BDPB2103 PDF

OUM Business School
BDPB2103
Introductory Human Resource Management
Copyright © Open University Malaysia (OUM)

BDPB2103
INTRODUCTORY
HUMAN RESOURCE
MANAGEMENT
Haji Yaakob Ibrahim
Dr Ho Jo Ann
Assoc Prof Dr Santhi Raghavan

Project Directors: Prof Dato’ Dr Mansor Fadzil
Prof Dr Wardah Mohamad
Open University Malaysia
Module Writers: Haji Yaakob Ibrahim

Dr Ho Jo Ann
Universiti Putra Malaysia

Moderators: Assoc Prof Dr Khulida Kirana Yahya

Universiti Utara Malaysia

Developed by: Centre for Instructional Design and Technology

First Edition, July 2008

Second Edition, August 2016 (rs)
Copyright © Open University Malaysia (OUM), August 2016, BDPB2103

All rights reserved. No part of this work may be reproduced in any form or by any means without
the written permission of the President, Open University Malaysia (OUM).

Table of Contents
Course Guide ixăxiv
Topic 1 Introduction to Human Resource Management 1

1.1 Definition of Human Resource Management 2
1.2 Functions of Human Resource Management 3
1.2.1 The Acquisition of Human Resources 4
1.2.2 The Development of Human Resources 5
1.2.3 Remuneration, Health and Safety of Human Resources 6
1.2.4 Industrial Relations 7
1.2.5 The Relationship between Various Functions of 8
Human Resource Management
1.3 Factors that Influence Human Resource Management 8
1.3.1 The External Environment 9
1.3.2 The Internal Environment 13
Summary 14
Key Terms 15
Self-Test 16
Topic 2 Job Analysis 18

2.1 Job Analysis as a Foundational Tool for Human Resource 18
Management
2.2 The Importance of Job Analysis 20
2.3 Types of Information Required 22
2.3.1 Who is Involved in a Job Analysis? 23
2.3.2 Controlling the Accuracy of Information 23
2.4 Methods of Job Analysis 24
2.5 Job Description 28
2.6 The Importance of Job Descriptions 32
2.7 Problems With Job Descriptions 32
2.8 Writing a Clear and Correct Job Description 33
2.9 Job Specification 33
Summary 34
Key Terms 34
Self-Test 35

iv  TABLE OF CONTENTS
Topic 3 Human Resource Planning 36

3.1 Definition of Human Resource Planning 37
3.2 The Process of Human Resource Planning 39
3.3 Methods of Forecasting the Demand for Human Resources 41
3.3.1 Quantitative Methods 42
3.3.2 Qualitative Methods 44
3.4 Methods of Forecasting the Supply of Human Resources 44
3.4.1 The Supply of Employees within an Organisation 45
3.4.2 The Supply of Employees from Outside an 47
Organisation
3.5 Achieving Balance between Demand and Supply 48
Summary 49
Key Terms 49
Self-Test 50
Topic 4 Employee Recruitment 51

4.1 Introduction to Recruitment 52
4.2 Alternatives to Recruitment 53
4.3 Recruitment Processes 55
4.4 Recruitment Sources 56
4.4.1 Internal Recruitment Sources 57
4.4.2 External Recruitment Sources 58
4.5 Recruitment Methods 61
4.5.1 Internal Recruitment Methods 61
4.5.2 External Recruitment Methods 62
Summary 65
Key Terms 65
Self-Test 66
Topic 5 Selection 67
5.1 Selection: Match Individuals to Jobs 68
5.2 Selection Process 68
5.3 Screening Applicants 70
5.4 Preliminary Interview 70
5.5 Selection Tests 72
5.6 Types of Selection Tests 74
5.6.1 Cognitive Competency Test 74
5.6.2 Psychomotor Competency Test 74
5.6.3 Job Knowledge Test 74
5.6.4 Job Simulation (Work Sample Test) 75
5.6.5 Situational Test 75

TABLE OF CONTENTS  v
5.7 Job Interviews 75

5.7.1 Planning an Interview 76
5.7.2 Types of Interviews 77
5.8 Conducting an Interview 79
5.9 Factors that Undermine the Effectiveness of an Interview 81
5.10 Verifying the Information Provided by Candidates 82
5.11 Selection Decision 83
5.12 Notification of Decisions to Candidates 84
Summary 85
Key Terms 85
Self-Test 86
Topic 6 Employee Development 89

6.1 Definition of Employee Training and Development 90
6.2 Advantages of Conducting Training and Development 91
6.3 A Methodical Approach in Conducting Training and 92
Development Programmes
6.3.1 Who Requires Training and Development? 93
6.3.2 Training Needs Analysis 94
6.3.3 Defining Training Objectives 95
6.3.4 Designing Training Programmes 95
6.4 Factors in Selecting Training Methods 98
6.5 Conducting Training Programmes 100
6.6 Evaluating Training Programmes 101
Summary 102
Key Terms 102
Self-Test 103
Topic 7 Performance Appraisal 104

7.1 Definition of Performance Appraisal 105
7.2 Uses of Performance Appraisal 106
7.3 Performance Appraisal Process 107
7.4 Features of an Effective Performance Appraisal 108
7.5 Deciding who will Conduct the Appraisal 110
7.6 Performance Appraisal Methods 113
7.7 Problems in Performance Appraisals 117
Summary 119
Key Terms 119
Self-Test 120

vi  TABLE OF CONTENTS
Topic 8 Pay, Benefit and Incentives 121

8.1 Defining Employee Remuneration 122
8.2 Types of Equity 123
8.2.1 Effective Remuneration Features 124
8.2.2 Basis of Determining Wages 124
8.3 Wage Survey 127
8.4 Performance Based Pay 128
8.5 Benefits 129
8.5.1 Statutory Benefits 129
8.5.2 Non-statutory Benefits 131
8.6 Remuneration Incentives 133
Summary 134
Key Terms 135
Self-Test 135
Topic 9 EmployeesÊ Health and Safety 137

9.1 Employee Safety and Health Acts in Malaysia 138
9.2 Factories and Machinery Act, 1967 138
9.3 Occupational Safety and Health Act (OSHA), 1994 139
9.3.1 EmployerÊs Responsibilities 140
9.3.2 EmployeeÊs Responsibilities 141
9.3.3 Responsibilities of Designers, Formulators, 141
Manufacturers, Importers or Suppliers
9.4 Causes of Accidents at the Workplace 142
9.5 Measures to Reduce Accidents at the Workplace 145
Summary 146
Key Terms 147
Self-Test 147
Topic 10 Industrial Relations 148

10.1 Industrial relations system 149
10.1.1 Employees and Their Organisations 150
10.1.2 Employers and Their Organisations 158
10.1.3 The Government and Its Agencies 161
Summary 167
Key Terms 167
Self-Test 167

COURSE GUIDE

COURSE GUIDE  ix
COURSE GUIDE DESCRIPTION

You must read this Course Guide carefully from the beginning to the end. It tells
you briefly what the course is about and how you can work your way through
the course material. It also suggests the amount of time you are likely to spend in
order to complete the course successfully. Please keep on referring to the Course
Guide as you go through the course material as it will help you to clarify
important study components or points that you might miss or overlook.
INTRODUCTION
BDPB2103 Introductory Human Resource Management is one of the courses
offered by the OUM Business School at Open University Malaysia (OUM). This
course is worth 3 credit hours and should be covered over 15 weeks.
COURSE AUDIENCE
This is a core course for all learners undertaking Diploma in Management and
Diploma in Human Resources Management.
As an open and distance learner, you should be acquainted with learning

independently and being able to optimise the learning modes and environment
available to you. Before you begin this course, please ensure that you have the
right course material and understand the course requirements as well as how the
course is conducted.
STUDY SCHEDULE
It is a standard OUM practice that learners accumulate 40 study hours for every
credit hour. As such, for a three-credit hour course, you are expected to spend
120 study hours. Table 1 gives an estimation of how the 120 study hours could be
accumulated.

x  COURSE GUIDE
Table 1: Estimation of Time Accumulation of Study Hours
Study
Study Activities
Hours
Briefly go through the course content and participate in initial discussion 3
Study the module 60
Attend 3 to 5 tutorial sessions 10
Online participation 12
Revision 15
Assignment(s), Test(s) and Examination(s) 20
TOTAL STUDY HOURS ACCUMULATED 120
COURSE OUTCOMES
By the end of this course, you should be able to:
1. Discuss human resource management regarding its concepts and practices

in an organisational context;
2. Identify the factors of human resources; and
3. Explain the factors that influence human resource management.
COURSE SYNOPSIS
This course is divided into 10 topics. The synopsis for each topic can be listed as
follows:
Topic 1 discusses the definition of human resource management and its

functions. This is followed by a discussion on the internal and external factors
that influence the human resource management of an organisation.
Topic 2 explains job analysis and its significance to an organisation. We will then
identify the types of information required for job analyses and how these are
carried out. This topic also focuses discussions on the use of job analysis
information in the preparation of job descriptions and specifications.

COURSE GUIDE  xi
Topic 3 will introduce human resource planning and discuss its importance
along with its processes. This will be followed by an explanation of the methods
that are used to forecast the demand and supply of human resources. At the end
of this topic, we will examine ways to achieve a balance between the demand and
supply of human resources.
Topic 4 explains how an organisation carries out the process of employee

recruitment. Recruitment sources and methods that can be employed in the
recruitment of employees are also discussed in this topic.
Topic 5 describes how an organisation selects the most qualified individual for a
specific job. We will identify why the selection process is vital in the acquisition
of human resources, as well as the steps involved in the selection process.
Subsequently, we will discuss selection tests that can help in the selection
process, as well as the fundamental concepts of selection tests such as the concept
of validation and reliability. We will also examine methods of conducting
interviews and the types of interviews that can be employed, as well as problems
that relate to adopting interviews as a selection tool. The topic concludes with a
discussion on carrying out background and reference checks on applicants.
Topic 6 explains the training and development process. We will discover how to
identify the requirements of training and development programmes for
employees and ways in which a specific programme can be effectively
implemented. The design and evaluation of training and development
programmes are also discussed.
Topic 7 will focus on performance appraisal programmes, which are one of the
tools that can help maintain and increase an organisationÊs productivity, as well
as help achieve strategic objectives.
Topic 8 introduces wages, benefits and incentives as well as the features of

effective remuneration. This topic also discusses the basis of determining wages
as well as the types of benefits and incentives that may be used to motivate
employees within an organisation.
Topic 9 clarifies the objectives of occupational health and safety programmes

within an organisation, the causes of accidents at the workplace, as well as
considerations of health and safety programmes at the workplace. The
Occupational Safety and Health Act (OSHA) 1994 will also be discussed.

xii  COURSE GUIDE
Topic 10 focuses on three primary parties within an industrial relations system,

namely, the employee and his or her trade union, the employer and its
organisation and the government and its agencies. Discussions will focus on the
roles and activities that are carried out, the influence and strength of each party
in the decision-making process of an organisation and the legal provisions with
regard to their activities.
TEXT ARRANGEMENT GUIDE

Before you go through this module, it is important that you note the text
arrangement. Understanding the text arrangement will help you to organise your
study of this course in a more objective and effective way. Generally, the text
arrangement for each topic is as follows:
Learning Outcomes: This section refers to what you should achieve after you
have completely covered a topic. As you go through each topic, you should
frequently refer to these learning outcomes. By doing this, you can continuously
gauge your understanding of the topic.
Self-Check: This component of the module is inserted at strategic locations

throughout the module. It may be inserted after one sub-section or a few sub-
sections. It usually comes in the form of a question. When you come across this
component, try to reflect on what you have already learnt thus far. By attempting
to answer the question, you should be able to gauge how well you have
understood the sub-section(s). Most of the time, the answers to the questions can
be found directly from the module itself.
Activity: Like Self-Check, the Activity component is also placed at various

locations or junctures throughout the module. This component may require you
to solve questions, explore short case studies, or conduct an observation or
research. It may even require you to evaluate a given scenario. When you come
across an Activity, you should try to reflect on what you have gathered from the
module and apply it to real situations. You should, at the same time, engage
yourself in higher order thinking where you might be required to analyse,
synthesise and evaluate instead of only having to recall and define.
Summary: You will find this component at the end of each topic. This component
helps you to recap the whole topic. By going through the summary, you should
be able to gauge your knowledge retention level. Should you find points in the
summary that you do not fully understand, it would be a good idea for you to
revisit the details in the module.

COURSE GUIDE  xiii
Key Terms: This component can be found at the end of each topic. You should go
through this component to remind yourself of important terms or jargon used
throughout the module. Should you find terms here that you are not able to
explain, you should look for the terms in the module.
References: The References section is where a list of relevant and useful

textbooks, journals, articles, electronic contents or sources can be found. The list
can appear in a few locations such as in the Course Guide (at the References
section), at the end of every topic or at the back of the module. You are
encouraged to read or refer to the suggested sources to obtain the additional
information needed and to enhance your overall understanding of the course.
PRIOR KNOWLEDGE
Learners of this course are required to pass the BDPP1103 Introductory
Management course.
ASSESSMENT METHOD
Please refer to myINSPIRE.
REFERENCES
Main Textbook:
Mondy, R. W., Noe, R. M., & Premeaux, S. R. (2009). Human resource

management (11th ed.). Upper Saddle River, NJ: Prentice Hall.
Additional Reading:
Aminuddin, M. (1996). Malaysian employment law and industrial relations (2nd

ed.). Malaysia: McGraw-Hill.
Aminuddin, M. (1997). A guide to human resource management attracting and

keeping good people (2nd ed.). Shah Alam: Penerbit fajar Bakti.
Aminuddin, M. (1997). Human resource management (2nd ed.). Shah Alam:

Penerbit fajar Bakti.
Bohlander, G. W., Snell, S., & Sherman, A. (2009). Managing human resource
(15th ed.). Mason, OH: Thompson South-Western.

xiv  COURSE GUIDE
Dessler, G. (2007). Human resource management (11th ed.). Upper Saddle River,
NJ: Prentice Hall.
Yong, A. K. B. (1996). Malaysia human resource management. KL, Malaysia:

Malaysian Institute of Management.
TAN SRI DR ABDULLAH SANUSI (TSDAS) DIGITAL

LIBRARY
The TSDAS Digital Library has a wide range of print and online resources for
the use of its learners. This comprehensive digital library, which is accessible
through the OUM portal, provides access to more than 30 online databases
comprising e-journals, e-theses, e-books and more. Examples of databases
available are EBSCOhost, ProQuest, SpringerLink, Books247, InfoSci Books,
Emerald Management Plus and Ebrary Electronic Books. As an OUM learner,
you are encouraged to make full use of the resources available through this
library.

Topic  Introduction
1 to Human
Resource
Management
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Explain the concept of human resource management in an
organisation;
2. Describe the four functions of human resource management; and
3. Discuss the external and internal environmental factors that may
influence human resource management.
 INTRODUCTION
Can you imagine an organisation without employees, supervisors, managers or
executives? Is it not weird? Without humans, an organisation cannot exist. In
order to form an organisation, a group of people must work together towards
achieving common objectives. An efficient and successful organisation is able to
combine the capabilities, knowledge and skills of individuals in the organisation.
All managers can be considered as human resource managers as they are

involved in activities such as recruitment, conducting interviews, selections and
training sessions. What does human resource management mean? What are the
functions of human resource management in an organisation?

2  TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT
Topic 1 explains the definition of human resource management and the functions
of the management of human resources. Subsequently, this topic also outlines the
relationship between the functions. You will also discover how the internal
environment influences the functions of human resource management.
1.1 DEFINITION OF HUMAN RESOURCE

MANAGEMENT
Human resource involves the humans employed in an organisation. Humans are
considered as a valuable resource and at times, difficult to replace owing to the
skills, knowledge and the ability they possess, which may increase the efficiency
and effectiveness of an organisation. The management of human resources is a
process of attracting, training and organising a talented and efficient workforce.
Placing managers, designing jobs and teams, creating trained employees and
offering rewards for an employeeÊs successes are important elements in the
management of human resources. A manager carries out his or her duties
through the capabilities of the employees in an organisation and this requires an
effective management of human resources. As a result, managers from all levels
of employment must understand human resource management.
Human resource management is a priority for organisations, more so in this era

of technology. This is crucial as managers realise that technological input has
limitations, despite the advancement of technology. As technological
advancements are available worldwide, being in possession of technology does
not necessarily guarantee the success of an organisation. As a whole, employees
in an organisation are responsible for the success or failure of a business.
At present, employees in an organisation consist of people from different

backgrounds, races, religions, genders and levels of education. To work well with
other individuals, an employee must understand human behaviour. They should
be aware of the existing systems and practices that help to build a trained and
motivated workforce. The task of a manager is not limited to the recruitment of
employees for a job but he or she is also responsible in ensuring the job
satisfaction of employees.

TOPIC 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT  3
SELF-CHECK 1.1
What do you understand about human resource management? Explain

in your own words.
1.2 FUNCTIONS OF HUMAN RESOURCE

MANAGEMENT
There are four primary functions involved in the effective management of human
resources. They are acquisition, development, the remuneration, health and
safety of human resources and industrial relations. Figure 1.1 shows these
functions. Let us look at each function in greater detail in the following subtopics.
Figure 1.1: Functions of human resource management

1.2.1 The Acquisition of Human Resources

The process of acquiring human resources is an important function that can
contribute to the success of an organisation. An organisation must possess
individuals who have the capability, skills and qualifications to carry out a task.
In order to acquire such individuals, human resource planning, recruitment and
selection must be carried out. An organisation must ensure that the workforce is
productive and continues to be productive be it in a short- or long-term period.
An effective selection of human resources determines the success and failure of
an organisation. The acquisition of human resources comprises three important
components and these are the planning, recruitment and selection of human
resources which are explained as follows:
(a) Human Resource Planning

Before an organisation carries out recruitment and selection processes, it
must conduct planning for human resources. The planning for human
resources is a process to systematically research the requirements of human
resource for the organisation, in order to ascertain the required number of
skilled employees and to ensure that the skills required are suitable for the
job offered. The planning for human resources will be discussed in-depth in
Topic 3. Job analysis is another useful tool for employers to plan for the
supply of human resources in an organisation. Job analysis is a process of
formulating detailed job procedures with regard to specific tasks related to
the job and to determine the relationship between a particular job and other
jobs. It also determines the required knowledge, skills and capabilities
necessary for an employee to carry out his or her job well. The topic of job
analysis will be discussed in-depth in Topic 2.
(b) Recruitment
Recruitment is the process of attracting individuals who are qualified and
encouraging individuals to apply for employment in an organisation. Prior
to beginning the search for qualified employees, the organisation must be
aware of the job specifications needed to fill the position. Job specification is
a statement that outlines the knowledge, skills and capabilities that must be
possessed by an individual in order to perform the job. Aside from job
specifications, managers and supervisors also require a job description to
select and match an employee to a job. A job description is an account that
outlines the duties and responsibilities of a job. Recruitment will be
discussed further in Topic 4.

(c) Selection
Selection is a process of choosing a suitable individual from a pool of
applicants to fill a vacancy. Effective selection objectives include matching
the characteristics of an individual ă capability, experience and academic
qualifications ă with the requirements of the job. The managementÊs failure
to find a suitable match can affect the future performance and job
satisfaction of the employee. The selection process can be considered most
difficult for a manager and this will be discussed in-depth in Topic 5.
ACTIVITY 1.1
Browse the Internet on any homepage of companies and discuss with

your coursemates in the class or on the myINSPIRE forum about the
advantages you see in using the Internet to attract job candidates.
1.2.2 The Development of Human Resources

The development of human resources helps an individual and team members to
be more effective. It is a necessity, owing to the constant changes of human,
technological, job and organisational factors. Therefore, an organisation must
train and develop its employees in order to achieve higher productivity levels.
Human resource development also prepares individuals to take on higher
positions. The primary components of human resource development are
orientation, employee training and development and performance appraisals as
seen in Figure 1.2. These topics will be discussed in Topics 6 and 7.
Figure 1.2: The primary components of human resource development

(a) Orientation
Orientation is a formal process aimed at familiarising new employees with
their jobs, regulations, the organisationÊs objectives and introducing them to
their colleagues. New employees are required to attend the orientation
programme sponsored by the organisation. This is important in
familiarising the employee with the job in the organisation.
(b) Employee Training and Development

Employees in an organisation need continuous training to maintain
effective performance levels and to adapt to new working practices.
Employee training and development may be defined as a set of activities
that offer employees the opportunity to acquire and improve their work
skills. Through training, an organisation can encourage work practices that
are healthy, productive and conducive to the environment of the
organisation.
(c) Performance Appraisals

A manager must assess the performances of employees based on the
responsibilities handed to them. The manager may do so via performance
appraisals. For this purpose, a manager uses forms and evaluation systems
designed by the human resource department. Performance appraisals
comprise the process of identifying, measuring and managing the
performance levels of individuals in an organisation. Through performance
appraisals, an employeeÊs performance in carrying out the tasks handed to
him or her can be appraised.
ACTIVITY 1.2
In your opinion, why must an employer train its employees? Search for
further information on employee training on the Internet.
1.2.3 Remuneration, Health and Safety of Human

Resources
The remuneration, health and safety of human resources is an important
mechanism that can be used by firms and managers to attract, retain and
motivate competent employees, so that their performance is in accordance with
the organisationÊs objectives. Remuneration represents the reward offered by an
organisation to an employee based on his or her contributions and service to the
organisation. Examples include gratuities, pensions and retirement benefits. This
is accepted by an employee when he or she agrees to be employed by the
organisation . Benefits and rewards received may be a combination of any of the

following:
(a) Wages
Money in the form of „Ringgit‰ and „Cents‰ received by an individual for
carrying out a task.
(b) Benefits
A monetary reward apart from the basic salary, such as annual leave, sick
leave and insurance.
(c) Incentives
A reward given to motivate employees. For example, sales incentives in the
form of commissions or holiday vouchers that are given for achieving sales
targets. Other types of incentives include performance bonuses, attendance
bonuses and rewards for excellent service.
(d) The Health and Safety of Employees

The organisation is responsible for the health and safety of its employees.
The organisation must ensure that the job they offer is safe and will not
jeopardise the health of the employee who performs it. Health refers to the
general physical and mental well-being of an employee, while safety means
to protect an employee from injuries caused by accidents at the workplace.
An employee who is well protected and healthy will be productive and will
make contributions to the organisation. We will discuss the health and
safety issues of employees in-depth in Topic 9.
1.2.4 Industrial Relations

At the beginning of this topic, we learnt that an organisation comprises several
individuals whose aim is to achieve the objectives of the organisation.
Sometimes, the needs of an individual conflict with the objectives of the
organisation or the work ethic of an individual may differ from that of the
organisational system. This may create problems. Industrial relations refers to
established systems and rules that have been agreed upon in the organisational
policies towards creating a specific work environment. There are two
components in industrial relations, namely:
(a) Employer-employee Relationship

To maintain a satisfactory work environment, an organisation must pay
attention to the relationship between the employer and employees. A
working environment full of conflict between employees or between

employees and employers may affect the productivity and performance of

the organisation.
(b) Employee Discipline

Industrial relations also include discipline and disciplinary actions against
employees who defy organisational rules and policies.
1.2.5 The Relationship between Various Functions of

Human Resource Management
All functions of human resource management that were discussed earlier are
interlinked. Managers must be aware that a decision made on one function will
affect other functions directly. For example, an organisation that focuses on
recruiting qualified candidates but does not offer satisfactory remuneration
schemes will result in a waste of the companyÊs time and money. Skilled and
productive employees will lose their motivation if they are not given adequate
training and development opportunities to acquire new skills. In addition,
benefits and rewards alone are not enough; an employee should also be offered a
safe and healthy work environment.
ACTIVITY 1.3
Draw a diagram that shows the relationship between each function of

human resource management. Compare your diagram with those of
your coursemates and discuss.
1.3 FACTORS THAT INFLUENCE HUMAN

RESOURCE MANAGEMENT
We have discussed the definition of human resource and its various functions.
Now, let us look at how the environment can influence the management of
human resources. There are many factors that influence human resource
management. These factors are categorised as internal and external
environments. Figure 1.3 shows the external environment factors while Figure 1.4
illustrates internal environmental factors that influence human resource
management.

1.3.1 The External Environment

The external environment comprises factors that are shown in Figure 1.3 and
these include factors such as economy, technology, consumers, competition,
shareholders, trade unions, labour markets and statutory requirements. These
factors, either separate or combined, may influence the management of human
resources.
Figure 1.3: The external environment that influences human resource management
Each of these factors is elaborated further as follows:
(a) Economy
A countryÊs economic condition is an environmental factor that has a big
influence on human resource management. Generally, the economic climate
will determine the demand and supply of employees. During economic
depression, more candidates will apply for jobs and therefore organisations
have a larger labour market to choose from.
The economic climate also influences the development of the workforce.

During economic depression, organisations will reduce staff training and
development compared to during economic prosperity. For example,
companies that contribute to the Human Resource Development Fund will
be allowed to take out a part of their contributions for staff development.

Another function of human resource management that is influenced by the

economic factor is benefits and rewards. During economic prosperity,
organisations will offer bonuses and increments. On the other hand, during
depression, an organisation may cease the payment of bonuses and
increments or employees may have to face a salary cut. Industrial relations
between employees or trade unions and employers may be tense, especially
if the organisation adopts the retrenchment strategy.
ACTIVITY 1.4
In your opinion, what were the effects of the economic depression in

1998 on the human resource management of an organisation?
(b) Technology
Technology changes at such a rapid pace. One of the most challenging
aspects of human resource management is to train and develop employees
so that they can keep up with the steady advancement of technology. With
changes in technology, certain skills will become redundant and in fact,
employees will be required to acquire new abilities like an enhanced
knowledge of computer applications and an enhanced understanding of
technological information and the communication of the information.
The advancement of technology also allows for the process of employee

recruitment using the Internet. Job vacancies in an organisation may be
advertised through the organisationÊs website or on web pages that have
been specifically designed for the recruitment of employees. There are also
organisations that carry out computer-based trainings. One of the primary
uses of technology in human resource management is the organisationÊs
human resource information systems. These human resource information
systems may be used to produce accurate and up-to-the-minute reports, to
aid management in making decisions relating to the requirements of human
resources, the planning of careers and promotions and for the evaluation of
policies and human resource practices.

(c) Consumers
Consumers represent those who use the products and services of an
organisation which are a part of the organisationÊs external environment.
Because sales are important for the existence of any organisation, the
management must ensure that the work practices of employees do not offend
consumers. Consumers will always demand goods and services of high
quality. Consumers who fail to acquire their expected services or goods will
cease dealing with the organisation. Therefore, the organisationÊs workforce
must be able to provide services and goods of high quality. These
circumstances directly correlate with the skills, qualifications and motivation
of employees in an organisation.
(d) Competition
A firm will face stiff competition in the production and labour markets. There
are always other firms that produce similar goods or services. Therefore, a
firm must have skilled employees if it desires to survive, grow and succeed.
A firm must ensure that it is able to acquire and retain a sufficient workforce
in various fields in order to compete effectively. Employees have high
mobilityand may choose to move on to other firms, especially during an
inflated economic climate. To encourage qualified employees to stay on at an
organisation, the management must adopt a suitable human resource policy,
a remuneration scheme that is competitive or better than that of its
competitorsÊ, a safe and healthy work environment and continuing on with
staff development efforts to provide employees with newer skills.
(e) Shareholders
Shareholders are the owners of a corporation. They are people who invest
in a firm or corporation. As such, they will often challenge the decisions
made by the management. Management may be required to explain the
effectiveness of a programme and its impact on the organisationÊs expenses,
revenues and profits. Shareholders also have the right to inquire into how
budgeting decisions such as these can increase revenue or reduce costs.
Therefore, the management must be prepared to explain the efficacy of a
programme from the perspective of its benefits and economic costs.
(f) Trade Unions

The types of remuneration, employment benefits, wage levels and
employment environment are jointly decided on by trade unions and the
management of an organisation. A trade union is an organisation that
attempts to improve the working conditions of employees. As a rule of
thumb, trade unions will negotiate with the management of organisations
that have trade unions. Trade unions can influence the management of
human resources from the perspective of remuneration and benefits offered

to an employee. Usually, issues that form the main topics of discussion

include issues of remuneration and the working environment.
(g) Labour Markets

An organisation obtains employees from the labour market. The labour
market is considered an external factor because new employees are hired
from outside the organisation. The labour market is volatile and hence,
constantly changing. These changes will have a direct effect on the use of
labour in an organisation. Organisations possess a workforce that is varied
in relation to gender, race and ethnicity. A varied workforce has a wide
implication on the management of human resources. Managers must
amend their philosophies from the assumption that each person is similar,
to recognise individual differences and hence, avoid any discrimination
against these individuals.
The labour market creates organisations with a varied workforce. A varied

workforce results in the organisation having employees with varying
degrees of expertise. Amendments to the management of human resources
include offering training and work environments that can accommodate
these differences. If these differences are not well managed, it may result in
a high rate of turnover, a difficulty in communicating and interpersonal
conflicts between employees and the organisation.
(h) Statutory Requirements

The management of human resources is governed by federal, state and local
statutes and courtroom decisions. For example, benefits such as maternity
leave and the Employee Provident Fund (EPF) are enforced by legislation.
Aside from these, company policies are subjected to acts such as the
Employee Provident Fund Act 1991, Social Security Act 1969, Employee
Safety and Health Act 1994 and others. These acts are formally documented
in the management procedures outlined by an organisation. A large portion
of an organisationÊs success in managing human resources depends on the
effective implementation of relatedlaws. To operate within the confines of
the law, an organisation must develop an internal system that abides by the
rule of law.
We shall now discuss aspects of the internal environment in the

management of human resources.

