HUMAN RESOURCE MANAGEMENT

Meaning/Concept:
process of making the efficient and effective use of human resources so that the set goals are achieved.

Objectives/Functions of HRM:
1. Organizational Objectives:
To achieve efficiency and effectiveness in organization
Acquiring right man for the right job at right time in right quantity, developing through right kind of
training, utilizing the selected workforce, and maintaining the workforce are the organizational objectives
of HRM.

2. Functional Objectives:
HRM performs so many functions for other departments. However, it must see that the facilitation should
not cost more than the benefit rendered.

3. Personal Objectives:
In today’s world there is shortage of requisite talent. Employees are encouraged by competitive firms to
change the jobs. HRM has the responsibility to acquire, develop, utilize, and maintain employees.
This would be possible only when the HRM helps employees to achieve their personal goals to get their
commitment. Creating work-life balance for the employees is a personal objective.

4. Societal Objectives:
• HRM must see that the legal, ethical, and social environmental issues are properly attended to. Equal
opportunity and equal pay for equal work are the legal issues not to be violated. To take care of farmers
(whose land has been acquired for the factory) and tribal’s (who are displaced by industries and mining
companies) are the ethical issues.
• The results are clear when these issues are not taken care of. To help the society through generating
employment opportunity, creating schools and dispensaries, helping women empowerment are the social
responsibility issues.

5. Managerial Functions:
Planning
Organizing
Directing
Controlling
 6. Operative Functions:
Procurement Functions
Development Functions
Compensation Functions
Integration Functions
Maintenance Functions

SCOPE OF HRM:
 SCOPE OF HRM:
1. The Labour or Personnel Aspect:
This is concerned with manpower planning, recruitment, selection, placement, transfer, promotion, training
and development, lay-off and retrenchment, remuneration, incentives, productivity, etc.
2. Welfare Aspect:
It deals with working conditions, and amenities such as canteen, creches, rest and lunch rooms, housing,
transport, medical assistance, education, health and safety, recreation facilities, etc.
3. Industrial Relations Aspects:
This covers union-management relations, joint consultation, collective bargaining, grievance and disciplinary
actions, settlement of disputes, etc.

IMPORTANCE OF HRM:
Organisation Significance:
HRM is of vital importance to the individual organisation as a means for achieving their objectives.
It contributes to the achievement of organisational objectives in the following ways:
1. Good human resource practice can help in attracting and retaining the best people in the organisation.
2. Developing the necessary skills and right attitudes among the employees through training, development,
performance appraisal, etc.
3. Securing willing cooperation of employees through motivation, participation, grievance handling, etc.
4. Effective utilisation of available human resources.
5. Ensuring that enterprise will have in future a team of competent and dedicated employees.

Social Significance:
Social significance of HRM lies in the need satisfaction of personnel in the organisation. Since these personnel are
drawn from the society, their effectiveness contributes to the welfare of the society. Society, as a whole, is the
major beneficiary of good human resource practice.
i. Employment opportunities multiply.
ii. Eliminating waste of human resources through conservation of physical and mental health.
iii. Scare talents are put to best use. Companies that pay and treat people well always race ahead of others and
deliver excellent results.

Professional Significance:
Professional significance of HRM lies in developing people and providing healthy environment for effective
utilisation of their capabilities.
This can be done by:
HRM CHALLENGES:
Environmental Challenges:
• Rapid Change
The world is changing at a faster rate because change is constant from several centuries. So the
management of the organizations should be quickly adaptive to the changing requirement of the
environment otherwise they become obsolete from the market. 

• Work Force Diversity

The changing environment provides both the opportunities & threats to the human resource management
of the organization. The HR manager should adopt such policies that can make possible the diverse work
force of employees. 

• Globalization
One of the serious issue that today’s organizations are facing is the issue of globalization. The world is
converting into global business and severe competition is started between domestic & foreign companies.
Such competition results in the laying off the effective workforce of the organization. The HR department
can play an important role in keeping the culture of the organization as global & wider.

•Technology
The technology is also growing with great speed especially in the field of computer & telecommunication.
New methods are emerging that quickly dominates the older ones & makes them obsolete. Therefore the
skills required by the employees also changes with the changing technology & this would compels the
worker to advance the skills three to four times throughout their working lives. So there comes a burden
on the HR department to constantly update the skills & expertise of their employees.

Organizational Changes:
Controlling Costs
Improving Quality
Developing Distinctive Capabilities
•Controlling Costs
An organization can avail the competitive position by lowering its cost & strengthening its cash flows. For this
purpose, the labor cost of the organization is minimized through effective compensation system that adopts
innovative reward strategies for good performances. 

•Improving Quality
The quality improvement can lead an organization towards competitive advantage. The total quality management
programs are employed that improves all the processes within the organization which would ultimately result in
the improvement of the final product or service.

•Developing Distinctive Capabilities

Another method of gaining competitive advantage is to employ the people that have distinct capabilities to
develop extra ordinary competence in specific area.

Individual Challenges:
01- Productivity
02- Empowerment
03- Brain drain
04- Ethics & social responsibility
05- Job insecurity
06- Matching people & organization
STRATEGIES FOR NEW MILLENIUM IN HRM:
HRM IN NEW MILENNIUM:
1. HR Can Help in Dispensing Organizational Excellence-By designing an entirely new role and agenda that
results in enriching the organization’s value to customers, investors and employees, HR can help in delivering
organizational excellence. This can be carried out by helping line managers and senior mangers in moving
planning from the conference room to the market place and by becoming an expert in the way work is
organized and executed. HR should be a representative of the employees and should help the organization in
improving its capacity for change. HR will help the organizations in facing the competitive challenges such as
globalization.
2. Human Resource Should be a Strategy Partner-- First HR need to define an organizational
architecture by identifying the company’s way of doing business. Second, HR must be held responsible
for conducting an organizational audit. Third, HR as a strategic partner needs to identify methods for
restoring the parts of the organizational architecture that need it. Fourth and finally, HR must take stock of
its own work and set clear priorities.

