior Suggesting Unionization Activity
* Have certain employees suddenly gained popularity in the organization?
■ Are workers making curious investigation about fringe benefits, wage

levels, raises, promotions, grievance procedures, or other employee-
160 Human Resource Management and Organizational Behavior | Reference
related matters?
■ Do management decisions and policies criticisms appear more vocal?
■ Have the disappearance rate of employee directories increasing?
■ Are employees inquiring management’s response to unions?
■ Are solicited questions being raised about the company’s rules?
* Have employees been discussing the company’s past future group

meetings?
■ Are strangers seen in the cafeteria or parking-lots?
■ Are superiors not included in the employees’ conversations?
* Are cards or flyers being distributed?
* Will management actions be termed as iniquitous labor practices?
■ Will management actions act as a driving force for the corporation?
IN0- Relations and Assessment

The existence of a union organization committee can bring about another constraint. The
committee consists ofthe union drive supporting employees who encourage and persuade their
colleagues to join it. They do this with the help of pamphlets, speeches, conversations, and even
home visits. The objective of the committee id to get the employees to sign agreement cards
indicating employees’ interest in the union. The committee, after getting 30 percent of
employees to sign the cards, approaches the respective government authorities for the
arrangement of representation elections. This election’s result determines the existence of the
union. The committee during this procedure may raise questions regarding the management’s
activities that influence employees, even if its practices are just.
Lastly, unionization creates another concern towards the actions of the management. When any
member of the management commits an unfair labor practice, the organization has to go
through expensive, time-consuming lawsuits. As further validation for creating a union, the
organizing committee may highlight any violations committed by the management. Union
leaders may file claims for the introduction and implementation of new more employee favorable
policies, despite the fact that the actions of the management are lawful.
Human Resource Management and Organizational Behavior | Refe-

Employee Skill Management
Training is an activity that we are all familiar with, either as the person
carrying out the training and/or the person being trained. We will start this
chapter by looking at a definition of training, before considering the various
types of training that an individual may encounter. The next i&pdrts'&n
■ List the steps to training and development
■ List and explain with examples training and development approaches
■ Describe the process of evaluation of training and development
examination of how people learn, and the different learning styles that we all
have.
The reasons why organizations carry out training will then be considered,
followed by a description of a systematic approach organizations may tike to
training. The chapter concludes by considering the different levels of training
evaluation that maybe used by organizations.
Pratt and Bennett (1970) defined training as:
“The systematic development of knowledge, skills and

attitudes required by an individual to perform a given
task or job”
There are various types of training:
Induction training
This is the training that is given to individuals when they join an rsanization.
Normally there will be both generic and specific elements to this induction
training. The generic elements are suitable for anyone who joins the
organization and will cover topics such as the : riranization’s mission and
values, the reward systems, performance ~ inagement, health and safety, etc.
Many businesses will run this training with participants drawn from a range of
business units. What the participants have in common is that :hey are new to
the organization. Indeed, some organizations tailor their recruitment process
to ensure that new entrants to the business start
163
this type of training on their first day, before going to their units.
Thereafter, the induction training will be specific to the unit and role to
which the new entrant has been recruited.
Technical Training
-
This is the training that an individual receives to provide thr the skills and
knowledge that they need in order to perform ~ role. This training will
almost certainly occur as part of an in induction training, but it will also
happen throughout the ' time with the organization. For example, it may be
that for a role, the volume of this training is too great to be carried ota one
course; therefore a staged approach is taken whereby the broken down into
smaller chunks or steps.
At the end of each stage of the training, the trainee’s perfo be assessed by
the trainer or some other assessor, for exarr.r-r leader or a trainer. Once the
trainee is deemed to be compe:=“ area, they then go to the workplace to
deal with this type of so build up their proficiency. Once they are deemed to
be . in this area, they then move on to the next step in the training before
putting these new skills into practice, and so on.
Professional Training
This is training for an individual on the “softer” skills that ire for them to be
_
successful in either their current or fut_ r example, this could be on
communication skills, in:e etc. Professional training is also helpful in
developing le managerial skills in the employees.
The Approach to
Learning is a concept applicable to all behavior and is c acquiring
Learning and
knowledge, attitudes, values and responses. It b have some
Learning Styles
knowledge of how people learn to provide e ~
There are several different approaches that attempt to people learn, but all
involve the idea that there are differed* that comprise the learning process.
One approach - cognitive learning - says the process of important

and consists of two components:
■ Much learning involves understanding or thinking being

learned
■ Insight is needed in a situation if a person is to r».
164 Human Resource Management and Organizational Bensw* (

Learning can also occur when knowledge is stored from experience and then
integrated so that the individual can adapt to new situations and achieve
personal goals.
What we are looking at here can also be called “experiential learning”. This is
the way that we have learned throughout our lives — from learning how to
walk to mastering how to operate a pc effectively! In order to engage with
experiential learning, those being trained need to
have some form of activities or exercises to experience within a training

environment.
Concrete experience
In training we need to provide participants with an opportunity to practice
the skills that we are introducing them to. Primarily we are giving the
participants a forum to have some sort of hands-on experience of the skills
that have been introduced by the training.
Reflection on the experience

Moving on to the next stage of the cycle, participants in the experience will
reflect primarily on what happened at this stage. Likely questions they will
ask of themselves in a banking context, for example, include:
■ Did I balance the cash and process vouchers correctly?
■ Did the team achieve its goals?
* How did the team perform in comparison with the other teams?
■ Did I manage to prepare and print the document correctly?
■ Did I close on the sale at terms beneficial to the bank and the customer?
As can be seen from the above, all we are looking at here is a factual reflection
on what actually happened. A more in-depth analysis will rbllow in the next
stage.
Formation of modification concepts
This is the stage where we begin to consider why the points raisei previous
section happened; for example:
■ Why did I not manage to balance the cash?
■ Why did our team end up in disarray?
■ Why did/did I not manage to prepare and print the correctly?
■ Why did I close the sale but not obtain a suitable arrange Testing
under new conditions

Now, having considered the points made thus far, we decide will do
differently the next time we carry out this exercise, forward to do so.
Examples here include:

■ Giving clearer instructions to a team at the start of an ensure that they
are clear about the objective of the exercac
■ Processing vouchers differently next time.
The stages and personality types associated with each staac of are:
Activists
Involve themselves fully in any new experience. They live for moment
and their thinking is dominated by immediate They are o'pen-minded
people who are not usually skerrJji result they tend to be enthusiasts.
Their outlook in life is * try anything once. They tend to react to
_
situations first. a a of the consequences. They will fill their days with
activity. - on brainstorming. They are gregarious people who set f with
others, but by being like this, they seek to be the cer.:rr
Reflectors
Like to sit back and consider experiences, looking at thers different
perspectives. They lay great store in the c from disparate sources and
consequently, they can decisions for a long time. Caution is their outlook in
i it. they tend to be quiet, taking a back seat during disc listen to others
points of view before coming in with tfc will usually have a low profile, with
a slightly distant and them. When they do commit to action, it is part of a
>.dl plan based on the past as well as on other people's they add to their
own thoughts.
166 Human Resource Management and Organizational Behs> s\

Theorists - are keen to adapt and integrate what they see into complex but
logically sound theories. They like to think theories through in a step-by-step
logical way. They are skilled at pulling disparate facts into coherent theories.
They are often perfectionists who will not be satisfied until everything is tidy
and in their rational scheme of things. They are keen on questioning basic,
underpinning assumptions. Questions that they will frequently ask are “Does
this make sense?” ’’How does this fit with that?”“What are the basic
assumptions?”
Pragmatists
Want to try out learning to see how well they will work in practice. They will
actively seek new ideas, and experiment with their application. They are the
type who will return from a course full of ideas and can’t wait to try them out.
Pragmatists like to get on with things sooner rather than later and will quickly
get impatient with prolonged discussion.
■%y Training
Today, some form of training is carried out at all levels within financial
Should Be
services. Why is this training considered to be such a necessary part of
Carried Out
organizational life?
Enhances Performance
As outlined at the start of this chapter, training can improve the individual’s
performance on a job through induction and later training. This improved
personal performance will result in improved organizational performance.
*
Legislative/ Regulatory Requirements
Organizations are often required to carry out training initiatives to comply
with legislation and regulation.
Maintenance and Development of Skills

Training also helps to maintain and further develop the skills of employees.
Developments in technology make it essential to train and update staff on
changes; for example, either the introduction of a new front end computer
system or the enhancement of an existing system, say with the provision of
new screens, to capture additional customer information and thus aid the sales
process.
Increased Motivation
Training increases the motivation of employees by retaining their interest and
giving them a wider range of skills. In addition, staff can have increased
feelings of belonging to the organization due to the investment they see their
employer making in their development. Motivation may also be increased due
to the social contact that face-to-
i-Jt vanagement 167

face training events allow to happen, thus giving course participants the
opportunity to network.
The Systematic Approach to Training

Stage 1: Analysis of Organizational Needs
Is the organization short of particular skills or jobs? Where and in what areas
are further skills required?
Analysis Of
Organization
al Needs
Job Analysis
training Needs >
Now identified r
Objectives For
Performance
Training Needs Now

Identified
Feedback
<"
Person Analysis
Training Needs
Nov/ identified
Object Pei ves for

*
for matice
.
*
Feedback
* *
*
* *
Of
Programme And
implementation
Stage 2: Job Analysis/ Person Specification

The job analysis involves an examination of the duties, responsibi.rrkfl and skills
required by the job. The person analysis will assess the abflr and skills of the
individual.
Stage 3: Objective Setting

This involves setting objectives for job performance and what individual is
expected to achieve.
Stage 4: Identifying Training Needs

After objectives have been set, training needs can be identified can be
influenced by changes in legislation/regulation, ways of i and the activities
carried out by the organization.
Uviroau Re^QUtce Management and Organizational Behavior | 8

Stage 5: Establishing Training Objectives
Good training objectives are essential if effective training is to occur. They
determine what exactly should be achieved by the investment made in the
training. When writing objectives, active verbs should be used to describe
observable and measurable actions once the training has been completed.
Stage 6: Training Programme Design

The exact content of the programme is determined by its design and the
objectives are broken down, setting out in greater detail exactly what the
-j:nee should do to satisfy the training objectives. The training media to re

used is also established at this stage, as well as the type and placc of ' - and
assessments — if appropriate.
Stege 7: Validation of The Training Program and Implementation

£ format of the training programme, whether it is a formal course, on the
fob or distance learning, e-learning, etc, will have been decided at Scase 6. At
Stage 7 an assessment of costs will be made which may result i~ aaiustments
in training techniques as well as highlighting the need additional facilities
and increased resources. Whatever forms the training takes, it has to be
validated internally before implementation.
Stage 8: Training Evaluation

evaluation oftraining is the final but integrative part of any training r:-
'gramme and can occur at several different levels and stages based on tne
individual’s response to the training, others’ assessment of his/her
rerrormance and the individual’s contribution to the organization.
r'. aiuation is concerned with the cost benefit of training in monetary terms
and the perceived value and usefulness from the point of view of the people
involved and the work they do. It can occur for the employee a number of
levels.
A well known four level model of training evaluation was developed r.

Donald Kirkpatrick. Kirkpatrick’s model states that evaluation of ‘.'l ining
should always begin with level one, and then, as time and other resources
(such as budget) allows, should move sequentially through e . eis two, three,
and four. Information from each prior level serves as a rase for the next level’s
evaluation. Thus, each successive level represents
- more precise measure of the effectiveness of the training programme, rut at
the same time requires a more rigorous and time-consuming analysis.
Level 1 Evaluation — Reaction level

If you have ever attended a training course, you will almost certainly be
ramiliar with this type and level of evaluation. Level 1 evaluation seeks to
measure how participants in a training event react to it immediately on
the conclusion of the course. It attempts to answer questions regarding the
participants’ perceptions:
■ Did they like it?
169
■ Was the material relevant to their work?
* How do they feel about the way in which the trainer delivered the material?
■ Did their manager carry out a pre-course briefing?
■ What did they feel about the training environment and support materials?
Therefore, having attended a training course, you will almost certainly have
completed some type of level i evaluation document and either returned it to the
trainer or sent it directly to the organization’s training department.
This type of evaluation is often called a “happy sheet”. According to Kirkpatrick,

every training event should at least be evaluated at this level to provide feedback
for the potential improvement of a training programme. In addition, the
participants’ reactions have important consequences for learning (level two).
Although a positive reactier does not guarantee learning (for example, the
participant may ha-.; enjoyed the event, but they do not have the opportunity to
consolidate their learning by practicing the skills learned once they return to the
workplace), a negative reaction almost certainly reduces its possibility.
Level 2 Evaluation — Learning

Assessing at this level moves the evaluation beyond learner satisf. and
attempts to assess the extent participants have advanced in knowledge or
attitude. Measurement at this level is more diffic_’t laborious than level one.
Methods range from formal to informal i to team assessment and self-
assessment. If possible, participants test or assessment before the training
(pre test) and after train: test) to determine the amount of learning that has
occurred.
Level 3 Evaluation — Transfer