1.3.2 The Internal Environment

The internal environment comprises factors that are controlled by an
organisation. This includes organisational strategies, organisational goals,
leadership styles, the corporate culture and the types of jobs. These factors are
used to produce a positive business environment while being a catalyst towards
enhancing productivity. Figure 1.4 illustrates the internal factors that influence
the management of human resources.
Figure 1.4: The internal factors that influence human resource management
Each of these internal factors is explained in the following:
(a) Organisational Strategies

Organisational strategies are important because they represent a plan of
action that sets the organisationÊs course, so that members of the
organisation are aware of where to direct their efforts. Through strategic
planning, an organisationÊs upper management may ascertain the overall
objectives and goals that need to be achieved and how to attain these.
Upper management also expects human resource activities to be in line
with the organisational strategy toward achieving these objectives.
(b) Organisational Objectives

An organisationÊs objectives may influence managerial decisions. How
much an organisation pays heed to promotions or expenditure allocations
for staff training and development, depends on the organisationÊs
objectives. Therefore, organisational objectives offer a planned indication of
the success or failure of the organisation.

(c) Upper Management

Upper management generally brings about success and profitability
missions to the organisation which then depends on the cooperation and
efforts of employees. Emphasis is given to human resources and the
functions of human resource management.
(d) Corporate Culture

Corporate culture is a system of beliefs, assumptions, norms and values
that unite the members of an organisation. Corporate culture determines:
(i) What an organisation represents;
(ii) How resources are distributed;
(iii) The organisational system structures used;
(iv) The individuals recruited for employment; and
(v) What are considered as problems and an opportunities.
Human resource management is a key ingredient in shaping an

organisationÊs culture. For example, an organisation that promotes
entrepreneurship among its employees will encourage human resource
policies such as non-formal recruitment, a flexible remuneration package
and a generic work plan.
 Human resource management is related to the utilisation of human resources

in an organisation to achieve the organisationÊs objectives.
 Human resources are the people employed in an organisation.
 The functions of human resource management include the acquisition of

human resources which involves human resource planning, recruitment and
the selection of candidates, staff development, remuneration schemes,
employeesÊ health and safety that encompass financial and beneficial aspects.
 It also includes occupational safety and health and industrial relations, which
refers to the interaction of employees (either individually or represented by
trade unions) with the management.

 Industrial relations also include disciplinary actions and carrying out these
procedures against an employee who has defied the rules of the organisation.
All functions of human resource management are interlinked.
 External and internal environmental factors can influence the functions of

human resource management.
 The external environment comprises factors such as economy, technology,

consumers, competition, shareholders, trade unions, labour markets and
statutory requirements. These factors, either separate or combined, may
influence the management of human resources.
 The internal environment comprises factors that are controlled by an

organisation. This includes organisational strategies, organisational goals,
leadership styles, the corporate culture and the types of jobs.
Aquisition Industrial relations

Employee training and development Remuneration
Human resource management

1. Read each statement carefully. Then, match each statement with the
terminology given below. Write the letters that represent the correct
terminology in the given space.
Answers Statement
The process of attracting, training and organising a talented
and effective workforce.
The process of attracting qualified individuals and
encouraging them to apply for jobs in the organisation.
The formal process to familiarise new employees with their
responsibilities, rules, the objectives of an organisation and
to introduce them to co-workers.
Wages, benefits and incentives received by employees as
they agree to be employed by the organisation.
Activities that give the opportunity to acquire and improve
job skills.
A statement that outlines the responsibilities of a job.
(a) Remuneration
(b) Job Description
(c) Orientation
(d) Human Resource Management
(e) Employee Training and Development
(f) Recruitment

2. Fill in the blanks for each statement by selecting a suitable answer from
those given in the box.
Selection Incentive External Internal

Environment Environment
Corporate Job Analysis Benefits Job Specifications

Culture
(a) __________________________ is an organisational process that selects

the most qualified individual, from a group of applicants, to fill a job
vacancy.
(b) __________________________ is a process that creates a detailed

explanation regarding the tasks of a job, determining the relationship
between this job and others. It also determines the knowledge, skills
and abilities required to successfully carry out the job.
(c) __________________________ is a statement that outlines the

knowledge, skills and abilities required to carry out the job.
(d) __________________________ is a financial reward given to employees

to motivate them.
(e) __________________________ is an additional monetary reward aside

from basic wages, annual leave, medical leave and insurance.
(f) __________________________ comprises factors outside the

organisationÊs parameters that influence the human resources of a
firm. It includes factors such as the economy, technology, consumers,
competition, shareholders, trade unions, labour markets and statutory
requirements.
(g) __________________________ comprises factors that can be controlled

by an organisation. It includes organisational strategies, organisational
goals, styles of leadership, corporate culture and types of jobs.
(h) __________________________ is a system of beliefs, assumptions,

norms and values that unites the employees of an organisation.

Topic  Job Analysis
2
LEARNING OUTCOMES
1. Explain what is meant by job analysis;
2. Discuss the importance of job analysis in human resource
management; and
3. Relate the information that has been collected by an organisation to
structure a job analysis and job specification.
 INTRODUCTION
This topic focuses on job analysis, a detailed description of the tasks involved in a
job and the quality of human resource such as the level of skill and knowledge
required to do the job. Human Resource Executives are responsible for
supervising and documenting changes in individual work content. We will
discuss why job analysis is an important tool for managers and why it is the basis
of existence for other human resource programmes.
2.1 JOB ANALYSIS AS A FOUNDATIONAL

TOOL FOR HUMAN RESOURCE
MANAGEMENT
We will begin this topic by defining job analysis and its importance. Then we will
examine the types of information needed for a job analysis and who will carry
out the analysis. We will also analyse the use of information from job analyses in
preparing job descriptions and job specifications.

TOPIC 2 JOB ANALYSIS  19
SELF-CHECK 2.1
Before you explore this topic in detail, explain your understanding of

the term job analysis.
Job analysis is sometimes thought to be the basis of human resource management

as information collected by means of the process becomes useful to the functions
of human resource management. Job analysis is a process that identifies and
specifies job duties, responsibilities and the knowledge required to carry out the
job successfully. It answers the following questions:
(a) What is the physical and mental work that needs to be carried out by an
employee?
(b) Do employees use machineries and special equipments?
(c) What knowledge, skills and abilities should a jobholder have in order to
carry out the job?
(d) What are the environment and job conditions needed for the job to be
carried out?
(e) What are the necessary expectations needed to carry out the job?
(f) Why is the job carried out?
When is a job analysis performed? A job analysis is conducted under three

conditions. Firstly, it is done when an organisation is newly established and a job
analysis is being done for the first time. Secondly, it is done when new jobs are
created in an organisation. Thirdly, it is done when important changes occur in a
job due to the advancement of technology, procedures, methods or systems.
Information contained in a job analysis will be used to prepare job descriptions

and work specifications. A job description is a document that outlines the
functions and responsibilities of a job. It is a written account of what should be
done by an employee, how it should be done and the work situation. Job
specifications include the qualifications, knowledge and abilities required from
an individual to effectively carry out a particular job. Figure 2.1 illustrates how a
job analysis is done and its various applications.

20  TOPIC 2 JOB ANALYSIS
Figure 2.1: The process of job analysis and the relationship between job analysis and
human resource management
2.2 THE IMPORTANCE OF JOB ANALYSIS

From Figure 2.1 we can observe that data collected from a job analysis is inter-
related to all aspects of human resource management. Job analyses can impact
human resource functions in the following ways:
(a) Recruitment
Employee recruitment in an organisation must be done systematically. The
process will become chaotic if the recruitment officer is ignorant to the job
qualifications required to perform a job in a given vacancy. As a job
analysis contains information such as types of skills, knowledge and the
abilities required to accomplish a job, hence job descriptions and
specifications may be used to determine the type of individual that should
be recruited for employment.

(b) Selection
An organisation wanting to select employees for open positions, needs
good planning. A comprehensive job analysis may help a Human Resource
Manager match an individual to the most suitable job, by means of skills,
knowledge and ability of the individual.
(c) EmployeesÊ Training and Development

Job analysis plays an important role in identifying staff training and
development. Information contained in the job analysis is used to design
and build training and development programmes. Job analysis and the
description that is generated from its information provides details of the
skills and training that is relevant for particular jobs. When a job analysis
proposes that a job requires certain knowledge, skill or ability and the
individual does not have the qualifications required, he or she will need to
undergo a training or/and development programme. The objective of
training and development is to help an employee to perform the tasks in a
job description or as preparation to assume a higher position.
(d) Performance Appraisal

Evaluation standards that are used to evaluate the performance of a worker
for promotions, benefits, discipline or dismissal should be job related.
Information obtained in the job analysis will bring about a more objective
human resource decision.
(e) Remuneration
Job analysis information may be used to compare relative contribution
values of a job against the overall performance of the organisation. In terms
of remuneration payouts, the relative value of a job must be informed
before the job is evaluated in financial terms. Generally, the more important
the tasks and responsibilities of a job, the more valuable the job is. A job
that requires additional knowledge, skill and abilities should be more
valuable to an organisation.
(f) Employees Safety and Health

Information obtained from a job analysis may be used to ascertain health
and safety recommendations. For example, employers are required to
inform employees whether the job will expose them to any dangers or
otherwise. The job description or specification should state this condition.

(g) Employer ă Employee Relationship

Information obtained in a job analysis is important in employer-employee
relationships. The job analysis acts as a Skills Comparison Standard when
considering an employee for a promotion, transfer or demotion and in
supporting decisions made in these areas. Information obtained from a job
analysis will result in a more objective human resource decision.
In this topic, we will further discuss the information needed to conduct a

job analysis.
ACTIVITY 2.1
How will job analyses help the human resources management functions
of your organisation? Discuss your thoughts in the myINSPIRE forum.
2.3 TYPES OF INFORMATION REQUIRED

A job analyst performs job analyses and needs a lot of information to sucessfully
complete the analyses. The job analyst will decide the actual duties and
responsibilities related to a job. Within the process, the important functions of a
job are also decided upon. Work activities and employee-related activities are
equally important. A job analyst also observes the types of machinery
knowledge, tool and work support tools that are used to perform a job.
There is also a job analysis system that identifies the standard of work to be
achieved. Sometimes work measures are performed to decide the time frame to
accomplish a job. The job analyst also studies the details of the job such as work
schedules, financial and non-financial incentives and the physical work
environment. As a job is normally performed together with other jobs, therefore
social and organisational context must be taken into consideration. Education,
training and working experience related to a job must also be identified.

2.3.1 Who is Involved in a Job Analysis?

An individual who conducts a job analysis collects information that should
answer the following question „What is needed to accomplish the job?‰ As
shown in Figure 2.1, those who are involved in a job analysis must consist of:
(a) Employees that perform the work to be analysed; and
(b) Supervisors of the employees concerned.
A large organisation might have more than one job analyst but in a small
organisation this will be the responsibility of the supervisor. There are also
organisations that use external consultants to conduct a job analysis. Regardless
of the methods employed, the job analyst must know the work in-depth before
conducting the job analysis. The job analyst must study the organisational charts
or interview the individuals who are knowledgeable in the job to be analysed.
Before conducting a job analysis, the department manager or the employeeÊs

supervisor must introduce the analyst to the employees and explain the purpose
of performing a job analysis. It is important for a job analyst to gain the trust and
confidence of the employee whose work is being analysed to avoid the job
analysis from being technically imperfect.
2.3.2 Controlling the Accuracy of Information

The information obtained from a job analysis has many uses, therefore the
information collected must be accurate. The job analyst must ensure that
important information is included in the analysis. He or she must be cautious
towards employees who might exaggerate the difficulty they face in performing
their jobs, in order to get higher pays. While conducting interviews or
questioning employees, an analyst must observe if the response received is
contrary to the information or assumption he or she has. When gathering job
information from employees, a job analyst must also obtain information from a
group of employees who perform the same job and not only from an individual
employee.
When an analyst suspects that the information given by an employee is

inaccurate, he or she has to obtain further information from the employee, his or
her manager or other individuals who know about the job or have performed the
job. It is also common practice for the jobholders and their supervisors to re-
evaluate the job description that has been produced.

2.4 METHODS OF JOB ANALYSIS

There are several ways to collect information on duties, responsibilities and
activities of a job. The selection of job analysis methods take into account the
usage of the information, whether it will be used for work evaluation, training,
increment and career development or whether the method chosen could be
implemented in the organisation. Figure 2.2 outlines job analysis methods
including interviews, questionnaires, observations, employeesÊ logs, management
position description questionnaires, position analysis questionnaires, critical
incident approach or a combination of several methods. In practice, you may use
the most suitable method or a combination of methods for your respective
purposes. Now, let us study each method in greater detail.
Figure 2.2: Job analysis methods
(a) Interview
Job analysis data may be obtained from three types of interviews, which are
individual interviews with each employee, group interviews with a group
of employees doing the same type of work or interviews with one or more
supervisors who are familiar with the job that is being analysed.
Group interviews are conducted when there are a large number of

employees doing the same job. It is a fast and cost effective method to learn
about a job.

In an interview, the job analyst may question the employees and managers
about the job being studied. Normally, the job analyst will interview the
employees and help them describe their work. Then, he or she will
communicate with the employeesÊ supervisor to obtain further information
or to check the accuracy of the information received from the employees or
to seek clarification.
(b) Questionnaire
A job analyst could also get information about a job by distributing
questionnaires to be answered by the jobholders and their manager or
supervisors. The form is used to get information about their duties and
responsibilities, the purpose of performing the job, physical conditions and
other needs to perform the job (such as educational skills, physical and
mental requirements), tools and materials to be used and specific issues
related to safety and health when performing the job.
Although it is a fast and cost effective method, there are times when the
written skills of an employee interviewed is poor and this affects the
effectiveness of the method.
There may also be employees who have the tendency to exaggerate the
importance of their duties by stating additional responsibilities than the
actual job requirements.
(c) Observation
A job analyst can also learn about a job by observing and recording the
daily activities of employees performing the job. This method is used to
obtain information on manual workers, such as machine operators. It helps
the job analyst to identify the relationship between the physical and mental
duties required for the job. However, the observation method alone is not
enough to conduct a job analysis, especially if mental skills is a major part
of the job. For example, we may observe an accountant and obtain little
information about the needs or requirements of his or her job.

(d) EmployeeÊs Log

Jobholders may be asked to describe their daily activities in a daily log
book. This book is usually filled at a specified time (for example, during
shift work, the employee is required to record his or her activities every
hour or every half an hour). Normally, an employee is requested to record
his or her daily activities within a fixed period. However, the job analyst
must be cautious against employees who might exaggerate the importance
of their duties.
(e) Management Position Description Questionnaire

The Management Position Description Questionnaire is a job analysis
method that is designed for managerial positions. It is an important method
for analysing middle and top level managers. It uses a list of factors such as
supervision, service responsibilities, production and authority to make
decisions. Each employee is evaluated based on a scale related to each
activity. This method is used to determine the training needs of an
individual selected to be promoted as a manager. Management Position
Description Questionnaire may also be used to evaluate and decide the rate
of remuneration for managers.
(f) Position Analysis Questionnaire

The Position Analysis Questionnaire is a structured job analysis
questionnaire that contains 194 different items. By using a five-point scale,
this job analysis questionnaire will determine how different items or
elements of work are involved in performing a job. All of these items are
included in the six areas as follows:
(i) Information input ă where and when an employee obtains the

required information to perform a job.
(ii) Mental process ă reasoning, decision-making, planning and

information processing activities involved in performing a job.
(iii) Work output ă physical activities and tools used by employees to

perform a job.

(iv) Work context ă social and physical context while performing a job.
(v) Interpersonal relationship ă interactions between employees while

carrying out the work.
(vi) Other activities, conditions and characteristics related to the job.
A Position Analysis Questionnaire that is completed will be analysed by a

computer to produce a profile and highlight its relevant features.
(g) Critical Incident Approach

The critical incident approach is a method used to identify the critical tasks
of a job. These critical tasks are important duties and responsibilities carried
out by a jobholder in order to complete a job successfully. Information on
the critical tasks of a job may be obtained by interviewing the employees or
managers or through an individual mission statement written by
employees.
For example, a job analyst who studies the work of a librarian may ask him
or her to describe his or her job based on the daily work activities, the tools
or equipment used. The librarian may describe his or her work as follows:
„I help the clients to solve their problems in finding books, magazines and
other resources in the library. I also give information to help them to find
materials in the library. To perform my duties, sometimes I have to search
for the materials or refer the clients to someone who can help them. There
are also individuals who need training on the use of library materials or
special facilities in the library. To perform my task, I also use computers
and various reference books.‰
After collecting the job data, a job analyst will write a separate statement of
duties representing important work activities. For the librarian, a work
statement of duties might read like this, „Listening and solving problems
related to finding library materials.‰ Very often, a job analyst will note down
five or ten important job statements for each job that is being studied. This
results in a clear job statement, which is complete and easily understood by
individuals who know nothing about the job. The critical incident approach
is an important method in job analysis because it trains the job analyst to
focus on employee behaviours that are important to the success of a job.

(h) Combination of Methods

Normally, a job analyst will use a combination of methods when
conducting a job analysis. In analysing clerical and administrative
employees, an analyst may use questionnaires, interviews and observations
to obtain the required information. In general, to obtain an accurate
description and specification, a job analyst should use a combination of
several methods.
When a job analysis is completed, two basic human resource documents, a

job description and a job specification may be prepared.
ACTIVITY 2.2
We have discussed the methods of collecting job analysis information

including interviews, questionnaires, observations and employeesÊ logs.
List two advantages and disadvantages of each of these methods.
2.5 JOB DESCRIPTION

Information obtained from a job analysis is important in preparing a job
description. We have already defined job description as a document that
provides information on the duties and responsibilities of a job position.
A job description should be relevant and accurate. It should contain a brief and
complete statement on the job to be performed, how to perform the job and the
working atmosphere. There is no standard format for a job description, hence,
there are differences among organisations in terms of format and content.
However, many job descriptions contain three parts: job position, introduction to
the job and job duties. Figure 2.3 shows a sample of a job description for the post
of Human Resource Officer.

Figure 2.3: Job description and its components

The content of a job description depends on its intended use. Let us now examine
the components that can be found in a job description.
(a) Job Title

The first item in Figure 2.3 identifies the job description. A job title has
importance. An accurate job title may provide a description of the
characteristics of the job and differentiate the job from other positions. A job
titled „electronic engineer,‰ „salesperson‰, „food inspector‰ or „career
counsellor‰ could reveal information regarding the duties of each position.
However, there are also job titles that may be confusing. For example, a
marketing executive of a firm could be dealing with marketing plans
however, in another organisation a marketing executive could be working
as a salesperson.
A job title is also important in order to attract employees to an organisation.

In modern societies, the social standing of an individual is closely
associated to the type of job he or she holds. A job title gives an important
psychological impression to the reputation and status of an employee. For
example, the job title „cleanliness control engineer‰ is pleasant to hear as
compared to „garbage collector‰.
A job title must also show the position of the jobholder in an organisational
structure. For example, from the description „senior engineer,‰ we know
that the rank is higher than that of „engineer.‰
(b) Job Introduction Section

A job title is normally followed by the job introduction section. Jobholders
will report to an individual on the day the analysis is conducted. The date
will be recorded in the job description analysis form to help identify the
changes in a job that may result in the job description being unable to be
used again. By stating to whom the jobholder should report to, if the job
being described is a managerÊs job and who the subordinates are then we
can get a clear picture of the position of the job in the organisational
hierarchy.
(c) Job Duties or Important Functions Section

Statements on the job duties are usually arranged according to the
importance of the job. Statements of duties must emphasise the
responsibilities of the job and the results to be achieved. It is also a normal
practice to state the types of tools to be used by the jobholder in performing
his or her duties. These will be clarified in Figure 2.4.

This section will provide guidelines to the types of training that will be
made available to the employee. It is also the basis for performance
appraisal. Jobs constantly undergo changes. The scope of work widens and
the duties become more complicated. Therefore, the final duties that are
shown in a job description normally look like this:
A jobholder is required to carry out other duties as required by his or

her supervisors.
This phrase is used to avoid problems with employees who refuse to carry
out other duties that are not stated in the job list in their job descriptions. It
should be noted that the duties and responsibilities that are listed must be
clear and precise. Otherwise, the job description cannot be used for training
and performance appraisals.
Figure 2.4: Tasks or the important functions of a department
(d) Job Specification Section

All the requirements needed for a jobholder to carry out his or her work
duties and responsibilities are specified in the job specification section.
Normally, it covers two areas:
(i) The required skills; and
(ii) The physical demands to carry out the work.

Skills relevant to a job include level of education, experience, special

training, individual characteristics or specific capabilities. Physical
demands refer to the walking, standing, talking or lifting involved while
doing the work. The physical work area and the possible danger to a
worker is also a part of physical demands.
2.6 THE IMPORTANCE OF JOB DESCRIPTIONS

A job description is the basis of the functions of human resource management
such as identifying the needs for staff training and development, performance
appraisal and determining benefits and remunerations. When an organisation
decides to form and restructure, a job description becomes a useful tool to
identify all unnecessary duties, overlapping responsibilities and the existence of
certain functions that have not yet been entrusted to anyone.
Job descriptions are important to employees. It helps them to learn about their
job and remind them of the results that are expected of them.
For employers, a job description is to reduce disagreements between managers

and employees concerning the needs of a job. For example, the benefits and
remunerations paid to male employees are normally higher compared to those
paid to women, although both carry out the same work. Rightfully, they should
receive the same benefits and remunerations if there is no clear difference in their
duties.
If there is any difference in remuneration payments, the job description may be

used to show the difference in terms of skills, efforts, responsibilities or work
environment of employees. Job elements that may be hazardous to health or of
high social risks to society should be mentioned in the job description. By
presenting the job description to a prospective employee during an interview, he
or she is informed of the risks if he or she agrees to take up the job offer.
2.7 PROBLEMS WITH JOB DESCRIPTIONS

Although a job description is a very useful tool in carrying out human resource
management functions, some problems are often associated with it. Among the
problems are:
(a) A poorly written job description that uses ambiguous terminologies cannot
be used as a guideline by an employee.

(b) A job description is not updated when there are changes in job duties and
specifications.
(c) Sometimes, a job description contravenes with the law because it contains
specifications that are not related to the work. For example, in a job
description for the post of a secretary, there is a statement that says „The
position should be held by a young beautiful lady‰.
(d) The job description limits the activities that could be done by a jobholder.
This will reduce the flexibility of the organisation.
2.8 WRITING A CLEAR AND CORRECT JOB

DESCRIPTION
When writing a job description, it is important to use brief, accurate and clear
statements. Unnecessary expressions or words should be avoided. The term
„sometimes‰ is used to describe a duty that is performed occasionally and the
word „could‰ can be used for duties performed by certain employees only.
A manager may find the writing of a job description a difficult task and this may
interfere with their other managerial responsibilities and duties. There are
computer software packages to simplify this. There are many types of software
packages that may be obtained from Human Resource Management journals
such as HR Magazine, Personnel and Workforce.
2.9 JOB SPECIFICATION

A job specification answers the question „What are the characteristics and
experiences needed by an individual to perform a job successfully?‰ It shows the
types of individual that should be recruited and the characteristics to be tested. A
job specification is a statement that lists down the knowledge, skills and ability
required to enable an individual to perform the job. It could be separated from or
be a part of the job description.
Items that are usually found in a job specification are educational requirements,
experiences, personal characteristics and physical abilities. In terms of work
practices, job specification is one of the main components in a job description.
Information contained in a job specification is important in the recruitment and
selection process. It provides the recruitment officer with a guideline to evaluate
the suitability of a candidate for the post.

After a job has been analysed and a job description has been written, it will be
scrutinised by the employees with their supervisors to ensure that it is accurate,
clear and understandable. One of the advantages of doing this is that employees
will then readily accept the job description.
SELF-CHECK 2.2
Based on your understanding, what are the skills required for the post
of a human resource officer?
 Job analysis is a process that identifies and specifies job duties,

responsibilities and the knowledge required to carry out the job successfully.
 When conducting a job analysis, we need to know the types of information

required and how to obtain them. Information contained in a job analysis will
be used to prepare job descriptions and work specifications.
 Job analysis methods include interviews, questionnaires, observations,

employeesÊ logs, management position description questionnaires, position
analysis questionnaires, critical incident approach or a combination of several
methods.
 A job description is a document that outlines the functions and

responsibilities of a job. It is the basis of the functions of human resource
management such as identifying the needs for staff training and development,
performance appraisal and determining benefits and remunerations.
 Job specifications include the qualifications, knowledge and abilities required

from an individual to effectively carry out a particular job.
Critical incident approach Jobholder

Job analyst Management Position Description
Job description Position Analysis Questionnaire
Job introduction

1. What is meant by the statement „A job analysis is the most basic human
resource management tool‰?
2. Fill in the blanks for each statement by selecting an appropriate answer

from those given in the box.
Management Position Critical Incident

Description Questionnaire Approach
Position Analysis Questionnaire Job Introduction
Job Specification Job Description
Group interview Job Analysis
(a) ______________ is a process to identify the duties, responsibilities and

knowledge required to successfully perform a job.
(b) ______________ is a document that provides information about the

duties and responsibilities of a job.
(c) The qualification, knowledge and abilities required from an

individual to carry out a job effectively are contain in a
______________.
(d) ______________ is a job analysis method designed for managerial

positions.
(e) ______________ is a structured job analysis questionnaire that

contains 194 different items.
(f) ______________ is a job analysis method that is used to identify the

critical duties for the success of a job.
(g) In a job description, the departmentÊs location, to whom the job holder
should report and the date of the analysis conducted are found in the
______________.
(h) An analyst will usually use the ______________ method when many
employees do the same work.

Topic  Human
3 Resource
Planning
LEARNING OUTCOMES
1. Define human resource planning;
2. Explain what is meant by forecasting the demand of human
resources;
3. Compare the methods of forecasting the demand of human
resources; and
4. Discuss the methods of forecasting the supply of human resources.
 INTRODUCTION
An organisation must determine the goals and objectives it hopes to achieve. For
example, does an organisation want to expand its operations to capture a bigger
market or does it want to manufacture goods to give the highest returns on its
investments?
After an organisation has decided on the action to be taken and charts its course,
it becomes the responsibility of the top management to equip the organisation
with the necessary resources in order to succeed. Recruiting suitable individuals,
determining the number of employees needed and when they are needed are
important processes. Only detailed planning can guarantee an organisationÊs
success in achieving its goals.