3. HR Accountability Should be Fixed to Ensure Employee Commitment-- HR must be held

accountable for ensuring that employees feel committed to the organization and contribute fully.

4. The New HR Must Become a Change Agent: The new HR must become a change agent, which
is building the organization’s capacity to embrace and capitalize on change.

5. Improving the Quality of HR: The most important thing that managers can do to drive the new
mandate for HR is to improve the quality of the HR staff itself. Senior executives must get beyond the
stereotypes of HR professionals as incompetent support staff and unleash HR’s full potential
EVOLUTION OF HRM:
1. Industrial Revolution Era- old cottage system
2. Trade Union Movement-- worker's association for their common interest.
3. Social responsibility Era--Founded by Robert Owen for humanitarian approach, improving the conditions of
work.
4. Scientific Management Era
5. Human Relations Era-- group formation and group influence, nature of leadership and supervision.
6. Behavioural Science Era-- goal and efficiency oriented and consider understanding the nature of work and the
people in the work environment.
Personnel Management:
Personnel management is an administrative function of an organization that exists to provide the
personnel needed for organizational activities and to manage the general employee-employer relationship. 

Personnel management can be defined as obtaining, using and maintaining a satisfied workforce. It is a

significant part of management concerned with employees at work and with their relationship within the
organization.

Role of Personnel Manager:

•Personnel manager provides assistance to top management- The top management are the people who
decide and frame the primary policies of the concern. All kinds of policies related to personnel or workforce
can be framed out effectively by the personnel manager.
•He advices the line manager as a staff specialist- Personnel manager acts like a staff advisor and assists
the line managers in dealing with various personnel matters.
•As a counsellor,- As a counsellor, personnel manager attends problems and grievances of employees and
guides them. He tries to solve them in best of his capacity.
•Personnel manager acts as a mediator- He is a linking pin between management and workers.
•He acts as a spokesman- Since he is in direct contact with the employees, he is required to act as
representative of organization in committees appointed by government. He represents company in training
programmes.

Functions of Personnel Management:

Follwoing are the four functions of Personnel Management:
•Manpower Planning
•Recruitment
•Selection
•Training and Development
Nature of Personnel Management
•Personnel management includes the function of employment, development and compensation- These
functions are performed primarily by the personnel management in consultation with other departments.
•Personnel management is an extension to general management. It is concerned with promoting and
stimulating competent work force to make their fullest contribution to the concern.
•Personnel management exist to advice and assist the line managers in personnel matters. Therefore,
personnel department is a staff department of an organization.
•Personnel management lays emphasize on action rather than making lengthy schedules, plans, work
methods. The problems and grievances of people at work can be solved more effectively through rationale
personnel policies.
•It is based on human orientation. It tries to help the workers to develop their potential fully to the concern.
•It also motivates the employees through it’s effective incentive plans so that the employees provide fullest
co-operation.
•Personnel management deals with human resources of a concern. In context to human resources, it manages
both individual as well as blue- collar workers.

Objectives of Personnel Management:

These are classified into two:
(а) General Objectives:
These reveal the basic philosophy of top management towards the labour force engaged on the work and its
deep underlying conviction as to the importance of the people in the organisation. The following are the most
important objectives.
(i) Maximum individual development:
The employer should always be careful in developing the personality of each individual. Each individual
differs in nature and therefore management should recognise their individual ability and make use of such
ability in an effective and make use of such ability in an effective manner.
(ii) Desirable working relationship between employer and employees:
It is the main objective of personnel management to have a desirable working relationship between
employee and employees so that they may co-operate the management.
(iii) Effective molding of human resources as contrasted with physical resources: Man is the only
active factor of production, which engages the other factors of production to work.

(b) Specific objectives: Following are some of the important activities:

(i) Selection of right type and number of persons required to the organisation.
(ii) Proper orientation and introduction of new employees to the organisation and their jobs.
(iii) Suitable training facilities for better job performance and to prepare the man to accept the challenge of
PERSONNEL MANAGEMENT vs HRM:
Strategic Human Resource Management:
The process of making strategies to help companies best meet the needs of their employees while promoting
and accomplishment of company goals.
It requires thinking ahead,and planning ways for a company to better meet the needs of its employees and for
employees to better meet the needs of the company.
ROLE OF STRATEGIC MANAGEMENT IN HRM:
strategic management process involves four important stages: environmental scanning, strategy
formulation, strategy implementation and evaluation and control.

Environmental Scanning:
Environmental scanning is the acquisition and use of information about events, trends, and relationships in
an organization's external environment, the knowledge of which would assist management in planning the
organization's future course of action.
Environmental scanning can be defined as 'the study and interpretation of
the political, economic, social and technological events and trends which influence a business,
an industry or even a total market'.The factors which need to be considered for environmental
scanning are events, trends, issues and expectations of the different interest groups. Issues are
often forerunners of trend breaks. A trend break could be a value shift in society, a technological
innovation that might be permanent or a paradigm change. Issues are less deep-seated and can be
'a temporary short-lived reaction to a social phenomenon'.A trend can be defined as an
‘environmental phenomenon that has adopted a structural character'.
Environmental scanning is an ongoing process and organizations are always refining the way their particular
company or business goes through the process. Environmental scanning reinforces productive strategic plans
and policies that can be implemented to make the organization get the maximum use of the business
environment they are in. Environmental scanning not only helps the business find its strengths in its current
environment but it also finds the weakness of competitors, identifies new markets, potential customers and up
and coming technological platforms and devices that can be best used to sell/market the product or service.
Environmental scanning helps a business improve their decision-making process in times of risk to the external
and internal environments the business is in.
 Environmental scanning refers to possession and utilization of information about occasions,
patterns, trends, and relationships within an organization’s internal and external environment. It
helps the managers to decide the future path of the organization. Scanning must identify the threats and
opportunities existing in the environment. While strategy formulation, an organization must take advantage of
the opportunities and minimize the threats. A threat for one organization may be an opportunity for another.