This level measures the transfer that has occurred in learners due to the
training event. Evaluating at this level attempts to question - are the
newly acquired skills, knowledge or ate! used in the everyday working
environment of the participant? this level represents the truest
assessment of a program’s e.‘
However, measuring at this level is very difficult as it is to predict

when the change in behavior will occur arc ascribable this change in
behavior is to the training e*
requires important decisions in terms of when to evaluate, how often to evaluate,
and how to evaluate.
Level 4 Evaluation — Results

Frequently thought of as evaluation on the bottom line, this level measures the
success of the programme in terms that managers can understand - increased
production, improved quality, decreased costs, reduced frequency of accidents,
increased sales, and even higher profits or return on investment.
From a business and organizational perspective, this is the overall reason for a
training event, yet level four results are not typically addressed. Determining results
170 Human Resource Management and Organizational Behav

in financial terms is difficult to measure, and is hard to link directly with training.
For example, it is almost impossible to relate the outcomes of a behavioral training
event on the organization’s bottom line as there can be a number of other factors
that may either change the participants’ behavior, or the bottom line itself.
HRM Challenges
In This Part Chapter 1: Workplace Diversity
Workplace Diversity Employee Engagement Talent
Management Succession planning
Chapter 2: Motivational Approaches
What is motivation?
Three Different Approaches to Motivation
Maslow’s Hierarchy of Needs
Implications of Maslow’s Theory For Organizations
Herzberg’s Two Factor Theory
McClelland’s Theory
The Complex Man View or Process Theories Porter and
Lawler’s Expectancy Theory Practical Applications of
Motivation
Workplace Diversity
Outcome By the end of this chapter you should be able to:
■ Define and describe the term "workplace diversity" and concept of

employee engagement
■ Discuss diversity management and talent management
■ List the pros/advantages and cons/disadvantages of workplace

diversity
'' = icgement 171

■ Describe the ways of organizing talent strategically in an organization and
the concept of succession planning
Workplace Diversity Training Diversity The centerpiece of most diversity programs is

training. For instance, a relatively recent survey found that most of the
companies with diversity initiatives use training as part of their programs.
Diversity training programs are generally intended to provide a vehicle for
increasing awareness and examining stereotypes. Participants learn to value
individual differences, increase their cross-cultural understanding and confront
stereotypes.
Workplace Diversity
The “business case for diversity” theorizes that, in a global marketplace, a
company that employs a diverse workforce (both men and women, people of
many generations, people fromethnically and racially diverse backgrounds etc.)
is better able to understand the demographics of the marketplace it serves and
is thus better equipped to thrive in that marketplace than a company that has a
more limited range of employee demographics.
An additional corollary suggests that a company that supports the diversity of

its workforce can also improve employee satisfaction, productivity, and
retention. It is however important how an organization utilizes its various
relevant diversities. If a workforce is diverse, but the employer takes little or no
advantage of the breadth of that experience, then it cannot monetize whatever
benefits background diversity might offer.
If workplace diversity is limited, there are both benefits and challenges. Some
of the benefits are:
It is easier to manage because most of the employees are similar in their

mindsets, background and working styles.
There is little or no chance of prejudice or aggression towards peers and

fellow employees. Misunderstandings that may be created due to customs
such as diet, greeting practices, maintenance of personal space and dressing
can easily be avoided.
Limited diversity may lead to the following challenges:

1. A loss in ability to understand and reach new, potential customers,
especially for companies that operate in far-flung areas.
2. The company may miss out on a broader talent pool that might have been
available. When employee selections are not limited by such criteria as
age group, educational experience or location, this increases the
possibility of finding the right employee-employer match.
3. Companies may be reluctant to venture into new areas because of a

limited resource pool.
Employee Employee engagement is about the level of comm itment and involvement
Engagement an employee has towards their organization and its values. An
engaged employee istaware of the business context, and works with
colleagues to improve performance within the job for the benefit of the
organization. It is a positive attitude held by the employees towards the
organization and its values. HR practitioners believe that the engagement
challenge has a lot to do with how the employee feels about the work
experience and how he or she is treated in the organization. It has a lot to do
with emotions which are fundamentally related to driving bottom line
success in a company. There will always be people who never give their best
efforts no matter how hard HR and line managers try to engage them. “But
for the most part employees want to commit to companies because doing so
satisfies a powerful and basic need in connecting with and contributing to
something significant”.
Employee engagement defines an employee’s dedication and involvement

towards the organization and its moral values. Engaged employees well-
equipped and knowledgeable about the organization’s frame'.', cn and thus
attempt to improve the performance of existing jobs for * benefit of the firm
:
in collaboration with their colleagues. It is s the positive mind-set of
employees towards the organization ar_i principles. According to HR
professionals, employee work experk
and employee treatment in the corporation highly influence employee engagement. An
employee’s emotional attachment with his/her work is the principle driving force of the

company’s bottom line success. Despite the HR officials and line managers efforts of bringing
improvement through employee engagement, certain people in the workforce tend to show lax
attitude towards their work thus failing to give their best shot.“Nevertheless, most of the times,
employees eagerly obligate to the companies in order to satisfy the fundamental need of
connecting with and contributing to something momentous.”
Aspects of Employee Engagement

Global studies highlight three fundamental aspects of employee engagement:
1. The employees along with their distinctive psychological framework and know-how.
2. The employers and their skills of crafting an environment promoting employee engagement.
3. Employee interaction at all levels.
It is thus an organization’s duty to create a milieu and culture favorable to employee-employer

relationship and thus form a win-win situation.
Categories of Employee Engagement

Generally people can be categorized into three types:
Engaged
Engaged employees are considered to be builders. They willingly yearn to understand and know
the expectations of the organization in order to fulfill and even surpass them. They are eagerly
inquisitive about their company and their position in it. They show persistent high level
performances and are keen to display and make use of their aptitude and skills at work. They
act as a driving force for their organization and with their zeal and novelty facilitate its growth.
Not Engaged
These types of employees focus more on the completion of the tasks rather than on the
achievement of anticipated goals and the end result. They expect to be given responsibilities
and carry out these jobs just for the sake of finishing them. Such employees are under the
impression that the organization does not acknowledge their efforts and does not contribute to
tapping their talents. This is because of the disengaged employees’ weak relationship with their
mangers and co-workers.
Actively Disengaged
These employees are considered to be the “cave dwellers”. They are “Consistently against
Virtually Everything”. They show their d issatisfaction from work by acting it out. These workers
seek every cha nee of disseminating pessimism in the organization and make attempts of
demoralizing the achievements of their committed coworkers. The problems cultivated by these
employees can harm the organization’s operation greatly due to the fact that all the workers
highly depend on each other for the creation of the organization’s products and services.
Importance of Engagement
It is prudent for the organizations to develop employee engagement, as the root cause of the
employees’ lack of involvement and motivation is their disengagement and estrangement to
their work. Lack of interest and impassiveness to one’s work mostly leads to meaningless work.
Another research shows that variables like employee turnover, customer satisfaction - loyalty,
safety and, to a lesser degree, productivity and profitability criteria are connected to employee
engagement usir.;: i. different resource of engagement (involvement and enthusiasm).
An organization’s ability to accomplish high performance levels finer business results is

largely dependent upon the organize aptitude to manage employee engagement.
Following are a few benefits of having engaged employees:

■ It helps the company retain its employees, helps employees co to the firm’s bottom
line success and promote the company products and services
■ Usually, their motivation is high and performance is better
■ Employee engagement and profitability are momentously o
■ An emotional connection is created between the employers organization thus

influencing their attitude towards the clients resulting in improving customer
satisfaction and se
* It manufactures in an employee enthusiasm, dedication with the organization’s

objectives and strategic plans
■ It enhances employee’s confidence in the organization
■ It establishes loyalty in a competitive environment
■ It provides high-energy working milieu
■ It heightens business growth
■ It produces dedicated brand ambassadors with the

A highly dedicated and engaged employee persistently shows performance
that surpasses the expectations of the firm. Researchers of employee
engagement while surveying the workplaces have often asked the employees
whether they are given the liberty to perform the tasks they are best at. Out of
five employees, one agreed with this fact. The organizations with the greater
ratio of people agreeing to people disagreeing are the ones most successful in
performing efficiently.
In conclusion, any organization in quest of retaining valued employees is

highly dependable on employee engagement. According to the Watson Wyatt
consulting companies, employee engagement, customer loyalty, and
profitability contain an intrinsic link. In a situation where organizations
globalize and thus heavily rely on the technology in a virtual working
environment, employee engagement becomes a crucial need to provide
employees organizational identity.
Talent Talent Acquisition

ement The right acquisition strategy for the right people is the primary step towards the
right human resource management. As people are at the hub of business
delivery processes in the banking organization, this talent acquisition is
prudent. Unfortunately, the resistances of the Unions on one side while the

existence of colossal organizations for the common entrance process
influence the public sector banks largely. Such banks have limited
liberalization and flexibility in attracting the right aptitude from the market
place at the right market price. Additionally, these banks do not use the
theory of campus employment (direct recruitment of management trainees
from the management institutes) despite the limited autonomy provided to
them for practical purposes.
Consequently, public sector banks face the predicament of scarcity at junior

management levels.
Another issue that public sector banks face is that they never pursued the
concept of employer branding from the recruitment point of view and thus
especially among the gifted and learned youth of today, it is one of the least
preferred career choices. Yet they cannot be blamed for this as they lack the
competitive advantage needed to magnetize the appropriate talent compared
to their private/foreign neighbors or other market players.
Talent Management
The following steps are taken in talent management:
■ Positioning of the right people at the right places
■ Human resources orientation into the organization’s culture

■ Talent recognition
■ Talent appreciation and feedback mechanism
■ Creation of a genial aptitude development environment

Alas, organizations mostly fail to mu 11 over some of the issues mentioned above.
HR is still considered a support service and fails to assimilate with the corporation’s
strategic vision, mission and objectives. Thus the placement of personnel is done for
nothing more than filling in the vacancy in a given place. It scarcely happens that
the HR carries out proper induction process, scans the CVs of applicants and
shortlists the most appropriate people placing them at their rightful place. The
management’s key setback is that they have a contracted list of options available and
variety of considerations, apart from pure merit due to the intrusion of different
quarters, drives all the HR roles.
MAX O*I aê.\s> atvol'tae.T m . tYvera\cs\.. Tr\e age cVt empYavees

in the public sector is over 50 years compared to the 30-35 age b: in the private
sector firms. A lot of partition and pointless h„ exists between different classes
of people depending on age. s officers vs. workmen, and so on. Management
has failed to e: this high level antagonism among people despite the many
efforts! made, thus failing to produce a favorable environment for the
professionals to permeate in.
Talent Development
There are numerous concerns that should be addressed prior to . a long-
term commitment to a career, apart from creating condu. environment for
the employees to prosper in. These concerns the achievement of
satisfaction through job enrichment r recognition for good work, prospects
of performance based 7 accomplishment of flexibility in terms of job hours
and other aspects, receiving monetary and non-monetary benefits and
promotion process. The public sector is unable to provide such not because
the management is reluctant to provide them r _r the government, its
regulatory systems and procedures are ut»
Therefore, it becomes hard to retain the right talent in i : set-up. In contrast to

the general deregulation in the co change is occurring at a slower pace.
Preserving taler: a challenge due to the absence of appropriate talent
approaches. The introduction and production of voluntary programs by the
organizations elaborated and confirmed ** as these programs involved the
expiration of talented contradictory to the management’s intention.
Placement in the right position and promotion
Many local corporations practically lack these concepts. In such situations, organizations
tend to disregarded merit and overshadow contemplation, for instance, posting in
desirable positions that signify high self-worth like foreign postings and postings in
foreign exchange trading desks. While filling in this type of vacancies, it has been
witnessed that the process of recruitment rather conducted random hiring than
Human Resource Management and Organizational Behavte? •

considerably conducting objective hiring of employees, going against the principles of
meritocracy. Similar conduct is seen while carrying out the hiring process of top position
people like General Manager Credit etc. Such policies consist of many grey areas such as
lack of apparent objectivity.
In order to make the working place enjoyable to work at and in order to make the HR
systems more effective, certain measures can be taken:
■ Developing a strong HR department at corporate and administrative levels