TOPIC 3 HUMAN RESOURCE PLANNING  37
We will begin this topic by discussing the reasons for carrying out human
resource planning. Subsequently, we will describe the process of human resource
planning and the methods of forecasting the demand and supply of human
resources. Finally, we will observe methods to reach a balance between the
demand and supply of human resources.
ACTIVITY 3.1
Before we look at the definition of human resource planning, what do

you understand by the word planning? Explain.
3.1 DEFINITION OF HUMAN RESOURCE

PLANNING
Human resource planning is a systematic process that studies the need for
human resources to ensure that the number of employees with the required skills
are readily available when needed. In other words, human resource planning is a
process to determine how many employees are needed and from where we can
get them. Supply of labour means workers with the required skills are readily
available to fill the labour demand of an organisation. Demand for labour refers
to the number of workers needed in the future by an organisation.
All organisations, either large or small, perform human resource planning.

Human resource planning in a small organisation is simple and informal. Very
often, it involves the recruitment of a small number of employees to carry out
work as and when needed. The planning is reactive and done to solve the
problems of labour shortage for a particular period. However, in a large
organisation, human resource planning is complex, very formal and takes into
account a lot of information and variables before decisions are made.
Human resource planning not only fulfils the need for human resources but also
determines how to effectively resolve future demands and supplies in the
provision of human resources. Therefore, the planning for human resources
depends on the size of an organisation, the business that is conducted, the
operational systems, the organisational culture and the extent of planning by the
organisation.

38  TOPIC 3 HUMAN RESOURCE PLANNING
Planning is an important process in the management of an organisation,

especially in current economic conditions when relocation of factories, company
mergers and retrenchments of workers are common. When an organisation
restructures, it has to consider the types of skills required by the organisation to
support the changes. Only through detailed projections and skills enhancement
may an organisation fulfil the skills and competencies needed. Apart from these,
human resource planning must be integrated into a companyÊs strategy if the
organisation wants to fulfil human resource needs and achieve its objectives.
Today, the labour force in Malaysia does not only consist of the local population
but also of workers from Pakistan, Indonesia, Bangladesh, Australia, Europe and
the US. These big changes in the composition of the labour force causes managers
to be more involved in human resource planning because the changes that occur
do not only involve the recruitment of employees but also the methods of
employee selection, training, remuneration and motivation.
A well executed human resource planning can avoid an organisation from

incurring costs that are caused by the reduction of productivity due to job
vacancies. A reduction in productivity also happens when longer time is needed
to train new employees.
Apart from these, good human resource planning may avoid the shortage or
surplus of labour force. For example, a department that is terminating its
employee should discuss with other department in the organisation if they need
these employees.
Human resource planning determines the needs of an organisation for human

resources for long or short-term periods. An organisation may fulfil its need for
workers from internal or external sources. An organisation may recruit
employees from within by promoting an employee to a higher position.
However, his or her replacement should be recruited externally. Without proper
forecasting and development of internal resources, it may be quite difficult for an
organisation to recruit suitable employees within the organisation for promotion
to a higher position.

Human resource planning is important because it prepares critical information

that may help the management of an organisation to make correct decisions. The
information may help an organisation in the recruitment process, staff
development and recommendations for replacement of employees or managers.
Without proper planning for human resources, it would be also quite difficult for
an employee to chart his or her career plans or individual development. This may
result in capable and ambitious employees moving to other firms.
SELF-CHECK 3.1
Why is human resource planning identified as an important process for

any organisation?
3.2 THE PROCESS OF HUMAN RESOURCE

PLANNING
The purpose of human resource planning is to maintain and expand the
capabilities of an organisation to achieve its objectives. The human resource
manager must focus on the methods to coordinate human resource planning
with the overall strategic planning of the organisation. Therefore, the manager of
human resource must be involved in the strategic planning process. This will
enable the top management of an organisation to decide on the overall objective
and goals of the organisation and how they may be achieved. Through strategic
planning, an organisation may set out main objectives and undertake
comprehensive planning to achieve these objectives.
Once the strategies of an organisation have been determined, human resource

planning may be implemented. Figure 3.1 shows the strategic planning that must
be performed before the execution of human resource planning.

Figure 3.1: The human resource planning process

Source: Mondy, R. W., Noe, R. M., & Premeaux, S. R. (2009)
As shown in Figure 3.1, the forecasting of demand and supply of human

resources should be done based on an external environment analysis and of the
environment within an organisation. Internal environmental factors that may
influence the forecast of demand and supply of human resources include the
demand for productivity and service, organisational financial resources, an
organisationÊs growth and organisational philosophy. External environmental
factors include employee demographic changes such as education, age, gender,
race and religion, workersÊ mobility, government policies, technology along with
economic conditions. For example, the analysis of a nationÊs economic forecast
and position, the community background and technological advancements are
done so that human resource planning is precise and in line with general
organisational change and environmental growth.

Forecasting the demand for human resources involves deciding on the quantity
and types of employees required, according to the level of skills and areas
that require them. This forecast will reflect various factors like production
programmes and productivity changes. Frequent environmental changes also
influence demand.
When an organisation has forecasted the need for human resources, it has to
determine whether there is an adequate number and the category of employees
to fill the expected vacancies. Hence, the manager of human resources must look
at both internal and external resources. When the need and demand for human
resources have been identified, an organisation may then determine whether
there is a surplus or lack of employees. If an organisation has a surplus of
employees, a solution must be found to reduce and limit the number of
employees. Among the methods that may be taken by an organisation in doing
this includes reducing working hours, early retirement, retrenchment and the
downsizing of the organisation. If a scarcity of employees is expected, an
organisation must get the exact number of quantity and quality workers in such
circumstances. Recruitments and selections should be done from outside the
organisation.
Owing to the frequent changes of internal and external environments of an

organisation, human resource planning must be consistently performed. A
change in situations may affect the entire organisation and sometimes might
require revisions to an earlier forecast. Planning enables managers to foresee and
be prepared to face these environmental changes and the planning of human
resources allows flexibility in the field of human resource management. For the
last 10 years, various environmental factors have caused organisations to
downsize. Good human resource planning enables maintaining disruptions to a
minimum in the management of the labour force.
In the following section, we will observe the methods used to forecast the
demand for human resources.
3.3 METHODS OF FORECASTING THE

DEMAND FOR HUMAN RESOURCES
Forecasting the demand for human resources is a process that determines the
quantity and the categories of employees needed in the future for an organisation
to achieve its goals. Some of the techniques used are of quantitative and
qualitative methods. Now, let us look at some of these techniques.

3.3.1 Quantitative Methods

Quantitative methods include zero-base forecasting, the bottom-up approach and
trend analysis which will all be described subsequently.
(a) Zero-base Forecasting

Zero-base forecasting is a method that estimates the future needs of
employees in an organisation by using the current employment level as a
starting point. In this method, when an employee retires, is dismissed or
leaves the organisation, his or her position will not automatically be filled.
A careful analysis will be conducted in advance to identify whether the
position should be appropriately filled. This is the same when creating a
new position. Zero-base forecasting is an in-depth analysis for the need of
human resources, a certain vacant position will be thoroughly analysed
before a successor is chosen. Usually, the position will not be filled and
duties of the position will be divided among existing employees.
(b) Bottom-up Approach

Some organisations might use the bottom-up approach method to forecast
the demand for human resources. The bottom-up method is based on the
rationale that a manager is the best person to know about the needs of his
or her unit. In this method, each consecutive level in the organisation
forecasts an aggregate quantity of employees needed, by starting at the
lowest level.
For example, if XYZ Company employs this method, the supervisors of

every division will forecast their needs for human resources. Then, the
number will be added to the need of human resources that has been
estimated by department managers. The overall need for human resources
is the amount of labour force required by the supervisors and department
managers.
A human resource forecast is most effective when a manager forecasts from

time-to-time his or her own needs for human resources, comparing current
needs with expected ones and providing sufficient time for the human
resource department to explore internal and external sources.

(c) Trend Analysis

Trend analysis is a quantitative method that uses organisational indexes,
such as sales or productivity outcomes, to forecast the need for human
resources. This method is based on information on the number of
employees in an organisation therefore, such information should be
recorded accurately. The use of this method involves several steps as
follows and an example of this method is shown in Table 3.1.
(i) An organisationÊs index will be chosen (example: sales);
(ii) A historical trend about the relationship of the index and the number
of employees required must be obtained;
(iii) The productivity of a worker for five years should be calculated. This
is measured by dividing the amount of sales with the number of
workers; and
(iv) Finally, the needs for human resources will be forecasted.
Table 3.1: Example of Calculating Trend Analysis
Number of Need for

Business Index
Workers Per Worker Human
(Sales in
Year  (from = Productivity Resource
Thousands RM)
Previous (b)
(a) (a)  (b)
Information)
1996* 2,400 150 16 150
1997* 2,615 158 16.55 158
1998* 2,750 200 13.75 200
1999* 3,350 220 15.22 220
2000* 3,800 280 13.57 280
2001* 4,000 295 13.56 294
2002* 4,500 331 13.6 330
2003* 4,650 342 13.6 341
* Forecast

ACTIVITY 3.2
Using your own words, explain the meaning of forecasting the demand
for human resources. Provide examples of the methods used by
companies in forecasting this demand. Discuss and check your answers
with your tutor and coursemates in the myINSPIRE forum.
3.3.2 Qualitative Methods

Compared to the quantitative method, the qualitative method does not use
statistics or mathematics to make a forecast. One of the qualitative methods is a
management forecast that shows the future needs of human resources of an
organisation based on inputs from supervisors and department managers. The
human resource planning in a large or small organisation depends on the
experts who may help them to make a forecast which may envisage the need for
human resources. In this method, every supervisor or department manager is
responsible for forecasting the need for human resources.
SELF-CHECK 3.2
Compare the differences of the three methods of forecasting the
demands for human resources:
(a) Zero-base Forecasting;
(b) Bottom-up Approach; and
(c) Trend Analysis.
3.4 METHODS OF FORECASTING THE SUPPLY

OF HUMAN RESOURCES
When an organisation has made a forecast on the need for employees, it has to
determine whether the quantity and types of employees to fill the vacancies are
available. The forecast also shows whether the employees needed should be
sourced from within or outside the organisation or a combination of both
sources.

3.4.1 The Supply of Employees within an

Organisation
One of the sources to fill up the forecasted needs for employees is the current
pool of employees working in an organisation. Employees may be transferred
from their current working areas or be promoted to meet the demands for human
resources. Figure 3.2 shows several methods in deciding the supply of employees
in an organisation.
Figure 3.2: Methods in deciding the supply of employees in an organisation
These methods are explained in the following:
(a) Skills Inventory System

A skills inventory system is an „information bank‰ that contains
information on non-managerial employees and is usually stored on a
computer. The type of information kept includes:
(i) Employee background;
(ii) Working experience;
(iii) Special skills and knowledge;
(iv) Previous performance appraisal;
(v) Career goal; and
(vi) Training record.
This system also shows the level of readiness of a non-managerial employee

towards assuming a higher position. An updated and well maintained
inventory system enables an organisation to match expected vacancies with
the appropriate employees.

(b) Management Inventory

Management inventory is a collection of information on managers. It
contains all information found in the skills inventory system and additional
information such as:
(i) Developmental need;
(ii) Potential for promotion at present and after receiving additional

training and development;
(iii) Field of speciality;
(iv) Types of jobs and favoured location of work area;
(v) Aspiration and career goal;
(vi) Expected date of retirement; and
(vii) Results of work tests.
The management inventory is used to identify managers who have the

potential to assume a higher rank and is used in the process of job
promotion and succession.
The skills inventory system and management inventory developed by the

Human Resources Department may help an organisation to find available
human resources to fill vacancies at different levels of the organisation.
(c) Markov Analysis

The Markov analysis is a method used to track the movement of workers at
various jobs in an organisation. The analysis shows the percentage and the
number of workers who are still employed by an organisation, who have
been promoted, demoted, transferred to other areas of work or dismissed.
(d) Succession Chart

A succession chart is a diagram that shows all positions in an organisation,
including the name of the jobholder and the names of qualified successors
to the position. The chart is structured to identify the rank of employees
available for promotion. This chart may also be used to inform the top
management of an organisation about a candidate in the organisation who
could replace a jobholder who is about to retire, be dismissed or resign.

If there is a gap in the succession chart of an organisation, where no suitable

candidate in the organisation could become a successor for a particular
position, the management is forced to have a management development
programme for its employees or to recruit from outside the organisation.
As the chart contains information such as current job performances and

suitability for promotions, it is often used for succession planning.
Succession planning is a process to ensure that qualified individuals are
ready to assume management positions if there are vacancies due to the
death, dismissal, termination and retirement of officers in those positions.
Usually, succession planning is done for top managerial positions, such as
directors, chief executive officers and other senior positions in an
organisation.
Succession planning is important to ensure that there is a successor to the

position that is considered important in an organisation.
3.4.2 The Supply of Employees from Outside an

Organisation
Sometimes, the employees in an organisation cannot fill the forecasted need for
human resources. Among the reasons why an organisation depends on the
supply of workers from outside an organisation include:
(a) The employees in the organisation do not possess the skills and knowledge
required by the organisation;
(b) The organisational expansion results in the shortage of employees;
(c) There are no qualified employees to be promoted; and
(d) The management is searching for employees to fill the positions.
When such circumstances arise, an organisation has to recruit employees from

outside the organisation. Some organisations conduct direct recruitment
exercises from universities, vocational institutions, competitorÊs companies and
from candidates who have applied. There are many factors that influence the
supply of employees, including the demographic changes of the population, the
demand for employees with particular skills, the economic conditions of a
country, population mobility and education levels of the labour force as well as
the condition of the labour market. The effects of these factors in the recruitment
of employees have been discussed in Topic 1.

There are many useful statistics such as the demographic area of the population,
the profile of the industry and the job profile that can be obtained from the
annual report of the Statistics Department, The Ministry of Human Resources.
Organisations in Malaysia that need information such as the forecasted levels of
demand and supply of human resources across industries in different countries,
states and districts may refer to the Federal Manufacturers of Malaysia (FMM).
If an organisation has information of the sources of employees, it can focus on the

recruitment of these sources. For example, to fill the position of a technician,
Canon Marketing launched a recruitment campaign at technical colleges like Tafe
and FIT.
Sources for the supply of employees from outside an organisation will be further
discussed in the next topic.
3.5 ACHIEVING BALANCE BETWEEN DEMAND

AND SUPPLY
Following the forecasting of the demand and supply of human resources, a
human resource manager must take steps to balance the demand and the supply.
As shown in Figure 3.1, if the forecast of demand by an organisation may be
filled by the forecast of its supply, the firm will not take any action. Figure 3.3
shows the measures that can be taken when an organisation has a scarcity or
surplus of human resources.
Figure 3.3: Steps to achieve balance between the demand and supply of human resources

 Human resource planning is a systematic process that studies the need for
human resources to ensure that the number of employees with the required
skills are readily available when needed.
 Supply of labour means workers with the required skills are readily available
to fill the labour demand of an organisation.
 Demand for labour refers to the number of workers needed in the future by
an organisation.
 Internal environmental factors that may influence the forecast of demand and
supply of human resources include the demand for productivity and service,
organisational financial resources, an organisationÊs growth and
organisational philosophy.
 External environmental factors include employee demographic changes such

as education, age, gender, race and religion, workersÊ mobility, government
policies, technology along with economic conditions.
 Quantitative methods for forecasting the demand for humans resources

include zero-base forecasting, the bottom-up approach and trend analysis.
 The supply of human resources can be forecasted within an organisation

through the following methods: skills inventory system, management
inventory, Markov analysis and a succession chart.
Bottom-up approach Strategic planning
Management inventory Succession chart
Markov analysis Zero-base forecasting
Skills inventory system

Fill in the blanks for each of the following statement with an appropriate answer.
1. ______________ is a systematic process that studies human resource needs

in ensuring that the number of skilled employees required is available
when needed.
2. ______________ is a process that illustrates how top management decides

the overall organisational directions and goals and how to achieve them.
3 Demands for productivity and service, an organisationÊs financial resources

and organisational philosophy are ______________ environment factors that
could influence the forecast of the demand and supply of human resources
whereas ___________ environment factors includes employee demographic
changes such as education, age, gender, race and religion, labour mobility,
government policies, technology and economic conditions.
4. ______________ indicates to a human resource manager determining

whether the need for employees may be filled from within an organisation,
externally or by combining both resources.
5. ______________ is a process to forecast the number and types of employees

required in the future by an organisation to achieve its goals.

Topic  Employee
4 Recruitment
LEARNING OUTCOMES
1. Define recruitment and sources of recruitment;
2. Discuss the choices available to an organisation other than
employee recruitment;
3. Describe the recruitment process;
4. Explain internal recruitment methods; and
5. Identify the advantages and disadvantages of internal and external
recruitment methods.
 INTRODUCTION
In Topic 3, we saw how human resource planning is done. In this topic, we will
discuss employee recruitment. When an organisation has to conduct a
recruitment process, it should know where to find qualified candidates and how
to attract them to apply for jobs in the organisation.
We will begin this topic by defining employee recruitment followed by a

discussion on alternatives to recruitment. Next, we will observe the recruitment
process and recruitment sources. We will also discuss internal and external
recruitments as well as the advantages and disadvantages of each method.

52  TOPIC 4 EMPLOYEE RECRUITMENT
4.1 INTRODUCTION TO RECRUITMENT

Once human resource planning has been done, an organisation will know
whether it has a surplus or shortage of employees. If it needs more employees to
fill the need for human resources, it will begin the process of recruitment.
Recruitment is a process of finding and attracting candidates to apply for job
vacancies in an organisation.
Recruitment is also an important process because any error in the process may
result in an increase in employee turnover and training costs and time wastage in
training new employees who may eventually quit. It is also difficult to terminate
an employee whose work performance is unsatisfactory. Thus, finding qualified
candidates to apply for vacancies in an organisation is very crucial when the
organisation needs employees.
Before an organisation carries out the recruitment process, job descriptions and
job specifications must be prepared (refer to Topic 2 for explanations of these).
Do you remember what is meant by a job description and a job specification? A
job description contains information on the duties, functions and responsibilities
of a job and job specification contains information on the qualifications, skills and
the level of education required to perform the job. Job descriptions and job
specifications may provide results only after a job analysis is performed. Job
descriptions help a human resource manager to know the duties of particular
jobs while job specifications tell us the types of candidates that are most suitable
for jobs. After identifying the job and the qualifications required for it, the task of
finding a qualified individual capable of performing the job becomes very
structured and simple.
During the recruitment process, candidates will be informed on the qualifications

required for the job and the prospects of career advancement in the organisation.
Whether or not a vacancy should be filled internally or externally depends very
much on the organisationÊs human resource policies and the required
qualifications. It also depends on the availability of employees within the
organisation to fill the vacancy and the expansion level of the organisation.
A new organisation that has just started operations or acquired a huge business
contract needs to acquire quickly and simultaneously a large number of
employees at all levels. Therefore, it has to carry out external recruitment
processes. Alternatively, it might transfer employees from other departments or
promote qualified employees to fill the vacancies.

TOPIC 4 EMPLOYEE RECRUITMENT  53
However, some organisations use methods other than recruitment to meet their
needs. We will study these options in the following subtopic.
ACTIVITY 4.1
Describe what is meant by employee recruitment. Obtain information

on a recruitment process from your employer and discuss it with your
tutor and coursemates in the myINSPIRE forum.
4.2 ALTERNATIVES TO RECRUITMENT

Although the human resource planning of an organisation may verify a need for
additional employees, the organisation may avoid carrying out recruitment. One
of the reasons for this decision is that recruitment and selection processes are
very costly. The process of finding prospective employees, interviewing
candidates, paying job agencies and training new employees is very costly for
small organisations.
An organisation will avoid carrying out recruitment for the need of human
resources unless it arises only during a specific period. For example, a
supermarket may need additional employees during a sale and festive seasons.
When a supermarket recruits employees for that period, the employees will be
terminated after the period is over. The costs involved are the recruitment costs
and lay-off remuneration payments. This also gives the company a bad image.
Hence, how can this problem be solved?
Among the options of solutions include:
(a) Transferring the Responsibility of Performing the Job or Providing the

Service to Other Companies (Outsourcing)
The decision to shift the responsibilities of a particular job to a sub-
contractor who could do the job effectively and efficiently may avoid the
recruitment of additional employees and reduce the size of the current
employee pool. For example, some companies may transfer the
responsibility of their salary payout to an outside company. This allows the
Human Resource Department to concentrate on other functions.

(b) Employ Part-timers and Temporary Employees

Using part-timers and temporary employees provided by a job agency is an
alternative to employee intake and has become a more common practice
among companies. These types of employees are normally employed to
support the permanent staff in an organisation especially when there are
additional or specific duties to be carried out. For example, a post office
may need additional employees during the festive season to manage the
influx of greeting cards.
(c) Employee Leasing

Employee leasing is a process where an employer terminates the services of
some employees in an organisation and in return, a third party known as
the Organisation for Professional Employees (OPE) rehires them. The OPE
will then lease them back to their original employer. The employee leasing
agency will then perform all the functions of the employerÊs Human
Resource Department such as recruitment, payroll, performance appraisals,
administrative benefits and other daily human resource activities.
Employee leasing provides an organisation with employees who have the

knowledge and skills of the organisationÊs operations because they were
formerly employed by the organisation. Leasing is not practised in
Malaysia, but it is an alternative to employee recruitment now favoured by
American firms.
(d) Asking Employees to Work Overtime

Overtime is a method frequently used by organisations when there is
additional workload. Permanent employees in an organisation are asked to
work overtime. This method is preferred by organisations because
recruitment is not needed and the cost related to the selection and training
of new employees and the organisation can be avoided. For employees,
working overtime means additional income as they are paid based on
overtime rates.

ACTIVITY 4.2
We have discussed several alternatives to recruitment. Provide two

advantages and two disadvantages of each alternative. Compare your
answers with that of your coursemates in the myINSPIRE forum.
4.3 RECRUITMENT PROCESSES

Figure 4.1 shows that before a recruitment process is conducted, an organisation
must formulate human resource planning. This is because through human
resource planning, an organisation will know whether it needs additional
employees, the type of employees that are needed and the departments that need
the employees. If there is any vacancies, the organisation may in advance study
the options available, rather than recruiting employees to fill the job vacancies. If
the additional employees are needed for a fixed or longer period, then it is
appropriate for the organisation to recruit new employees.
A recruitment process begins when a manager issues an employee requisition

document. This is a document that identifies the designation of the post to be
filled, the name of the department, the time the vacancy occurred and the due
date of the vacancy to be filled. In an employee requisition document, a manager
may refer to the job specification to determine the qualifications required for the
job. It will be submitted by the department manager where the vacancy exists
and be delivered to the human resource department.
The next step involves the human resource officer determining from the
recruitment sources whether a qualified employee is available.
Recruitment sources are locations that provide qualified individuals whether

from within or outside an organisation. Recruitment methods are methods that
are used to attract future employees to submit an application to an organisation.
Managers must identify in advance, the recruitment sources before choosing the
method to be used.

Figure 4.1: Recruitment process

Source: Adapted from Mondy, R. W., Noe, R. M., & Premeaux, S. R. (2009)
4.4 RECRUITMENT SOURCES

We have discussed the supply of human resources that may be obtained from
two sources, within an organisation or from the labour market (outside the
organisation).
The employee recruitment sources that are chosen depend on:
(a) An OrganisationÊs Policies On Human Resources

Organisational policies on human resources may greatly impact employee
recruitment. For example, if the policies on promotions of an organisation
encourages that promotion must be done from within, this will give an
opportunity for employees in the organisation to be promoted. However if
the policies discourage promotions from within, the organisation has to
recruit externally.

(b) Whether the Skills and Knowledge Required could Be Attained from
Within an Organisation
If a future employee with skills may be attained from within an
organisation, the recruitment process may be done from within. If not, an
external recruitment has to be done by the organisation.
4.4.1 Internal Recruitment Sources

Internal recruitment is done in the form of a job promotion or transfer. The
practice of internal recruitment is effective because:
(a) The Suitability of Candidates is Evident

It is easy to evaluate the suitability of a candidate for a job because the skills
and abilities of the candidate have been previously identified by the
organisation.
(b) Motivates Employees and Shows the OrganisationÊs Dedication in Staff

Development
Internal recruitment, especially for a higher position, may be motivating for
employees. Promotion is a kind of reward to employees for their efforts and
it encourages them to continue on with their efforts. It also shows to others
that hardworking employees will be promoted. This will increase employee
morale in the organisation. Internal recruitment also proves that an
organisation is committed to its employeesÊ career development.
(c) Cost and Time-saving

Internal recruitment is faster and more cost saving compared to external
recruitment. The cost and time spent for employee training can be saved
because the employees already possess the relevant knowledge and
expertise regarding the operations of the organisation.
Now, let us discuss external recruitment sources.

ACTIVITY 4.3
Does your organisation practice internal recruitment? Discuss the

advantages and disadvantages of internal recruitment based on your
organisationÊs or othersÊ experiences in the class or in the myINSPIRE
forum.
4.4.2 External Recruitment Sources

An organisation has to depend on the conditions of the labour market to recruit
externally. A countryÊs weak economy and high level of unemployment will
make the process of recruitment easier for an organisation. However, if the
unemployment rate is low and the economy is prosperous, the recruitment
process becomes difficult. Why does an organisation practice external
recruitment? External recruitment is done when an organisation wants:
(a) To fill a vacancy left by an individual who moves or has been promoted;
(b) To acquire skills that are not possessed by the companyÊs employees;
(c) To acquire new ideas and employ employees from various backgrounds;
and
(d) To fill entry level positions.
An organisation may get prospective employees through several external

recruitment sources. Some of these are:
(a) Colleges, Universities, Vocational Schools and Technological Institutes

These sources are suitable for finding candidates with technical and
academic qualifications but who have no working experience. Most
colleges, universities and vocational schools are now more sensitive to
certain job needs and they normally provide learners with specific work
skills. There are companies that collaborate with colleges, universities and
vocational schools to ensure a continuous supply of trained individuals in
their organisations. There are companies that offer scholarships to learners
who are undergoing training, requiring them to work with the companies
for several years upon completion of their studies.

(b) Other Companies

Competitors or other companies in the same industry or geographical
location are the most important sources of employees with working
experience. Small companies usually look for employees trained by larger
companies.
(c) The Unemployed

Everyday there are individuals who leave their current jobs due to many
reasons. Unemployed individuals normally seek for jobs and are an
important recruitment source.
(d) Ex-military Personnel

Some organisations like to employ ex-military personnel as staff because
they believe that these people are disciplined, motivated and have various
skills.
(e) Self-employed Individuals

Some organisations might consider self-employed individuals for jobs that
require technical, professional and management skills or for jobs that
require entrepreneurship experience.
(f) Customers
A customer who knows an organisation well, including its services and
products may be an innovative source of recruitment. These customers who
are satisfied and happy with the service or products of the organisation
may bring enthusiasm to the workplace compared to individuals who have
lesser knowledge of the organisation. Customers are also people who use
the companyÊs products or services. As such, they can provide valuable
information as to how the organisation may improve further.
External recruitment depends on the types of vacancies to be filled. For

example, the recruitment sources for the position of marketing manager are
different from that of a clerk. Colleges, universities, vocational schools and
technological institutes are suitable for entry-level positions but these are
not the appropriate places to get employees with high-levels of skill and
working experience.

Table 4.1 summarises the advantages and disadvantages of internal and

external recruitment.
Table 4.1: Advantages and Disadvantages of Internal and External Recruitment
INTERNAL RECRUITMENT EXTERNAL RECRUITMENT

ADVANTAGES ADVANTAGES
1. An organisation may evaluate 1. Potential candidate is a source of
accurately the suitability of the new ideas. To avoid recruitment
candidates as it has their among staff.
performance records. 2. External candidates may have
2. Orientation time and cost can be more working experience than
saved. internal employees.
3. To raise employee morale and to 3. The new candidate may posses
motivate employees in an the required skills and new
organisation as internal knowledge.
recruitment means that good
performance will be rewarded.
This also encourages loyalty
among employees to the
organisation.
4. No cost incurred or the cost of
recruitment is low. The
recruitment time is also reduced.
DISADVANTAGES DISADVANTAGES
1. Lack of new ideas. 1. External recruitment incurs high
2. Candidates who do not succeed cost.
may be disappointed and leave 2. More time is needed to select
the organisation. suitable candidates among the
3. The recruitment may be applicants.
influenced by office politics. 3. Chances of selecting unsuitable
4. No employees have the ability or candidates may be higher as the
skills required by the organisation organisation does not have
to fill the relevant vacancies. reliable information on the
performance of the candidates.
4. The organisation may offend
internal candidates for choosing
external ones.
5. An orientation must be done to
inform the new employees of the
work culture and the
organisationÊs operations.