Strategy Formulation
Strategies are formulated at three levels:
1. Corporate level,
2. Business unit level,
3. Functional level
Business strategy:
While the major question at the corporate-level is, “In what industries or businesses should we be
operating?,” the appropriate question at the business unit level is, “How should we compete in the chosen
industry or business?” A business unit is an organizational subsystem that has a market, a set of
competitors, and a goal distinct from those of the other subsystems in the group. 
the corporate-level strategy and the business-unit strategy are the same.

Functional-level Strategy: Each business unit will consist of several departments, such as

manufacturing, sales, finance and HRD. Functional-level strategies identify the basic courses of action that
each of the departments must pursue in order to help business unit to attain its goals.
In formulating functional level strategies, managers must be aware that the different functions are
interrelated. A change in one department will invariably affect the way other departments operate.

Flow of People: Hiring, promotions, transfers, out placement and training and development
Flow of performance management: Measurement, rewards and follow-up
Flow of information: Keeping the organization in touch with key external realities, managing internal
communications, and designing information technology infrastructure.
Strategy Implementation:
Strategies formulated need to be implemented.
Implementing strategies require such actions as altering sales territories, adding new departments, closing
facilities, hiring new employees, changing an organization’s pricing strategies, developing financial budgets,
formulating new employee benefits, establishing cost-control procedures, changing advertising strategies,
building new facilities, transferring managers among divisions and building a better computer information
system.

Strategy Evaluation & Control:

The strategic management process results in decisions that can have significant and long-lasting
consequences. Erroneous strategic decision can inflict severe penalties can be exceedingly difficult, if not
impossible, to reverse. Strategy evaluation, therefore, assumes greater relevance. Strategy evaluation helps
determine the extent to which the company’s strategies are successful in attaining its objectives. Basic
activities involves in strategy evaluation are:
1. Establishing performance targets, standards and tolerance limits for the objectives, strategies and
implementation plans.
2. Measuring the performance in relation to the targets at a given time. If outcomes are outside the limits,
inform managers to take action.
3. Analyze deviations from acceptable tolerance limits.
4. Execute modifications where necessary and feasible.
HUMAN CAPITAL:
the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value
or cost to an organization or country.

Human Capital management refers to managing an organization’s employees for them to

contribute significantly in the overall productivity of organization. In a layman’s language managing
workforce of an organization refers to human capital management.

In simpler words, upgrading the existing skills of an employee and extracting the best out of him/her refers to
human capital management.

Types of Human Capital:

•Intellectual Capital
Individual Level
Organizational Level

•Social Capital
Internally
Externally

•Emotional Capital
IQ
EQ

•Spiritual Capital:
the. effects of spiritual and religious practices, beliefs, networks and institutions that have a. measurable
impact on individuals, communities and societies.
Importance of Human Capital Management:
To conclude, human capital management is important for:
Hiring the right talent
Orienting him/her to the organization
Making a new employee feel comfortable
Training employees in order to constantly upgrade their skills
Retaining employees
Making employees self sufficient and prepare them for adverse conditions

Objectives of Human Capital Management:

•To determine the impact of people on the business & their contribution to shareholders’ value.
•To determine the Human Resource Practices, produce value for money in terms of Return on Investment.
•To provide guidance on future HR & Business Strategies.
•To provide diagnostic & predictive data that will inform strategies & practices designed to improve the
effectiveness of people management in the organization.

EMOTIONAL QUOTIENT:
•Emotional intelligence (EI) is the capability of individuals to recognize their own, and other
people's emotions, to discern between different feelings and label them appropriately, to use emotional
information to guide thinking and behavior, and to manage and/or adjust emotions to adapt environments or
achieve one's goal(s).
• Emotional Quotient emerges from mind’s status of a person and not from his brain.
•Persons with high EQ are high on self-awareness, self-control, autonomy, confidence, focus, purposefulness,
integrity & motivation.
MENTORING:
•Mentoring is the process whereby a senior manager acts as a guide to a new recruit, easing the latter through
the teaching, coaching, counselling, guiding and so on.
•It reduces training times, ensures individual attention to problems & makes the learning flexible rather than
structured.

Objectives of a Mentoring Program:

•To retain and advance talented employees.

•To retain and advance women and minorities.
•To give mentors satisfaction and a rewarding experience.
•To open up new channels of communication, information, and education.
•To demonstrate that the organization invests in people and encourages opportunity for a diverse workforce.
•Non-goal: The program is not intended for sponsoring anyone for a particular position in the
organization.

Importance of Mentoring:
Benefits of MentorshipTo the Mentee [A Person who is under Mentor]

•Makes him feel at home in the organization in a short period of time

•Smoother transition into the work place
•Feeling of having a buddy or friend in the organization in addition to have formal bosses and colleagues
•Availability of support and guidance
•Having a confidant with whom discussions on some specific sensitive issues can be held
•Developmental opportunity
•Having some one who can back you up and sponsor in the organization
Mentoring can Succeed if:
•Top management supports the process.
•Mentors take a genuine interest in the exercise.
•There is no complacency in training & retraining human resources.
•Individual ideas are respected.
•Employees are made to sharpen their skills.
EMPLOYEE STOCK OWNERSHIP PLAN(ESOP):
•Under ESOP, employees are offered the company’s shares at a concessional price. When the market price of
the share increases the employees earn considerable capital gains. ESOP are considered performance based
incentives. Also known as Employee Stock Ownership Plan in U.S.A.
• A stock option gives an employee the right to buy a certain number of shares in the company at a fixed price
“grant” for a certain number of years. It allows employees to “cash in” by exercising (purchasing) the stock at
the lower grant price and then selling the stock at the current market price.