(zonal/regional offices) and staffing them with highly experienced and competent
people who are over and above all in the levels of age and maturity and who are
acceptable by all as executives in a positive and objective approach. Specifically, the
most senior HR manager must be someone respected by employees all over the
organization and must be an optimistic individual.
■ It is essential for every organization to have comprehensive policy guidelines related

to the various HR issues. Also it is prudent that these guidelines are established in
accord with the existing government guidelines and in sounding with the Unions.
However, it is imperative that these guidelines are categorical, in line with the
organization’s goals, crystal clear and contain the required contrivance to address to
employee objections and discontent.
Following aspects of employee engagement should be addressed by definite HR

department’s roles at all points:
■ Right placement of right people in right jobs.
■ Comprehensive job descriptions and specifications along with the accountability at

all levels.
■ An inclusive code of ethics policy.
■ Particular rewards (both monetary and non-monetary) for acknowledging

exceptional performance or talent, for instance, best branch manager award for each
zone etc.
■ To certify accurate usage of communication channels at all levels, availability of open

two-way communication channel between the line managers, employees and top
managers.
* Contrivance of identifying employee talent at all levels of operations and
various methods of appreciating and gratifying the achievers.
■ Special ways to design well thought of succession plans at all levels.
■ An internal regulator made for addressing complaints.
■ Promotion of “out of the box” and novel discerning for enhancing

employee engagement. For instance, internal contests on new product/
process development, schemes arranging external trips for selected
achievers etc.
These are certain common recommendations. Specific action plans according

to the latitude of the company’s business activities differs from organization
Diversity 179
to organization. According to McKinsey’s report on “War for Talent”, it is
prudent for every organization to implement its presented seven talent
imperatives in order to achieve success in this intricate and competitive
world. These talent imperatives are constructing talent mind-set at all levels
of the organization, creatine employee value propositions (EVPs) in order to
retain employees in the organization, creating a high-performance oriented
culture, employing the finest talent available, evolving all the employees to
their fuller, potential and making sentient efforts to retain high performers. It
b crucia 1 for the HR department to apply some of these ideas for furnishing
the strategic imperatives.
Recently, many organizations’ executive body has been suceessfa in

implementing some of the most appropriate HR practices. Tre newest
examples among many others of these implementations are performance-
based promotion policies, objective approaches for 1 reallocation of various
positions, explicit training policies for all categories, and introduction of
gratitude/reward schemes for emp at all levels.
Succession This is the procedure which involves ensuring the supply of planning
beneficiaries for the current and future chief jobs.
It is specifically essential to anticipate the accessibility of L executive

contenders in a succession plan. For instance the pote most suitable
-
candidates for top management can be channeled * the executive jobs
at numerous major divisions as well as ov succession plan usually
consists of the following activities:
1 Determining by looking at the company level, fur.; expertise,

the prospective requirements of executives anc

■ Appraising the present administrative talent for anticipating the future supply from
internal sources.
■ Forecasting individual career paths through objective approximation of future needs and
assessments of the potential.
■ Career counseling considering the future needs of the corporation and the individuals.
■ Augmenting promotions by establishing development objectives against the future

business needs.
■ Carrying out performance-related training and development in order to concoct

individuals for future roles and current duties.
■ Conducting planned tactical employments in order to fulfill shortterm requirements as

well as provide people for future requirements.
■ Filling in the vacancies in reality, with the help of recruitment managers, internal
promotions and etc.
There are three steps in a usual succession plan:

1. Consideration of dynamics like planned development to antedate management needs.
2. Evaluation of a corporation’s management skills inventory (information on aspects such

as educational and work experience, career preferences and performance appraisals)in
order to analyze the present talent.
3. Production of replacement charts — the summary of the organization’s potential

employees and their development needs.
Pa
"l _______ Motivational Approaches
Chapter 2
■ Explain the significance of motivational approaches in an

organizational setup
■ Illustrate the motivational approaches deployed by managers in

different situations
What is Motivation? Schein in “Organizational Psychology” defines motivation as:
“Impulses that stem from within a person and lead him to act in ways that will
satisfy these impulses”
The concept underlying motivation is that there is some driving force within
individuals which drives them to attempt to achieve a goal or objective in
order to satisfy their need or needs. After all, if we were not motivated, why
would we get out of bed in the morning?
Some organizations supposedly have a preponderance of “good workers” who

are highly motivated and derive a great deal of satisfaction from work. By
contrast, other organizations appear to be overloaded with poorly motivated,
dissatisfied employees.
A lack of motivation within a team can affect the morale, so if they are not
interested in what they are doing they tend to have low spirits. Likewise if
they are motivated and are interested and getting a “buzz’’ out of what they
are doing, they will generally be in good spirits. Motivational theories have
attempted to explain and predict the development and satisfaction of human
needs.
Three Different There are three major groups of theories of motivation. The first and earliest
Approaches to approach has been referred to as the traditional or utilitarian view of man.
Motivation The second is the human relations view (also known a? social or actualizing
man). The complex man view or process theories are the third approach.
The Traditional View/ Utilitarian Man

This traditional approach to motivation and encouraging a satisfactory level
of employee involvement and effort is expressed in McGregor's
Human Resource Management and Organizational Behavior 1 Reference Book 2

Theory X (which also summarizes the authoritarian style of leadership). This view states
that people need to be controlled and threatened before they put in enough effort at work.
You may have heard reference made to the “carrot and stick” approach to motivation - this
is the traditional view.
Fortunately, according to Theory X, not all people are like this; there are some superior
people who can assume authority and control (those destined to be team leaders and
managers).
A predecessor, who held similar views, although writing 50 years earlier, is Frederick W
Taylor with his view' of man as a purely rational, economic being. He assumes employees
are motivated purely by economic reward and will work harder if they believe there is to be
more money.
The Human Relations View

A number of different theories fall within this area. The earliest approach could perhaps be
termed that of “social man”. This view developed from the Hawthorne experiments
conducted by Elton Mayo which supported the concept that man is asocial animal, who
gains a sense of identity, self respect and fulfillment from social relationships. To
rationalize work and take the social element out of it takes the meaning out of work.
According to this theory, the manager needs to build social relationships into the work
situation and design organizations around work groups, so as to help fulfill these social
needs.
Self Actualizing Man

These theories developed from the concept that man is selt-motivated and self-controlled.
This view maintains that the usual managerial actions tend to reduce responsibility and
autonomy and so reduce motivation. This group of theories can be summarized in
McGregor’s Theory Y - people enjoy working and can exercise control over their own work.
hierarchy This is one theory that could be said to belong to the self-actualizing of Needs approach.
People’s needs are arranged in a hierarchy; when one need is satisfied, individuals move on to the next
level. His hierarchy arranges individual needs in an order of prepotency -the stronger ones at the bottom
and the weaker (but more distinctly human) ones at the top.
The hierarchy starts at the bottom with physiological needs and extends through four
levels of psychological needs:

Physiological needs are basic survival needs that are satisfied by:
■ eating
■ drinking
■ sleeping
■ obtaining adequate shelter and warmth
■ sex
Safety and security covers the need to feel safe both now and in the future.
Working and saving can characterize the behavior used in an attempt to
satisfy this level of need.
Social needs include the need to belong to and to be accepted by a group, to

communicate with others, to give and receive affection and love.
Esteem needs cover the need to achieve both self respect and the respect of
others.
Self actualizing includes the desire to realize one’s potential - to feel that I am
more than a “cog in the wheel”, to achieve self fulfillment by creating,
innovating, learning and developing.
Maslow argued that unsatisfied needs motivate, and they emerge in

particular order. When each level of need is satisfied, a new one takes place
and the capacity of the now satisfied need to motivate is reducr If we cannot
s
a
t
Managers should strive to find out where their individual team me are
i
placed on the hierarchy. An organization will gain most by sa: the lower
s
order needs because then an individual is motivated by? rather than
f
money. Organizations need to be able to satisfy- u levels of needs for
y
different individuals.
The ways in which an organization can use Maslow’s hierarchy - in the

o
following diagram:
u
r higher level needs at work, then we seek to outside of work.
Implications of Maslow's Theory For Organizations

Self-fulfilling
Promotions 6 appraisals
Self-
actualization
lob design
Although Maslow’s theory is intuitively appealing, when closely

examined, Physiologica a number of problems seem to be present:
l
■ Can the theory be put into effect because there is no timescale to indicate when satisfaction is
supposed to occur at a particular level? The organization will therefore need to be constantly
checking and rechecking the satisfaction level of employees.
* Although Maslow implied the need pattern was the same in all individuals, it does seem to vary
from one person to another (for example, penniless artists who could be said to be on the esteem
level without satisfying the physiological).
■ It is difficult to fit motivators into categories (for example, a company car satisfies physiological
and esteem needs).
■ Research carried out into Maslow’s theory has found no empirical evidence to support his views.
Lawler and Suttle (1972) found no evidence to indicate that “satisfied” needs become any less
important than “unsatisfied” ones or that the satisfaction of lower level needs
<
raised the importance of higher level ones.
-erzberg's Two This theory evolved in the later 1950s from a questionnaire answered by 200 engineers and
Factor Theory accountants asking them what made them feel exceptionally good or bad at work.
The “good” .tors The “bad” factors

fa<
---
Achievement Company policy and administration
Recognition Supervision
Work itself Salary
Responsibility Interpersonal relations
Advancement Working conditions
I Human Resource Management and Organizational Behavior ( Reference Book 2

■ ::,vational Approaches 185
Herzberg drew the conclusion that characteristics in the work situation fell into two categories:
■ Those that led to satisfaction and were intrinsic to the job - motivators (the first set of factors)
■ Those extrinsic to the job - hygiene factors. Although these could prevent dissatisfaction to some
extent, they never provided true satisfaction (the second set of factors).
He used the term “hygiene factors” by way of analogy, in the same way as providing a hygienic
sewerage system, you may prevent the plague from starting, but hygienic sewers will not cure a
plague once it has started.
Implications of Herzberg's theoy for organizations

If managers wish to motivate employees they can only do so through job content. Pay increases or
better working conditions alone cannot vcvcrease. VC\O\\N?A.\O'CV 'occa.vvse. Sx \s A \_\xe.
e,vsv^\oê.c.
can never become completely satisfied.
Autonomy and responsibility for organizing and controlling one’s own work is the real answer. No
amount of environmental improvement can compensate for task impoverishment. However, this
presents significant challenges for organizations in the present day as the need for consistent levels
of customer service has led to many organizations agreeing standards and procedures that cover
many of the routine jobs in the business; therefore there is a reduction in the autonomy levels of the
individuals operating in this type of environment.
There are also some other problems wi g’s two factor theory:
■ The theory is method bound - if the same methodology is used, the same results are always
obtained, but if more searching questions are asked, the results are not the same.
■ The two groups of factors are not mutually exclusive as Herzberg suggested -motivators can also
act as sources of dissatisfaction.
However, Herzberg’s contribution is still considered to be important as he established the

theoretical basis for job enrichment and new job designs.
McClelland developed his theory in the 1970s, citing various needs and motives (over 40 in total)
McClelland's theory
which are of importance to individuals and act as factors which influence behavior and
reactions. One of the needs
I Human Resource Management and Organizational Behavior ( Reference Book 2

which, McClelland claims, is of particular importance in our competitive society is the need for
achievement.
Individuals differ in the extent to which they experience this need. In order to assess this, McClelland
uses TPT (thematic perception tests) - a mixture of pictures to interpret verbal questions and
problems. The role of management is to determine the level of needs an individual possesses and
assign organizational duties in line with this.
Some of the ways people might demonstrate a particular need are:
■ Need for achievement
■ enjoys taking risks
■ likes initiative
■ enjoys new things and change, but is not so concerned about attention to detail
■ Need for power
* likes supervising others
■ enjoys taking decisions
■ uses his/her initiative
■ has good ideas
■ expresses him/herself well
■ enjoys organizing his/her own and others’ work
■ Belonging
■ enjoys being a member of a team or club loyal to department or team
■ likes to share decisions
■ likes to be popular and so is not good at criticizing or disciplining others

B
conforms to group norms and values “ good at communicating with others
The problems with McClelland’s approach have been:

■ A lack of empirical support for the theory
■ The unreliability of the TAT stories and pictures
■ The lack of attention given to the issue of how the needs interact with other organizational
factors.
Motivational Approaches 187

The Complex Man The more recently expressed views on motivation (from the late 1960s) accept that people
View or Process may have hierarchies of needs but maintain that these hierarchies can change as
Theories circumstances change. Man is variable; he has many needs and does not necessarily find
fulfillment of all his needs in any one solution. He can respond to a variety of managerial
strategies - his reaction is dependent on the situation and the needs which are dominant at the time.
This view of motivation, together with some of the problems associated with the earlier theories,
gives an indication that simple theories of motivation are not enough to account for behavior in
organizations.
The theoretical models do not explain the individual context, how individuals understand, attach
meaning to and interpret the work situations they find themselves in.
Porter and Lawler's There are several theories very similar to that presented by Lawler and Porter but theirs is
Expectancy Theory perhaps one of the simplest to understand.
Percived Effort
The advantages of this approach are that:

■ It is a comprehensive approach incorporating many variables; instead of promotion it could be
examination success, a company car, etc
* There is an emphasis on feedback and its importance
* It takes account of the many intervening factors that determine motivation and attitudes to work.
This theory states that people are only likely to exert some effort when they value the rewards and see
that they will get these rewards as a result of doing what is required. An individual’s social
background can greatly affect their valuation of different kinds of reward. Some groups may strive for
improved social status, others will not.