4.5 RECRUITMENT METHODS

As mentioned at the beginning of this topic, managers must first identify the
appropriate recruitment sources before choosing the suitable recruitment
method. For example, if a company is looking for a director of human resource
with not less than eight years experience and no employees in the organisation fit
the criteria, most probably the candidate is working for a competitor or is self-
employed. After determining the recruitment sources, the recruitment officer will
choose the best method to attract qualified candidates.
In this section, we will examine the recruitment methods suitable for internal and
external recruitment sources.
4.5.1 Internal Recruitment Methods

An effective internal recruitment method must be able to discover qualified
individuals who considered themselves qualified to apply for the job vacancy.
These methods include:
(a) Skills Inventory System and Management Inventory

An organisation may use a skills inventory system and management
inventory to find qualified individuals from within an organisation. Do you
remember the skills inventory system and management inventory
discussed in Topic 3? Management inventory contains detailed information
on managers and is used to identify individuals who have the potential to
move up to higher positions. A skills inventory system contains
information on the readiness of a non-managerial employee to move to a
higher position or another level in an organisation. As a recruitment tool,
both inventories are very useful as an organisation can determine whether
qualified employees are readily available to fill a job vacancy. However, the
information in the inventory must be updated and well kept or it might be
difficult to decide which employee has the required ability for the vacancy.
(b) Job Vacancy Announcement and Job Bidding

An organisation may use the announcement method to publicise vacancies
to its employees. Previously, job vacancies were advertised by posting a
notice on a notice board of the organisation. It contains the job
specifications, the job descriptions and the details of the contact person.
Now, as computers are widely used, some organisations develop computer

announcement systems and job bidding. Some organisations display the
notice of vacancies on their websites.

Bidding is a method that enables qualified individuals in an organisation to

apply for vacancies. Normally, interested employees have to make an
application through their supervisors. This is to ensure that the supervisors
are informed about the employee who applied for the position.
Among the advantages of the „job vacancy notice‰ are:
(i) To avoid employees from saying that they are not aware of the job
vacancy until the post has been filled;
(ii) It reflects the transparency of the organisation; and
(iii) It gives employees the opportunity to develop their careers in the

organisation.
However, this method has some disadvantages. The computer based job-
announcement system and job bidding is costly and time consuming. When
an applicant fails to get the job, he or she must be given an explanation as to
why he or she has been rejected. If due attention is not given to ensure that
the most qualified employee is chosen for the position, other employees
may begin to distrust the organisation.
4.5.2 External Recruitment Methods

Sometimes, an organisation has to carry out external recruitment, especially
when an organisation wants to increase the size of its labour force. As discussed
earlier, there are several sources for external recruitment. In this section, we will
study the methods that can be used by recruitment officers to attract individuals
from the labour market to apply for jobs in an organisation. These methods
include:
(a) Advertisement in Mass Media

The advertisement of a job vacancy is a method that uses the media like
radio, television, newspapers or trade journals to inform the public of job
vacancies in an organisation. However, the cost of advertising on television
is very high thus this method is rarely adopted by the public sector.
The private sector normally opts for newspapers. One of the advantages of
doing this is that it gives a wider coverage because of the circulation and
the cost is low. However, the advertising method has some disadvantages.
Among them is that non-qualified candidates may apply for a vacancy. This
complicates the selection process and could result in unsuitable candidates
being chosen.

Longer time is needed to prepare a newspaper advertisement. The choice of

phrases, content and the design of a job vacancy advertisement must be
attractive, precise and not lengthy. To prepare a job vacancy advertisement,
the Human Resource Management Department can collaborate with
experts from the advertising companies.
Organisations can also use radio, journals and billboards to advertise their
job vacancies. For example, if an organisation is looking for a manager of
human resource, they may place an advertisement in the MIHRM journal
(Malaysian Institute of Human Resource Management). Some organisations
advertise their job vacancies through radio.
(b) Headhunter and Professional Recruitment Agency

A headhunter is an organisation that assists companies in recruiting
employees and helping individuals to find jobs. The services of
headhunters are usually needed for non-managerial, part-time and
temporary staff recruitment. Using their services can save time in the
selection process as recruitment officers do not have to advertise or screen
the application forms.
Professional recruitment agencies help organisations to find qualified

individuals for job vacancies by matching their qualifications with the
vacancies available. Usually, this agency helps organisations to find
individuals for managerial posts.
(c) Job Recommender

The services of a job recommender is suitable for job vacancies that face a
tight new market. The employees of an organisation will announce the job
vacancies to their friends or relatives. Normally the candidates they
recommend are good employees. Some organisations pay incentives to job
recommenders to encourage their efforts.
(d) Unsolicited
An organisation with a reputation of being a good place to work will
receive applications from individuals searching for jobs. If there is no
vacancy at that time, their applications will be filed and reviewed when
there is a suitable vacancy in the future.

(e) Career Day/Week

Sometimes an organisation or a group of organisations organise a career
day/week to attract a large number of candidates. Guidance and
counselling units of a college or university may also organise career
exhibitions to help final year learners find jobs. As a method of recruitment,
career day/week gives organisations the opportunity to meet a lot of
candidates within a short period. The cost involved is lower than that of
other recruitment methods.
(f) Practical Training

In many local universities and colleges, learners are required to undergo
practical training in private organisations or government departments for a
specific period. They will be placed in organisations that have agreed to
accept them to expose them to business practices. They may contribute to
the organisations by carrying out their duties. Organisations that accept
these practical learners may observe their performances and after
completing their studies, potential candidates may be offered positions in
the organisations.
(g) Recruitment through the Internet

Advertising on the net is a method of recruitment used by companies to
attract future employees. The recruitment officer may advertise a job
vacancy on the organisationÊs website or a special website specially
designed for advertising job vacancies. For example, on Job Street
(www.jobstreet.com) and jobsDb (www.jobsdb.com), vacancies are
arranged according to job categories (management, marketing, technical
etc.), locations or salaries offered.
Advertising via the Internet is cheap compared to advertising through print

media. A vacancy may be advertised for a period of time on a fixed rate of
payment. Advertising on organisational websites also allows easy updating
of the advertisement and it may attract individuals from around the world.
Websites like jobstreet and jobsdb.com also enable job seekers to send their
applications via email. However, the recruitment officer must constantly
update the website to maintain the image of the organisation. Vacancies
that have been filled must be taken off the website.

The recruitment method used depends on the labour market and the
position of the job vacancy in an organisation. In a tight labour market, an
organisation may have to use a combination of methods to attract qualified
candidates. For example, an organisation may have to advertise, use job
recommenders and get the service of employment agencies to fill the need
of the labour force. However, during an economic downturn, with a high
level of unemployment, many individuals will be looking for jobs. During
this time, an organisation might not have to use creative recruitment
methods to fill the needs of its workforce.
 Every organisation is different. Therefore, the types and qualifications of

employees required to fill job vacancies in organisations also differ. So,
recruitment must suit the needs of a company.
 Recruitment is a process of finding and attracting candidates to apply for job

vacancies in an organisation. Before an organisation carries out the
recruitment process, job descriptions and job specifications must be prepared.
 There are several alternatives to recruitment: Transferring the responsibility

of performing the job or providing the service to other companies
(outsourcing), employ part-timers and temporary employees, employee
leasing and asking employees to work overtime.
 There are different methods and sources of recruitment and an organisation

may carry out external or internal recruitment depending on their needs.
Announcement method Job bidding

Recruitment sources Recruitment methods
Management inventory Headhunter

1. Explain the terms:
 Management inventory;
 Skills inventory system; and
 Job vacancy announcement.
2. Fill in the blank for each statement by selecting an appropriate answer from
those given in the box:
Employee leasing Recruitment sources Management inventory

Job bidding Recruitment methods Recruitment
Employee requisition Headhunter
document
(a) ______________ is a process of finding and encouraging candidates to

apply for a job vacancy in an organisation.
(b) ______________ is a process when an employer terminates the

services of several employees who are then hired by a third party
known as the organisation for professional employees who will hire
them to the original employer.
(c) ______________ is a document that contains the name of the post to be

filled, the name of the department where the vacancy exists and the
due date to fill the vacancy.
(d) ______________ are places where you can get qualified individuals.
(e) ______________ are methods that may be used to attract prospective

employees to apply for jobs.
(f) ______________ contains detailed information on managers and is

used to identify potential individuals for promotions.
(g) _____________ is a method that allows qualified individuals in an

organisation to apply for a suitable position.
(h) An organisation that helps companies to recruit employees and

individuals to find jobs is called a ___________________.
Topic  Selection
5
LEARNING OUTCOMES
1. Define the term selection;
2. Explain the importance of the selection process;
3. Discuss the basic concepts of a selection test, specifically validity
and reliability;
4. Describe the types and methods of interviews that may be used
and problems that could arise from them; and
5. Describe the importance of background and reference checks on
applicants.
 INTRODUCTION
So far, we have discussed how a company may estimate the number of
employees it requires through human resource planning and the methods of
attracting candidates to apply for vacancies in an organisation. In this topic, we
will discuss how an organisation selects the best individual for a job.
We will begin this topic by discussing what selection is and why selecting a
candidate is important. Then, we will examine each step in the selection process.
We will also discuss the types of selection tests. Finally, we will discuss the types
and methods of interviews that may be used and the reasons why background
and reference checks are carried out.

68  TOPIC 5 SELECTION
5.1 SELECTION: MATCH INDIVIDUALS TO

JOBS
The next step for an organisation, after successfully attracting suitable candidates
is to select the most qualified individual for the job opening. Selection is the
process of choosing the most suitable individual from a group of candidates
applying for a job in an organisation. It involves short listing from a pool of
candidates by using tools such as selection, background checks and references to
determine the suitability of a chosen candidate.
There is a close relationship between the selection process and recruitment.

When a selection process fails to attract qualified candidates, an organisation has
no alternative but to choose a lesser qualified candidate. The selection process
essentially is an important process and the most difficult to execute when hiring.
When an organisation recruits a new employee and the employee resigns or is
terminated because he or she is unsuitable for the job, the company has to incur a
huge loss because the process in taking in a new staff requires a repeat of the
recruitment process and selection along with the training that goes with it.
Indirectly, the image and good name of a company will be compromised and
tarnished when a new employee is terminated due to his or her unsuitability in
performing the job required. The selection process is also important because
recruiting employees who are not qualified will cause a high turnover of staff
and this will hamper the operations of an organisation. Besides these, if an
organisation has a large number of employees who are mediocre or
underachievers, the organisation will not succeed even though there is in place a
good organisational plan, a perfect structure and tight organisational control.
SELF-CHECK 5.1
Why is selection considered as an important process for an

organisation?
5.2 SELECTION PROCESS

Figure 5.1 shows the steps of the selection process. The selection process begins
with an initial screening; a curriculum vitae that is sent to the department of
human resource will be checked to determine the suitability of the candidate.
Normally, a human resource officer will use job specifications to help review the
curriculum vitae received. Apart from helping to identify the competency of the

TOPIC 5 SELECTION  69
individual who is needed to successfully perform a job, job specifications may

also be used to differentiate qualified from non-qualified candidates. A candidate
without the appropriate skills, knowledge and ability will be rejected. Suitable
candidates will be called for a preliminary interview and asked to fill in a job
application form. Then, they have to undergo selection tests. If they pass these
tests, they will be called in for a formal job interview. The human resource officer
will check the reference and background of the candidates. A successful
candidate will receive a letter of offer and is required to undergo a medical
examination. Normally, the job offer is given after the candidate passes the
medical examination. A candidate who passes the medical examination will be
employed by the organisation. Not all candidates will go through the steps
shown in Figure 5.1. Some candidates are eliminated after the preliminary
interview and some after sitting for the selection tests.
Figure 5.1: The selection process

Every step in the selection process is important because it provides information

on the suitability of a candidate to fill in the job vacancy. Only those who „pass‰
one level will be allowed to continue to the next. If the selection process is well
conducted, the chance of employing a qualified and suitable candidate is higher.
It also saves time as unsuitable candidates will be rejected earlier.
The number of steps and its sequence in the selection process is not only different
among organisations but also among the types and job levels to be filled. For
example to fill the position of a manager, a candidate may be required to sit for a
selection interview and attend several levels of interviews to evaluate his or her
suitability. Apart from these, a detailed background check will be done to
confirm his or her experience and capability. For the post of a clerk, a candidate
might be required to undergo only a short interview and a typing skill test. For a
production worker, the selection process is very brief and is done in an open
interview.
In the sections that follow, we will discuss in detail the levels of the selection
process.
5.3 SCREENING APPLICANTS

Normally job applicants will send their curriculum vitae when applying for a job
in a company. A curriculum vitae is usually used by job applicants to show their
qualifications. If the selection process receives good response, an organisation
will have a lot of applicants for the vacancy. The main purpose of screening an
applicant is to ensure that they possess the required knowledge and skills for the
job. The manager or officer of human resource who screens applicants would
normally use a job specification as a guide to determine the skills, knowledge
and ability required for the job. A candidate who does not meet the requirements
of the job will be rejected at this level.
5.4 PRELIMINARY INTERVIEW

After applications are screened and short-listed, the candidates who meet the
requirements of the company will be called in for a preliminary interview. The
interview gives the applicant an opportunity to evaluate the job conditions,
location and career advancement opportunities in the organisation. Preliminary
interviews allow an interviewer to obtain further information on an applicant
that is not found in his or her curriculum vitae. This approach is called visual
screening.

Even if candidates have submitted their curriculum vitae, they still have to fill in
an application form during the preliminary interview. Most companies require
candidates to fill in the application form because it is a fast and systematic way of
getting information from candidates. An application form usually contains the
post applied for, date of application, personal biodata, academic qualifications,
working experience and other information such as whether the applicant has
been convicted of a crime or ever sent to prison and references.
The uses of an application form include:
(a) To provide information to determine whether a candidate fulfils the

minimal needs of a vacancy in terms of experience, education and skills.
This information cannot be obtained from a curriculum vitae;
(b) To test the ability of a candidate to spell, write clearly and answer questions
correctly. Handwriting is said to reflect the character of an individual and
also proves essential in the selection process;
(c) To interpret career potential from the information provided by a candidate.

For example, information on a candidateÊs favourite school subject and
dislikes may show his or her potential to successfully perform the job;
(d) When a candidate is employed in an organisation, his or her application

form becomes a permanent and individual record that may be used as
future reference when the organisation needs the information; and
(e) As a source of reference check.
After filling in an application, a candidate is called in for an interview. The

information provided in the form will be the basis of the interview. The
interviewer may need further information or clarification on the information
provided. Additional questions on the needs of the job will be asked. For
example, a job may require the applicant to work in rural areas. If a candidate is
not able to commit himself or herself to do so, further discussion will be useless.
Information obtained from an application form and preliminary interview will be

combined and compared with the job specification to determine whether a
candidate suits the needs of the organisation. Only candidates who „pass‰ this
level will be called in for a selection test. Consequently, a preliminary interview
may be used to screen applicants. When a candidate is found to be unsuitable, he
or she must be informed of the reasons why he or she has been rejected.

5.5 SELECTION TESTS

Although employers usually use interviews to forecast and evaluate the skills
and ability of a candidate, a selection test can also be used for a more accurate
forecast and evaluation. A selection test is an objective and fixed behavioural
guideline to measure knowledge, skills, ability and other characteristics of an
individual. It is often a simple test, such as a typing test for a clerk, driving test
for a lorry driver or a combination of several tests to select the most qualified
individual for a managerial post.
Since a selection test is used to help a manager to make selections, it is important

to have a well designed test. Only a good test can be an accurate and reliable
method of selecting qualified candidates from a pool of applicants. A well
designed selection test should have the following characteristics:
(a) Standardisation
Standardisation refers to the uniformity in conditions and procedures while
administrating a test. A performance comparison test done on candidates
must be fair throughout and all candidates must take the test in same or
almost similar conditions. For example, instructions and time allocated
must be consistent and under the same physical environment. When a
candidate takes the test in a noisy room and other candidates do it in a
quiet atmosphere, different results will be obtained. This difference may
influence their performance.
(b) Objectivity
Objectivity in a test may be attained if all interviewers give the same scores
or marks for the same test. Multiple choice and true-false questionnaires are
said to be objective because they only provide one correct answer for each
question. An individual who sits for an objective test chooses either a right
or wrong answer.
(c) Norm
Norm is a reference to compare the performance of each individual. It
reflects the distribution of marks obtained by other individuals who were
tested.

(d) Reliability
Another important characteristic of a selection test is reliability. Reliability
refers to how far the selection gives the same or fixed results when
repeated. In other words, if an individual takes a test in January and once
again in March, the results obtained must be the same. Even when there is a
disparity, it should be caused by different conditions and candidates who
sat for the test and not because the test is faulty.
A test given to the same individual within a gap of a few days which shows
various results is considered to be unreliable. A selection test may only be
used when the result is reliable.
(e) Validity
A validation test answers the question „Does this test measure what it is
supposed to measure?‰ In staff selection, validity refers to how far a test
forecasts the future work performances of a candidate. In job testing, there
are three methods to validate a selection test; criterion based validation,
content validation and conduct validation.
(i) Criterion based validation is determined by comparing the marks

obtained in a selection test against a sample of job performance
appraisals, valid production records and other successful
measurements applicable to every type of job. For example, in sales,
the figure is normally used as a foundation for comparison. In
production, the quantity and quality of output might be the best
criteria in determining job performance.
To show criterion based validation is to show that the candidates who

obtain good results in a test will perform well in their job and those
who fail will not perform well.
(ii) A test is said to have content validation if it contains duties and skills
required for a particular job. It is a method of validation where a
candidate is asked to perform a particular duty in a job. For example,
a typing test for candidates who apply for the post of a clerk is a test
that has content validation.
(iii) Conduct validation is a method of test validation that determines

whether a test measures the characteristics or features considered
important in performing a job. For example, if a work requires
teamwork among employees, the test will be used to measure a
candidateÊs ability to work in a group.

5.6 TYPES OF SELECTION TESTS

There are several types of selection tests to measure cognitive (mental)
competency, psychomotor competency, behaviour, interest or achievement.
5.6.1 Cognitive Competency Test

Cognitive competency test is a test that measures the skills of an individual to
learn and perform a job. It tests a personÊs general reasoning skills, vocabulary,
speech fluency and skill with numbers. Examples of cognitive competency tests
are intelligence tests and intelligence tendency tests as explained here:
(a) Intelligence test (IQ test) is a test that measures general intellectual
competency. It does not only measure oneÊs intelligence competency but
also skills like memory and skills with numbers and vocabulary. This test is
an excellent performance predictor for a large number of occupations.
(b) Intelligence tendency test or specific cognitive test measures specific mental
abilities such as inductive and deductive reasoning, oral comprehension,
memory and skill with numbers. A specific cognitive test is also known as
an intelligence tendency test because it measures oneÊs intelligence
tendency towards a job. For example, a candidate who applies for a job as a
teacher in the public sector is required to take an intelligence tendency test
to determine whether he or she possesses the intelligence tendency to
become a teacher.
5.6.2 Psychomotor Competency Test

A psychomotor competency test measures a personÊs strength, movement
adaptation and agility. The motor skills that are tested include dexterity of
fingers, the ability to work rapidly using hands, agility of the hand and reaction
time. The psychomotor competency test is usually applied to test employees in
the installation division.
5.6.3 Job Knowledge Test

The job knowledge test measures a candidateÊs level of understanding of a job. It
can be designed specifically for a job, based on the information obtained from a
job analysis.

5.6.4 Job Simulation (Work Sample Test)

Simulation or work sample test measures how a candidate performs a part of the
work of a job. The work sample test simulates the exact condition and work to be
done in a job. It enables an employer to see his or her prospective employee
„doing the work‰. For example, if an individual is employed for a position that
requires him or her to train other employees in the company, he or she is
required to make a presentation. The work sample test gives a clear picture on
the ability and skills of the candidate. It is considered to have content validation
and provides a high forecast validation. It is reliable, cheap, valid and acceptable
for candidates.
5.6.5 Situational Test

If a competency cognitive test measures mental capabilities, a situational test
measures oneÊs characteristics and attributes. It is used to identify highly
motivated individuals who are flexible and able to work in a group. Some
companies use this test to classify the types of conduct.
A situational test is the most difficult test to evaluate and use. It is expensive to
design and only qualified testers can evaluate the test. An expert must analyse
the reaction of a candidate and summarise his or her conduct. The use of this test
in the selection process depends on the assumption that there is a relationship
between the conduct that may be measured with the success of performing a job.
Although the forecast validity for a situational test is low, a better forecast on
oneÊs job performance may be obtained if it is used together with a cognitive
competency test.
5.7 JOB INTERVIEWS

An organisation rarely recruits employees without interviewing them. Normally,
only candidates who have passed the selection tests will be called in for a job
interview. They will be referred to the department where the vacancy exists. The
manager or supervisor who makes the final decision will interview them.
An interview is a non-formal conversation to evaluate the knowledge, skills and

ability of a candidate and to provide the candidate with information of the
organisation and the vacancy. The aim of an interview is to evaluate a
candidateÊs communication skill, to analyse his or her background and to see if

there are any important characteristics that will enable him or her to perform the
job successfully. The interview may be conducted by a member of a workgroup
or another person, depending on the type of job offered. Although the
effectiveness of an interview is not certain, it is still a popular method employed
as a selection tool because:
(a) It is a practical method for a small number of candidates;
(b) It is believed that the personality and ability of a person can be evaluated
by meeting and talking to him or her; and
(c) An interview has the same function as public relations.
However, interviews have problems such as an individualÊs subjectivity and

tendencies. When we meet someone for the first time, we have the tendency to
evaluate him or her based on prior information and our first impression. We will
discuss the factors that undermine the effectiveness of an interview in detail in
the following sections.
ACTIVITY 5.1
Although interviews have many weaknesses, it is considered to be the

most popular method in the selection process. Provide your reasons for
this and discuss this with your coursemates in the myINSPIRE forum.
5.7.1 Planning an Interview

An effective interview must be well planned. It must be held in a private room
with the least interference. The interviewer must be friendly and be able to
communicate and to listen attentively. Before interviewing, he or she must study
an applicantÊs curriculum vitae and note his or her weaknesses and strengths and
any doubts that may arise. The interviewer must study the job specification and
start the interview with a clear picture of the candidateÊs attributes in mind. The
structured type of interview should be used if possible, i.e. to ask questions
related to the needs of the job. At least, list down the questions before conducting
an interview.

5.7.2 Types of Interviews

There are several types of interviews, as shown in Figure 5.2:
Figure 5.2: Types of interviews
(a) Structured Interview

A structured interview consists of a series of questions related to a job and
each question has a fixed answer. An interviewer will ask each candidate
the same questions and the answers will be evaluated based on
predetermined answers and suitability of the content. Asking the same
questions will form a basis to evaluate the candidates. The three questions
normally asked in a structured interview are:
(i) Situational questions, these are the questions that try to get the
candidateÊs reaction towards a specific work situation. Example: „You
are loading the car and are ready to go for a holiday with your family
when you realise you have an appointment with a client that
morning, what would you do?‰
(ii) Job knowledge questions which evaluate whether a candidate has the
basic knowledge required to perform a job.
(iii) EmployeeÊs work requirement questions evaluate the commitment of

a candidate to carry out a job in certain situations. Example: „In our
business, there are times when we will be very busy, especially when
we are having our sales exhibitions. How would you feel towards
working overtime?‰
Other features of structured interview questions are based on information

from a job analysis, additional questions are restricted (to ensure that
interviewers will only ask the same questions), a lot of questions are asked
and the candidate is allowed to ask questions only at the end of the
interview.

A structured interview will provide the types of information required to

make appropriate decisions because all questions asked are job-related. It
also helps interviewers who are uncomfortable with the process to ask
questions and conduct the interview effectively. Since an interview is a
subjective process, a structured interview will reduce subjectivity and
increase consistency among candidates. However, a structured interview is
inflexible and does not allow interviewers to ask further questions on the
candidateÊs answers that attract the interviewer. To avoid this problem, the
non-structured interview can be adopted.
(b) Non-structured Interview

In a non-structured interview, the interviewer will ask questions that
crosses his or her mind. Unlike the structured interview, in this interview
the questions asked do not have any format and there is no guideline to
evaluate the answers. The questions asked may be different for each
candidate.
Further questions are asked based on a candidateÊs answer. This type of

interview gives freedom to a candidate to decide the direction of the
discussion and they are encouraged to talk as much as they want to. A
interviewer may ask an open-ended question such as „Tell us about your
experience in your last job‰ and allow the candidate the freedom to talk
without interruption.
In a non-structured interview, an interviewer will generally listen to the

answers attentively, without disputing, disturbing or changing the topic of
the discussion abruptly. Further questions will be asked to allow candidates
to elaborate their answers. Therefore, a non-structured interview takes
more time than a structured interview.
The freedom given to candidates help in understanding their feelings or

behaviour, that is usually not made apparent in a structured interview.
However, since the direction of the discussion is decided by a candidate
and different information are obtained from different candidates, validation
and reliability in a non-structured interview are poor.
ACTIVITY 5.2
Differentiate between structured and non-structured interviews in your

own words. Find examples of both types of interviews from your
organisation or the Internet.

(c) Behavioural Description Interview

A behavioural description interview is essentially a form of structured
interview that uses questions to understand a candidateÊs past behaviour in
a situation. It emphasises the work incidents that have happened to the
candidate. In this interview, a candidate will be asked the actions that have
been taken by him or her in a given situation. The questions asked are
carefully selected so that it is related to a successful performance of a job.
Answers will be provided for every chosen situation. The answers are
obtained from the behaviour of successful workers and used to evaluate a
candidateÊs answers. For example, a candidate might be asked such a
question: „Explain how you will make an important decision without
having any required information.‰ This method is based on the critical
incident job analysis method and assumes that past performance is a good
predictor for future performance. How a candidate reacted in the past will
reflect how he or she will react in the future.
(d) Situational Interview

Another variation in structured interviews is situational interviews. This is
an interview that tests a candidateÊs behaviour in a given situation. Unlike
behavioural description interview, the questions asked in a situational
interview are based on incidents that are assumed. A situational interview
focuses on the ability of an individual to show how he or she will behave in
a situation. For example for the post of a supervisor, a candidate will be
asked of the types of actions to be taken when a worker is consistently late
for three days. The candidateÊs answers will be evaluated and compared to
the predetermined answers.
5.8 CONDUCTING AN INTERVIEW

There are several ways to conduct a job interview, the methods used include:
(a) One-to-one interview;
(b) Panel or board interview;
(c) Group interview;
(d) Computer interview; and
(e) Pressure interview.

Each one is explained further as follows:
(a) One-to-one Interview

A one-to-one interview is the most common method used. In this interview,
a candidate meets the interviewer and an oral question and answer session
will be conducted.
(b) Panel or Board Interview

A board interview means that a panel of interviewers will interview a
candidate. In a board interview, a candidate will normally be interviewed
by three or four interviewers. At the end of the interview, all interviewers
will discuss their observation and agree on the suitability of a candidate.
This interview is more valid than the one-to-one interview since more than
one opinion can be obtained, allowing for a better decision to be made and
the time for decision-making is shorter.
(c) Group Interview

In a group interview, a panel of interviewers interview several candidates
simultaneously. Normally, in a group interview, a panel will put forward a
problem to be solved and each candidate in the group will take turns to
provide answers to the problem. This method is very useful and time
saving for busy officers.
(d) Computer Interview

With the advancement of information technology, more organisations use
computers and the internet to assist them in the interview process.
Normally in a computer interview, a candidate is required to answer a
series of multiple choice questions (75 to 125 questions). For example, the
question for the post of a salesperson may be as follows:
How does your supervisor evaluate the performance of your customer

service?
A. Very good
B. Good
C. Average
D. Not good
E. Poor

The candidateÊs answers will then be compared to the answers provided by

another candidate or to an assumed ideal response. A computer interview
is usually performed to reject unacceptable candidates and to choose those
who will proceed to the subsequent face-to-face interview. In computer
interviews, impressions based on appearance can be avoided. However,
some candidates think that the prospective employer is impersonal for
using this method.
ACTIVITY 5.3
Provide types of jobs and suitable times for carrying out computer
based interviews. Check your answer with your tutor in the class or on
the myINSPIRE forum.
(e) Pressure Interview

A pressure interview is an interview in which candidates are asked
impolite questions to make them uncomfortable. The aim of this method is
to identify oversensitive candidates and whether they can tolerate a high
level of stress. This information is useful when a job requires candidates
with a high stress-tolerance level.
5.9 FACTORS THAT UNDERMINE THE

EFFECTIVENESS OF AN INTERVIEW
In this section, we will look at the factors that may influence the effectiveness of
an interview and its use as a candidate selection tool.
(a) Comparison Effect

Comparison effect is an error in judgement caused after interviewing
exceptionally good candidates or very weak candidates before the next
interview takes place. For example, it happens to an interviewer who has
interviewed several less qualified candidates which is then followed by an
interview with an average candidate. In comparison, the latter will look
more qualified than he or she actually is.