Benefits of ESOP:
Benefits to Sellers:
• Opportunity for superior price
• Potential continued relationships with the company
• Reduced financial risk
• Potential for tax advantaged sale proceeds
• Opportunity for wealth creation

Benefits to Employees:
• Improved relationships between employees and management
• Favorable tax treatment compared to other benefit plans
• Potential for wealth creation
• Sense of company ownership for ESOP participants
• Put option by law
• Increased morale and loyalty
• ESOP loan is non-recourse to employees
• Retirement plan correlated with employee performance
Limitations of ESOP:
•It can be used by only the profit-making companies
•Share prices do not always reflect fundamentals
•Falling share prices results in loss to employees
•Unsound stock market conditions cause inconvenience to employees in en-cashing their investment.
•Lack of transparency can earn accusation of favoritism.

THE COMPANY
Advantages to Companies of establishing Employee Share Ownership
The key advantages of establishing an Employee Share Ownership Plan (ESOP) are:
• Align employees’ interests with those of shareholders;
• Recruit or retain key employees;
• Compensate for lower salaries and relieve pressure on cash flow;
• Lower the supervision required of employees;
• Increase innovation;
• Increase customer loyalty;
• Increase shareholder value;
• Motivate employees to become more productive;
• Improve the communication between employee and managers and increase cooperation;
• Increase loyalty and reduce staff turnover;
• Increase employee job satisfaction;
• Increase the Company’s likelihood of survival;
• Realise owner’s investment[1]

Disadvantages to Companies of establishing Employee Share Ownership

There can be some disadvantages:
• Where the share price of the company’s shares does not increase and the employee feels they
have no control over the share price outcome, then it can affect morale and retention;
• There are costs associated with establishment and administration of the ESOP;
• Share Ownership, specifically option plans can be dilutive – i.e as more shares are issued each
share you own becomes a smaller percentage of the company.
THE EMPLOYEE
Benefits for Employees
Benefits to employees can include:
• Financial rewards, linked to individual and organisational performance or a long term savings and
ownership structure;
• An increased sense of ‘ownership’ and association with the enterprise;
• Improved awareness about the ‘big picture’ decisions; directions and corporate plans of the enterprise;
• There is a better partnership and communication between management and their employees;
• ESOPs are often linked with employee engagement and involvement and this presents the opportunity
to influence decisions about products and process.

Risks for Employees

Sometimes ESOPs can go wrong (if they are not properly structured) and some of the potential risks are:
• The employee has all their eggs in one basket. Essentially the employee is over exposed to the
company’s shares, so if the company does not perform or worse goes into administration the
employees investment is lost (this problem can be minimised by limiting the amount of salary or
shares that the employee can buy);
• The share price can decrease and this can impact the value of the holding for an employee;
• The employee does not feel they can influence the share price or performance measures and as a
FLEXI TIME: result the plan has no value for them.
• Flexi-time is a scheme where an organization gives its employees the opportunity of a flexible working hour’s
arrangement.
•Under flexi-time, there is normally a core period of the day when employees must be at work, whilst the rest of
the working day is “flexi-time”, in which staff can choose when they work, subject to achieving total daily,
weekly or monthly hours. An employee must work between the basic core hours and has the flexibility to clock
in/out between the other hours. The hours employee work between these times are credited to employees flexi-
time balance.
• Most schemes allow a credit or debit margin, often of about 8 hours. It there is enough flexi-time credit, it can be
turned into time off, and this is one of the best liked features in the organization. This could be one or maybe two
days a month depending on the scheme of the organization.
Benefits of Flexi Time to the organization:
•Greater staff morale and job satisfactory.
•Reduces stress and fatigue and unfocussed employees.
•Increases employee satisfaction and production.
•Greater staff retention and increased ability to attract new staff.
•Ability to attract a higher level of skills.
•Work time visits to doctor/dentist etc. are in employees time.
•Measures employee’s attendance.
•Greater competitiveness.
•Increased customer satisfaction and loyalty.

Benefits of Flexi Time to the employees:

•Increased opportunity to fit other commitments and activities in with work.
•More in control of their workloads, and manage a better balance between life and work.
•Allows you bank time to be used for leisure/personal activities.
•Avoid the stress of commuting at peak times.
•Personal matters can be stored without having to take time off.
•Helpful for people caring for children or other dependants.

Disadvantages of Flexi Time:

•If the scheme is not monitored properly, there is potential for employees to abuse the system.
•Administration of the system may make demands upon a HR department and create additional workload.
•negative effects flexible working patterns had to employers as it adds expenses and responsibility on the
organisation, negative availability perspectives of employees on the customers, and employee availability.
•Both academics and industrial sources were established that in some professions flexible working arrangement
may not be available or its availability will have a negative perspective on employees by others with a non-
flexible arrangement, example of such profession is the medical profession. The researcher done by Evans et al.,
(2000) on flexible working patterns in medical profession emphasized how some medical doctors may attributes
negative perception with colleagues with flexible working pattern.
Disadvantages of Flexi Time continued:

•Staff Maintenance
A possible disadvantage to flextime scheduling is the lack of supervision of employees who work nontraditional
hours. Most members of management work traditional 9 to 5, 40-hour workweek schedules. As a result, flextime
employees often work under limited supervision. Lack of employee supervision could lead to noncompliance with
company policies such as tardiness or misuse of electronic communications. Lack of supervision may also create a
problem if a customer issue arises and a member of management is not available to resolve the problem.

•Utility Costs
Scheduling employees during nontraditional hours increases utility costs for an employer. For example, if an
organization operates 24 hours per day rather than operating from 8 a.m. to 10 p.m., the employer must maintain
electricity and natural gas heat for an additional 10 hours per day. Profits earned during this time may not be enough
to cover the increase in operating expenses.