It cannot be assumed (and the theory quite rightly allows) that work is the
central life interest. The importance of work may vary with socioeconomic
background, age, gender, etc. The theory also accepts that the people the
manager is trying to motivate may not believe that their effort will result in
the offered reward; promotion is not always available. Similarly, the
effectiveness of effort is mediated by their own skills, the resources available
to them and their own perceptions of their role.
As always, there are several difficulties with the theory that have to be
resolved:
■ The theory has become very complex because it tries to incorporate so

many variables.
■ The theory tends to concentrate on prediction in terms of present events,

such as how the needs relate to current work attitudes and behavior,
rather than how the needs arise in the first place - why does someone feel
the need to be promoted?
Managers often hope that there is a technology of motivation that can be

applied to unmotivated employees. They are usually disappointed. The value
of studying motivation lies in helping people think about their own views (or
sometimes prejudices) on the matter. The employees managers are trying to
motivate often seethe world quite differently and it may be more beneficial
for managers and team leaders to reflect uqon emQlovees’ perceptions.
Practical Although different factors can both motivate and de-motivate, there are
Applications of some common factors to consider, such as:
Motivation .,,
* High absenteeism
■ Poor quality work
* More complaints re bad service
■ Late finishes
■ Backlog of work
■ Bad timekeeping
Team leaders and managers need to be aware of the signs so that they can
recognize them and intervene as necessary. Again, there is no prescriptive list
of these factors, but they may well include:
■ Boredom
■ Lack of training
Chapter: Motivational Approaches

P3,t6 ______ Business Ethics
Chapter 1
■ Define the term "business ethics"
■ Describe the significance of business ethics in an organization
■ Discuss the concept of conflict management
■ Differentiate between ethics and norms
■ Illustrate potential issues arising from conflict of interest and

compliance with ethical standards
■ List ways that managers can adopt to resolve conflicts st
■ Differentiate between ethical and non-ethical behavior m

scenarios
■ Explain the link between business ethics and longevit. of
■ Identify the minimum ethical standards expected in a economy
■ List the steps businesses must take to ensure the ex standards are
met
Introduction— Ethics considers what is right and wrong and \v What is Ethics?
individuals and organizations is good or bad. Stra i we see
that there is an element of judgment in this, of ethics is
centered on human behavior; either for benefit or by humans
on behalf of organizations. One the subjective nature of
ethics is that you will rarely b that a behavior or outcome is
absolutely right or wr examination will present you with case
study see will be asked to exercise judgment about ethical the
examiner will give you credit for your conclus: may be
different to those in the next script marked as long as you
back your answer with rational a.gi are bound to arise in
capitalist systems because the enterprises are usually defined
in relation to ma value, which may in turn create wealth but
have for other individuals and groups.
Branches of ethics
The term “ethics” is generic, and is often studied in the broader context of philosophy. As stated
earlier, it addresses right and wrong, though some consider ethics in relation to attitudes, behaviors
and actions that will enrich one’s life.
1S8 Human Resource Management and Organizational Behavior

Some parts of this section consider descriptive ethics, which concern what is generally regarded as
right and wrong. Many writers address this empirically, by studying how people take decisions and
react to situations in real life.
Normative ethics is of most relevance to our study. It looks at how people actually act and whether
such actions are right or wrong. There are three established branches of normative ethics:
■ Virtue ethics
■ Deontological ethics
* Teleological (or consequentiality) ethics
Much of this chapter deals with these three approaches.

As its name suggests, applied ethics asks how we apply our conclusions about values and morals and
put them into practice. This is relevant to the formulation and implementation of policies relating to
ethics and values, such as codes and statements of practice. There are also some more esoteric
branches of ethics. For example, meta-ethics questions what terms like “right” and “wrong” really
mean. Such studies can be absolutely fascinating to academics and deep thinkers on ethics, but offer
little value to our current study.
Overview of the three approaches

Virtue ethics considers the moral character of those taking decisions or reacting to situations.
However, different societies have different interpretations of what moral character is and how it is
manifested. Virtue today is often seen in terms of fairness, objectivity, alt: ui5 and loyalty.
Ethics based on duty relates to absolute moral rules as propounded by philosophers such as Kant. It is
suggested that some moral rules should apply in all circumstances. Kant refers to such rules as
categorical imperatives. A test of this approach is never to act in a manner that would be condemned
in others. This deontological approach distinguishes between people and objectives - people have
feelings and dignity.
Ethics based on consequences (or the teleological approach; judsc-5 actions by looking at outcomes.
Bentham was a utilitarian writer who maintained that actions should reflect the greatest good for the
srcate<:
r-= ness Ethics 193

number of people. The problem is that this may cause misery to the few, or the minority, justifying to
some extent the protections afforded to the minority.
The Bentham principle can also be used to justify unethical actions taken to secure a contract on the
basis that nobody actually loses out. A higher principle might be to test whether the individual would
be proud to tell his or her family of such actions.
The one ethical question is the extent to which the organization must pursue broader purposes.
Business Ethics Traditionally, it is the senior management of the organization who consider such
issues. The accountability for addressing the organization’s ethical position or stance lies with the
board of directors. The decisions taken by the board in this respect are likely to be unstructured (non-
programmable) and will be influenced by many factors, including:
■ Their own personal values and views
■ The traditions, founding values, culture and heritage of the organization
■ The influence of regulators and others who can force the organization to behave in a particular
manner
■ Other external stakeholders, particularly existing and potential customers
The level of discretion at different levels of the organization and the nature of decisions has a crucial
bearing on the extent to which the organization’s values are applied consistently or otherwise. During
the 1980s and 1990s, there was a shift in management thinking that moved towards empowerment of
managers. The idea underpinning this is that managers further down the hierarchy will be more
intimately familiar with the needs of their stakeholders, particularly their customers and their staff.
With competition increasing, organizations had to demonstrate that they could adapt to change
quickly. Successful organizations were those who could not only react to small changes in their
environment but also predict and pre-empt such changes.
This notion of empowerment sits comfortably with the traditional role of managers in banks.
Historically, retail branch managers were seen as important figures in the community. They could
take important decisions, some of which could mean the difference between the success and failure of
small companies who banked with them.

The managers took many decisions without having to refer to head office or
regional office, and where they were able only :o make recommendations;
their recommendations would seldom be reacted. Empowerment had further
benefits for young banking professiona'.s. who could aspire to follow a
defined career path and become manager; themselves.
A notable spin-off from the traditional model of management in banking was

diversity in the ways in which different managers operated. The system
encouraged individualism, so while some managers would have great
organizational and administrative strengths, delegating sales activities to
others, some managers would lead the sales effort from the front, often
through powerful networks of contacts in local business communities. This
had numerous benefits to the manager, including considerable credit in the
community.
In some banks it was also accepted practice for the manager to personally
receive commissions from business referred to other organizations (such as
insurance companies) resulting in a practice of incoming managers making
“goodwill” payments to those who retired or moved on to more senior
appointments. This would of course be totally unacceptable (and illegal)
today.
The financial services sector has evolved in a different way. Today,

empowerment is applied not at individual level but to strategic business
units. Banking organizations are now structured according to core business
competences - retail, treasury, international trade, and so on. Managers are
less empowered, not more so.
The decisionsthey take are controlled centrally orthrough control systems

and manuals. Information technology enables senior management to adopt
flatter organization structures and therefore employ less people. The focus is
on securing and retaining business. Higher risk decisions are managed at
higher levels. Those decisions taken closer to the point of sale tend to be
structured or semi-structured (that is. with a imited and tightly defined level
of discretion). More important, not oni\ the decision but the way that the
business unit thinks and operates has to be totally consistent with the ethos
embraced by strategic decision takers.
Levels of There are various levels of compliance in organizations, including;

Accountability . „ ,
■ Supranational sources of authority - for example, the Consnrunon
of many countries acknowledges the dominance of international treaties
where ratified by the State
■ The law as laid down by central and local government
Chapter: Business Ethics 195

■ Regulations made by bodies with delegated authority
■ Sector-wide voluntary codes and statements of practice
■ Policies, procedures and practices of the organization
■ Informal standards generally accepted by all employees

The decision takers have no power to change the first three of but can exercise discretion in the
other areas. Their interpretation implementation will determine the extent to which the
organization perceived as being socially or ethically responsible.
1
The concept of fiduciary responsibility is difficult to define, bui f* generally be regarded as a high
Fiduciary form of moral responsibility - goes further than contractual accountability to others.
Responsibility
Some de>:~ fiduciary responsibility as a duty of faithful service. Others express ir B terms
of a person having responsibility for the property or interests others.
A director of a company has a fiduciary responsibility to a comra~ and its shareholders. At

corporate level, fiduciary responsibility may be perceived as external accountability - to the
political system, to the community and to society at large. Fiduciary obligations may be
interpreted in a subjective manner and quite independently of any legal constraints. It is generally
accepted that the decision takers in a~ organization are not only in place to achieve the strategic
goals of the business but also to meet the broader expectations of society.
The ethical standards expected from companies in the global economy are:
* Employment is freely chosen

Ethical Standards in c
Global Economy ■ No forced, bonded or involuntary labor
■ Workers are not required to lodge “deposits” or identity papers with their employer
■ Workers are free to leave their employer after reasonable notice
* Working Conditions
■ Safe and hygienic work environment - considering the industry/ type of business
■ Regular health and safety training

■ Access to clean facilities (such as drinking water, sanitary etc.)
■ Provide safe and clean accommodation (where applicable)
■ No child labor
■ No new recru itment
■ Transition of any existing child labor
■ Wages
■ Level of wages must be enough to meet basic necessities
* No deduction of wages as a disciplinary measure
■ Working Hours
■ Must comply with laws and benchmarks
■ Overtime shall be voluntary (unless agreed in advance)
■ Overtime shall be compensated at premium rate
■ No discrimination
* No discrimination in hiring, compensation, access to training, promotion, termination or
retirement based on race, caste, national origin, religion, age, disability, gender, marital
status, sexual orientation
■ Treatment
■ Physical abuse or discipline, the threat of physical abuse, sexual or other harassment and
verbal abuse or other forms of intimidation shall be prohibited.
Organizations may pursue explicit social and ethical objectives.

Social and Ethical
For customers
Objectives of
Companies ■ Lending products that further the cause of environmental protection (mortgages on
eco-homes, loans to companies to promote carbon neutrality)
■ Provision of banking services for the socially excluded
■ Continuation of loss-making products or outlets to ensure that financial services remain

accessible
Business Ethics 197

For the workforce
■ Salary policy
■ Job security
■ Working conditions
■ Job satisfaction For society
■ Control of pollution
■ Sponsorships of charities, sports and good causes
■ Partnerships with government and local authorities Implications for
management
Implication of ethical conduct is becoming an imperative function for management. While
compliance requires adherence to the law, most accept that the values and culture of the
organization should refer to broader objectives.
Ethical standards may be pursued in relation to:

■ Personal ethics-based on persona I beliefs and values, and supported by legislation such as
that relating to matters like “whistle blowing”
■ Professional ethics as laid down by professional bodies
■ Organizational cultures that foster the “right” behaviors. Paine suggests that ethical decisions
are becoming more significant and may be supported by two approaches:
■ the compliance-based approach, designed to ensure that companies operate within the
letter of the law
■ The integrity-based approach, which places greater emphasis on managers taking

responsibility for ethical behavior.
Ethical Stance
Johnson and Scholes define ethical stance as the extent to which the organization will
exceed its minimum obligation to stakeholders. The ethical stance of any business can be
evaluated by considering the following issues.
A major determinant of ethical stance is where the responsibility for ethical conduct lies in the
sector or company concerned. For example, in the medical profession (in the United Kingdom)
this is influenced by the policies of the National Health Service which sets out broad (and
sometimes specific) guidelines on the use of certain treatments. Linked to this factor is the
regulatory regime.