(b) Halo Effect

The halo effect happens when an interviewer allows one or several personal
characteristics to influence the overall perception of candidates. The
interviewer will assume one factor as extremely important and give an
overall good or bad evaluation based on that factor. For example, an
interviewer who gives very high evaluation for cleanliness may give low
evaluation to untidy or unattractive candidates. Directly or indirectly, the
interviewer lets his or her evaluation on the cleanliness of the candidate
influence the overall evaluation and ends up giving the candidate low
marks.
(c) Central Tendency Effect

The central tendency effect happens when an interviewer refuses to give a
very high or very low evaluation to a candidate. In this situation, all
candidates will be evaluated as average. When an interviewer evaluates all
candidates as average, they fail to differentiate between really good and
weak candidates.
5.10 VERIFYING THE INFORMATION

PROVIDED BY CANDIDATES
Most employers will review and verify the information of a candidateÊs
background. Reference and background checks may give further information
and insights to the information provided by a candidate and allow the
verification of the information. The purpose of reference and background checks
is to confirm the accuracy of the information provided by a candidate and to find
out about any doubtful background information such as criminal records,
suspension of driverÊs license etc. Reference check and/or background check is
said to be a part of the screening process to reject candidates who give false
information in their application forms. This also allows employees to check
candidates who have criminal records for offences that are directly related to the
job application.
For the purpose of reference and background checks, candidates are required to
give a reference that may give further information about them.

Reference and background checks may be done through telephone or mail.

Generally, reference checks done through telephone are more frequently
performed because this method saves time, information can be obtained
immediately and the answers given are sincere. Normally a supervisor is the best
individual to provide information on the work habits and performance of a
candidate.
If background checks are done thoroughly, it can reduce high turnover rates,
white-collar crimes and theft by employees. Thus, by doing a background check,
an organisation can get valuable information on the conduct and habit of a
candidate.
A company can also verify the accuracy of the information by giving a candidate
a polygraph test with the aim of confirming or rejecting the information given.
Polygraph tests or a lie detector measures changes in repository, blood pressure
and pulse of the individual being questioned. An examiner will pose some
questions and a candidate should either answer yes or no. Questions asked cover
various topics such as whether he or she is a drug addict, has he or she ever
stolen anything from employers or whether he or she has ever committed a
serious crime without being detected. However, the polygraph test is not widely
used as a selection tool in organisations in Malaysia.
ACTIVITY 5.4
Explain three mistakes often made in an interview. What are your

suggestions to avoid these mistakes? Compare your answer with that of
your coursemates in the myINSPIRE forum.
5.11 SELECTION DECISION

The most important step in a selection process is the decision to accept or reject a
candidate. The final selection will be made based on the candidates who passed
each selection level following the background checks, after the selection test and
after the interview information have been evaluated. Although, the Human
Resource Officer is involved at every level of the selection process, the manager
responsible for the performance of the new employee will make the final
decision.

Once the results of the job offer have been determined, the next step in the
selection process requires a candidate to go through a medical examination. A job
offer usually depends on the results of the medical examination. This is the last
step in the selection process because it incurs high cost.
There are few reasons why a medical examination is done. It is not only used to
determine whether a candidate passes the physical requirements of the position
but also to detect any medical limitations that should be taken into consideration
in the placement of the candidate. It is also a record and basis of a candidateÊs
health for insurance purposes or insurance remuneration claims. Apart from that,
it may also be used to identify health problems, to reduce absenteeism and to
detect illnesses unknown to the candidate. A candidate is required to undergo
medical examination at the companyÊs panel clinic.
5.12 NOTIFICATION OF DECISIONS TO

CANDIDATES
In a large organisation, the human resource department notifies the candidates of
the results and job offers. If the results of the medical examination are still
unknown, a conditional offer is made provided that the candidate passes his or
her medical examination. If the candidate is still working elsewhere, he or she is
required to give a two to four weeks notice of resignation.
In some organisations, particularly smaller companies, only successful

candidates are informed. However, unsuccessful candidates should also be
informed of the results. This is not only considerate but also portrays a good
image of the organisation to the public. Usually, the human resource department
communicates a notification of failure through letters.
ACTIVITY 5.5
Explain whether it is important to choose a candidate based on his or

her values besides normal criteria such as experience and skills. Discuss
with your coursemates.

 Selection is the process of choosing the most suitable individual from a group
of candidates applying for a job in an organisation.
 The selection process begins with an initial screening, then a preliminary

interview and asked to fill in a job application form. Then, they have to
undergo selection tests and a formal job interview. The reference and
background of the candidates will be checked. A successful candidate will
receive a letter of offer and is required to undergo a medical examination.
 A selection test is an objective and fixed behavioural guideline to measure

knowledge, skills, ability and other characteristics of an individual and
should always focus on its validity and reliability.
 The different types of selections tests include: cognitive competency test,

psychomotor competency test, job knowledge test, job simulation test and
situational test.
 The aim of an interview is to evaluate a candidateÊs communication skill, to

analyse his or her background and to see if there are any important
characteristics that will enable him or her to perform the job successfully.
 There are four types of interview formats: structured, non-structured,

situational and behavioural description.
 There are several ways to conduct a job interview: one-to-one interview,

panel or board interview, group interview, computer interview and pressure
interview.
 The information provided by candidates can be verified via background and

reference checks, after which a medical examination is done and notice of the
decision is communicated to successful and non-successful candidates.

Board interview Criterion based validation

Central tendency effect Halo effect
Comparison effect Situational test
Conduct validation Work sample test
Content validation
1. Read each statement carefully. Then, match them to the terminology given.
Write the letters that represent the correct answer in the given space.
Answer Statement
A frequently used method by job seekers to show their
qualifications.
A process to choose the most suitable candidate from a
pool of candidates for a vacancy in an organisation.
A selection test criteria that refers to the uniformity in
condition and procedure of the selection.
An important selection test attribute that refers to how far
the selection test gives the same or consistent results when
repeated.
An important selection test attribute that refers to how
good the test accurately forecasts the future work
performance of a candidate.
A test that measures an individualÊs skills to learn and
carry out a job.
A selection test designed to measure a candidateÊs skill in
understanding a job.
A selection test that measures the strength, movement-
adaptation and agility of a candidate.

(a) Psychomotor Skills Test
(b) Validity
(c) Trustworthiness
(d) Cognitive Competence Test
(e) Work Knowledge Test
(f) Standardisation
(g) Selection
(h) Curriculum Vitae
2. Fill in the blanks for each statement by selecting an appropriate answer

from those given in the boxes:
Situational Non-structured Central tendency

interview interview
Board Behavioural question Halo effect

interview interview
Interview
(a) _________________ is a formal conversation aimed to evaluate the

knowledge, skills and ability of a candidate and to inform the
candidate about the organisation and vacancy in the organisation.
(b) _________________ is an interview in which candidates are asked

how they will behave in a given situation.
(c) _________________ are questions that try to get the reactions of

candidates in certain working conditions.
(d) In a _________________ an interviewer will ask impromptu questions

that cross his or her mind. In this interview, the questions asked
have no specific format or guideline to evaluate the quality of the
questions.
(e) The type of interview carried out by a panel of interviewers is called a

_________________.

(f) One of the factors that may reduce the effectiveness of an interview
is the _________________ where an interviewer allows the
characteristics of an individual to influence his or her overall
perception of a candidate.
(g) _________________ is also one of the problems in interviews where

the interviewer refuses to give a high or too low evaluation to a
candidate. In this situation, all candidates will be evaluated as
average.

Topic  Employee
6 Development
LEARNING OUTCOMES
1. Describe employee training and development;
2. Determine the advantages of training and who needs training;
3. Discuss the methodological approach in organising employee
training and development programmes;
4. Identify the steps in the training needs analysis; and
5. Illustrate the types of training programmes.
 INTRODUCTION
Each employee in an organisation needs continuous training to remain qualified
or to prepare themselves with new work practices. We will begin this topic by
discussing the definition and scope of training and development and the
importance of training and development to an organisation. This topic also
discusses how to carry out staff training and development programmes. We will
end the discussion on staff training and development by outlining the training
programmes that can be carried out by an organisation.

90  TOPIC 6 EMPLOYEE DEVELOPMENT
6.1 DEFINITION OF EMPLOYEE TRAINING

AND DEVELOPMENT
The most important investment of an organisation is to provide training to its
employees. Unfortunately, a lot of money has been spent for less effective
trainings and therefore some organisations have withdrawn their budget for
training during the countryÊs economic crisis. Hence, it is important for
organisations to adopt a methodological approach in conducting training
programmes. As training is an important component in an employeeÊs
development, who is responsible for training? Training is a shared responsibility
between every department in an organisation, especially the human resource
department. Although this department conducts the training programme, it
should be supported and get feedback from other departments regarding the
types of trainings to be conducted for the benefits of their employees.
EmployersÊ reactions towards training is one of the challenges to be addressed.

Some organisations allocate a high budget for employeesÊ training throughout
the year and some may even offer training services to other companies. For
example, the Malaysian Airline System (MAS) built its own complex for their
training activities, i.e. MAS Academy at Kelana Jaya. MAS also offers its training
services to other airlines. There are also employers who allocate minimal budget
for training. They avoid spending too much money on the grounds that the staff
may leave the organisation after the training. These companies can afford to pay
high wages while saving on the training cost. This is also a short-term move as
employees will eventually leave to work in another company that is able to give a
better offer.
Training is an important activity that is conducted to improve employeesÊ

performance or to transform them. This is done through a learning process to
enable them to perform their duties more effectively. For example, an employee
who normally uses a typewriter is trained to use a computer. This means that the
employee is expected to change after the training. Therefore, to see these
changes, the training programme must be effective.

TOPIC 6 EMPLOYEE DEVELOPMENT  91
Development involves lessons to advance an employeeÊs skills for future

responsibilities. Training and development is a continuous effort carried out by
the management of an organisation to improve employeesÊ skills and the
performance of the organisation. An example of a development programme is
the Morale Building Camp.
SELF-CHECK 6.1
Based on your understanding, explain what is meant by:
(a) Training; and
(b) Development.
ACTIVITY 6.1
In your opinion, why is a training and development programme

important to you as a new employee? Discuss with your coursemates.
6.2 ADVANTAGES OF CONDUCTING TRAINING

AND DEVELOPMENT
Generally, training and development have many advantages even though the
cost involved cannot be measured financially. To calculate the cost incurred in
conducting a training programme is easy but to calculate the output of the
training is very complicated. Although it is difficult to measure the advantages in
Ringgit, the benefits that can be noticed include:
(a) Increase in Employee Productivity

Training and development increases the productivity of employees by
enhancing their skills to perform their current jobs. Although an employee
may improve his or her performance by learning through mistakes, an
organisation should avoid mistakes. An effective training programme may
accelerate the learning process of new employees to enable them to carry
out their duties as soon as they are hired. It increases the output and the
quality of work.

(b) Increase in Job Satisfaction

A productive employee is always satisfied with his or her work and the
organisation he or she works for. This reduces the desire to find another job
and reduces the rate of employee turnover. An employee who is satisfied
and passionate in his or her work is respected because of his or her ability
to carry out job-related duties. The employee will experience a lower stress
level. This indirectly creates healthy workers and subsequently reduces
medical costs.
(c) Update in EmployeeÊs Knowledge to Always be Ahead

Technology never stops changing. Whatever skills an employee has learnt
is outdated and cannot be used at present. Therefore, an employee should
be given training and development when new equipment is used, new
procedures, rules and regulations are introduced or an employee is
promoted and required to carry out new duties. It is useless to spend
thousands of Ringgit to buy new tools if no one knows how to operate it.
(d) Helps in Motivating Employees

Development programmes and lessons may be offered to employees as a
benefit. It may be used as a tool to motivate employees. Although training
and development programmes should be secured for employees who need
it, employees who are hardworking, diligent and willing to work overtime
should also be considered for the programmes, as a form of reward.
ACTIVITY 6.2
Draw a mind map that shows the advantages of training and

development.
6.3 A METHODICAL APPROACH IN

CONDUCTING TRAINING AND
DEVELOPMENT PROGRAMMES
Training and development is an important investment to an employer. As with
any other investment, a reasonable rate of return is expected. However, some
organisations conduct training programmes for the sake of training, without
taking into account the costs and returns that are involved. Therefore, a
methodical approach is needed to ensure effective training and development.

Before conducting a training and development programme, an analysis of

training and development requirements should be conducted. Two important
questions should be answered ă who needs training and development and what
are the weaknesses of the employee?
Training and development should not be conducted on the basis that „it appears
to be a good thing‰ or without considering whether the employee needs it.
Essentially, it is not wise to secure a training and development programme for an
employee who does not need it as it will result in the dissatisfaction of the
employee. A participant who is not happy might cause trouble during the
training programme. For example, his or her refusal to cooperate will make other
participants lose focus and will result in the overall ineffectiveness of the training
programme.
6.3.1 Who Requires Training and Development?

Executives who are responsible for training should work closely with the heads
of departments and use the employee performance appraisal system to identify
employeesÊ training needs. Teams that need training are also identified. Apart
from employees with unsatisfactory performances, new employees, employees
who take over new duties or are recently promoted or transferred also need
training.
Therefore, training and development is needed when:

(a) Employees face difficulties in performing their duties satisfactorily;
(b) New employees are hired;
(c) New technology and procedures are introduced; and
(d) Individuals are transferred or promoted.
ACTIVITY 6.3
Discuss the benefits of training and development in the following

circumstances:
(a) When a new employee is recruited; and
(b) When new technology and procedures are introduced.

6.3.2 Training Needs Analysis

Most of the time, deficiencies and weaknesses of employees cannot be clearly
identified. A manager may complain that his or her employeeÊs performance is
unsatisfactory. These types of complaints are ambiguous since the source of the
problem cannot be identified. Therefore, several steps should be taken when
conducting a training needs analysis. The steps are as follows:
(a) To identify performance problems;
(b) To decide if a problem is serious enough for action to be taken;
(c) To identify the cause of a problem;
(d) To determine the action taken to solve the problem; and
(e) To choose the best training options.
Most of the steps in the training needs analysis are ordinary steps. However,
it is one of the most effective problem-solving methods. It should be understood
that not all problems can be resolved through training and development
programmes. For example, an employee facing a personal problem should be
referred to the counselling division and not to the training and development
team.
Since there are no shortcuts in conducting an effective training and development

programme, the training needs analysis should be conducted continuously.
Those who are responsible for conducting a training needs analysis should focus
on the needs of the organisation because many of them prefer to handle the
modules they are familiar with and ignore the suitability of the programme. If
training is needed to improve an employeeÊs performance, the programmes that
are conducted must be flexible and contain the modules that are suitable to meet
the needs that have been identified.
ACTIVITY 6.4
Draw a flow chart that shows the steps in a training needs analysis.

6.3.3 Defining Training Objectives

Generally, the purpose of training is to improve an employeeÊs ability and
performance in his or her duties. Each training programme being offered should
have clear objectives. These objectives should be measurable because they are the
guidelines of what is expected from the participants. The objective of a training
programme should have these characteristics:
(a) Terminal Behaviour

Terminal behaviour is a statement that identifies the minimum
requirements expected from the training. The trainer must identify in detail
what should be done by the participants during the training programme.
Terminal behaviour usually sounds like, „at the end of this course,
participants should be able to ⁄‰ Ambiguous words such as „know‰ and
„understand‰ should be avoided. Words that may produce a measurable
behaviour such as „identifyÊ, „indicate‰ and „state‰ should be used.
(b) Standardisation to be Attained

It is useful to clearly state the standards to be achieved by participants.
Without these standards, evaluation cannot be carried out effectively.
Normally, learners will ask their teacher if the passing marks in an
examination is either 40 per cent or 50 per cent. This is a standard that should
be achieved by a learner to pass the examination. However, in industrial
training, the standard is different. When an employeeÊs performance is
unsatisfactory, he or she needs additional training. Sometimes, the standard
is set at 100 per cent. For example, a bank clerk should have the skills to
identify counterfeit money. Therefore, he or she should not fail to identify
counterfeit money whenever he or she is shown one.
6.3.4 Designing Training Programmes

To conduct a successful training programme, adequate time and focus should be
given to designing the programme. This is a difficult task due to several factors.
The factors to be considered include the allocation of expenditure, the number of
employees involved, the venue, the facilitator and the training methods used.
Hence, our next discussion will concentrate on answering some of these questions.
Two main issues to be discussed here are:
(a) Where will the training take place?
(b) What are the methods used?

After answering these two questions, the rest of the issues will subsequently fall
into place.
(a) Training during Working Hours or Outside Working Hours

Training programmes may be done during or outside working hours.
(i) Training during Working Hours

Training during working hours involves all types of training offered
by an organisation. Training is conducted at the employeesÊ
workplace where they perform their duties.
This type of training is normally conducted for new employees. Since

it is often conducted, some organisations do not consider this as a
training method. Problems arise if such training is poorly conducted.
It is often conducted because it is low in cost, no special tools or
equipment are needed, it requires no space or special area and no
fulltime trainers are needed.
If it is well conducted, employees can perform well in their tasks. The

success of the method depends on the trainers. Many organisations
allocate these duties to senior employees with experience. It is
important to choose the right trainer. He or she should be able and
willing to train new employees. Therefore, he or she should be an
individual who is skilled in that field and able to explain how to do
the work. Most of us could be skilled in our work but lack
communication skills and the ability to foster interpersonal
relationships to teach others. A trainer should be a good teacher with
patience and able to help other people. To ensure the success of this
technique, a trainer should be given reasonable incentives and
benefits for his or her commitment. Trainers should undergo „training
technique‰ programmes before they train other people. Finally, a
trainer should at least be exposed to some training techniques as
follows:
Step 1: To divide the work into different parts
Step 2: To give an overall overview of the duties
Step 3: To show a part of the work to trainees
Step 4: To allow trainees to try what has been shown
Step 5: To rectify any mistakes that has been made
Step 6: To let the trainees self-train

Although training is done during working hours, in some situations,

it is not advisable as some jobs may be dangerous. For example, the
work could be life threatening if mistakes are made. As such, an
alternative training method should be considered. Sometimes,
training during working hours is not advisable especially when
expensive equipment is used in the training. A noisy working area is
also inappropriate because it is difficult to hear the instructions clearly
and to concentrate.
Therefore, it is important to have a special place for training. The

commitment of an organisation towards its employees can be seen
from the availability of special training areas. When high attendance
training programmes are regularly conducted, it is wise to establish a
training centre to house training equipment. An example of an
organisation that has an allocation for training centres are banks and
MAS.
Apart from the costs involved in establishing training centres, one of

the weaknesses of a training centre is that it differs from the actual
environment of the work area. When exposed to actual working
situations, employees may not be able to face the situation presented.
Therefore, training conditions and actual working conditions should
be similar.
SELF-CHECK 6.2
List two advantages and two disadvantages of conducting a training
during working hours.
Advantages Disadvantages

(ii) Training Outside Working Hours

This type of training which is done by external organisations is
normally conducted outside the workplace. Government bodies like
The National Institute of Public Administration or (INTAN) and
University Putra Malaysia (UPM), professional bodies like the
Malaysian Institute of Management (MIM) and the private sector offer
various seminars, workshops, conferences and courses. There are also
organisations that offer study leave with scholarships for employees
to complete their certificates, diplomas, degrees and postgraduate
studies. This is known as training outside working hours. The cost
incurred for this training method is very high. The effectiveness of
this training depends on who is sent for the training and the efficiency
of the organisation at conducting these training programmes.
The advantages of this training include the opportunity for

individuals to interact with others from similar industries and the
experience gained may be beneficial for the future of the employee
and the organisation.
6.4 FACTORS IN SELECTING TRAINING

METHODS
A training method does not only involve delivering and receiving lectures.
Trainers may use various methods when conducting the programme. The choice
of training method depends on several factors as follows:
(a) Financial Allocation

A small organisation must be realistic. The purchase of comprehensive and
modern computer equipment must be well considered.
(b) TrainerÊs Skills

Not everyone is skilled in using all methods. A trainer must avoid using
unfamiliar methods until he or she has learnt to employ them.

(c) Objectives of the Programme

The method used has certain objectives. Some methods are suitable for
teaching new skills and knowledge and some to change habits. Therefore,
the methods used must be suitable with the objectives of the programme.
(d) Trainees
The satisfaction of trainees that receive the training differs from one person
to another. It depends on the level of his or her previous training. The
number of trainees has to be considered. Some methods are suitable for
individual training and some for teamwork training.
(e) Learning Principles

It is also necessary to decide if a training programme is successful or not
based on lesson principles that define certain questions. This includes
„How does one learn?‰ Therefore a trainer must learn the methods of
educating adults so that training programmes can achieve higher success
rates.
These are several issues to be considered in the training of adults:
(i) A Learner Must Have the Desire to Learn

Human beings cannot be forced to learn. Therefore, attention should
be given to encouraging employees who have the desire to continue
learning and acquiring new knowledge. Although individuals may
receive encouragement in the same way, benefits are normally received
after the training programme is concluded. Employees are given
certificates of appreciation or publicity in organisational bulletins.
There are also delayed benefits. Promotions are given to those who
have successfully gone through several levels of courses, but
remember that empty promises should be kept to a minimum. If a
training is not intended to lead to a promotion, employees should not
be given the impression that it will.
Clarifying the objectives and purposes of a training programme can

motivate employees. They will learn better if they know that learning
a new skill is important.
To encourage a comprehensive learning process, the training module

should be interesting. No one will be able to learn in dull conditions.
It is important for creative trainers to ensure that a variety of
presentation methods and techniques are used and not repeated.

(ii) Active and Passive Learning

Attention should also be given to ensure that trainees participate in
active training processes. A tennis player may not play well by just
reading the best book on techniques of playing tennis or listening to
lectures from the best tennis coaches. One of the methods is to
perform, to make mistakes, to rectify and to try again. A passive
method is when an employee just listens to what is said by the trainer.
There must be a balance between active and passive learning.
(iii) Feedback
Trainers should provide feedback to trainees as to whether they have
learnt what they should know. The more feedback they receive, the
better they can improve their performance.
ACTIVITY 6.5
In your opinion, what are the principles that should be taken into
account when conducting a learning programme for adults? Search e-
books on adult learning principles for further knowledge on this then
discuss with your coursemates.
6.5 CONDUCTING TRAINING PROGRAMMES

Before a training programme is conducted, proper planning should be done. The
facilities should be booked, the trainer must be chosen, the training schedule
should be given and materials should be printed to be distributed later. Matters
that normally seem trivial like room temperature and food must be given due
attention because it could interrupt the running of the training. Therefore, a
checklist of items should be prepared.
ACTIVITY 6.6
One of the factors that may result in a successful training programme is
the attitude of the facilitator. List down and explain four important
features required from a trainer.
1. ____________________ 3. ____________________
2. ____________________ 4. ____________________

6.6 EVALUATING TRAINING PROGRAMMES

Every training programme must be evaluated because there are no other
methods to make sure the training investment is justified. The evaluation of
training programmes should be done to improve the effectiveness and
standardisation of training programmes that are offered. Evaluation should also
be conducted to articulate the advantages and the importance of training to the
management of an organisation so that support is channelled for training. Once
the evaluation of training programmes is done, four factors should be
considered:
(a) What are the Reactions of Trainees towards the Training Programme
The trainer will ask for feedback from trainees about their feelings towards
the training module. Questionnaires are distributed to seek opinions about
the delivery of the trainer, the atmosphere of the venue and the
effectiveness of the material. To obtain a fair feedback, trainees are not
required to write their names and answer questions that require open
feedback. Most of the time, useful feedback and criticism will be received.
(b) What Has Been Learned by Trainees?

Trainees should be able to evaluate if they have learned anything from
the training programme organised. This may be done through comparing
objectives that were set before the course began. If the training programme
was designed to see if a new skill had been learned, the trainee must be able
to show it. However, if the dissemination of information happens to be the
main objective, written or oral tests must be conducted.
(c) What Behavioural Differences Can be Seen in Trainees After the Training?
Department Managers should know the types of training that trainees have
received. The manager must work closely with the trainer to make sure
what is learned is practised at work. It is important to note the behavioural
or skill differences after the training programme.
(d) What Benefit Does an Organisation Receive from a Training Programme?

The last step appears to the most important and difficult step because
it determines whether an organisation should continue the training
programme. Trainers and supervisors should evaluate how far the
organisation has benefited financially. One evaluation method is to
compare two groups; one group which has received training and the other
has not. The first group should show a higher level of output or good
quality within a shorter period.

 Training is an important activity that is conducted to improve employeesÊ

performance or to transform them.
 Development involves lessons to advance an employeeÊs skills for future

responsibilities.
 Training and development have many advantages: increase in employee

productivity, increase in job satisfaction, update in employeeÊs knowledge to
always be ahead and helps in motivating employees.
 A methodical approach is needed to ensure effective training and

development.
 Before conducting a training and development programme, it is important to

determine who needs the training and development programme, conduct a
training needs analysis, define training objectives and focus on the design of
the programme.
 Trainers may use various methods when conducting the programme, taking
into consideration financial allocations, trainerÊs skills, objectives of the
programme, trainees and learning principles.
 Proper planning should be done before a programme is implemented and

evaluation after to determine its success.
Terminal behaviour
Training needs analysis

1. Assume that you are a supervisor of a group of workers and their duties are
to assemble radios. You discover that the quality of the assembling is low
and many of the radios that were assembled have been returned. Your
manager told you, „You must train your workers better‰.
(a) What are the „staff‰ factors that have contributed to this problem?
(b) Explain how to evaluate if a problem is a training issue.
2. Differentiate between training and development.
3. What are the steps involved in a training needs analysis?
4. When is training and development required?

Topic  Performance
7 Appraisal
LEARNING OUTCOMES
1. Explain performance appraisal, its process and application;
2. Describe the approaches and methods involved in performance
appraisals; and
3. Discuss the problems related to performance appraisals.
 INTRODUCTION
In the previous topics, we discussed several effective methods in hiring and
developing excellent employees. However, having talented employees is not
enough. A successful organisation must also drive its employees to achieve
beneficial goals, not only for the organisation but also for themselves. In this
topic, we will discuss performance appraisal, which is one of the methods that
may be used to maintain and raise productivity by helping an organisation to
achieve its goals.
We will begin this topic by defining the meaning of performance appraisal and
its functions. Then, we will discuss the performance appraisal process, its
effective features and who should conduct a performance appraisal. We will end
the topic with a discussion on the methods in conducting a performance
appraisal and the related problems.

TOPIC 7 PERFORMANCE APPRAISAL  105
ACTIVITY 7.1
Actually, we have all gone through some form of performance appraisal

at one time or another. For example, at school, our performance was
evaluated through exams.
Think about how your performance may be evaluated if you work in a

bank. Discuss with your coursemates.
7.1 DEFINITION OF PERFORMANCE

APPRAISAL
You may have a lot of experience in conducting a performance appraisal. For
example, some colleges ask learners to appraise their lecturers. Performance
appraisal may be defined as an official system that has to be conducted from time
to time to evaluate and revise individual or group performance. It involves the
identification, measuring and management of human resource in an
organisation.
Identification means determining the field of work to be studied by a manager

when performance is to be measured. Performance appraisal systems should
concentrate on factors that influence the success of an organisation and not on
features that are not related such as race, gender or age.
Measurement is the pulse of any evaluation system. A manager has to make

managerial decisions on how „good‰ or „bad‰ the performance of an employee
is. A good appraisal system must be the same in all divisions of an organisation.
A manager in an organisation must maintain comparable evaluation standards.
Management is an entity that is usually not taken seriously by managers in an

appraisal system. Performance appraisal is usually considered a time orientated
activity and is used to criticise or complement an employee for his or her
performance in the previous year. However, it should be future orientated. It
should take into account what should be done by an employee to remain
qualified in an organisation. This means that a manager must provide employees
with feedback and instructions to attain higher performance.
A manager is responsible not only for maintaining and improving his or her
performance level but also the performance of others. A manager must be aware
that a performance appraisal provides an overall view of the work undertaken. It
is a continuous process and not just a process that happens annually.