•Time Management
Flextime schedules have benefits and drawbacks from a time management standpoint. On one hand, flextime could
create difficulty scheduling trainings and meetings. Flextime could also interfere with interoffice communications. On
the other hand, flextime schedules could compel employers to implement a sophisticated time recording system to
maintain employee scheduling, monitor punctuality and supervise schedule adherence.
QUALITY CIRCLES:
a group of employees who meet regularly to consider ways of resolving problems and improving production in their
organization.

A Quality Circle is a small group of employees from the same work area which meets regularly to identify, analyze
& solve quality & other work related problems.
Objectives of QC:
• To contribute to the improvement & development of the organization.
• To develop respect for human relations & induce job satisfaction.
• To deploy human capabilities to the fullest extent & draw out their infinite potential
Advantages:
• Generation of creative ideas.
• Improvement in productivity.
• Better teamwork.
• Higher motivation.
• Development of problem solving skills
Limitations of QC:
Limitations:
• Lack of positive attitudes
• Lack of participation
• Lack of education
• Delays in implementation
• Operational problems
Conditions Necessary for Making QC Effective:
• Top management support.
• Education & training of managers & workers.
• Timely implementation of ideas generated by QC.
• Sharing gains in productivity with workers.
• Facilities for meetings & discussions.
• Regular monitoring of working of QC.
KAIZEN:
•a Japanese business philosophy of continuous improvement of working practices, personal efficiency, etc.
•It means continuous improvement with the involvement of everybody in the organization from top
management, to managers then to supervisors, and to workers so as to generate value for customers.
•It is based on the belief that there will be no progress if you keep on doing things exactly the same way all the
time.
• Kaizen is different from innovation. Innovation involves a drastic improvement in the status quo as a result
of a large investment in new technology and/or equipment. On the other hand, Kaizen means small
improvements on an ongoing basis.
• “Kaizen” refers to a Japanese word which means “improvement” or “change for the better”. Kaizen is defined
as a continuous effort by each and every employee (from the CEO to field staff) to ensure
improvement of all processes and systems of a particular organization.
• Kai = change Zen=good . Overall meaning = change is for good
Five S of Kaizen
“Five S” of Kaizen is a systematic approach which leads to foolproof systems, standard policies, rules and
regulations to give rise to a healthy work culture at the organization. You would hardly find an individual
representing a Japanese company unhappy or dissatisfied. Japanese employees never speak ill about their
organization. Yes, the process of Kaizen plays an important role in employee satisfaction and customer
satisfaction through small continuous changes and eliminating defects. Kaizen tools give rise to a well organized
workplace which results in better productivity and yield better results. It also leads to employees who strongly
feel attached towards the organization.
Let us understand the five S in Detail:
•SEIRI - SEIRI stands for Sort Out. According to Seiri, employees should sort out and organize things well. Label
the items as “Necessary”, ”Critical”, ”Most Important”, “Not needed now”, “Useless and so on. Throw what all is
useless. Keep aside what all is not needed at the moment. Items which are critical and most important should be
kept at a safe place.
•SEITION - Seition means to Organize. Research says that employees waste half of their precious time searching
for items and important documents. Every item should have its own space and must be kept at its place only.
•SEISO - The word “SEISO” means shine the workplace. The workplace ought to be kept clean. De-clutter your
workstation. Necessary documents should be kept in proper folders and files. Use cabinets and drawers to store
your items.
•SEIKETSU-SEIKETSU refers to Standardization. Every organization needs to have certain standard rules and set
policies to ensure superior quality.
•SHITSUKE or Self Discipline - Employees need to respect organization’s policies and adhere to rules and
TOTAL QUALITY MANAGEMENT:
•a system of management based on the principle that every member of staff must be committed to maintaining
high standards of work in every aspect of a company's operations.
•Total Quality management is defined as a continuous effort by the management as well as
employees of a particular organization to ensure long term customer loyalty and customer
satisfaction. 

Total Quality management can be divided into four categories:

Plan
Do
Check
Act
Also referred to as PDCA cycle.

•Planning Phase
Planning is the most crucial phase of total quality management. In this phase employees have to come up with
their problems and queries which need to be addressed. They need to come up with the various challenges they
face in their day to day operations and also analyze the problem’s root cause. Employees are required to do
necessary research and collect relevant data which would help them find solutions to all the problems.

•Doing Phase
In the doing phase, employees develop a solution for the problems defined in planning phase. Strategies are
devised and implemented to overcome the challenges faced by employees. The effectiveness of solutions and
strategies is also measured in this stage.

•Checking Phase
Checking phase is the stage where people actually do a comparison analysis of before and after data to confirm
the effectiveness of the processes and measure the results.

•Acting Phase
In this phase employees document their results and prepare themselves to address other problems.
Importance of TQM:
•Quality management tools help an organization to design and create a product which the customer
actually wants and desires.

•Quality Management ensures increased revenues and higher productivity for the organization.
Remember, if an organization is earning, employees are also earning. Employees are frustrated only when their
salaries or other payments are not released on time. Yes, money is a strong motivating factor. Would you feel like
working if your organization does not give you salary on time? Ask yourself. Salaries are released on time only
when there is free cash flow. Implementing Quality management tools ensure high customer loyalty, thus better
business, increased cash flow, satisfied employees, healthy workplace and so on. Quality management processes
make the organization a better place to work.

•Remove unnecessary processes which merely waste employee’s time and do not contribute much to
the organization’s productivity. Quality management enables employees to deliver more work in less time.

•Quality management helps organizations to reduce waste and inventory. It enables employees to work
closely with suppliers and incorporate “Just in Time” Philosophy.

•Quality management ensures close coordination between employees of an organization. It inculcates a

strong feeling of team work in the employees.
SIX SIGMA:
•Six Sigma (sometimes stylized as 6σ) is a set of techniques and tools for process improvement. It was introduced
by engineer Bill Smith & Mikel J Harry while working at Motorola in 1986.[1][2] Jack Welch made it central to his
business strategy at General Electric in 1995.
• It seeks to improve the quality of the output of a process by identifying and removing the causes of defects and
minimizing variability in manufacturing and business processes.
•The maturity of a manufacturing process can be described by a sigma rating indicating its yield or the percentage
of defect-free products it creates. A six sigma process is one in which 99.99966% of all opportunities to produce
some feature of a part are statistically expected to be free of defects (3.4 defective features per million
opportunities).