Johnson and Scholes refer to the “key actor” in business ethics. This could be
a supranational authority such as the government, a government agency, a
trade association or a group of large organizations in the same industry. Key
guidelines for ethical standards may be laid down by any of these bodies. It is
also necessary to consider the key issues. In the financial services sector these
have firmly moved towards establishing practices that ensure that customers
are treated fairly, whereas twenty years ago the focus was mainly on sales
practices for certain types of product and their distribution, such as life
assurance products and regulated investments.
To whom the business is responsible is a crucial determinant. This is not

always the government or a government agency. In the legal profession
ethical conduct is often regulated from within and usually through a
professional body.
It is often difficult to assess whether an individual or firm is compliant with

the necessary standards, so deciding how this should be measured and
reported will influence ethical stance.
Johnson and Scholes also suggest that how the ethical stance is incorporated
into business activity will shape ethical behavior in an organization. This will
be affected by organizational structure and the level of autonomy of business
units, together with the zeal with which the organization’s cultural values are
communicated and implemented.
Ethical problems facing managers

The primary duty of managers is often regarded as the pursuit of profit,
consistent with corporate goals. The ethical standards expected of managers
impose broader duties - to guard, preserve and enhance the value of the
enterprise for the benefit of its stakeholders. Some of this broader
responsibility arises from the more litigious society in which businesses
operate. Other issues that have to be considered include the potential
exposure to influences such as extortion, bribery, gifts and the need for
“softeners”.
Absolutism and Absolutism

Relativism This approach proposes that society should adhere to a strict and unchanging
code of beliefs and values. This is common in countries where the legal
system is based on religious principles as these are regarded as being
inalienable. However, absolutism is a common approach in countries where
there are many laws written down, even if they do not come from a religious
source. Citizens of some cou~:r:c' are known to prefer a system that dictates
what is right and wrong.
Business Ethics 199

Absolutism implies that all-embracing truths are known and should be applied to benefit society.
The deontological approach can sometimes be absolutist when the system is influenced by natural
law. Here there is a view that there is a natural system of moral principles that should be
automatically adopted to guide society. Therefore, absolutism (or cognitism) can be sourced in
religious values, detailed legislation or natural principles.
Advantages of Absolutism
In some countries citizens are used to rules driven from a central source, such as a religion or central
government. In Germany, a proverb states “If there is no rule it is forbidden”, though modern
Germans usually quote this in an ironic manner nowadays.
When principles are derived directly from religious authority, the majority of citizens will accept it.
The absolutism approach is more definite. Everyone knows where they stand. In Pakistan adultery
and alcohol are forbidden and that’s it. If you have a relationship outside your marriage or make or
consume alcohol, you are breaking the law and your actions are judged to be wrong.
Disadvantages of absolutism
Over time the norms of society change which means that what was once universally accepted may
no longer be so. If the absolute model is driven by central government and legislation, this may not
be a problem. The most obvious contemporary example is homosexual relationships, which were
forbidden by law in the United Kingdom but are now legal. However, if the views of society run
deeper, such as religious principles, there can be a big problem in facilitating change.
As universally applicable laws are regarded as binding, a problem occurs when the acknowledged
sources of law differ. For example, the state may disagree with the church.
Furthermore, those within the decision-taking hierarchy may also differ. A major problem arises
when two sources fundamentally differ on the same principle, or where the same source is
apparently contradictory. Some would argue that it is never right to tell a lie. Consider then the
dilemma of an individual who knows that his mother is terminally ill but the mother is not aware of
this. If the mother asks “Am I dying?” is it really wrong to say “no” in every case?
Relativism
This is sometimes called the non-cognitive approach to ethics. It states that it is not possible to
acquire objective knowledge of moral principles; therefore all moral statements are subjective and
open to challenge or debate.
Relativism accepts the differences between rules of behavior in different
cultures and communities.
When carrying out business across international frontiers it is important to

recognize whether an absolute or relative approach is adopted in a host
country.
Advantages of relativism
The approach acknowledges cultural diversities, which are important in
societies where communities are made up of several different ethnic groups
or races. It does not mean that everyone will be happy with the system.
Relativism can be mixed with absolutism. Relativism avoids moral conflict

between different groups in society.
Disadvantages of relativism
By accepting that everything is relative, some argue that this approach will
always result in contradictions and ethical dilemmas. If everyone is right, who
is wrong? Some suggest that relativism promotes a belief that anything is
acceptable. This may compromise moral values and decent behavior.
A wholly subjective approach is not always appropriate and in most societies

there are universally identifiable and agreed standards. For example, most
religions agree on certain truths. Some of the principles contained in codes of
conduct are pretty much accepted by all, such as the banker’s duty to adopt
standards of the highest integrity.
ate rest Financial services organizations and their employees and agents have a duty to
take reasonable care to identify potential conflicts of interest and take actions
that are appropriate to address them. A conflict of ir.re'est can arise from two
situations:
■ The individual may have a personal interest in a transact! n :-at : client is

making or proposing
■ A decision will have a positive impact on one client and a negative impact
on another client.
Generally, the first situation is less difficult to resolve than the second
situation.
Sources of conflicts of interest

There are five generic ways in which conflicts can arise. These correspond
broadly to the “threats” identified in the Code of Ethics for Professional
Accountants.
241
Self-interest
The individual may have a financial interest in a transaction proceeding. The most
commonly encountered situation is where a broker or employee will receive
commission income from completion of a contract with the client. There are several
safeguards in place to prevent mis-selling. The
individual may have a close business or personal relationship with the client. This can
be of enormous significance to a banking organization. In the 1980s a major freight
company was permitted to increase its overdraft to unacceptable levels because the
bank’s business adviser did not have the courage to say “no” to the client’s
representative with whom he had a close business relationship, developed over many
years. Today such situations arise rarely as banks are much more rigorous in applying
centralized controls over large exposures.
“Soft” commissions, such as gifts and hospitality, can create a conflict of interest. This
is most likely to occur when such gestures cease to be rewards and turn into
inducements to do further business. There is sometimes a thin line between a “thank
you” and an inducement.
Many organizations attempt to reduce the risks arising from self-interest in a proactive
way; for example, they may:
■ Forbid staff from accepting gifts of any kind
■ Forbid the acceptance of gifts of particular types, or with a value in excess of a

stated figure
* Introduce and maintain a gift register and make it a policy of the organization that
all gifts be declared and recorded.
Sometimes the fear of losing the customer may result in the financial institution
agreeing a fee or charging structure that is simply too low. This practice is sometimes
referred to as “low balling”.
Self-review
These conflicts often arise in the field of auditing work, or where the client has
responsibility for evaluating the work or standing of others. For example, an internal
auditor may have to evaluate the quality of
a system but may also have been involved in developing and installing the system. The
individual here is bound to have preconceived opinions about certain aspects of the

system and cannot therefore make a truly objective assessment.
When a lender assesses a mortgage application, it is usual for a valuation to be requested

in order to assess the adequacy of security for the loan. The values should be independent
- the report will be less meaningful if the person valuing it was involved in the design of
the property.
In some cases, the financial services professional may have worked for or in association
with client organizations before joining the firm.
Advocacy
The term “advocacy” means to support. In the context of professional services, this threat
arises where a professional firm is called upon to support the client. There are many
examples of this, including banking organizations providing corporate finance services
and then being asked to support legal action by other financial institutions in the event of
default on loans. A bank may also provide small business loans to a client whose affairs
are then conducted in an exemplary manner, only later to be asked by a second
mortgagee to enforce securities.
Banking organizations now reduce the advocacy threat by taking a neutral position when
considering the business plans of clients. The well-known Verity case involved a branch
manager agreeing that the client’s business assumptions were sound, only to be sued later
for giving misleading advice. The clients won their case.
<
Familiarity
This can arise in several ways:
■ The firm has a long-standing relationship with the client and the principals of each
entity are too familiar with one another
■ There is a personal or family relationship between firm and client
■ Such risks can be mitigated by:
■ Rotating personnel involved in providing professional services
■ Involving additional, independent personnel
■ Obtaining independent reports or reviews Intimidation

The main risk here is where a client threatens litigation against the financial services
organization. The threat may be an empty- one or i real preparedness to take legal action.
The consequences may re:
Self-interest
The individual may have a financial interest in a transaction proceeding. The most
commonly encountered situation is where a broker or employee will receive commission
income from completion of a contract with the client. There are several safeguards in
place to prevent mis-selling. The
individual may have a close business or personal relationship with the client. This can be
of enormous significance to a banking organization. In the 1980s a major freight
company was permitted to increase its overdraft to unacceptable levels because the
bank’s business adviser
whom he had a close business relationship, developed over maaf Today such
situations arise rarely as banks are much more r,£rrc* applying centralized controls
over large exposures.
“Soft” commissions, such as gifts and hospitality, can create a of interest. This is
most likely to occur when such gestures eeisc rewards and turn into inducements to
do further business, sometimes a thin line between a “thank you” and an induce-ea.
Many organizations attempt to reduce the risks arising frorr. seJ-rr in a proactive
way; for example, they may:
■ Forbid staff from accepting gifts of any kind
■ Forbid the acceptance of gifts of particular types, or with 1 excess of a stated

figure
■ Introduce and maintain a gift register and make it a : Eq| organization that all
gifts be declared and recorded.
Sometimes the fear of losing the customer may result in ire institution agreeing a
—
fee or charging structure that is s:
This practice is sometimes referred to as “low bailing^
Self-review
These conflicts often arise in the field of auditing work, or client has responsibility
for evaluating the work or sr^~-~
For example, an internal auditor may have to evaluate d
a system but may also have been involved in developing and installing the system. The
individual here is bound to have preconceived opinions about certain aspects of the
system and cannot therefore make a truly objective assessment.

When a lender assesses a mortgage application, it is usual for a valuation to be requested
in order to assess the adequacy of security for the loan. The values should be independent
- the report will be less meaningful if the person valuing it was involved in the design of
the property.
In some cases, the financial services professional may have worked for or in association
with client organizations before joining the firm.
Advocacy
The term “advocacy” means to support. In the context of professional services, this threat
arises where a professional firm is called upon to support the client. There are many
examples of this, including banking organizations providing corporate finance services
and then being asked to support legal action by other financial institutions in the event of
default on loans. A bank may also provide small business loans to a client whose affairs
are then conducted in an exemplary manner, only later to be asked by a second mortgagee
to enforce securities.
Banking organizations now reduce the advocacy threat by taking a neutral position when
considering the business plans of clients. The well-known Verity case involved a branch
manager agreeing that the client’s business assumptions were sound, only to be sued later
for giving misleading advice. The clients won their case.
Familiarity
This can arise in several ways:
■ The firm has a long-standing relationship with the client and the principals of each
entity are too familiar with one another
■ There is a personal or family relationship between firm and ;
■ Such risks can be mitigated by:
■ Rotating personnel involved in providing professional sen ice?
■ Involving additional, independent personnel
■ Obtaining independent reports or reviews Intimidation

-
The main risk here is where a client threatens litigation against : .e financial services
organization. The threat may be an empty one or i real preparedness to take legal action.
The consequences may be:
■ Damage to the firm’s reputation, even if it is innocent
■ Financial consequences such as compensation and costs
Litigation risk is common. Banking organizations are perceived as being well

able to defend themselves and to pay compensation. This has resulted in a
“compensation culture” in many countries. The most common threat arising
from this source is that of an action for professional negligence. However,
controversies involving bank fees and charges have revealed that the
intimidation threat can escalate once the broader issues become known to the
3ws 203
Loss of
general the client
public.
The threat of litigation can be reduced but never avoided entirely. All
providers of professional services should have adequate professional
indemnity insurance in place to ensure that the compensation and expenses
incurred can be paid if a case against the firm is successful. This does not
reduce the liability of the firm and cannot avoid the damage to reputation,
but it does ensure that the claimant can be paid. Some regulators and many
professional bodies insist that practicing firms have this insurance cover in
place.
When litigation occurs, it may be necessary to reassign some individuals or

teams to other duties. The audit committee should be appraised at an early
stage of the potential threat. The firm may also choose to involve an
additional independent and suitably qualified person in reviewing the work
carried out.
Intimidation threats also arise when a client seeks a second opinion from
another professional firm. This occurs in the accountancy, legal and medical
professions in particular. It is also quite common for the second opinion to
differ from that of the original firm. There are often two or more views of any
given situation and intelligent people have a right to disagree with one
another.
Whenever a second opinion is sought, there are risks to all parties involved. It
cannot be assumed that all will be working from the same information, or
even when they are working from the same information, that it will be
represented in exactly the same way. The directors of the client company may
deliberately withhold information, making a variance between opinions
inevitable.
There are various ethical considerations to take into account here. For
example, if an accountancy firm is invited to consider information with a view
to forming a second opinion, it should seek permission to contact the original
audit firm if it is necessary to do so.

Resolving ethical conflicts
There are numerous decision-taking models that have been developed to deal
with ethical dilemmas and conflicts of interest. Many of these originate in the
accountancy profession which is especially vulnerable to threats arising from
such situations.
When faced with ethical conflicts firms should consider:
■ the facts of the situation
■ the ethical principles involved
■ related fundamental principles
■ internal procedures
■ alternative courses of action
■ consequences of each
The ethical decisions should turn on the answers to a series of questions:
* What are the facts of the case?
■ What are the ethical issues in the case?
■ What are the norms, values and principles relating to the case?
■ What are the alternative courses of action?

■ What is the best course of action, consistent with the norms, principles
and values identified?
■ What are the consequences of each course of action?
■ What is the decision?
Dealing with conflicts of interest

If a conflict of interest becomes apparent or if there is ; reasonable prospect of
such a conflict arising, the individual or organization should disclose this to
the client as soon as possible. In some cases h be necessary to decline the
business.
There is no hard and fast rule in relation to timir.;: c: relationships -

obviously, if an organization last deal: with - client twenty years ago this is
unlikely to be material. Some suggest tiut relationships that ceased more than
two years previously 3 re ur.Iikeh': give rise to conflicts of interest rooted in
self-review.
The scope of disclosures to be made is an important consideration. It may be

necessary to make a disclosure not only to the client but also
to other relevant parties. The form of the disclosure may be a simple
statement of fact that a potential conflict exists, or a statement that the firm
“jr5S EthiCS 205

does not provide its services on an exclusive basis.
Other steps that can be taken include:

* creating explicit written policies on confidentiality, security arc disclosure
■ segregating teams and individuals working on tasks where confli::> may

arise
■ imposing Chinese walls - policies that forbid the sharing of information

between divisions/departments
■ having appropriate disciplinary measures in place for activation when

breaches occur
* limiting access to information
■ use of confidentiality agreements
In some cases it may be necessary to review the safeguards that are in place
by engaging the services of an independent professional. Clier.:? may also be
advised to seek independent legal or financial advice where appropriate.
■ Focus on the spirit of compliance and reliance to some extent on self
regulation
■ Some degree of subjectivity in interpreting the code
■ Some degree of discretion in applying the code
Who develops and administers codes of conduct and ethics?