106  TOPIC 7 PERFORMANCE APPRAISAL
7.2 USES OF PERFORMANCE APPRAISAL

You may think that a performance appraisal is used for a limited number of
purposes, to appraise the best employee. Essentially, performance appraisal is a
useful method for an organisation. A performance appraisal can fill many
functions that are beneficial to an organisation and to the individuals being
appraised.
Generally, an organisation performs a performance appraisal for managerial or

development purposes:
(a) Managerial Purposes

From a managerial standpoint, a performance appraisal provides input that
may be used for all human resource management activities. Performance
appraisal may be used as a basis for remuneration decisions, especially in
determining salary adjustments. Performance appraisal is also directly
connected to several important human resource functions such as job
promotion, transfer and decision on temporary layoff. Data from a
performance appraisal may be used in human resource planning, to
ascertain a relative value of a job under a job evaluation programme and as
a criterion to validate selection tests. Essentially the success of the whole
human resource programme depends on an employeesÊ performance as
compared to the goals to be achieved by them. This is because the
performance appraisal can influence an employeeÊs behaviour and
therefore improve his or her performance level.
(b) Development Purposes

In terms of individual development, performance appraisal gives important
feedback in discussing the strengths and weaknesses of an employee and
how to improve his or her performance. Without taking into account an
employeeÊs performance, the appraisal process identifies issues for
discussion, like getting rid of problems that may arise and the setting of
new goals in order to achieve better performance. Performance appraisal
may highlight the training and development needs of an employee.
Byhighlighting the shortcomings of an employee, managers and human
resources may plan a training and development programme that allows an
individual to improve his or her strengths and minimise his or her
weaknesses. This is one of the advantages of a performance appraisal
programme as it sets a perfect foundation for improving performances.

ACTIVITY 7.2
Explain the relationship between performance appraisal and selection,

training and development in your own words. You may refer to
Mondy, Noe and PremeauxÊs (2000) textbook as listed on page (xiii) of
this module.
7.3 PERFORMANCE APPRAISAL PROCESS

Now we will discuss the process involved in a performance appraisal. It consists
of the following steps:
(a) Determining the Goals of the Performance Appraisal

This is the starting point in a performance appraisal process. As the
appraisal system is unable to achieve all goals effectively, a manager has to
determine some goals that should be realistic and achievable. For example,
some companies emphasise staff development and some emphasise
managerial decisions such as salary adjustments. Most performance
appraisal systems fail because the management does not only fail to set the
goals but it tries to achieve too many goals through the system.
(b) Determining Job Expectations

After determining the goals of the performance appraisal system,
employees and team members need to understand what is expected from
them in their jobs. While determining the duties and job standards, a
manager should discuss with the employees to get further information
(input) and their agreement to the goals that will be appraised.
(c) Performance Appraisal

In this step, an employeeÊs actual performance is compared to established
standards.
(d) Feedback Session

In the feedback session, employeesÊ performance and progress will be
discussed. The discussion will determine the reasons why an employee fails
to achieve the set goals and programmes to solve the problems encountered
by the employee will be formulated. Included in the session is a goal setting
process for the next evaluation period.

ACTIVITY 7.3
Illustrate the relationship that exists between each step in a performance

appraisal.
7.4 FEATURES OF AN EFFECTIVE

PERFORMANCE APPRAISAL
The main purpose of a performance appraisal is to improve the performance of
an individual, a team and the whole organisation. As it is also used to make
management decisions, a precise performance appraisal will enable a
development programme to improve the performance of an individual and the
team. Realising the importance of performance appraisal in an organisation, a
performance appraisal should be developed and must have the features as
shown in Figure 7.1.
Figure 7.1: Features of a performance appraisal
Each feature is explained further in the following:
(a) Job-related Criteria

Criteria that are used to conduct a performance appraisal must be job-
related. Although subjective factors such as effort, morale, loyalty and
teamwork are important, these factors cannot be used if they are not related
to the job.

(b) Performance Expectations

Managers and subordinates must agree on the expectations of the
performance before starting the appraisal. It is not fair for a manager to
evaluate an employee based on criteria that is unknown to the employee.
Therefore, the performance expectation should be set earlier.
(c) Standardisation
Standardisation means that an employee and supervisor in a job category
must be appraised using the same instruments. The appraisal should be
done frequently and the evaluation period should be the same period for all
employees. When a performance appraisal is carried out, it must be
formally documented and employees must sign their appraisals. If an
employee refuses to do so, action can be taken by the manager.
(d) Trained Appraiser

Usually the supervisor conducts a performance appraisal. However, the
subordinates, colleagues or customers can also conduct a performance
appraisal. Nevertheless, the responsibility to appraise the employeesÊ
performance should be given to an individual who can directly observe the
employees to be appraised. The appraiser must receive continuous training
to ensure consistency. The training should not only cover the methods to
appraise an employee but also on how to conduct an appraisal interview.
(e) Open Communication

Most employees want to know about their performance achievements. A
good performance appraisal system usually gives a desired feedback.
Therefore, appraisal interviews should not contain any „surprises.‰
Eventhough the interview seems like a good opportunity for both parties to
exchange ideas, it cannot substitute daily communications.
(f) Rights to See the Appraisal Results

The effort to develop an employee will be disturbed if he or she is not given
the chance to see his or her performance results. This is to enable the
employee to check the results that has been given to avoid mistakes.
Sometimes, there are employees who are not satisfied with the decision
obtained and want to challenge it. Managers should offer training and
guidance to employees who receive poor performance results. They must
be informed of the consequences if they fail to reach satisfactory levels of
work.
(g) Due Process

Due process is important for an organisation because it allows employees to
make appeals against an appraisal if they believe that it is not fair or
inaccurate.
SELF-CHECK 7.1
What are the features of an effective performance appraisal? List down

and explain each feature.
7.5 DECIDING WHO WILL CONDUCT THE

APPRAISAL
Who is supposed to evaluate employeesÊ performance? Of course, you would
answer the „employer‰, but, there are other parties who may also evaluate
employees. As shown in Figure 7.2, the appraiser may be a supervisor,
colleagues, yourself, subordinates and customers.
Figure 7.2: Choice of resources for a performance appraisal
Each of the appraisers will be detailed in the following:
(a) Appraisal by Supervisor or Immediate Superior

Appraisal by a supervisor or an immediate superior is an ordinary method
to evaluate employeesÊ performance. A manager or supervisor is
considered to be the most qualified person for this because their position
allows them to observe an employeeÊs job performance. A manager is given
the responsibility of managing a unit. If the duty to appraise a subordinate
is given to other people, the manager will not have absolute authority in the
performance appraisal process.

If the appraisal is done by a supervisor, his or her superior will revise the
appraisal that has been done. This is to reduce unfairness in the appraisal.
Usually, the comments by a supervisorÊs superior are more objective and
give a wider scope to the employeeÊs performance as compared to the
appraisal by the supervisor.
(b) Appraisal by Colleagues

In peer appraisal, employees of the same standard in an organisation will
appraise each other. The peer appraisal may give different information
because colleagues have different points of views. Colleagues may identify
leadership skills and other strengths and weaknesses of their colleagues.
Peer appraisal is effective in forecasting the future career of an individual as
a manager.
One of the advantages of peer appraisal is that information is more accurate

and valid as compared to an appraisal performed by a supervisor. The
appraisal data by colleagues is one of the most reliable sources of
information because a colleague may have a clearer picture than a
supervisor who sees the employee only occasionally. This method is also
considered as free of any influence. Although evidence shows that peer
appraisal is the more accurate method to assess an employeeÊs behaviour,
there are reasons why it is seldom practised.
Some of the reasons include:
(i) A peer appraisal can become a popularity contest;
(ii) Managers do not want to lose authority in the appraisal process;
(iii) Employees with a low rating may want to take revenge on their
colleagues; and
(iv) Stereotyping an employee in the rating.
When there is competition among colleagues, i.e. for the post of a

salesperson, performance appraisal for the purpose of making
administrative decisions like salary and bonus payment is not encouraged.
(c) Self-appraisal
Sometimes an employee is asked to appraise himself or herself. Self-
appraisal is usually done by an employee being appraised by filling in an
appraisal form before the performance interview. It is a useful method if a
supervisor wants the employee to participate in the performance appraisal
process. It also allows the employee to think about his or her strengths and

weaknesses and the problems he or she faces in achieving effective

performance.
This method is also suitable when managers and employees work together
to determine performance goals or employeesÊ development programmes.
One of its weaknesses is that individuals who appraise themselves tend to
be more lenient than a manager and will have the tendency to give
themselves a higher appraisal. Therefore, self-appraisal is more suitable for
staff development rather than to make managerial decisions.
(d) Appraisals by Subordinates

Many organisations allow their subordinates to evaluate their managersÊ
performance. This process is called upward feedback. When this method is
used in an organisation, the process helps top management to determine
leadership styles, to identify „individual‰ issues that may turn into
problems and to take corrective action with the managers if necessary. The
subordinates are in a suitable position to appraise their managers because
they are always in contact with the managers and able to observe a lot of
performance-related behaviour. Among the most suitable performance
dimensions to be appraised include leadership, oral communication,
distribution of authority and teamwork coordination.
As subordinate appraisal gives employees power over their managers,

some managers may be reluctant to accept this system, especially if it can be
used as a basis for measuring remuneration. But managers should be more
open towards this method if the information is used for development
purposes. However, to avoid problems, subordinate appraisals should be
sent anonymously and several individual appraisers should be pooled
together.
(e) Appraisal by Customers

This appraisal is based on the concept of total quality management. A
company receives appraisals from its internal and external customers.
Appraisals by external customers have been used in appraising restaurant
employees. However, other companies have now also begun to employ this
method. A manager will determine the customer service measurement and
employeesÊ goals related to the organisational goals. Usually, a customer
service measurement will be related to employeesÊ remuneration through
incentive programmes.

Unlike external customer appraisals, internal customers consist of

individuals in an organisation that are dependent on the revenue of an
employee. For example, a manager of a department who is dependent on
the human resource department for selection and recruitment will be the
candidate who will do the appraisal by customers for the human resource
department.
ACTIVITY 7.4
In your opinion who should conduct a performance appraisal for the

following individuals?
(a) Salesperson
(b) Photocopier Technician
(c) Manager of Human Resource
(d) Lecturer
7.6 PERFORMANCE APPRAISAL METHODS

In this part, we will discuss the methods used in conducting performance
appraisal processes:
(a) Graphic Rating Scale

This is the most favoured technique in performance appraisals. In this
method, a set of work appraisal factors such as quantity and quality of
work, knowledge, loyalty, attendance and efforts are listed. Subordinates
will be appraised based on each factor. A graphic rating scale used is 1 (an
unsatisfactory performance) until 5 (a very satisfactory performance). A
supervisor will appraise every subordinate by circling or ticking the value
that best summarises the employeeÊs performance accurately. Then, the
values will be added together. This is the most favoured method because
even though it does not give much information compared to other
evaluation methods (such as essay rating or critical incident method), it
does not take up much time. This method also allows for quantitative and
comparative analysis.

(b) Critical Incident Method

In a critical incident method, a supervisor will keep a log and list down all
incidents or employeesÊ behaviour (good or bad) related to the job. The
supervisor and the employee will then meet and discuss the employeeÊs
performance by using these incidences as examples. In this method, the
evaluation covers the entire evaluation period and does not focus on the
last month or week prior to the evaluation only.
(c) Essay Rating

In essay rating, an appraiser is required to prepare a written statement that
accurately describes the employee being evaluated. He or she is required to
describe the strengths and weaknesses of the employee and suggest ways to
develop his or her skills. This method usually gives additional information
on the employeeÊs performance that cannot be attained in the graphic rating
scale method. This method also gives the employee an opportunity to show
his or her unique characteristics. However, if an appraiser wants to write
important aspects of an employee, it will take a long time to do so. Another
weakness of this method is that the appraisal of an employee depends on
the written skills of the appraiser. An appraiser who is skilled in writing
may make an average performer look like an employee with high
performance.
(d) Behavioural Anchored Rating Scale

This method is a combination of the critical incidents method and graphic
rating scale. This method decides the work behaviour that is certain, can be
observed and measured.
Behavioural Anchored Rating Scales comprise a series of five to 10 vertical

scales ă each scale for every performance dimension that has been
identified through a job analysis. A sample of the behaviour and work
performance dimension may be attained by asking an employee to explain
a behaviour that is effective or ineffective in each work performance
dimension. Then, all the work behaviour will be interpreted as a set of work
performance dimension and each contains different performance levels.
The dimension is based on the behaviour that has been identified through
the critical incidents analysis method.
In this method, various levels of performance are shown in one scale and
are described in terms of an employeeÊs work behaviour. A sample of a
Behavioural Anchored Rating Scale is given in Table 7.1. In this table, you
will see a scale to evaluate performance, from „very good‰ to „very poor‰
(for value 1 to 5). Each value in the scale corresponds to a critical incident
and this helps to describe what is meant by „very good‰ or „very poor‰
performance.
Table 7.1: Behavioural Anchored Rating Scale Example
A Sample of a Behavioural Anchored Rating Scale for Human Resource Officers
One of the most important skills to be a human resource officer is the ability to
understand and define company policies. This skill is related to the ability of a human
resource officer to use his or her knowledge in advising other managers on company
policies, assisting in the recruitment process and updating the companyÊs policies.
5 Outstanding The employee may be a source of information to other employees

in addition to having in-depth knowledge of company policies.
4 Good The employee may give advice on company policies to other
employees in the organisation but he or she does not know all of
the policies.
3 Average The employee has an average knowledge of company policies but
is unable to advise other employees in this large field of policy.
2 Poor The employee has limited knowledge of company policies but he
or she can learn about new policies if explanation is given.
1 Very Poor The employee does not know the companyÊs new policies even
after explanation is given.
(e) Forced Distribution

Forced distribution is when an appraiser is required to place an individual
in a group that comprises several limited categories that are similar to a
normal frequency distribution.
Forced distribution is the same as giving marks on curves. With this

method, the percentage of employees are evaluated and placed in
performance categories. For example, you may decide to distribute as
follows:
15 per cent employees who are very high performers
20 per cent employees who are high to average performers
30 per centemployees who are average performers
20 per cent employees who are average to poor performers
15 per cent employees who are low performers

In schools, forced distribution means that not all students will achieve an
„A‰ and the performance is evaluated in relation to other studentsÊ
performances.
(f) Management by Objective

Management by objective is a management philosophy suggested by Peter
Drucker in 1954 and is still a method most prefer today. It appraises
performances based on an employeeÊs success in achieving the goals agreed
upon by the employee and the managers.
In this method, an employee is required to determine the objectives to be

achieved (production costs, sales volume, production output, profit)
through negotiations with managers. These objectives will be the basis of an
employeeÊs performance appraisal. It is a goal setting process, and the goals
may be determined at organisational, departmental, managerial and
workersÊ levels.
To determine its success, a „Management by Objective‰ programme must

be accepted as a part of the entire management system and not considered
as an additional work for the manager. A manager must be willing to
empower his or her employees in order to achieve the objectives set out. An
employee can choose the method to be used to achieve these established
objectives.
ACTIVITY 7.5
Describe briefly each step of a performance appraisal according to your

understanding.
(a) Critical Incidents Method

(b) Essay Method
(c) Behavioural Anchored Rating Scales
Compare your answers with those of your coursemates in the

myINSPIRE forum.

7.7 PROBLEMS IN PERFORMANCE

APPRAISALS
In practice, a formal performance appraisal sometimes provides discouraging
results. Some of the reasons for its failure is a lack of information and support by
the top management, unclear performance standards, unfair ratings, too many
forms to be filled and the use of a performance appraisal for contradictory
objectives. For example if a programme is used for pay adjustments and to give
encouragement to employees, there are contradictions in the management and
development objectives. Consequently, the performance appraisal interview will
become a discussion on salaries and a manager will end up having to defend his
or her actions. In this case, the discussion will have little effect on the employeeÊs
job performance in the future.
Although an organisation tries to find a performance appraisal which is free from

individual influences and prejudices, problems can still arise in this process. In
this part, we will discuss the problems that may result in the failure of a
performance appraisal in an organisation.
(a) Lack of Objectivity

One of the weaknesses of a traditional performance appraisal method is its
lack of objectivity. For example in the rating methods, factors that are
usually used are loyalty, personality and attitude of an individual. These
factors are difficult to measure and have nothing to do with job
performance. Although subjectivity always exists in an appraisal method,
the use of related job factors will increase the objectivity of the method.
(b) Halo Effect

The halo effect is a problem that does not only exist in the appraisal process
but also in the interview process during recruitment. Many individuals
have the tendency to give higher marks to someone they like. Halo effect is
the tendency of an appraiser who lets his or her evaluation of a personÊs
certain characteristic influence his or her evaluation of other characteristics
of the person. A personÊs personality and his or her other characteristics
may influence the managerÊs judgement. For example, a manager usually
likes people from the same background and lifestyle as him or her.
Therefore, he or she might give a higher evaluation to an employee who
was a graduate from the same college as him or her and not because of the
employeeÊs job performance.

(c) Leniency or Strictness Error

When an appraiser gives a high evaluation to an employee who does not
deserve it, he or she is said to have made a leniency error. This happens
when an appraiser gives a high mark in the performance appraisal. As a
result, the employeeÊs performance is pictured as higher than his or her
actual performance.
There are appraisers who are too strict when conducting a performance
appraisal. As a result, the employeeÊs performance is pictured as lower than
his or her actual performance.
This problem would not exist if all employees in an organisation are

evaluated by the same appraiser. The difficulty arises when different
appraisers with various levels of leniency evaluate the performance of the
employees. For example, Azmi and Bakri perform the same job but under
different supervisors and they have equal job performances. A difference in
evaluation can occur if AzmiÊs supervisor is lenient while BakriÊs is strict.
(d) Central Tendency

Central tendency is a mistake which occurs when an appraiser evaluates all
subordinates as average in all criteria that is evaluated. This attitude exists
because the appraiser is afraid of the negative reaction from employees if he
or she gives a low evaluation. However, if he or she gives a high evaluation
to all employees, the head appraiser may question him or her. To be on the
safe side, the manager evaluates all of his or her employees as normal or
average.
(e) Personal Bias

A supervisor who evaluates a performance might be prejudiced towards
some individual characteristics such as race, religion, gender or age. For
example, a supervisor with no university qualification might have a
prejudice against degree holders.
(f) Recent Behaviour Bias

Most employees know when they are scheduled for a performance
appraisal. Without realising, the employee may improve his or her
behaviour or productivity before the appraisal. Usually, an appraiser
remembers the recent behaviour of an employee compared to his or her
former actions. Performance appraisal should cover a certain evaluation
period and the appraisal must consider the whole period.

 Performance appraisal may be defined as an official system that has to be

conducted from time to time to evaluate and revise individual or group
performance.
 Organisations perform a performance appraisal for managerial or

development purposes.
 The steps involved in a performance appraisal process include: determining

the goals of the performance appraisal, determining job expectations,
performance appraisal and a feedback session.
 A performance appraisal must have the following features: Job-related

Criteria, performance expectation, standardisation, trained appraiser, open
communication, rights to see the appraisal results and due process.
 The appraiser may be a supervisor, colleagues, yourself, subordinates and

customers.
 There are several methods to conducting an appraisal including: graphic

rating scale, critical incident method, essay rating, behavioural anchored
rating scale, forced distribution and management by objective.
 Problems of the process include: lack of objectivity, the halo effect, personal
bias, leniency or strictness, central tendency and recent behaviour bias.
Critical incident method Leniency

Essay rating Peer appraisal
Forced distribution Self-appraisal

1. Alia, one of your employees, has been working for one year in the
company. Time has come for you as a manager to evaluate her
performance. Alia is a good employee, her work is efficient. Her work was
good until this morning when she scolded a major customer of your
company. Then, she left without giving any explanation. You observed the
incident but did not say a word. The next day, Alia returned but did not say
anything about yesterdayÊs incident. You now come to the „behaviour‰
section of the performance appraisal form. How will you fill it in?
Peer appraisal Halo effects Leniency

Central tendency Critical incident method Forced distribution
Performance appraisal Self-appraisal
(a) ______________ is defined as a formal system that is done from time-

to-time to appraise and comment on the performance of an individual
or group.
(b) In ______________, employees at the same level in an organisation

will appraise each other.
(c) In ______________, appraisal is done by the employee being

appraised, usually in a form that is filled by the employee before a
performance interview.
(d) In this method ______________ a supervisor will keep a log that lists
down incidents or employeeÊs good or bad behaviour that are related
to his or her work.
(e) In this method ______________ a certain percentage of employees who

are evaluated will be listed under the performance category.

Topic  Pay, Benefit
8 and Incentives
LEARNING OUTCOMES
1. Explain the types of remunerations and remuneration equity
concepts;
2. Relate the features of effective remuneration;
3. Describe the principles of job evaluation;
4. Differentiate between remuneration, benefit and incentive; and
5. Explain the types of benefits and incentives in organisations.
 INTRODUCTION
Pay, benefits and incentives are important to any employee. It may be true that
an individual will not work unless there is remuneration for doing the job. The
Human Resource Department plays an important role in formulating and
ensuring that the distribution of wages is fair, labour cost is controlled and
employeesÊ salaries are comparable with their competitorsÊ salaries for the same
job. However, some organisations face many choices in terms of the polices and
salary practises that can be used. Therefore, the biggest challenge for top
management is to choose the most suitable practices and policies for the
company. We will begin this topic by defining what is meant by remuneration
and workersÊ equity. Then we will observe the features of an effective
remuneration. This will be followed by the principles in determining pay. We
will also discuss the types of benefits and statutory benefits. Finally, we will
discuss the types of benefits used by an organisation in giving incentives to
employees.

122  TOPIC 8 PAY, BENEFIT AND INCENTIVES
8.1 DEFINING EMPLOYEE REMUNERATION

Remuneration for workers refers to all forms of pay and rewards paid by an
employer to its employees. This includes monetary and non-monetary rewards
given to employees by an organisation for carrying out a job. The remuneration
received by an employee comprises the following:
(a) Pay
Pay is basic remuneration received by an employee in an organisation after
a certain period of service, comprising monthly pay or wages (normally
paid per hour). Usually, payment is made fortnightly or at the end of a
month.
(b) Incentive
Incentive is a reward given to qualified and excellent workers. For example,
an annual bonus, expenses for trips abroad, sales commission and
Excellence Service Award.
(c) Benefit
Benefit is all types of rewards, monetary and non-monetary, given to
employees. Examples of benefits include employeesÊ insurance, leave,
employersÊ contributions to the Employees Provident Fund (EPF), health
protection and other benefits as per the Employment Act 1955.
The difference between incentive and benefit is that incentive is given to

individuals or a small group who is deemed qualified to receive it and is
normally related with employee performance. Benefit is given to all
employees regardless of their productivity or performance. As such,
benefits vary according to the types of jobs. Another type of benefit is a
special benefit given to employees with special status in an organisation,
normally the top management. Examples of special benefits are a company
car, driver, club membership paid by the organisation, special parking
space, etc.
SELF-CHECK 8.1
What do you understand by the term employee remuneration? Explain

in your own words.

TOPIC 8 PAY, BENEFIT AND INCENTIVES  123
ACTIVITY 8.1
In your opinion, how does benefit and incentive motivate employees?
8.2 TYPES OF EQUITY

Many organisations try to develop a remuneration system that considers equity
issues and fairness. A fair pay is a pay that is considered to be fair by the
employees. Equity is an important factor in determining pay rate, especially
internal and external equity. For employees, a pay equity is reached when the
amount of remuneration received is the same as the value of the job performed.
The pay must be the same or better than the rate in other organisations. If not, an
organisation will face difficulties in attracting and retaining qualified employees.
Figure 8.1 explains the types of equity.
External equity exists when an organisation pays the same wages as other
organisations for the same type of job. A remuneration policy is said to achieve
an internal equity when the employees in an organisation believe that the pay
rate they receive for the work done is almost similar to the value of the work in
the organisation. Individual equity is how far the pay rate distributed to certain
individuals in an organisation reflects the merits of the individual.
Figure 8.1: Types of equity

8.2.1 Effective Remuneration Features

If employers want an effective remuneration system, they must encourage
employees in an organisation to participate in the development and
administration of the remuneration plan. This method will promote employeesÊ
willingness to accept the remuneration plan.
Employees in an organisation must be able to see the relationship between the

rewards received and their work performance. This can be seen clearly if there
are standard quality and quantity objectives that can evaluate their
performances. EmployeesÊ commitment to achieve this standard is important for
the remuneration system to work. The management should not allow employees
to accept remuneration, especially payment of reward, as their rights. The
payment of rewards must be seen as a reward that is received because of their
efforts. Features of other effective remuneration systems are:
(a) Monetary incentives must be related to good behaviour;
(b) The incentive system that is introduced must be fair to employees;
(c) Payment methods must be simple and easily understood; and
(d) Productivity standards or qualities must be challenging but attainable.
8.2.2 Basis of Determining Wages

An organisation determines the value of a work formally through a job
evaluation process. Job evaluation is a systematic process that decides the
relativity of a job so that the organisation can decide which work should receive
higher pay. Job evaluation helps to establish internal equity among various jobs.
The relative value of a job is decided by comparing the job with other jobs in the
organisation or by comparing the job with a scale designed for the purpose. The
methods of evaluating a job is shown in Figure 8.2.
Figure 8.2: Methods of evaluating work

These methods are described as follows:
(a) Job Ranking System

Job ranking system is the easiest method to implement. This method ranks
jobs according to the relative value of the organisation. A technique used to
rank a job is to collect and arrange the cards that contain all duties and
responsibilities of every job according to their importance. Job ranking can
be done by an individual who is knowledgeable in all types of jobs. It can
also be done by a committee that consists of managersÊ, representatives and
employees.
One of the weaknesses of the system is that it only shows the relative
importance of a job and not the differences that exist among jobs. As the
system is very easy to use, it is suitable for small organisations.
(b) Job Classification System

A job classification system is a simple and widely used method. It divides
work into groups. Work groups with the same kind of work are called
classes, whereas groups with the same difficulty but are different in other
aspects are known as grades. In a job classification system, work is
classified and grouped together as a series of grades. The higher the grade
of a group, the more responsibilities, skills, knowledge, ability and other
factors are chosen to compare the work. The definition for each work class
becomes a scale to compare various job specifications. To grade a job, a
manager will evaluate each job by comparing the job specification with the
category of wages.
Although this method is easy to use, it is less accurate than the point system
method and factor comparison system which have more thorough job
evaluation systems.
(c) Point System Method

The third method in job evaluation is the point system method. This is a
technique of evaluation with relative attributes. In this method, the relative
values of a job are decided by adding the number of points allocated for the
job. It uses compensable factors to evaluate jobs. Compensable factors are
the most important work-related criteria by an organisation in evaluating
the relative value of different jobs. One of the compensable factors
frequently used is knowledge. Usually a job which requires higher
knowledge will receive higher rating and higher remuneration. Although a
company can determine or create its compensable factors for work groups,
most companies will use compensable factors that are found in an
established job evaluation system such as the Hay Guide Chart Profile
Method.
The main advantage of this method is that it is a finer basis for comparison
than the job rating system and the job classification system. Therefore, its
result is valid and difficult to manipulate.
(d) Factor Comparison System

Factor comparison system, just as the point system, enables a job to be
evaluated based on factor-to-factor. The difference between the factor
comparison system and point system method is that in the earlier system,
the evaluated compensable factors of a job are compared with the
compensable factors of a main job in the organisation that functions as a job
evaluation system. Main jobs can be defined as important jobs for
determining wages and are normally used in the labour market.
A main job is evaluated based on compensable factors like skills, mental

ability, responsibility and working conditions. Normally a committee is set
up to rank the criteria of the main job, the committee members will allocate
the wage rate for each compensable factor. When the duties have been
carried out, a factor comparison scale is created to evaluate other jobs.
A factor comparison system is commonly used by organisations because it

has several advantages, among which are accuracy and that it is
methodical. A job can be evaluated with other jobs to determine its value
comparison. The system is easy to explain to the employees in an
organisation. However, the main disadvantage of this system is its
complexity. Although it is easy to explain the factor comparison scale and
its rationality to employees, is difficult to demonstrate the method to
formulate it.
Job evaluation is a technique that determines the relative value of a job. You
have to remember that job evaluation is done internally and does not take
into consideration the wage scale in the market or what is done by other
organisations. Job evaluation only focuses on the value of duties that covers
a job and not the individuals who perform the job. To achieve external
equity, companies will conduct pay or wage surveys.