Six Sigma doctrine asserts:

•Continuous efforts to achieve stable and predictable process results (e.g. by reducing process variation) are of
vital importance to business success.
•Manufacturing and business processes have characteristics that can be defined, measured, analyzed, improved,
and controlled.
•Achieving sustained quality improvement requires commitment from the entire organization, particularly from top-
level management.

Features that set Six Sigma apart from previous quality-improvement initiatives include:
•A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project.
•An increased emphasis on strong and passionate management leadership and support.
•A clear commitment to making decisions on the basis of verifiable data and statistical methods, rather than
assumptions and guesswork.

Six Sigma projects follow two project methodologies inspired by Deming's Plan-Do-Check-Act Cycle. These
methodologies, composed of five phases each, bear the acronyms DMAIC and DMADV.
DMAIC is used for projects aimed at improving an existing business process.
DMADV is used for projects aimed at creating new product or process designs.
DMAIC:
The DMAIC project methodology has five phases:
Define the system, the voice of the customer and their requirements, and the project goals, specifically.
Measure key aspects of the current process and collect relevant data; calculate the 'as-is' Process Capability.
Analyze the data to investigate and verify cause-and-effect relationships. Determine what the relationships are,
and attempt to ensure that all factors have been considered. Seek out root cause of the defect under
investigation.
Improve or optimize the current process based upon data analysis using techniques such as design of experiments
, poka yoke or mistake proofing, and standard work to create a new, future state process. Set up pilot runs to
establish process capability.
Control the future state process to ensure that any deviations from the target are corrected before they result in
defects. Implement control systems such as statistical process control, production boards, visual workplaces, and
continuously monitor the process. This process is repeated until the desired quality level is obtained.
Some organizations add a Recognize step at the beginning, which is to recognize the right problem to work on,
thus yielding an RDMAIC methodology.

DMADV or DFSS:
The DMADV project methodology, known as DFSS ("Design For Six Sigma"),[7] features five phases:
Define design goals that are consistent with customer demands and the enterprise strategy.
Measure and identify CTQs (characteristics that are Critical To Quality), measure product capabilities, production
process capability, and measure risks.
Analyze to develop and design alternatives
Design an improved alternative, best suited per analysis in the previous step
Verify the design, set up pilot runs, implement the production process and hand it over to the process owner(s).
 UNIT 2

Human Resource Planning (HRP) is the process of forecasting the future human resource
requirements of the organization and determining as to how the existing human resource capacity
of the organization can be utilized to fulfill these requirements. It, thus, focuses on the basic economic
concept of demand and supply in context to the human resource capacity of the organization.

HRP is the process of determining manpower needs & formulating plans to meet these needs.

Features of HRP:
1.Forward looking or future-oriented
2.Continuous process (demand & supply of HR)
3.Integral part of corporate planning
4.Optimum utilization of current & future HR
5.Quantitative & qualitative aspect
6.Primary responsibility of management
7.Systems approach
8.Long-term & short-term
9.Two-phased process (HR demand plan & HR supply plan)
10.Study of manpower environment & utilization

Objectives of HRP:
11.To ensure optimum use of existing HR.
12.To forecast future requirements of HR.
13.To provide control measures to ensure that necessary HR are available as & when required.
14.To link HRP with original planning.
15.To assess the surplus & shortage of HR.
16.To anticipate the impact of technology on jobs & HR.
17.To determine levels of recruitment & training.
18.To estimate the cost of HR & housing needs of employees.
19.To provide a basis for management development programs.
20.To facilitate productivity bargaining.
21.To meet the needs of expansion & diversification programs.
Need and Importance of HRP:
1.Helpful in selection & training activities.
2.Identifies gaps in existing manpower.
3.Provision of replacement
4.Facilitates expansion & diversification.
5.Creates awareness.
6.Effective utilization of technological progress
7.Anticipation of surplus HR area
8.Anticipating the cost of HR
9.Facilitates career succession planning
10.Helps in planning for physical facilities
11.Facilitates geographical mobility of talent, employment generation at national level

Factors responsible for increase in HRP:

12.Employment situation
13.Technological changes
14.Organizational changes
15.Demographic changes
16.Shortage of skills
17.Legislative controls
18.Pressure groups
19.Systems concept
20.Lead time
21.Hiring costs
22.Increased mobility
Limitations of HRP:
1. Inaccuracy
2. Employees resistance
3. Uncertainties
4. Inefficient information system
5. Lack of top management support
6. Time & expenses
7. Unbalanced focus
Human Resource Planning Process:
1. Analysing Organizational Objectives:
The objective to be achieved in future in various fields such as production, marketing, finance,
expansion and sales gives the idea about the work to be done in the organization.
2. Inventory of Present Human Resources:
From the updated human resource information storage system, the current number of
employees, their capacity, performance and potential can be analysed. To fill the various job
requirements, the internal sources (i.e., employees from within the organization) and external
sources (i.e., candidates from various placement agencies) can be estimated.
3. Forecasting Demand and Supply of Human Resource:
The human resources required at different positions according to their job profile are to be
estimated. The available internal and external sources to fulfill those requirements are also
measured. There should be proper matching of job description and job specification of one
particular work, and the profile of the person should be suitable to it.
4. Estimating Manpower Gaps:
Comparison of human resource demand and human resource supply will provide with the surplus
or deficit of human resource. Deficit represents the number of people to be employed, whereas
surplus represents termination. Extensive use of proper training and development programme
can be done to upgrade the skills of employees.
5. Formulating the Human Resource Action Plan:
The human resource plan depends on whether there is deficit or surplus in the organization.
Accordingly, the plan may be finalized either for new recruitment, training, interdepartmental
transfer in case of deficit of termination, or voluntary retirement schemes and redeployment in
case of surplus.
6. Monitoring, Control and Feedback:
It mainly involves implementation of the human resource action plan. Human resources are
allocated according to the requirements, and inventories are updated over a period. The plan is
monitored strictly to identify the deficiencies and remove it. Comparison between the human
resource plan and its actual implementation is done to ensure the appropriate action and the
availability of the required number of employees for various jobs.
JOB ANALYSIS:
•Job analysis refers to the process of collecting information about a job.
•job analysis involves collecting and recording job-related data such as knowledge and skills required to
perform a job, duties and responsibilities involved, education qualifications and experience required and
physical and emotional characteristics required to perform a job in a desired manner.
The main purposes of conducting a job analysis process is to use this particular information to create a right fit
between job and employee, to assess the performance of an employee, to determine the worth of a particular
task and to analyze training and development needs of an employee delivering that specific job.