Codes of ethics and professional conduct may be developed by professional
bodies such as the Institute of Bankers Pakistan, the Association of Chartered
Certified Accountants, and the Institute of Chartered Accountants of Pakistan
and so on, or by trade associations. Some codes are introduced by individual
companies.
As trade associations usually represent highly diverse organizations working in

a particular industry or sector, it is quite difficult for them to agree on
universally applicable standards, and so it is usually left to professional bodies
to introduce codes.
What is in a typical code?

Codes are sets of written standards with which all members are expected to
comply. They are voluntary in that the individual can choose to remain a
member or not. Note that they are applicable to the individual and not to the
organization. However, unlike many typical codes of practice adopted by trade
associations, there are more serious consequences of diverging from the
standards laid down.
Human Resource Management and Organizational Behavior | R e f e r e r c - e 3 : 2

Codes of ethics issued by professional bodies are centrally formulated and
imposed on individual members. Corporate codes of conduct are usually
designed to promote the confidence of stakeholders in the company rather than
the individuals who represent it. Both types of code are relevant to your study,
so it is important to distinguish between them.
Most codes produced by professional bodies are principles-based. The principles

usually allude to:
* acting in the public interest
■ fundamental ethical principles embraced by the code
* A framework setting out the safeguards that will apply to address the threats
posed by non-compliance.
Typical minimum standards include the following:

what does this mean?
Integrity
Principle Those who join the profession should be
straightforward and honest in all their dealings. Their
actions should not compromise the perceived
reputation of their profession.
Objectivity Members of the profession should be free from bias in
their actions, avoid or declare conflicts of interests and
be free from the undue influence of others.
There is an ongoing duty to maintain knowledge and

Knowledge, skill skill commensurate with the standards expected of the
and due care profession by the public. This implies remaining
familiar with laws and technical standards necessary to
do the job and any subsequent job that the individual
is asked to do.
Confidentiality The common law has established that employees owe a
duty of confidentiality to third parties, and also in
respect of the employer’s “secrets” once he/ she leaves
the organization. However, even where legislation or
the common law does not dictate standards of
confidentiality, the individual should ensure that
information obtained in the course of professional
work should remain confidential.
It should not be used to obtain personal benefit,
financial or otherwise.
Professional Members should comply with the law and regulations
behavior
made there under and conduct themselves in a manner
that would be expected of a professional person by the
general public.
Safeguards
Several safeguards may be applied to support compliance with the principles
laid down in a code. They are rooted in extemalh dri\er. measures and the
systems and procedures of firms themselves.
The law
The academic board or other academic authorities may lay c; .- minimum
qualification and experience requirements. These may re examination based,
competence-based or a combination of these.
Chapter: Organizational Code of Conduct 209

In order to be a fund manager, Ali Ahmed would have to take appropriaia
regulatory Examinations, such as CFA; however, that will not enaSe him to
serve as a fund manager. He must be signed off as competent by his
organization, which usually implies having to gain appropriate experience
through internal training and competence schemes. Only when his supervisor
(who must also be a suitably competent person is satisfied that he is ready to
be a fund manager will Ali be able to work unsupervised with clients of his
organization. The requirement does not stop there - Ali must be monitored
and assessed on a regular basis to ensure that he remains competent to give
advice.
Codes of practice
Some codes apply to many businesses. For example, a Combined Code on
Corporate Governance was applied to public limited companies, listed on the
stock exchange, in the United Kingdom.
Professional standards
As we have seen, these are centered on individual rather than corporate
compliance and are focused on the member. These standards incorporate
personal qualities criteria and disciplinary sanctions.
Monitoring
Many professional bodies monitor the conduct of firms within the financial
services industry and investigate individual transgressions where appropriate.
Some of the undesirable practices are inappropriate policies of organizations
while others are divergences from accepted practice by individuals. Other
examples of inappropriate actions can be:
■ Cold calling by companies to sell mortgages (this is not permitted under

the Mortgage Conduct of Business rules)
■ Indiscriminate sales of home reversion plans (through which an elderly

person sells part or the entire home to release equity but remains entitled
to live in the property)
* Sales of sub-prime mortgages without making the mandatory suitability

and affordability checks
Organizations themselves can promote compliance with necessary standards

through many measures, including:
■ Introducing measures to reinforce independence where appropriate
■ Enhancement of the role of non-executive directors in relation to

oversight and scrutiny
■ Rotation of personnel to avoid certain threats that may compromise

objectivity

* Internal monitoring and compliance activities
■ Mystery shopping programs
■ Disclosure where appropriate
■ Outsourcing some functions to independent third parties

It should be noted, however, that many of the above activities reflect industry
standards rather than ethical conduct of the individual members of the
professional body. Many of those working in the financial services sector are
not members of a professional body but are still expected to adhere to agreed
industry standards.
Do Codes of Codes create greater awareness of professional standards and also generate
Conduct and Ethics further debate about ethical behavior, but they cannot complete the task of
Work? ensuring that individuals working in the financial services industry will
behave ethically at all times. That is too ambitious and there are many
drawbacks:
■ An individual can read this book and attend lectures for many hours, but
this will not necessarily make the person a more ethical person
■ Only some of those employed in the financial services industry are

members of a professional body
■ Some institutes do not recognize that they have a role in setting or

promoting ethical standards
■ Some organizations are prepared to act unethically in pursuit of profit, so

the standards embraced by those w'ho are more ethical will be
compromised in the eyes of the public by practices observed of others
■ The financial services industry is a global one. so some services ^re

provided from outside the country and sometimes from couririe? :n which
ethical behavior is of less concern.
Corporate Codes Corporate codes of conduct or ethics can be produced by groups of

organizations or individual organizations. The former are or.en prepared by
trade associations. In practice, corporate codes are oner. reactionary in nature
and prompted by bad publicity or negative pub'::; perceptions. Inevitably,
therefore, they have been used by groups as diverse as property timeshare
operators, car tire and exhaust companies and airlines.
Chapter: Organizational Code of Conduct 211

Organizational Behavi
Concepts
In This Part
Chapter 1: Organizational Behavior Concepts
Introduction Vision and Mission Developing an
OB Model Decision Making Leadership
Leadership and Interpersonal Relationships

Organizational Behavior
Concepts
-£5~ning Outcome By the end of this chapter you should be able to:
■ Define and describe the term "Organizational Behavior"
■ Describe the significance of an organization's vision, mission and

values for the culture of an organization
■ Discuss how an understanding of the organization's vision, mission

and values impacts on the employee's personal growth
■ List the elements of organizational behavior
■ List and explain the models of organizational behavior
■ Describe the importance of leadership and decision making in an

organization's performance
■ Discuss perception management and explain its importance in an

organization's overall performance
Introduction Organizational Behavior (OB) is a field of study that investigates the impact that
individuals, groups, and structure have on behavior within organizations, for
the purpose of applying such knowledge toward improving an organization’s
effectiveness. OB is a distinct area of expertise with a common body of
knowledge.
Organizational Behavior (OB) is the study that explores how the behavior
within the organization is influenced by individuals, groups and structures,
thus assisting the organization in using this knowledge in enhancing its
operations and efficiency. It is a distinct and unique area of proficiency that
contains a common body of knowledge.
OB defines three factors that reflect the behaviors in the organization;

individuals, groups and structures. Moreover, as already mentioned, it
implements the knowledge acquired from these determinants to help the
organization operate more effectively.
OB particularly highlights the employee-related situations and thus stresses

the connection of behavior with elements like jobs, work, absenteeism,
employment turnover, productivity, human performance, and management.
Chapter: Organizational Behavior Concepts

Vision and Mission Vision defines the way an organization or enterprise will look in the future.
Vision is a long-term view, sometimes describing how the organization would
like the world to be in which it operates. For example, a charity working with
the poor might have a vision statemer.: which reads “A World without
Poverty”.
Mission defines the fundamental purpose of an organization or an enterprise,

succinctly describing why it exists and what it does to achieve its vision.
Comparison of mission and vision

Mission and vision can be written as statements to guide certain actions and
future states:
■ A mission is what an organization does, its action; a vision is what an

organization would like to happen as a result of the action that it takes
* Mission equals the action; vision is the ultimate result of the action
■ Mission answers the question “What would not happen if we were not
here as an organization?” Or more positively, “What change is achieved
because we exist?”
■ Vision answers the question: “What are the results, the ends, the
consequences of our action?”
■ Vision looks forward; mission looks at today.
Vision and mission statements are fundamental parts of good governance.

Organizations which work at having both will find that they will have no
problem distinguishing between a vision and mission and using them toward
their success.
Organizational values
Organizational values define the acceptable standards which govern the
behavior of individuals within the organization. Without such values,
individuals will pursue behaviors that are in line with their own individual
value systems, which may lead to behaviors that the organization doesn’t
wish to encourage.
In a smaller, co-located organization, the behavior of individuals is much

more visible than in larger, disparate ones. In these smaller groups, the need
for articulated values is reduced, since unacceptable behaviors can be
challenged openly. However, for the larger organization, where desired
behavior is being encouraged by different individuals in different places with
different sub-groups, an articulated statement of values can draw an
organization together.
Clearly, the organization’s values must be in line with its purpose or mission,
and the vision that it is trying to achieve. So to summarize, articulated values of
an organization can provide a framework for the collective leadership of an
organization to encourage common norms of behavior which will support the
achievement Of the organization’s goals and mission.
Organizational culture
Organizational culture is an idea in the field of organizational studies and
management which describes the psychology, attitudes, experiences, beliefs
and values (personal and cultural values) of an organization. It has been
defined as “the specific collection of values and norms that are shared by people
and groups in an organization and that control the w'ay they interact with each
other and with stakeholders outside the organization”.
Organizational culture is a set of shared mental assumptions that guide

interpretation and action in organizations by defining appropriate behavior for
various situations. Although it’s difficult to get consensus about the definition
of organizational culture, several constructs are commonly agreed upon - that
organizational culture is holistic, historically determined, related to
anthropological concepts, socially constructed, soft, and difficult to change.
Strong culture is said to exist where staff respond to stimulus because of their
alignment to organizational values. In such environments, strong cultures help
firms operate like well-oiled machines, cruising along with outstanding
execution and perhaps minor tweaking of existing procedures here and there.
Conversely, there is weak culture where there is little alignment with

organizational values and control must be exercised through extensive
procedures and bureaucracy.
Research shows that organizations that foster strong cultures have clear values
that give employees a reason to embrace the culture. A “strong” culture may be
especially beneficial to firms operating in the service sector since members of
these organizations are responsible for delivering the service and for evaluating
customer feedback about the service. Research indicates that organizations may
derive the following benefits from developing strong and productive cultures:
■ Better aligning the company towards achieving its vision, mission, and goals
■ High employee motivation and loyalty
Chapter: Organizational Behavior Concepts 218

of the three levels act as building blocks of each other as every level is erected
on the previous level. Group concepts stem out of the foundation laid down at
the individual levels, while to understand and comprehend the organizational
behavior, we edge the structural constrictions on the individual and group.
The Dependent Variables
A dependent variable is the fundamental factor that is described and projected
by the organization and that relies upon another factor. According to some
scholars, traditionally productivity, absenteeism, turnover, and job satisfaction
are the key dependent variables in OB. Yet, lately, two new variables have been
added to this list; deviant workplace behavior and organizational citizenship
behavior. We will precisely highlight these variables and ensure your
understanding of their importance and reason for being distinctly added to this
list of variables.
Productivity
Productivity is when an organization successfully accomplishes its objectives at
the least possible cost of converting its inputs into the desired outputs.
Intrinsically, productivity greatly emphasizes the significance and achievement
of effectiveness and efficiency. For instance, a hospital is the most productive
when it successfully accomplishes and fulfills the requirements of its patients
and the most efficient when it does this at the lowest possible cost.
Additionally, a hospital accomplishes productive efficiency when it successfully
produces a higher output with its existing staff by reducing the number of days
a patient stays admitted in the hospital or by increasing the number of staff-
patient interactions per day. In contrast, a business organization achieves
productivity by accomplishing its sales and market share goals with efficiency.
Return on investment, profit per rupee of sales, and output per hour of labor
are some of the standard measures of estimating efficiency in a business
organization. Productivity can be seen from an individual's perspective as well.
In order to evaluate the efficiency of the service industry organizations, it is

essential to consider the customers’ needs and requirements. This is because in
such organizations, a complete chain of cause ani e:te:t is created and thus the
employers’ attitude and behavior will affect the customers’ attitude and
behavior, in the end affecting the organization's productivity.
In short, productivity is one of the most significant concerns of OB and is one

of the factors affecting the efficiency of individuals. and
the organization itself.
Chapter.- Organizational Behavior Concepts 219