ACTIVITY 8.2
List two advantages and disadvantages each of the following job

evaluation methods:
Methods Advantages Disadvantages

Job Ranking System
Job Classification
System
Point System Method
Factor Comparison
System
8.3 WAGE SURVEY

A wage survey determines the range of pay for each grade. The survey is done to
determine the usual wage rate paid in the labour market. A good survey can give
specific wage scales for particular types of jobs.
Employers use a wage survey in three ways. First, survey data is used to give
pricing to a benchmark job. Benchmark jobs are well known jobs in an
organisation and in the industry. They represent the whole job structure. It is also
a job that has the largest concentration of labour usage. Secondly, most
employers pay remunerations that are normally paid by other companies for the
same types of jobs, based on official and non-official surveys. Finally, the survey
also gathers employeesÊ benefits information like insurance, medical leave and
other types of leave to be the basis for decisions on employeeÊs benefits.
Wage surveys can be done formally or informally. Normally, a formal written

questionnaire is the most comprehensive survey method used but surveys via
telephone and newspapers are also acceptable as other sources of information.
Informal surveys through telephone are useful to check the number of small jobs
that are easily identified. For example, a human resource manger uses an
informal method to know about the salary of a clerk. Most wage surveys are
done officially through questionnaires. The questionnaire contains questions
such as the number of employees in the organisation, overtime work policies,
starting salary and the types of leave in the organisation.

8.4 PERFORMANCE BASED PAY

Many large organisations practise performance based pay. The objective of doing
this is to enhance employeesÊ motivation and performance so that they will work
more efficiently and increase their output. In this system, increment and other
payments are given based on e individual performance. This means that each
individual will not receive the same pay. An employee who shows good
performance will receive higher pay than an employee whose performance is
average or poor.
Performance based pay can be practised for individual employees, work groups
and the entire organisation. The performance for these three levels and group of
employees is normally stated in the performance appraisal. The performance
appraisal data will provide information for approaches like merit pay, variable
pay, skill based pay and competency based pay. Among the performance based
pay is merit pay, which is a pay raise given to employees based on their
performance level as shown in their performance appraisal. Variable pay is a
performance based remuneration. The type of variable pay normally given is
bonus, which is a payment made once a year. Another performance based pay is
skill based pay, a method of payment for employees based on their skills and
knowledge. Competency based pay is a kind of remuneration given to employees
with a high level of skill.
ACTIVITY 8.3
Define what you understand by the following terms:
(a) Merit pay

(b) Bonus
(c) Skill based pay
(d) Competency based pay
Compare your answers with that of your coursemates in the

myINSPIRE forum.

8.5 BENEFITS
We will now look at the benefits given to employees by employers. Benefit is an
important part of an employeeÊs pay and can be defined as all types of financial
and non-financial benefits received by an employee who works in an
organisation. Benefits given to an employee include gazetted leave, insurance,
education and health benefits. Benefit is different from incentive. Benefit is not
related to employeesÊ productivity. Therefore, it does not function as a
motivational factor to improve performance. Most benefits are given on the
discretion of the employer but there are also compulsory benefits given by
employers according to the law. Compulsory benefits under the law is known as
statutory benefits. This includes the Employment Act, EPF Act and the Social
Safety Act.
Why do employers provide benefits to their employees? Among the reasons is

that benefits can attract employees to work in an organisation. Benefits can also
retain employees and increase their productivity.
There are a few ways to classify benefits. Benefits can be divided into two ă
statutory benefits and non-statutory benefits.
8.5.1 Statutory Benefits

Statutory benefits ensure that employees are able to support themselves after
retirement or in case of an accident. Statutory benefits include contribution to
EPF and SOCSO, maternity leave and gazetted leave.
(a) Employees Provident Fund (EPF)

The Employees Provident Fund Act (Amendment) 1991 created a system of
retirement benefits. The aim of the Employees Provident Fund Act is to
ensure that every employee has a source of adequate finances when he or
she retires. Under this Act, every employer is required to register with the
Board of EPF when they establish a business. An employer who fails to do
so will be sentenced to three years in prison or a fine of RM10,000 or both.
An employee has to contribute monthly to EPF at a minimum rate of eight
to 11 per cent of his or her monthly salary. Employers are required to take
this amount from the employeeÊs salary to be paid to EPF on behalf of the
employee. Employers must also contribute 10 to 12 per cent of the
employeeÊs monthly salary. Employees can withdraw their savings from
their EPF account when they retire. There are individuals who withdraw a
part of their savings to buy a house. Normally the amount that can be
withdrawn is limited.

(b) SOCSO
The government compensates employees who have been involved in
accidents while working, who contract long illnesses or are paralysed. This
benefit is provided through the Workers Social Safety Act 1969. Under this
Act, all employers are required to register with SOCSO. Employers are also
responsible to pay contributions and benefits to the party who makes a
claim. As with the EPF payment, employees and employers make SOCSO
contributions although the employer is responsible to deliver the money to
the association.
The benefits given by SOCSO include:
(i) Medical benefits for those who are injured while working;
(ii) Compensation for those who are injured while working;
(iii) Benefits for the dependants of the employee who died due to injuries
while working;
(iv) Continuous treatment allowances;
(v) Funeral benefits;
(vi) Prosthetic parts; and
(vii) Rehabilitation benefits.
(c) Gazetted Payment

The Employment Act 1955 provides various types of paid leave such as
weekly rest days, public holidays, annual leave and medical leave. Section
59 (Employment Act) states that all workers are entitled to one rest day in a
week.
Section 60D of the Workers Act states that all workers protected under this
Act are entitled to gazetted paid leave in a year. These includes the:
(i) AgongÊs Birthday;
(ii) National Day;
(iii) SultanÊs Birthday; and
(iv) Labour Day.

Employers and employees can agree upon four other public holidays. In
terms of health benefits, employees are entitled to weekly rest days and
annual leave. Section 60E of the Employment Act states that the entitlement
of paid annual leave is as follows:
(i) For service less than two years ă eight days a year;
(ii) For service between two to five years ă 12 days a year; and
(iii) For service more than five years ă 16 days a year.
Employees are also entitled to 14 days medical leave (not hospitalised) a

year for service less than two years, 18 days for service between two to five
years and 22 days for service more than five years. For hospitalisation, an
employee is entitled to 60 days medical leave a year.
(d) Maternity Leave

Sections 37 to 44 of the Employment Act 1955 state that all female workers
are entitled to 60 days maternity leave for every delivery. Maternity
allowance will be paid to the worker on the condition that she does not
have more than five children who are still living. This allowance is
calculated based on a normal workerÊs pay rate.
8.5.2 Non-statutory Benefits

Organisations also provide various benefits to their employees voluntarily.
Among the non-statutory benefits that will be discussed in this section include
gazetted paid leave, health care, insurance, allowances and education facilities
and repayment.
(a) Gazetted Paid Leave

Apart from sick leave, maternity leave and annual leave which are
compulsory under the Employment Act 1955, companies offer other types
of leave like matrimonial leave, paternity leave, emergency leave,
compassionate leave and study leave.

(b) Health Care

The benefit, which gets the most attention from employers, is the health
care benefit. This is because it incurs a very high cost. Health care includes
payments to medical doctors, dental and optical bills. Organisations also
offer panel clinics for employees to receive treatment from. Some large
organisations hire nurses and doctors to come to their factories to avoid
workers from wasting their time while waiting for treatment.
(c) Insurance
Employers can take life insurance and group insurance policies on behalf of
employees. Some organisations extend the protection to cover employeesÊ
families. Usually, an organisation that offers this scheme will pay half the
yearly premium for insurance that is taken by the employees for their
family members.
(d) Allowances
Employees may be given allowances such as travel allowance or for
transportation, food allowance, housing allowance, relocation allowance
and festival allowance.
(e) Education Facilities and Repayment

To encourage employeesÊ personal development, an organisation might
build a library with reading materials and videos which can be borrowed
by the employees.
There are also organisations that encourage employees to attend training

paid by the employee. If an employee successfully completes his or her
course, the organisation will reimburse the amount of the fees paid by the
employee. There are also organisations that offer scholarships to their
employees to enable them to further their studies to gain knowledge and
skills.
ACTIVITY 8.4
List five non-statutory benefits in the organisations that you or your

relatives work for. Compare these with the lists of your coursemates.

8.6 REMUNERATION INCENTIVES

Remuneration programmes that relate salary with productivity are known as
remuneration incentives. The main purpose of an incentive programme is to
increase employeesÊ productivity level. To reach that aim, organisations should
use various rewards and focus not only on the employees needs but also on
organisational goals. In fact, all types of pays listed under performance based
pays are called incentives. These incentives include:
(a) Individual Incentive Programme

Merit pay, variable pay, skill based pay and performance based pay are
parts of an individual incentive programme. Another type of performance
based pay is the individual incentive programme called work by details.
Work by details is when an employee is paid for every unit produced.
(b) Group Based Remuneration Plan

The performance of a group is not the effort of individuals. Therefore,
employees should be recognised and rewarded for their contribution.
However, if a team functions efficiently, rewards should be given based on
the performance of the team as a whole.
However, team incentives have advantages and disadvantages. The

advantages are performance standards for a team are easier to develop than
the standards for individuals because there is less standardisation to be
determined. The output of a team also reflects the end product. The
disadvantage of team incentives is that it is related to exemplary
employees. If the individuals in a team do more work than another team,
the individuals might feel dissatisfied and will probably leave the
organisation.
(c) Company Incentive Plan

Company incentive plans are based on an organisationÊs productivity, cost
control and profit.
(d) Profit sharing is a compensation plan which involves the allocation of

certain percentage (either a fixed amount or is adjusted each year) of
organisational profits to employees.
(e) Employees shares option plan is a shares plan which enables an

organisation to contribute a half of its portion of shares to employees.

(f) Gain sharing is an incentive programme whereby employees share in

financial gains that come to their organisation as a result of their efforts. It
„ties‰ employees with organisational performance and provides incentive
payment based on better organisational performance. Generally, a gain
sharing plan is referred to as an incentive plan which involves all or a large
portion of the employees in efforts to accomplish the performance
objectives of an organisation.
Read from your textbook on Companywide Plans. It gives the definition of the
Scanlon Plan and its differences with a profit sharing plan.
 Remuneration for workers refers to all forms of pay and rewards paid by an
employer to its employees. This includes monetary and non-monetary
rewards including: pay, benefits and incentive.
 Equity is an important factor in determining pay rate and there are types:
internal equity, external equity and individual equity.
 An organisation determines the value of a work formally through a job

evaluation process. The methods of evaluation include: job ranking system,
job classification system, point system method and factor comparison system.
 A wage survey determines the range of pay for each grade in three ways: to
give pricing to a benchmark job, employers pay remunerations that are
normally paid by other companies to gather employeesÊ benefits information.
 Performance based pay enhance employeesÊ motivation and performance so

that they will work more efficiently and increase their output.
 Statutory benefits ensure that employees are able to support themselves after
retirement or in case of an accident and include contribution to EPF and
SOCSO, maternity leave and gazetted leave. Non-statutory benefits include
gazetted paid leave, health care, insurance, allowances and education
facilities and repayment.
 The main purpose of a remuneration incentive programme is to increase

employeesÊ productivity level and can include: individual incentive
programme, group based remuneration plan, company incentive plan, profit
sharing, employees shares option plan and gain sharing.

Benchmark job Internal equity

Classes Individual equity
Compensable factors Merit pay
External equity Variable pay
Grades
Job rating system Skill based pay Work by details

Profit sharing Employees stock option scheme Basic remuneration
Internal equity Compensable factors
(a) ______________ is a fixed pay received by an employee at a fixed

period.
(b) Remuneration policies can be said to have achieved ______________

when the employees in a company believe that the wages they receive
for a job done is similar to the work value in the organisation.
(c) The ______________ method rates a job according to its relative value
in an organisation.
(d) A point system uses ______________ such as knowledge to evaluate

jobs.
(e) ______________ is a wage scheme incentive, i.e. employee is paid for

every unit that is produced.
(f) ______________ is a share scheme that shows how an organisation

contributes its shares to a trust foundation to buy shares for its
employees.

(g) ______________ is a remuneration plan that results in the distribution

of a certain percentage of profits of a firm to employees.
(h) ______________ is a type of performance based pay that gives

remuneration to employees based on the skills and knowledge they
possess.
2. Read each statement carefully. Then, match each statement with the
terminology given. Write the letters that represent the correct answer in the
given space in the table.
(a) External equity
(b) Job evaluation
(c) Class
(d) Employee remuneration
(e) Benchmark job
(f) Incentives
No. Answers Statement

1. All forms of pay and rewards paid to
employees.
2. Programmes aimed to reward employees with
good performances.
3. An equity that exists when an organisation
pays wages which is comparable to the
amount paid by other companies.
4. A structured process to determine the relative
value of a job to enable the organisation to
determine which job should be paid higher.
5. Refers to a work group that consists of similar
work, in a job classification system.
6. A well known job in an organisation and
industry that represents the whole job
structure.

Topic  Employees
9 Health and
Safety
LEARNING OUTCOMES
1. Identify the importance of safety and health at the workplace;
2. Establish the legal framework of workersÊ safety and health in
Malaysia;
3. Explain the role of employers and employees in achieving an
effective level of occupational safety and health; and
4. Discuss the measures that may be taken to avoid accidents at the
workplace.
 INTRODUCTION
Generally, the cost of accidents is high. It can affect productivity and give an
organisation a bad name, it involves rehabilitation costs, the cost incurred by
employees and the legal action taken under current acts.
Accidents also cause suffering and financial burden to employeesÊ families. The
misfortune of accidents not only befall an individual and organisation but the
country that suffers from a substantial loss can obstruct the economic
development of the country. If organisations can reduce accident rates and
improve the quality of workplace conditions, this will indirectly:
(a) Increase productivity because operations are not interrupted by accidents;
(b) Increase efficiency and quality due to dedicated employees;
(c) Reduce medical costs and insurance;

138  TOPIC 9 EMPLOYEES HEALTH AND SAFETY
(d) Reduce the payment for compensation and other claims; and
(e) Raise the image of the organisation because it is free of workplace

accidents.
ACTIVITY 9.1
As an employee in an organisation, think about the importance of safety

and health at your workplace. Visit the DOSH and NIOSH websites to
get further knowledge on occupational safety and health in Malaysia.
9.1 EMPLOYEE SAFETY AND HEALTH ACTS IN

MALAYSIA
In Malaysia, the Department of Safety and Health of Workers (DOSH) under the
Ministry of Human Resource is responsible for the enforcement of health and
safety laws on workers. At the moment, there are two main laws that control the
aspects of health and safety of workers in this country, namely the Factories and
Machinery Act, 1967 and the Occupational Safety and Health Act (OSHA), 1994.
However, history and legislative development and safety regulations at the

workplace in this country can be traced back to much earlier. For example, a tin
mining company in Larut, Perak had enforced safety regulations by appointing
the first machinery guard in 1878, and this was subsequently followed by other
tin mining companies. After that, four states under the Federated Malay States,
which were Selangor, Perak, Pahang and Negeri Sembilan, introduced laws on
workersÊ safety and health in 1908.
9.2 FACTORIES AND MACHINERY ACT, 1967

This Act gives power to the Department of Factories and Machinery, Ministry of
Human Resource to conduct workplace safety checks. The department also
organises promotional activities to increase employersÊ and employeesÊ
understanding of good safety practices and to help other government
departments with their expertise. Due to the rapid development of the countryÊs
economy, especially the growth of manufacturing and other industries, the
Factories and Machinery Act, 1967 which was introduced since the beginning of
the development of the Malaysian economy, had to widen its scope. This is
because the definition of „factory‰ in the Act only covers less than half of the
workforce in the country. Provisions in this Act are limited and do not cover the
TOPIC 9 EMPLOYEES HEALTH AND SAFETY  139
technological development faced by many economic sectors in the country. It

also failed to explain the role of certain parties especially employers and
employees in controlling and guaranteeing aspects of safety and health at the
workplace.
9.2 OCCUPATIONAL SAFETY AND HEALTH

ACT (OSHA), 1994
After realising the weaknesses and shortcomings of the Factories and Machinery
Act, 1967, the government formed a committee to prepare a detailed and
comprehensive Act. The OSHA was gazetted on 24 February 1994.
This Act provides a legal framework to develop, stimulate and encourage a high
level of workersÊ health and safety at the workplace. This Act improves the
present health and safety legislation especially those covered by the Factories and
Machinery Act, 1967.
The main aim of this Act is to increase awareness and foster a culture of health
and safety among workers in Malaysia. The main principle of this Act is to
determine the health and safety of the workplace and to place responsibility on
parties who create workplace risks, as well as those who are at risk while
working. It also concedes that the biggest problem in improving the level of
health and safety at a workplace is the negative attitude and indifference on the
part of employers and employees. This Act ensures that all the parties involved,
especially employers and employees are responsible in preparing and
maintaining a safe and healthy workplace. Five regulations were established
under this Act:
(a) Control of Industrial Major Accident Hazards Regulations, 1996;
(b) Safety and Health Committee Regulations, 1996;
(c) Classification, Packaging and Labelling of Hazardous Chemicals

Regulations, 1997;
(d) Safety and Health Officer Regulations, 1997; and
(e) Safety and Health Officer Rules, 1997.
OSHA covers all sectors and industries except the Armed Forces and workers in
the shipping industry who have their own rules and acts. Its application covers
issues on workplace, machines and equipment, materials, power generation,
processing, safety apparel, starting up instruments and equipment management.

ACTIVITY 9.2
In your opinion, what are the reasons that encouraged the development
of the Occupational Safety and Health Act, 1994. Discuss with your
coursemates.
9.3.1 Employer’s Responsibilities

All employers who have more than five employees are required to provide
written regulations, display these regulations and give one copy to each
employee and discuss them in the induction of new employees. This Act requires
employers to:
(a) Provide and operate a factory and a safe working system without any risk
to health;
(b) Arrange the measures to be taken to ensure safety and health in using,
operating, storing and transporting materials to the factory;
(c) Prepare information, instruction, training and supervision to ensure that

employees can carry out their jobs safely without risk to health;
(d) Facilitate a safe workplace without risk to health including the entry and
exit to the workplace; and
(e) Provide and facilitate a safe and risk-free work environment, with adequate
facilities for the employeesÊ welfare.
Under OSHA, certain organisations are required to appoint health and safety
officers who are qualified and recognised by the government. This includes
shipping, gas, chemical, timber and cement industries that have more than 100
workers, the manufacturing sector that has more than 500 workers and the
building and engineering sectors that have more than 20 million workers.
Employers who have more than 40 workers are required to form a Workers
Safety and Health Committee in their organisations. The function of the
committee is to help in formulating systems and health safety at the workplace,
to study the effectiveness of programmes that are carried out, to make
suggestions on any changes to improve conditions and to carry out inspections
every three months.

9.3.2 Employee’s Responsibilities

Employees and employers are responsible for safety and health at the workplace.
Normally, many employers provide safety equipment while improving the level
of awareness through training and explanation. Unfortunately, many employees
have negative attitudes and do not follow instructions. Under this Act, an
employee is required:
(a) To give appropriate attention while working to guarantee the safety and
health of himself or herself and others;
(b) To cooperate with employers or others in fulfilling obligations under the
Act or regulation;
(c) To wear or use any safety and health equipment or personal protective
clothing provided by the employer; and
(d) To abide by any instructions or workersÊ safety and health steps required
by the employer, the Act or the regulation.
9.3.3 Responsibilities of Designers, Formulators,

Manufacturers, Importers or Suppliers
As far as possible, the Act requires innovators, formulators, manufacturers,
importers or suppliers to:
(a) Ensure that the factory and materials are safe and without risk to health
when used appropriately;
(b) Carry out and conduct required tests and checks in the factory;
(c) Prepare information on the use of the factory or materials so that they are
safe and without risk to health when used;
(d) Carry out and arrange the research needed to eradicate or reduce any risks
to safety or health that may arise; and
(e) Ensure that the construction and assembly of the factory is safe and without
risk to health when used.
The provisions in OSHA are based on a self-rule approach, i.e. the main
responsibility of ensuring safety and health at the workplace is the responsibility
of those who create the risks and those who work with those risks.

The self-rule concept encourages negotiation, cooperation and the involvement of

employees and employers in efforts to raise the level of safety and health at the
workplace.
9.4 CAUSES OF ACCIDENTS AT THE

WORKPLACE
Causes of accidents at the workplace include those seen in Table 9.1.
Table 9.1: Causes of Accidents at the Workplace
Causes Example
Job  Machinery malfunction ă failure to work properly;
 Old equipment ă failure to function well; and
 Dangerous jobs such as working in an underground tunnel and
working with dangerous chemicals.
Workers  Do not concentrate fully on the work;
 Half-hearted attitude;
 Drink liquor or take drugs;
 Misjudge the speed of a moving object;
 Lack of experience;
 Over-confidence due to experience;
 Poor eyesight and hearing;
 Incompetent in using equipment ă no training;
 Break safety rules such as not wearing a helmet and glasses;
 Age: too young (hasty) or too old (careless or incompetent); and
 Have personal problems ă cannot concentrate fully on the work.
Environment  Exposed to very high temperatures, electrical equipment and
chemicals;
 Very noisy;
 Exposed to smoke and dust; and
 Infection.

Employer  Unsatisfactory level of supervision;

 Failure to provide safety equipment to workers;
 Failure to give adequate training to use safety equipment;
 Failure to be firm in enforcing safety rules and policies;
 Failure to create awareness amongst workers on the importance of
safety and health;
 Failure to listen to workers complaints;
 Consider the aspects of safety as unimportant; and
 Consider the safety and health programme as a burden to the
organisation.
Accidents in the workplace in this country are as shown in Table 9.2. Roughly,
the figures are high especially when compared with accidents in developed
countries. Among the industrial sectors that record accidents at the workplace
are production and manufacturing, agricultural, forestry, fisheries and
construction sectors.
Table 9.2: Workplace Accident Report, 1993 to 1998
Number of Accidents Number of Accidents in Every

Year
Reported 10,000 Workers
1994 122,688 353
1995 114,134 295
1996 106,508 260
1997 86,589 207
1998 85,338 197
Source: Annual Report, Department of Social Health Malaysia
Generally, accidents in the workplace are divided into three main factors:
(a) Unsafe Working Environment

These are the reasons that contribute most to workplace accidents. Some of
them are as follows:
(i) The use of equipment and machinery which are not supervised and
do not conform to the rules;
(ii) The use of old and faulty machines;

(iii) Incomplete and unsuitable rules for the use of the equipment;
(iv) Poor lighting; and
(v) Poor ventilation.
(b) Work-related Factors

These factors are also major contributors to workplace accidents. Among
them:
(i) The nature of the job (especially work in construction, mining and
manufacturing sectors) which are normally exposed to dangers that
could result in accidents;
(ii) Work schedule that involves long working hours; and
(iii) The psychological condition of workers especially due to stress,

personal reasons or related to the work.
(c) WorkerÊs Behaviour and Reaction

Accidents at the workplace are mostly due to workersÊ carelessness and
indifference in carrying out their jobs. For example, accidents reported are
caused by the following actions:
(i) Joking and fooling around with friends and colleagues;
(ii) Throwing work equipment and materials;
(iii) Readjusting the speed of a machine without a supervisorÊs approval;
(iv) Using unsafe procedures while stirring, connecting and lifting

equipment;
(v) Making electrical connections; and
(vi) Leaving and placing dangerous equipment around the workplace.
ACTIVITY 9.3
Based on your understanding, list factors and other reasons why

accidents occur at the workplace. Visit the DOSH website for the latest
statistics on the number and rate of industrial accidents in Malaysia.

9.5 MEASURES TO REDUCE ACCIDENTS AT

THE WORKPLACE
The OSHA introduced guidelines to determine the minimum level of safety that
should be followed by employers and employees to avoid accidents at the
workplace. This Act is not useful if employees and employers are not aware of
the importance of safety and health at their workplace. The government has
limited mechanisms such as enforcement officers to ensure that all provisions of
the Act are followed by organisations. Therefore, employers are to prepare more
effective safety and health procedures that are suitable with the activities and
equipment at their workplace. As a guideline, these steps may help employers
and employees to reach higher levels of occupational safety and health practices:
(a) Knowledge and Awareness

Managers and supervisors should have a high level of awareness of the
importance of practices and procedures to be followed to ensure safety and
health at the workplace. There are studies that show the close relationship
between the increase in managersÊ dedication with the reduction of
workplace accident rates. When managers and supervisors fail to show a
high level of awareness, subordinates cannot be expected to have a high
level of awareness.
(b) Occupational Safety and Health Awareness Training Programmes

Many successful organisations have their own training programmes to
increase the level of employeesÊ knowledge on the importance of safety and
health at the workplace. This includes activities through lectures,
documentaries, seminars and printed materials to teach and make them
aware of these regulations. Besides these, supervisors must constantly
remind their employees of the procedures and rules of using equipment.
(c) Enforcement of Safety Regulations

Employers need to frequently enforce all safety and health rules and
regulations at the workplace to show that it is a serious matter. Immediate
action taken by employers against employees who misuse or break the
rules will be a warning to other employees of the seriousness of this issue.
Action can be taken in the form of verbal or written warning, suspension or
dismissal, depending on the frequency and seriousness of the offence.

(d) Giving Incentive and Encouragement

Incentive programmes to acknowledge positive actions on safety and health
are more effective than punishment for employees who break the rules.
Punishment will only encourage them to cover up their mistakes rather
than to repent. Instead, positive behaviour should be rewarded to
encourage employees to always follow the rules.
(e) Investigation and Accident Record

All accidents at the workplace should be investigated and recorded. Apart
from fulfilling the requirements of the law, investigation should also
identify the causes of accidents and give employers an opportunity to take
safety measures to avoid them. Accident records are an important guide
and reference for other employees.
 In Malaysia, the Department of Safety and Health of Workers (DOSH) under

the Ministry of Human Resource is responsible for the enforcement of health
and safety laws on workers.
 There are two main laws that control the aspects of health and safety of
workers in this country, namely the Factories and Machinery Act, 1967 and
the Occupational Safety and Health Act (OSHA), 1994.
 The Factories and Machinery Act, 1967 gives power to the Department of
Factories and Machinery, Ministry of Human Resource to conduct workplace
safety checks.
 The Occupational Safety and Health Act (OSHA), 1994 provides a legal
framework to develop, stimulate and encourage a high level of workersÊ
health and safety at the workplace.
 Employers, employees, designers, formulators, manufacturers, importers or

suppliers all have a responsibility to ensure health and safety at the workplace.
 Accidents in the workplace are divided into three main factors: unsafe working
environment, work-related factors and workerÊs behaviour and reaction.

 OSHA introduced guidelines to determine the minimum level of safety that

should be followed by employers and employees to avoid accidents at the
workplace. These include: knowledge and awareness, occupational safety
and health awareness training programmes, enforcement of safety regulations,
giving incentives and encouragement and incident and accident record.
Employee safety and health acts Occupational Safety And Health Act
(OSHA), 1994
Factories and Machinery Act, 1967
Self-rule approach
What are the main aim and principles of the Occupational Safety and Health Act
(OSHA), 1994?