Purpose of Job Analysis:

•Recruitment and Selection: Job Analysis helps in determining what kind of person is required to perform a
particular job. It points out the educational qualifications, level of experience and technical, physical,
emotional and personal skills required to carry out a job in desired fashion. The objective is to fit a right person
at a right place.
•Performance Analysis: Job analysis is done to check if goals and objectives of a particular job are met or
not. It helps in deciding the performance standards, evaluation criteria and individual’s output. On this basis,
the overall performance of an employee is measured and he or she is appraised accordingly.
•Training and Development: Job Analysis can be used to assess the training and development needs of
employees. The difference between the expected and actual output determines the level of training that need
to be imparted to employees. It also helps in deciding the training content, tools and equipments to be used to
conduct training and methods of training.
•Compensation Management: Of course, job analysis plays a vital role in deciding the pay packages and
extra perks and benefits and fixed and variable incentives of employees. After all, the pay package depends
on the position, job title and duties and responsibilities involved in a job. The process guides HR managers in
deciding the worth of an employee for a particular job opening.
•Job Designing and Redesigning: The main purpose of job analysis is to streamline the human efforts and
get the best possible output. It helps in designing, redesigning, enriching, evaluating and also cutting back and
adding the extra responsibilities in a particular job. This is done to enhance the employee satisfaction while
increasing the human output.
Therefore, job analysis is one of the most important functions of an HR manager or department. This helps in
fitting the right kind of talent at the right place and at the right time.
•Personnel Information:
Increasing number of organisations maintain computerised information about their employees. This is
popularly known as Human Resource Information System (HRIS). HRIS is useful as it helps improve
administrative efficiency and provides decision support^ Information relating to human resources working in
Advantages of Job Analysis:
•Provides First Hand Job-Related Information: The job analysis process provides with valuable job-related
data that helps managers and job analyst the duties and responsibilities of a particular job, risks and hazards
involved in it, skills and abilities required to perform the job and other related info.

•Helps in Creating Right Job-Employee Fit: This is one of the most crucial management activities. Filling
the right person in a right job vacancy is a test of skills, understanding and competencies of HR managers. Job
Analysis helps them understand what type of employee will be suitable to deliver a specific job successfully.

•Helps in Establishing Effective Hiring Practices: Who is to be filled where and when? Who to target and
how for a specific job opening? Job analysis process gives answers to all these questions and helps managers
in creating, establishing and maintaining effective hiring practices.

•Guides through Performance Evaluation and Appraisal Processes: Job Analysis helps managers
evaluating the performance of employees by comparing the standard or desired output with delivered or
actual output. On these bases, they appraise their performances. The process helps in deciding whom to
promote and when. It also guides managers in understanding the skill gaps so that right person can be fit at
that particular place in order to get desired output.

•Helps in Analyzing Training & Development Needs: The process of job analysis gives answer to
following questions:
Who to impart training
When to impart training
What should be the content of training
What should be the type of training: behavioral or technical
Who will conduct training

•Helps in Deciding Compensation Package for a Specific Job: A genuine and unbiased process of job
analysis helps managers in determining the appropriate compensation package and benefits and allowances
for a particular job. This is done on the basis of responsibilities and hazards involved in a job.
Disadvantages of Job Analysis:
•Time Consuming: The biggest disadvantage of Job Analysis process is that it is very time consuming. It is a major
limitation especially when jobs change frequently.
•Involves Personal Biasness: If the observer or job analyst is an employee of the same organization, the process
may involve his or her personal likes and dislikes. This is a major hindrance in collecting genuine and accurate data.
•Source of Data is Extremely Small: Because of small sample size, the source of collecting data is extremely
small. Therefore, information collected from few individuals needs to be standardized.
•Involves Lots of Human Efforts: The process involves lots of human efforts. As every job carries different
information and there is no set pattern, customized information is to be collected for different jobs. The process
needs to be conducted separately for collecting and recording job-related data.
•Job Analyst May Not Possess Appropriate Skills: If job analyst is not aware of the objective of job analysis
process or does not possess appropriate skills to conduct the process, it is a sheer wastage of company’s resources.
He or she needs to be trained in order to get authentic data.
•Mental Abilities Can not be Directly Observed: Last but not the least, mental abilities such as intellect,
emotional characteristics, knowledge, aptitude, psychic and endurance are intangible things that can not be
observed or measured directly. People act differently in different situations. Therefore, general standards can not be
set for mental abilities.