Absenteeism
Absenteeism is the failure of an employee to report to work and is a major
disturbance and expense to employers. An organization is unable to achieve its
prospective goals and function smoothly if the employees continuously fail to
report to their jobs. It leads to a disturbance in the workflow and thus leads to
prolonged holdups in imperative decisions. Absenteeism can create a great
commotion in organizations that depend immensely on assembly-line
production as it can lead to a sweeping fall in the organization’s output quality.
Moreover, in certain cases, it can also lead to a complete shutdown of
production facility.
A corporation’s competence and efficacy are heavily influenced if the level of

absenteeism goes way out of bounds. But are all absences bad? Most of the
times, an employee’s absence negatively effects the organization. However,
there are certain envisaged situations where an employee’s absence turned out
to be beneficial for the firm. For example, this situation is applicable in jobs that
require great vigilance of the employee, like a surgeon or an airline pilot. If a
pilot or a surgeon fails to report to work due to illness or exhaustion, his/her
absence would prove to be beneficial as he/she w'ould not be able to give his/
her hundred percent and might result in having an accident. This cost of
accident could be devastatingly massive. Yet, these examples are
nonconforming. Our major focus still remains on the fact that low absenteeism
is favorable for an organization.
Turnover
Turnover is the concept that signifies the voluntary and involuntary permanent
departure from an organization. High turnover signifies high enrollment and
selection and training costs. These costs can be immensely high and may take
you as a surprise. When highly qualified and erudite employees leave an
organization, and the replacements most appropriate and willing to take up the
jobs need to be found, a high turnover rate may lead to a huge disruption in the
manning process of the organization.
Every organization has a certain turnover rate. However, in case the right
people are leaving the organization, the turnover rate can be positive. This
includes the departure of marginal (unimportant) and sub-marginal employees.
It helps the organization replace a poorly performing employee with a more
experienced and motivated employee, it can open up a gate towards increased
promotions and it could equip the organization with novel and fresh ideas.
Moreover, in this dynamic world, a decent level of employee-initiated turnover

may facilitate the organization to taste flexibility and experience employee
independence, thus reducing the organization’s headache of

conducting management-initiated layoffs. Yet, turnover includes the loss of the
most valued employees as well. When the turnover goes beyond the normal
limit or when it includes highly valued employees, it can greatly upset the
organization’s effectiveness and proper functioning.
Oeviant Workplace Behavior

According to many OB researchers and scholars, the two factors contributing to
the creation of deviant workplace behavior are absenteeism and turnover.
Deviance can vary from playing music at peak volume to the practice of
violence. In order to tackle with any type of employee displeasure, it is crucial
for employers to comprehend and be aware of this varying behavior, since they
need to know what employees are reflecting from their behavior in order to
solve the problem.
Deviant workplace behavior (also called antisocial behavior or workplace

incivility) can be defined as a voluntary conduct that contravenes the moral
ethics and standards of the organization and terrorize the welfare of the
organization as well as its members. Under this situation, what are
organization’s customs? These can be company’s guiding principles that signify
the various types of behaviors the company proscribes like stealing, or they can
be the commonly shared tacit regulations like playing loud music at the
workplace. For instance, suppose an employee in the organization who listens
to music at his/her workplace at highly amplified volume. His absenteeism rate
may be low but his productivity will be low as well due to divided attention.
Also, such behavior may annoy his colleagues and customers, giving a bad
impression of the company. However, deviant workplace behaviors are more
threatening than just the playing of loud music. For instance, an employee may
act indecently by being insolent to a colleague, by filching, by excessively
gossiping, or by engaging in incapacitation thus wreaking mayhem in the
organization.
Workplace deviance can bring an organization into turmoil by largely swaying

the company’s financial position. For this purpose, managers aim to
comprehend and grasp the basis of workplace deviance in order to evade the
havoc it brought with it in the milieu, it is an imperative notion as it is a
reaction to dissatisfaction and displays ihe disappointment and discontent of
employees in various ways. Managing one’s behavior is not a remedy to the
problems faced and maybe futile unless the root cause is treated. An urbane
manager will tend to rectify the root cause of the problem rather than
attempting to cure one surface predicament (excessive absence) to see another
one crop up increased theft or sabotage).

Organizational Citizenship Behavior
Organizational citizenship behavior (OC;B) is a flexible conduct that doe? not
belong to an employee’s formal job requirements but hinders an organization’s
proper and efficient functioning.
Successful organizations look for employees who are more than willing to
perform additional tasks that are not a part of their job description and who
always perform extraordinarily. In the current fluctuating market, where
organizations perform more and more tasks in teams and where flexibility is a
necessity, organizations seek for employees who willingly participate in “good
citizenship” behaviors like helping others in their team, volunteering for extra
work, avoiding pointless conflicts, respecting the spirit as well as the letter of
rules and regulations, and gracefully tolerating occasional work-related
impositions and nuisances.
Organizations seek for employees who show innovation in doing activities that
are not included in their job description. Substantial evidence signified that
organizations with such a workforce surpass those who lack such a workforce.
Therefore, OCB is a dependent variable for OB.
job Satisfaction
Lastly, the dependent variable job satisfaction is a proactive feeling about one’s
job ensuing from an assessment of its characteristics. This variable in contrast
to other dependent variables indicates an employee’s attitude rather than
his/her behavior. It is yet considered a primary dependent variable due to two
reasons; its established relationship to the performance factors and the many
researchers’ value preferences. The basic principle saying that satisfied
employees are more productive than dissatisfied employees has been there for
years, but now researches support this principle with the assistance of
questions related to satisfaction-performance relationship. In conclusion,
advanced societies should stress on the significance of the quantity (material
acquisitions and higher productivity) as well as quality of life.
According to the strong humanistic scholars, satisfaction is a justifiable goal of

an organization. They argue that absenteeism and turnover are negatively
connected to satisfaction while it is also essential for organizations to provide
employees intrinsically gratifying and testing jobs. Consequently, despite the
fact that job satisfaction is an attitude rather than a behavior, it is considered
by OB professionals an integral dependent variable.
The Independent Variables

The question specifying the key variables or factors of productivity,
absenteeism, turnover, deviant workplace behavior, OCB, and job

satisfaction bring us to our last concept called independent variables. An
independent variable is a variable reflecting the alleged cause of certain change
in the dependent variable.
The initiating levels or the foundation of our model highly depends on the
understanding of individual behavior, considering our unswerving credence
which specifies that an organization’s behaviors can preeminently be observed
as a set of highly intricate building blocks.
Individual-Level Variables
It is considered prudent for the managers to make use of existing human
resources rather than the new ones - human resources initially utilized by
someone else. Employees when come into a new organization are considered to
be used cars as everyone is unique and different. Some arc “low mileage”, these
are the employees whose skills are watchfully utilized by organizations and
thus have restricted experience to the realism of the elements. In contrast,
some employees are “well worn” as their skills and knowledge ability has been
utilized roughly. Thus this signifies that employees enter an organization with
particular personality that further influences and affects their performance and
behavior in the organization. The most common characteristics among the
many are personal and biographical characteristics that majorly include factors
like age, gender, and marital status; personality characteristics; an innate
emotional framework; morals and attitudes; and basic ability levels. All these
characteristics are fundamentally in position as soon as it enters the workforce
and thus most of the times management is unable to make any amendments.
Nonetheless, they significantly influence or have a genuine brunt on the
employee behavior.
Group-Level Variables
The behavior of individuals in a group differs from the overall or summation of
all individuals’ acting in the similar manner. Our model becomes more intricate
due to the fact that people in a team behave in a different manner than they
behave individually. Consequently, for the understanding of OB and the
development of its comprehension, it is essential to study the behavior of
groups; how individuals in an organization while working in a group execute
the behavior that if being expected from them, according to the group, what are
the acceptable moral and behavioral standards and how much are the
employees concerned towards each other. Some other factors that it highlight
include the understanding of efficient work teams, commun::a::cn. leadership,
power and politics, and how levels of conflict influence group behavior.
• = : Ef t rganizational Behavior Concepts 223

Organization System-Level Variables
An organization adds to its classiness and reaches the peak level at
sophistication by toting up a formal structure to its prior individual arc group
knowledge. Corporations are more than the collection of their groups or teams
just like a group is more than the sum of individuals' capabilities. The formal
organization’s design, its internal culture and it? human resource guidelines
and performance (like, selection processes, training and development
programs, and performance evaluation methods) influence the dependent
variables massively.
Toward a Contingency OB Model

Our final model, shown in Figure 7-1, signifies six chief independent variables
and significant dependent variables, prearranged by the level analysis that
according to research influence the former in numerous ways. Despite the
complexity of this model, it still does not do justice to OB’s convoluted subject
matter.
Decision Making
Decision making is an important element in leadership and therefore a factor in
successful management.
According to Vroom and Yetton (1973), decision making may be described as:
“A resolution to adopt a particular course of action in preference to alternative

policies”
It is a judgment based on available information; a judgment that must always

involve some element of risk, since any one outcome is never wholly certain.
There are close links between decision making and problem solving. A situation
needing a decision arises because a problem has been identified and the first
stage in decision making therefore involves problem identification.
Factors That Indicate The Need for a Decision

A situation which calls for a decision to be made only arises because a problem
has been noticed. Most of us will probably notice a problem exists because:
■ The performance of our area of operations is falling
■ There is negative customer reaction to service
* There are env i ronmental changes in ter ms of competition, technology and

economy
■ There are other adverse comments by staff or customers.

The evidence a problem exists reaches a point where it cannot be ignored
and the manager is then in a position to embark on the problem solving and
decision making process.
Figure 7-1: Basic OB Model
Productivity
Absence
Turnover
Deviant I
workplace
b
e
h
Citizenship
a
vior
Wurnan resource policies and

* + Satisfaction
Organizational
Culture
Organization
Systems Level
Leadership
L and tiust
Work teams
**
Conflict jf-ower and politics!

Levels of Decision Making
There are three levels at which decisions can be made in an organization:
Strategic Decisions
There are several characteristics associated with decision making that let us
determine whether the decision is strategic. The first area to think about is
whether the decision is likely to affect the long-term existence of the
organization. If the answer to this question is yes, then we are likely to be
looking at a strategic decision.
Secondly, a strategic decision will usually come about if the company is

attempting to gain some competitive advantage through the decision. For
example, is the company trying to “steal a march” on the competition, by
making a move before they do?
Strategic decisions are likely to be concerned with the range of activities in

which an organization is engaged. For example, does the company specialize
in one area of operations, or do they spread their activities over a number of
areas? This is a vital decision for any organization as the range of activities is
central to any organization’s strategic direction. When looking at the range of
an organization’s activities, we should also think in terms of geography. For
example, does the company wish to operate on global or domestic areas?
Again, this decision will be central to the strategic direction of the company.
Strategic decisions may well result in major resource changes for the
organization.
Administrative/ Managerial Decisions

Administrative/managerial decisions are concerned with the routine decisions
of business. Most organizations provide processes and procedures, as well as
rules and systems which offer guidance on, for example, handling grievances,
recruitment, etc. Financial services organizations are frequently referred to as
being bureaucratic because they have so many rules and procedures for
managers to follow. However, the rapidly changing business environment is
creating a need for banks to be more flexible in their approach, while still
retaining a measure of consistency for managers to following order to be fair
and consistent in dealings with staff.
Operational Decisions
Operational decisions are concerned with ensuring that the day-to-day
operations precede smoothly; for example, decisions about a breakdown in
technology, reorganizing staff when there is absence, or amending a plan
which is not working. It seems that if a manager or employee is to make
successful decisions, a similar pattern of stages should be followed, which is
what we will look at in the next section.
The decision-making process
Problem awareness
The environment, both external and internal, should be constantly monitored

to obtain feedback. The decision maker monitors the environment to detect
deviations from plans and therefore is aware of problems.
Define and gather more information

The problem or situation facing the employee needs to be precisely defined.
The information that has been picked up through monitoring could be the
symptoms, not the cause. Further information may be required. The
monitoring and defining stages are in fact problemsolving processes.
Specify
The decision objectives have to be specified with the key result areas and
clearly defined standards of performance. The likely risks and constraints
need to be identified. What the decision makers hope to achieve should be
clarified.
Diagnosis
The problem must be analyzed and the causes scrutinized before action can
be taken.
Develop alternative courses of action

The options open are considered, and if necessary or appropriate, discussed at
length with interested parties. The critical options can then be listed.
Establish criteria
The methods or criteria to be used in the appraisal of different options need to
be established before they can be applied.
Appraise alternatives
Alternative solutions or courses of action must be appraisee. Each is evaluated
in terms of the quantity and quality of informati :>n :rat can be provided; the
costs of implementation of the various alternatives should also be explored.
Costs and benefits can be expressed in bo:h quantitative and qualitative terms.
Choose
The best alternative is then selected by an individual or a group of interested
parties.
Implement
Once the decision has been taken, it must then be implemented.
Evaluation

This involves the assessment of the consequences of the decision and leads to
monitoring for new problems. This is an important stage because it is a way of
ensuring that action is carried out in accordance with the plans.
Factors in decision making

Risk
Any decision involves a certain amount of risk that may affect the outcome of
the decision. In its simplest terms, risk can be defined as “the possibility of
loss, injury, disadvantage or destruction”.
Risk can be minimized by:
■ reducing to a minimum the timescale between the point of decision and

emergence of results
■ identifying correctly the natu re of the problem
■ allowing the decision process to follow a logical sequence
■ analyzing correctly the ramifications of the decision
■ Ensuring that the information available is adequate for the decision. Risk
management
Risk management is the sum of all the actions taken by an individual or

organization to acceptably mitigate risks that could occur. Most business
activity involves some risk. The more successful the business, the more likely
it is that the business has been able to assess risk and rewards accurately.
Financial services, like all sectors, involve taking risk. There is a series of
established stages, (according to Whyte and Plenderleith) in risk
management.
The stages of risk management are:
1. Analysis of risk
2. Quantifying the risk
3. Recording the objective data in the decision
4. Monitoring the effects of the decision
5. Feedback and adjustment of risk analysis

Risk analysis involves measuring the probability an event will occur and the
impact of it, should the identified risk actually occur.
Decision support system

This provides information to supplement rather than replace managerial
decision making. Normally it consists of a database which can then be
analyzed and rearranged using a computer model. An expert system is

one example of a computer-based decision-making model which is used to
make lending decisions on small businesses. Another example is the
computer-based credit scoring system for credit card applications.
Models are used throughout the financial services industry globally. Examples
of the purposes for which models are used include:
■ To determine product pricing
■ In portfolio and risk management
■ For profitability analysis
■ To assist in the investment decision-making process
■ For external reporting.