Topic  Industrial
10 Relations
LEARNING OUTCOMES
1. Identify the three main parties in an industrial relations system in
Malaysia;
2. Explain the role and activities that are carried out by the three
parties; and
3. Review the influence and strength of each party on the decision-
making process in an organisation and the provisions of law
related to their activities.
 INTRODUCTION
Workers and trade unions as well as employers and EmployerÊs Associations are
two main parties that play an important role in any industrial relations system.
Apart from these, a third party i.e. government and its agencies is also an
important component of the system. The governmentÊs role in industrial relations
system may be seen at various levels. The government is an entity that provides
laws and regulations and enforces them. As a third party in an industrial
relations system, the government and its agencies are there to ensure a good
relationship between employees and trade unions and between employers and
EmployerÊs Associations. This topic discusses trade unions, EmployerÊs
Associations, the government and its agencies in the context of industrial
relations in Malaysia.

TOPIC 10 INDUSTRIAL RELATIONS  149
ACTIVITY 10.1
Visit the websites of the Department of Industrial Relations Malaysia

and the Department of Trade Union Affairs Malaysia.
Think about the trade unions that you know and their roles. Discuss
your thoughts with your coursemates.
10.1 INDUSTRIAL RELATIONS SYSTEM

Normally, an industrial relations system involves three parties: workers and their
organisations, employers and their organisations and the government and its
agencies. The industrial relations system of these three parties is also known as a
tripartite. The relationship is as shown in Figure 10.1.
Figure 10.1: The main parties in industrial relations system
As shown in Figure 10.1, every industrial relations system is controlled by laws

and regulations. Besides this, the industrial relations system itself will formulate
rules to be implemented in a workplace. For example, agreements, status,
governance, regulations, policies, guidelines and practices and work culture. In a
dynamic society, all regulations should be revised and amended to adapt to the
changes of the environment, technological advancements and the economic

150  TOPIC 10 INDUSTRIAL RELATIONS
system of a country. The history of industrial relations has long existed formally
and informally since the existence of the traditional concept of the servant-master
relationship. In principle, industrial relations is not born out of disputes between
employers and the needs of employees. Disputes in working conditions gave rise
to factors such as a natural tendency towards aggression, a wide difference
between the needs of employers and employees, competition from limited
sources and the cultural aspects of an organisation and community.
For example, employers will always try to get as much profit as possible while
employees expect a higher pay rate and good working conditions. The wants of
both parties are always different. This creates a continuous dispute. In
maximising profits, employers may minimise workersÊ pay and oppose an
employee who expects better rewards for services rendered. Due to the existence
of such disputes and negativity, there exists a problem between the two parties.
The main objective of any industrial relations system is to find the best solutions
to these disputes.
10.1.1 Employees and Their Organisations

Employees will be represented by unions that will fight for their rights. Trade
unions are volunteer associations established by employees to develop and
protect the social, economic and political rights and interests of the members
through their joint action. The following are details on trade unions:
(a) Trade Union

All trade unions must be sanctioned and registered and should include the
required resources to represent their members. The sanction of a union is a
process that needs employers to formally accept them as a trade union,
which represents the whole or a part of the employees who aim to jointly
decide on employment rules and regulations. In Malaysia, the trade union
comprises associations or workersÊ unions, which have been registered
under the Workers Union Act 1959. In principle, all workers in this country
are given the rights to be members of trade unions. The Industrial Relations
Act 1967 clarifies that no one may obstruct, prevent or force a worker or
employer to fulfil his or her rights to help in the establishment and to join a
workersÊ union and involve himself or herself in all legal activities. An
employer cannot discriminate workers. (For example, a job promotion
cannot be denied with the excuse that the staff has joined a trade union).

(b) Trade Union Registration

The trade union registration for an association must be made to the Director
General of Trade Unions. It has to be submitted by no less than seven
committee members and sponsors from an organisation. The Workers
Union Act, 1959 empowers the Director General to question the registration
of a trade union. For example, he or she may reject the application of a
trade union based on the following reasons:
(i) If any objectives of the association contravenes the law;
(ii) If there is any part of the constitution which contravenes the Workers
Union Act, 1959;
(iii) If the name of the association is not suitable or similar to another
association that is already in existence or a name that is ambiguous;
and
(iv) If the association is used for other purposes to challenge the law.
Besides these, the Director General of Trade Union has the power to cancel
or revoke the registration of an association because it contravenes the law of
the country. All employees in Malaysia who are 16 years and above may be
a member of a trade union. However, it is only permitted to workers in an
association, business, jobs and industries under which the trade union is
registered.
The following groups of workers however are not allowed to be members

of an association:
(i) A worker in the management and professional group including
executives;
(ii) The police, prison services or the military; and
(iii) Those who are working in fields related to official secrets and
security.
ACTIVITY 10.2
In your opinion, what excuses can be used by a Director General of a
trade union to reject your application to the trade union association.
Visit the website of the Department of Trade Union Affairs, Malaysia
for further knowledge on your rights as an employee.

(c) Trade Union Objectives

The trade union movement has a long history in many developing
countries. In Malaysia, trade unions started in the early 1920s. As such,
labour unions or as they are now called trade unions, are unique and have
their own objectives. Several general objectives of a trade union may be
concluded as follows:
(i) To ensure and improve the standard of living and economic status of
its members;
(ii) To expand and guarantee the safety of individual workers from any
harm and changes in the market, technologically and due to an
employerÊs actions;
(iii) To influence power relations in a social system through the direction
of the trade union;
(iv) To ensure and protect the welfare of workers; and
(v) To establish a mechanism to avoid any unfairness and pressure on the
policies and regulations against workers.
The philosophy of a trade union as a whole is to establish and ensure

fairness and deny oppression at the workplace. To achieve this objective,
many trade unions feel that they should expand and fight for their workersÊ
rights through power sharing at the organisations they represent.
(d) Development of Trade Unions in Malaysia

In 1965, the number of trade unions was 286. This figure went down to 252
in 1975. 10 years later, the number of trade unions stood at 369 and in the
year 1990 it increased to 468. At the end of 1998, the number of trade unions
in Malaysia was 533, 420 were established in Peninsular Malaysia, 67 in
Sarawak and 46 in Sabah. Table 10.1 shows the number of trade unions
from 1965 to 1998.
Table 10.1: Number of Trade Unions in Malaysia, 1965 to 1998
Number of Trade Number of Trade

Year Year
Unions Unions
1965 286 1990 468
1970 237 1992 479
1975 252 1994 501
1980 369 1996 516
1985 369 1998 533
Source: Industrial Relations Department, 1999

An analysis on trade unions according to sectors shows that 58 per cent of

trade unions are from the private sector whereas 42 per cent from the
public sector. From the public sector percentage, 25 per cent is from
government services and 75 per cent from statutory bodies. Table 10.2
shows the number of trade unions according to sectors.
Table 10.2: Trade Unions According to Sectors 1993 to 1998
1993 1998
Sectors
Total Percentage (%) Total Percentage (%)
Private 276 56 314 59
Public 132 26 133 25
Statutory Body and 88 18 86 16
Local Govt.
Total 496 100 533 100
Source: Industrial Relations Department, 1999
The Industrial Relations Act, 1967 provides that every worker has the right
to join a trade union. However, the number of workers joining a trade
union in Malaysia is very low compared to other countries. This may be
seen in Table 10.3.
Table 10.3: Percentage of Trade Union Members According to Sectors 1998
No. of Workers Joining No. of Trade

Sector Percentage
Trade Unions Union Members
Agriculture 1,401,000 55,000 3.9
Mining 42,000 1,000 6.4
Manufacturing 2,279,000 145,000 5.9
Construction 808,000 4,000 0.5
Private 3,190,000 195,000 6.1
Public 877,000 320,000 36.5
Overall Sectors 8,597,000 720,000 8.2
Source: Department of Industrial Relations, 1999

Based on Table 10.3, the public sector has the highest percentage of workers
joining a trade union in Malaysia. However, the percentage does not reflect
the actual strength and effectiveness of the trade union. This is because the
workers in this sector are not involved directly in negotiations and
industrial issues at the central level. This includes issues such as pay, rules
of service, welfare and the workplace environment.
The private, mining and manufacturing sectors show a high percentage

compared to the other sectors. However, the percentage of workers joining
trade unions is very small although trade unions play a very important part
in these sectors. This is because the working conditions in the private sector
requires them to be involved in issues such as working rules and
regulations, safety and health of workers, pay and wage rates, dismissal
from work and other disputing factors.
(e) Types and Structures of Trade Unions in Malaysia

Generally, the trade union is divided into three types:
(i) National and District Trade Unions;
(ii) Union in a Company; and
(iii) Employers Association.
Each type is explained further here:
(i) The National and District Level Trade Unions have a membership
made up of employees from various organisations, the same
organisations or from employees of the same trade or job. Majority of
the similar industries have a national trade union. For example, the
NUPW, NUTP, NUTE, TWU and NUBE. The employees in the public
sector are represented by CUEPACS.
There are trade unions where the members are of a certain industry
but the membership is restricted to certain districts in the country. For
example, the Trade Union of Textile and Clothing Industry of Perak.
Workers from Sabah and Sarawak are also not allowed to join trade
unions in Peninsular Malaysia.

ACTIVITY 10.3
In your opinion, why are workers from Sabah and Sarawak not allowed
to join Trade Unions in Peninsular Malaysia? Discuss this with your
coursemates in the myINSPIRE forum.
(ii) The Union in a Company is one where the workers have set up a
trade union from a particular company or organisation which has a
limited number of employees. Statutory bodies and local authorities
are restricted in setting up such trade unions. In the private sector, a
few internal trade unions have existed for more than 20 years. For
example, the Cold Storage Workers Trade Union and the Rothmans
Workers Trade Union.
Since the 1980s, in-house unions have become very popular in certain
organisations. This is due to the encouragement given by the
government based on the positive relationship between employers
and employees. Employers in Malaysia are also keen with the
establishment of trade unions by their employees. In 1985, there were
52 in-house trade unions but in 1997, 218 in-house unions had been
set up with a membership of 144, 875 members.
(iii) Employers Associations happen to be associations established by

employers. The aim is to represent and advice all members on their
activities in relation to trade unions to facilitate the administration of
employers. The Malaysian Employers Federation (MEF) is an example
of a large employers association. Being different from a trade union,
MEF was established in 1959 under the Registration of Associations
Act 1996. At present, the association has a membership of 2,200.
(f) Why Do Workers Join Trade Unions?

Every individual has a reason of his or her own for joining a trade union. It
may be related to job issues, personal, social and could be political. It is
quite difficult to discuss all the reasons but the main reasons are as follows:
(i) Economic needs;
(ii) Dissatisfaction towards employers;

(iii) Opportunity to be a leader;

(iv) Social needs; and
(v) Influenced by co-workers.
Each will be described in the following:
(i) Economic Needs

Dissatisfaction with pay, benefits and working environment are the
main reasons why a worker joins a union. Normally when an
employee feels the need to fight for his or her economic needs, he or
she believes that it is more effective if it is done in a group rather than
individually. Trade unions are considered as the most suitable party
to fight for their rights and needs.
(ii) Dissatisfaction towards Employers

Workers might join a union if they believe that the employers are not
fair towards them. This includes matters like conditions of service and
pay, transfer of work area, promotion, disciplinary action, action
taken, performance appraisal and yearly increment.
(iii) Opportunity to be a Leader

There are individuals who desire to become leaders and trade unions
are considered a good opportunity for them to prove their abilities
and efforts. As in any organisation, trade unions also have their own
leadership hierarchy and the members have an opportunity to hold
positions at various levels. Union leaders are normally recognised by
employers. It is common for employers to give recognition or to
award promotions based on employeesÊ abilities to lead.
(iv) Social Needs

Naturally, every worker has his or her own social needs. Generally,
they prefer to be surrounded by their colleagues with the same
interests. Most workers join trade unions in order to join social
activities organised by the union. They have a lot of family and
welfare activities.

(v) Influenced by Co-workers

The influence of co-workers is one of the reasons why employees join
trade unions. Co-workers continuously remind the workers who have
not become members. This is considered important because some
workers may need the help of the trade union to fight for their
welfare, which includes dismissals, transfers, discipline problems and
other unexpected matters.
ACTIVITY 10.4
Apart from what has been stated, list other factors that may encourage
the setting up of a trade union.
(g) A Working Environment Free of Trade Unions

Employers who have suitable strategies and techniques may have an
organisation free of trade unions. Some employers believe that the presence
of a trade union represents his or her failure to treat employees fairly. This
may be true but there are other factors that can avoid the existence of a
trade union. These factors include:
(i) The employees feel that their employer is not taking advantage of
them;
(ii) An employee who is proud of his or her job;
(iii) High performance may be reached by an organisation. An employee

will feel that his or her job is secure and his or her efforts always
yields results;
(iv) There is justice in the meting out of discipline and actions, employees
will respect firm discipline and fairness;
(v) There is no favouritism in matters of job promotion and other

businesses; and
(vi) A leader has a good relationship with his or her employees.
Reports from a study in Europe has found that organisations may sustain
the absence of a union provided they have an attractive pay scale and
benefits, establish working groups, have an open communication system, a
safe work environment and an employer who avoids staff dismissal.

10.1.2 Employers and Their Organisations

Employers Associations may be defined as a formal group established to defend,
represent or advice its members and to strengthen their position in society as a
whole, on job related issues. Unlike the trade union whose members consist of
individuals, the Employers Association consists of companies or organisations.
Dunlop 1958 referred to the Employers Association as the „Bosses Union‰.
In many countries, Employers Associations may trace their existence to the end
of the 19th and early 20th century. The development of this association is closely
associated to the development of trade unions. For example in Britain, New
Trade Unions influence the Federation of Modern Employers. The Association of
Employers relates to the reaction of economic pressure. It was established
especially among employers who carried out competitive edge activities. The
organisations include:
(a) The International Organisation of Employers

The inaugural meeting of the industrial employersÊ representatives was
held in 1912 in Turin in conjunction with Labour Day Exhibitions. The
meeting suggested the establishment of an association in every country to
conduct studies on the possibility of having associations at world levels.
However, the first ILO (International Labour Organisation) in 1919 started
a new step towards establishing it. In 1920, the International Organisation
of Industrial Employers based in Brussels was established. Following
World War II, the association changed its name to the International
Organisation of Employers. It has 95 members from 90 countries. IOE
works closely with the ILO. Their purpose is to give special assistance to
developing countries by organising seminars or sending their
representatives to help solve problems.
(b) Malaysian Employers Foundation (MEF)

The establishment of the Malaysian Employers Foundation, MEF, started in
1959 when the Federation of MalayaÊs Industrial and Commercial
Employers Consultative Association had 73 pioneering members. This
association then changed its name to the Malayan Employers Consultative
Association (MECA).

In 1962, the Malayan Council of Employers Organisation was established. It

comprised of MECA as well as two other associations, the Malayan
Agricultural Producers Association (MAPA) and the Malayan Mining
EmployersÊ Association (MMEA). Both were considered major associations
representing employers in the private sector. Parallel to the economic
progress as well as the need to expand its number of members, MCEO and
MECA were dissolved and was then replaced with the Malaysian
EmployersÊ Foundation (MEF).
The details of MEF are as follows:
(i) MEF Objectives

MEF was established based on the Association Act, 1966 and the
objectives are as follows:
 To coordinate the views of employers with regard to general

industrial issues and to advance, protect and defend the interests
of employers;
 To maintain a good relationship between employers and

employees through the use of employment administration
principles and to maintain effective industrial relations;
 To hold meetings among members to discuss their common

interests;
 To inform members on the amendment of any acts and

regulations related to industrial relations;
 To advise members on bilateral negotiation issues, industrial

disputes while jointly representing them in industrial court
proceedings;
 To prepare data and information related to pay structures,

benefits, the labour market and matters pertaining to employers
activities; and
 To provide training facilities to members for their skill

development at various levels.
(ii) MEF Membership

When established in 1959, the association had 73 pioneering members.
The membership expanded to 877 in 1978 and currently it has 3,280
members. MEF membership is open to all employers in the private
sector and other employerÊs associations. Companies in private

sectors will be accepted as ordinary members while the ManagerÊs

Association will be categorised as federal members. Most of the
members are employers from the central region (2,419 companies)
followed by the northern region (290 companies) and the southern
region (257 companies). Most of the members comprise companies
that are free of trade unions (2,714 companies). Currently, there are
eight federal members comprising the Association of Insurance
Employers, CEAPM, MCM, PMBOA, SECA and MCBA.
Membership fees is based on the number of employees in an

organisation. Aside from fees, MEFÊs other sources of income come
from seminars, training, published work and programmes for
industrial relations diplomas.
(iii) MEF Functions

The Malaysian Employers FoundationÊs functions can be divided into
2 areas:
 Function in the development of the countryÊs economy; and
 Function in the provision of service to its members.
ă The development of a countryÊs economy: Since two decades

ago, Malaysia has achieved significant economic growth and a
low unemployment rate. This economic development is very
much dependent on the contribution of the private sector.
With respect to the contributions from the private sector, the
government has handed a large area of responsibility to
associations, which include the:
o National Labour Advisory Board;
o Employee Provident Fund (EPF);
o Social Safety Association;
o National Productivity Board;
o The National Council of Human Resource Management;
o National Vocational Training Council;
o Institute of Health and Safety of Workers; and
o Hotel Workers, Sales Assistants and Cinema Workers Pay

Council.

ă In providing services to its members: The MEF has various

experts in different fields. Their members are in
communication with each other in order to advice on matters
pertaining to the discipline of workers, service dismissal,
recognition, workers union and bilateral negotiations. It also
represents members in industrial court proceedings.
Apart from that, MEF provides numerous training facilities to update the
knowledge of members about related laws and jobs, about OSHA and other
related areas.
10.1.3 The Government and Its Agencies

The role of the government in industrial relations in Malaysia may be seen very
clearly through the history of its movement. It started with the Labour Code
introduced in 1912 to protect workers in the mining sector. The economic
development of the country needed the government to play a bigger role
especially by deciding on a harmonious relationship between employees and
employers. The role of the government is now considered very important to
guarantee a smooth and systematic economy. Details of government involvement
are explained in the following:
(a) Background of GovernmentÊs Intervention

The earlier trade unions in Malaysia started in 1920; Chinese workers who
worked in tin mines mainly established various associations. The
associations were registered under Social Associations due to the absence of
laws on industrial relations.
The movement and its activities were mainly influenced by communism

and Chinese nationalism brought from mainland China. Chinese renegades
had seeped into the movement and played a main role as leaders of labour
unions. In the 1930s the British governmentÊs policies started to focus on the
labour movement.
Labour Movement Laws were enacted in 1940 and were implemented only
in 1946 after the Second World War when the British came to power once
again. The registration office of the trade union was established in July 1946
to enforce the trade union Enactment of 1940. Under this Enactment, an
association that is established is required by law to apply for registration
with the Registrar of Trade Unions.

The registration of trade unions started in 1947 and by year-end, 298 trade
unions were registered with a total membership of 195,113. Following
negotiations that were held with the government, employers and the trade
union, the Trade Union Ordinance of 1959 was enforced on 1 June 1959 to
replace the Trade Union Enactment 1940. This Ordinance was given a wider
scope to Sabah and Sarawak in 1965 when Malaysia was established. The
Ordinance, after being examined by the Malaysian Law Reform
Commission 1981, was renamed the Trade Union Act 1959.
(b) GovernmentÊs Function in Industrial Relations in Malaysia

In Malaysia, the governmentÊs function in industrial relations is the
responsibility of the Ministry of Human Resource (MOHR). The
government through MOHR together with the central organisation on
behalf of employers and workers formulates policies with relation to
industrial relations. In short, the governmentÊs role for the country
concerning industrial relations may be categorised as:
(i) Formulating laws;
(ii) Administrators;
(iii) Third party; and
(iv) Employers.
These categories are described as follows:
(i) Formulating Laws

The government as the authoritative power through Parliament has
enacted laws to control the activities and to create industrial relations
in this country. Several laws on industrial relations have been
enacted. Some of these laws are related to:
 Jobs;
 Wages;
 Safety and health of employees;
 Trade unions; and
 Industrial relations.

(ii) GovernmentÊs Role as Administrator

MOHR is the main agency governing industrial relations laws.
The main activities and the departments in MOHR are shown in
Figure 10.2.
Figure 10.2: GovernmentÊs role as administrator
 The Industrial Relations Department was established in 1958 and

is a division of the Labour Dept and Industrial Relations. The
objectives of the department are to ensure the existence of a
positive and harmonious relationship between employers,
employees and trade unions in order to sustain a peaceful and
harmonious environment in industrial relations. The department
advices the minister on all aspects of industrial relations and the
law. This includes matters that are referred to industrial courts
and giving advice to employers, employees and their associations
or other organisations about general matters pertaining to
industrial relations. The roles of the department include:
ă To process recognition by trade unions;
ă To help in collective bargaining;
ă To help in job reinstatement;
ă To offer advice; and
ă To promote procedures for a harmonious industry.

 The Trade Union Affairs Department was formerly known as the

Department of Registration of Trade Unions established in July
1946 to enforce the Trade Union Enactment in 1940. The main
activity is to carry out registration activities of trade unions,
statutory investigations, complaints and industrial strikes and
actions.
 The Industrial Court is a tribunal that hears industrial cases. The

objective of the court is to establish principles and guidelines of
the labour law in the private sector through decisions or court
awards, which then become a precedent. The function of the court
is to try and minimise disputes and to decide if the issue should
be referred to the minister or referred straight to the disputing
parties. The industrial court also functions as a registrar and gives
consensual agreement and recognition along with the employers
or trade unions.
 The Department of Occupational Safety and Health (DOSH) is a

main government agency, which ensures the safety, health and
well-being of employees during employment. This department
has three different activities namely: formulating standards,
enforcement and support. From time-to-time, DOSH formulates
rules, codes of practice and guidelines relating to employers and
employees to ensure that all laws and codes of practices that have
been formulated are adhered to. The department carries out
strategic and effective enforcement actions.
 The Labour Department was established in 1912. The objective of

the department is to protect the interests and develop the welfare
of the workers in the private sector, to help the industry optimise
operations to raise productivity and establish a labour
environment, which is suitable for the industrial development
through the administering of the Labour Law. The department
provides services to ensure workers are protected under the
Labour Law, which is administered and enforced by the
department and enjoy the benefits that have been set under the
law regarding the welfare of the employers. Among the services
provided are the industrial court and the work force department.

 The Labour Court is a method of arbitration that is performed by

the department to settle claims by workers against employers or
vice versa. The industrial courtÊs jurisdiction are to:
ă Hear and decide disputes between workers and employers;
ă To decide on claims by workers, to lessen the claims of

judgement, behaviour from a heavier punishment that was
passed against them;
ă To decide claims against employers, on back dated wages

payment since dismissal; and
ă To decide claims against contractors.
 The Department of Manpower (DOM) is a department that does

not administer any laws or regulations. The objective of DOM is to
ensure the optimum use of human resources through industrial
training, services and information about the labour market.
(iii) The GovernmentÊs Role as a Third Party

Besides formulating and administering related laws, the government
also helps employers and employees form policies about the practices
of harmonious industrial relations. As an authoritative body, the
government acts as a peacekeeper to settle disputes unresolved at the
association level. Although in principle labour unions and employees
are encouraged to settle disputes among themselves through
negotiations, if such disputes go unresolved at that level, the
government will play its part by ensuring that industrial harmony is
maintained.
The National Labour Advisory Council and The National Council also
promote the governmentÊs role as a third party for Occupational
Safety and Health.
 The National Labour Advisory Council is a forum that formulates

policies for members who represent employees, employers and
the government. The National Labour Advisory Council is a
tripartite forum that discusses matters regarding labour and work
force issues which include labour policies and legislation and aims
to propose views to the Minister of Human Resource in relation to
promoting a harmonious industrial relationship in order to
increase productivity.

 The National Council for Occupational Safety and Health was

established in 1995, under the Occupational Safety and Health
Act, 1994. The establishment was parallel to the negotiation
principles, of which it is also the main principles in the
formulation of the Act. The councilÊs membership consists of
government representatives, employers, employees and volunteer
and professional bodies. The main aim of the Council is to
establish a body to discuss, research and investigate.
(iv) The GovernmentÊs Role as an Employer

In addition to the above, the government also plays a role in being the
largest employer in the country. Currently, the size of the civil service
is 1,135,552 employees which includes the federal government, state
government, statutory bodies and local law enforcement agencies. The
number of employees by category is listed in Table 10.4.
Table 10.4: Number of Employees According to Category
Employee Groups No. of Employees Percentage

Public Sector Main Posts 1,208 0.1
Management and Professional 149,417 13.2
Support 984,927 86.7
Source: Public Works Department, 2000
The industrial relations in the public sector differs from the system
used in the private sector. The mechanism established in the
industrial relations of the public sector is rather unique and of a
different level compared to the private sector. The mechanisms
consist of:
 Pay Committee and Commission;
 Public Works Department; and
 The Joint Council.

 Three important parties are involved in the industrial relations system in

Malaysia, namely the workers and the organisation, employer and
employerÊs organisation and the government and its agencies under its
jurisdiction.
 Discussions were focused on the role and activities that were carried out and
the influence of each party on the process of decision making in an
organisation, along with the provisions of legislation amongst them.
Industrial Court Worker Union Act 1959
Industrial Relations Act 1967
List the main roles of the government in the industrial relations system in
Malaysia.

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OUM Business School

Copyright © Open University Malaysia (OUM)

Copyright © Open University Malaysia (OUM)

Module Writers: Haji Yaakob Ibrahim

Assoc Prof Dr Santhi Raghavan

Moderators: Assoc Prof Dr Khulida Kirana Yahya

Assoc Prof Dr Santhi Raghavan

Developed by: Centre for Instructional Design and Technology

First Edition, July 2008

Copyright © Open University Malaysia (OUM), August 2016, BDPB2103

Copyright © Open University Malaysia (OUM)

Topic 1 Introduction to Human Resource Management 1

Topic 2 Job Analysis 18

Copyright © Open University Malaysia (OUM)

Topic 3 Human Resource Planning 36

Topic 4 Employee Recruitment 51

Copyright © Open University Malaysia (OUM)

5.7 Job Interviews 75

Topic 6 Employee Development 89

Topic 7 Performance Appraisal 104

Copyright © Open University Malaysia (OUM)

Topic 8 Pay, Benefit and Incentives 121

Topic 9 EmployeesÊ Health and Safety 137

Topic 10 Industrial Relations 148

Copyright © Open University Malaysia (OUM)

Copyright © Open University Malaysia (OUM)

COURSE GUIDE DESCRIPTION

As an open and distance learner, you should be acquainted with learning

Copyright © Open University Malaysia (OUM)

Table 1: Estimation of Time Accumulation of Study Hours

1. Discuss human resource management regarding its concepts and practices

2. Identify the factors of human resources; and

3. Explain the factors that influence human resource management.

Topic 1 discusses the definition of human resource management and its

Copyright © Open University Malaysia (OUM)

Topic 4 explains how an organisation carries out the process of employee

Topic 8 introduces wages, benefits and incentives as well as the features of

Topic 9 clarifies the objectives of occupational health and safety programmes

Copyright © Open University Malaysia (OUM)

Topic 10 focuses on three primary parties within an industrial relations system,

TEXT ARRANGEMENT GUIDE

Self-Check: This component of the module is inserted at strategic locations

Activity: Like Self-Check, the Activity component is also placed at various

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References: The References section is where a list of relevant and useful

Mondy, R. W., Noe, R. M., & Premeaux, S. R. (2009). Human resource

Aminuddin, M. (1996). Malaysian employment law and industrial relations (2nd

Aminuddin, M. (1997). A guide to human resource management attracting and

Aminuddin, M. (1997). Human resource management (2nd ed.). Shah Alam:

Copyright © Open University Malaysia (OUM)

Yong, A. K. B. (1996). Malaysia human resource management. KL, Malaysia:

TAN SRI DR ABDULLAH SANUSI (TSDAS) DIGITAL

Copyright © Open University Malaysia (OUM)

All managers can be considered as human resource managers as they are

Copyright © Open University Malaysia (OUM)

1.1 DEFINITION OF HUMAN RESOURCE

Human resource management is a priority for organisations, more so in this era

At present, employees in an organisation consist of people from different

Copyright © Open University Malaysia (OUM)

What do you understand about human resource management? Explain

1.2 FUNCTIONS OF HUMAN RESOURCE

Figure 1.1: Functions of human resource management

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