This list is not exhaustive as models form part of many business units who
will have specific and unique requirements. Models are used in situations
where an event or outcome cannot be assessed or observed in real life. The
purpose of models is to bridge the gap between theory and application to
allow us to accurately forecast what future outcomes are likely to be.
Individual influences
An individual may influence the way in which information is acquired,
processed and used. Research reveals that dogmatic or authoritarian
personalities show a lack of tolerance for ambiguity and uncertainty and are
less likely to search for information. They are also less capable of dealing with
inconsistent information and are les> flexible in approach.
Those who regard power as important can use information as a tool for
achieving personal objectives, resulting in the withholding of information in
order to maintain control or win favors. This can be detrimental to decision
making which relies on cooperative or combined efforts, and possession of the
right levels of information. Training provided by an organization sometimes
may resuir in an interference with the decision process. This can arise when
the decision ru es r procedures do not fit the decision; rigidity can result and
_
mpa r the capacity to react to circumstances although the employee will 'r-e c
fess time analyzing the problem and therefore it can be to their cc -'
Organizational influences
The division of labor in organizations allows for speck! izs±«r. n decision
making but also provides restrictions in the form of speck :rc language and
terminology, as well as communication barriers between different parts of the
business.
Organizational hierarchy
This is the organization of tasks in hierarchical form. It can lead to problems
in the processing and transfer ofinformation. The organization filters
information by providing less detail to the top of the business. Technology
has aided this process because senior managers can have direct access to

certain information.
All organizations possess a grapevine (the informal communication system).

The grapevine ca n ease the burden of overloaded com mu nication channels
but sometimes it is inaccurate and the quality ofinformation received from
this source can have an effect on decision making.
When to refer a decision

Decision making not only involves what to do but also how to do it.
Sometimes decisions have to be passed up to the next organizational level.
Questions which help to identify this are:
■ Is this an isolated incident?
■ Is it a unique problem?
■ Wil 1 there be others affecting other sections?
Leadership Those features which characterize a group’s effective performance are high morale
and high productivity. If productivity is high, unit costs will be lowered and
this will make the firm’s products more competitive. By the same token, high
morale is a good indication of low labor turnover and low absenteeism. These
are all positive indicators of effective leadership - a leader is someone who
influences others.
There are a number of definitions of leadership from the various writers in this
field. Mullins has defined leadership as: “A relationship through which one
person influences the behavior of other people”.
Fieldman and Arnold take things a little further, when they state:
“Leadership involves one person (the leader) consciously trying to get other
people (the followers) to do something the leader wants them to do”.
However, both of these definitions infer that some form of personal

relationship exists between the leader and the led. It seems that it is
impossible to separate (as Mullins states) “the process of leadership from the
activities of groups”. The job of the manager normally involves some
leadership ability, but as you may well be aware from your own experience,
not all leaders are managers. The difference between leadership and
management (although sometimes they may

be synonymous) is that management involves coordinating activities to achieve organizational
goals, whereas leadership is more generally concerned with acting as a guide and motivator
for others.
Leadership effectiveness
One issue which has concerned organizational theorists is why some leaders are effective and
others ineffective. You may well have experience of this from your own working life. A popular
boss is not always an effective boss. This person can sometimes hinder the performance of a
team by always putting the needs of the individual (or a number of individuals) first.
An effective boss is often the one who balances the needs of the team, individual and task that
has to be completed. The management of balancing these needs is generally known as “action
centered leadership”
Action centered leadership

In order to provide effective leadership, John Adair takes what he calls a functional approach
towards teams or groups and identifies overlapping sets of needs which must be satisfied in an
organization for effective performance to occur. These are set out in the diagram below.
This is known as action centered leadership and the need> are:
■ The need to achieve the common task
■ Maintaining morale and building a team spirit
« Meeting the needs of individual members of the group
Thus, achieve the task, build the team and develop individuals.
The difference between a need and what economists call a want is that a need cannot be done
without, whereas a want is something that can easily be done without- you may want a new
computer, whether you need one is a different matter.
Task Needs
The leader of a team has to get results, such as productivity, sales, etc. Consequently the
leader’s main contribution in achieving the required results lies in:
■ being quite clear what the task is
: ;2nizational Behavior Concepts 231

■ planning how to accomplish it
■ specifying the resources needed
■ controlling progress towards achievement of the task
* evaluating results in the light of planned objectives Team Needs

To achieve these objectives, the group needs to be cohesive. People need to be working
together in a coordinated fashion in the same direction; teamwork will ensure that the team’s
contribution is greater than the sum of its parts. Conflict within the team must be used
effectively. Therefore the key functions of the leader in meeting group needs are to:
■ Set and maintain group standards
■ Build up morale and team spirit within the group
■ Involve the group as a whole in achieving the objectives
■ Maintain group unity, minimizing any dissident activity Individual Needs

Within working groups, individuals also have their own set of needs — they need to know
what their responsibilities are, how they will be needed, how well they are performing. So that
each individual is sufficiently instructed to give satisfaction at work, he/she must:
* feel a sense of personal achievement in the job
■ feel that they are making a worthwhile contribution to the group’s objectives
■ feel that the job demands the best of them and is giving them the responsibility to match
their capability
■ receive adequate recognition for their achievements
■ feel that, as an individual, they are developing and advancing in experience and ability
A team leader must try to achieve the required results and to manage his/her interpersonal
relationships and those within the group by acting in all three areas of overlapping needs.

A leader can be appointed, selected or chosen informally. Attempted leadership occurs when
■ a n d one in the group tries to exert influence over others. You may have experienced this on
a leadership training course ■.vhere one course participant will try to exert influence over
his/her fellow participants.
Successful leadership occurs when influence brings about the behavior and results intended
by the leader. Effective leadership occurs when it results in functional behavior and the
achievement of team goals. Within an organization, the leadership influence will be
dependent on the type of power the leader can exercise over others. This exercise of power is a
social process and explains how different people can influence the behavior of others.
There are five main sources of power, as identified by French and Raven:
■ Reward power—based on fact and on the team members’ perception that the leader has
the ability and resources to obtain rewards for those who comply, such as pay, promotion
■ Coercive power — based on the fact and the team members’ perception that the leader has
the ability to punish those who do not comply
■ Referent power — based on the team members’ identification with the leader who
exercises influence because of perceived attractiveness - “charisma”; a manager may not be
able to reward subordinates but can still command respect
■ Expert power — based on the team members’ perception of the leader as someone who is
competent and has special knowledge
■ Legitimate power — based on the leader’s position of authority in the organization.
Another category of power defined by other writers is political power, which is derived from
knowing “how things work”, in other ords. :he politics of the organization.
Your power bases will depend on your job and position, but you will probably have at least
expert power. The sources of power ire based on the team members’ perception of the leader.
If suppliers believe ; manager has the power to withdraw an order, then the manager can
exercise considerable influence even though he/she may not have this power in reality.
:~anizational Behavior Concepts 233

Leadership is dynamic behavior because it is constantly changing and depends on:
■ the characteristics of each leader
■ the attitude, needs and characteristics of the followers
■ the nature of the organization - its purpose and structure
■ the environment
A leader can also act as a model for his/her team - his/her attitude, energy, etc can set a
pattern and standard for others to follow. The leader is also a representative of the team in the
eyes of others - by being the link in the organization between the team and others. Team
members rely on their leader to act as the mouthpiece and occupy a representative role to
other parties.
Perception Management
Perception management is a process by which individuals organize and interpret their sensory
impressions in order to give meaning to their environment. However, what we perceive can be
substantially different from objective reality. For example, all employees in a firm may view it
as a great place to work - favorable working conditions, interesting job assignments, good pay,
excellent benefits, understanding and responsible management- but, as most of us know, it’s
very unusual to find such an agreement.
Why is perception important in the study of OB? Simply because people’s behavior is based
on their perception of what reality is, not on reality itself? The world as it is perceived is the
world that is behaviorally important.
Factors That influence Perception

How do we explain the fact that individuals may look at the same thing yet perceive it
differently? A number of factors operate to shape and sometimes distort perception. These
factors can reside in the perceiver, in the object, or target, being perceived; or in the context
of the situation in which the perception is made.
When an individual looks at a target and attempts to interpret what he or she sees, the
interpretation is heavily influenced by the personal characteristics of the individual perceiver.
Personal characteristics that affect perception include a person’s attitudes, personality,
motives, interests, past experiences, and expectations. For instance, if you expect police
officers to be authoritative, young people to be lazy, or individuals holding public office to be
unscrupulous, you may perceive them as such, regardless of their actual traits.

of the target we observe can affect what we perceive. La. c re pie are
more likely to be noticed in a group than quiet ones. Sa. T ire extremely attractive or
unattractive individuals. Because
■ : acn't look at targets in isolation, the relationship of a target to its ■adtfround
cl>o influences perception, as does our tendency to group things and similar things
together. For instance, women, people af. r. or members of any other group that has
clearly distinguishable c‘_~ic:rr:>tics are often perceived as alike in other, unrelated
ways as wdL
context in which we see objects or events is also important. The •use at which
we see an object or event can influence attention, as can kxati on. light, heat, or any
number of situational factors. For example, in . restaurant on a Saturday night, you
may notice a young guest “dressed :c :he nines.” Yet that same person so attired for
your Monday morning ~;~.ugement class would certainly catch your attention (and
that of the rest of the class). Neither the perceiver nor the target changed between
Saturday night and Monday morning, but the situation is different.
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Part 1 Introduction to HRM 7

Chapter 1: The HRM Framework

Chapter 2: Role of HRM in Financial institutions

Chapter 3: Global View of HRM

Part 2 Functions of HRM 25

Chapter 1: Functions of HRM Introduction 28 Selection

Part 3 Chapter 1: Planning and Budgeting

Chapter 2: Setting the Budget

Part 4 The HRM Process

Chapter 1: Preparation and Selection

Chapter 2: Development and Evaluation

m Human Resource Manaaement and Orcianizational Behavior I Reference Book 2

Chapter 4: Employee Relations and Assessment

Chapter 5: Employee Skill Management

Part 5 HRM Challenges

Chapter 1: Workplace Diversity

Chapter 2: Motivational Approaches

Chapter 2: Organizational Code of Conduct

Corporate Codes 211

7 Organizational Behavior Concepts

Chapter 1: Organizational Behavior Concepts

Human Resource Management and Organizational Behavior | Reference Hook 2

Introduction Concept of HRM

Main components of the HRM system

Chapter 2: Role of HRM in Financial Institutions

Need for Human Resource Department (HRD) and HR

Building efficiency in Banks With The Help of HRM

Human Resource Management In Practice

Chapter 3: Global View of HRM

What is The Global Village?

The Implications for HRM

Changing Skills Requirements

The Rationale Behind Downsizing

The HRM Implications

* Explain the concept of the HRM framework in an organizational setup

A company’s culture, values, its environment and managerial behavior

Human Resource Manaoempnt anH .

1. Manpower of an organization is highly valuable for a corporation’s proper

2. Human resources cannot be treated like material resources as they have

HRM Model, beinga personnel managementproduction model approach, is an

HRM, with its differentiating role of strategic management, attempts to ^ fulfill

Human Resource Management and Organizational Behavior I Reference Book 2

1. An organization's members are considered the occans of untapped ^resources.

2. These resources have immeasurable development capacity.

1. The culture the corporation develops majorly focuses on synchronized superior-subordinate

Human Resource Management and Organizational Behavior I Reference Book 2

■ Describe the role of HRM in a financial institution setup

The external forces of change have resulted in a classical response of

Human Resource Management and Organizational Behavior | Reference Book 2

HRM is an approach that manages, develops, trains and motivates an

Need for ->uman

: i of HRM in Financial Institutions

Human Resource Management and Organizational Behavior I Reference Book 2

■ Building efficiency in banks through HRM is achievable by bringing in

■ A preeminent selection process implemented by the HR department is the

■ The fundamental role of HR is the effective management of the numerous

■ Focus pn job description and job assignment

■ Response to prospective risks and perils.

Human Resource A Case Study of State Bank of Pakistan

Second, the management responsibilities for Human Resource management in

By the end of this chapter you should be able to:

• Explain the global view of HRM