Techniques of Job Analysis:

1. Job Performance
2. Personal Observation
3. Interview
4. Questionnaire
5. Critical Incidents
6. Log Records
Job Analysis Process:
1. Organisational Job Analysis:
Job analysis begins with obtaining pertinent information about a job’. This, according to Terry
is required to know the makeup of a job, its relation to other jobs, and its contribution to
performance of the organisation.
Such information can be had by dividing background information in various forms such as
organisation charts i.e., how the particular job is related to other jobs; class specifications i.e.,
the general requirement of the job family; job description i.e., starting point to build the
revised job description, and flow charts i.e., flow of activities involved in a particular job.
2. Selecting Representative Jobs for Analysis:
Analysing all jobs of an organisation is both costly and time consuming. Therefore, only a
representative sample of jobs is selected for the purpose of detailed analysis.
3. Collection of Data for Job Analysis:
In this step, job data features of the job and required qualifications of the employee are
collected. Data can be collected either through questionnaire, observation or interviews.
However, due care should be taken to select and use the method of data collection that is the
most reliable in the given situation of the job.
4. Preparing Job Description:
The job information collected in the above ways is now used to prepare a job description. Job
description is a written statement that describes the tasks, duties and responsibilities that
need to be discharged for effective job performance.
5. Preparing Job Specification:
The last step involved in job analysis is to prepare job specification on the basis of collected
information. This is a written statement that specifies the personal qualities, traits, skills,
qualification, aptitude etc. required to effectively perform a job. The job analysis process
discussed above is now delineated in Figure 5.1.
There are 2 parts of Job Analysis:
Job Description
Job Specification

Job Description:
•It is a factual & organized statement describing the job in terms of its title, location, duties, responsibilities, working
conditions, hazards & relationship with other jobs.
•organized factual statement of duties & responsibilities of a specific job. In brief, it should tell what is to be done,
how it is done and why.
•job description differentiates one job from the other. In sum, job description is a written statement of what a job
holder does, how it is done, and why it is done.

Contents:
Job Identification
Job Summary
Job Duties & Responsibilities
Working Conditions
Social environment
Machines, Tools & Equipments
Supervision
Relation to other Jobs

Purposes of Job Description:

Job description is done for fulfilling the following purposes:
1. Grading and classification of jobs
2. Placement and Orientation of new employees
3. Promotions and transfers
4. Outlining for career path
5. Developing work standards
6. Counselling of employees
7. Delimitation of authority
Job Specification:
While job description focuses on the job, job specification focuses on the person i.e, the job holder. Job
specification is a statement of the minimum levels of qualifications, skills, physical and other abilities, experience,
judgment and attributes required for performing job effectively. In other words, it is a statement of the minimum
acceptable qualifications that an incumbent must possess to perform a given job. It sets forth the knowledge,
skills and abilities required to do the job effectively.

Contents:
1. Personnel planning
2. Performance appraisal
3. Hiring
4. Training and development
5. Job evaluation and compensation
6. Health and safety
7. Employee discipline
8. Work scheduling
9. Career planning
Job Evaluation:
Job evaluation is a comparative process of establishing the value of different jobs in a hierarchical order. It
allows one to compare jobs by using common criteria to define the relationship of one job to another. This
serves as basis for grading different jobs and developing a suitable pay structure for them.
It is important to mention that job evaluation cannot be the sole determining factor for deciding pay structures
because job evaluation is about relationships, and not absolutes. The techniques used for job evaluation
include ranking, job classification, points rating, etc.

RECRUITMENT:
Recruitment is the process concerned with the identification of sources from where the personnel can be
employed & motivating them to offer themselves for employment.
Recruitment is the process of finding & attracting capable applicants for employment.

Recruitment Process:
The five steps involved in recruitment process are as follows: (i) Recruitment Planning (ii) Strategy
Development (iii) Searching (iv) Screening (v) Evaluation and Control.
1. Recruitment Planning:
The first step involved in the recruitment process is planning. Here, planning involves to draft a comprehensive
job specification for the vacant position, outlining its major and minor responsibilities; the skills, experience
and qualifications needed; grade and level of pay; starting date; whether temporary or permanent; and
mention of special conditions, if any, attached to the job to be filled ”
2. Strategy Development:
Once it is known how many with what qualifications of candidates are required, the next step involved in this
regard is to devise a suitable strategy for recruiting the candidates in the organisation.
The strategic considerations to be considered may include issues like whether to prepare the required
candidates themselves or hire it from outside, what type of recruitment method to be used, what geographical
area be considered for searching the candidates, which source of recruitment to be practiced, and what
sequence of activities to be followed in recruiting candidates in the organisation.
3. Searching:
This step involves attracting job seekers to the organisation. There are broadly two sources used to attract
candidates.
These are:
1. Internal Sources, and
2. External Sources
4. Screening:
Though some view screening as the starting point of selection, we have considered it as an integral part of recruitment
The reason being the selection process starts only after the applications have been screened and shortlisted. Let it be
exemplified with an example.
In the Universities, applications are invited for filling the post of Professors. Applications received in response to
invitation, i.e., advertisement are screened and shortlisted on the basis of eligibility and suitability. Then, only the
screened applicants are invited for seminar presentation and personal interview. The selection process starts from here
i.e., seminar presentation or interview.
Job specification is invaluable in screening. Applications are screened against the qualification, knowledge, skills,
abilities, interest and experience mentioned in the job specification. Those who do not qualify are straightway
eliminated from the selection process.
The techniques used for screening candidates vary depending on the source of supply and method used for recruiting.
Preliminary applications, de-selection tests and screening interviews are common techniques used for screening the
candidates.

5. Evaluation and Control:

Given the considerable cost involved in the recruitment process, its evaluation and control is, therefore, imperative.
The costs generally incurred in a recruitment process include:
(i) Salary of recruiters
(ii) Cost of time spent for preparing job analysis, advertisement
(iii) Administrative expenses
(iv) Cost of outsourcing or overtime while vacancies remain unfilled
(v) Cost incurred in recruiting unsuitable candidates
In view of above, it is necessary for a prudent employer to try to answer certain questions like: whether the recruitmen
methods are appropriate and valid? And whether the recruitment process followed in the organisation is effective at all
or not? In case the answers to these questions are in negative, the appropriate control measures need to be evolved
and exercised to tide over the situation.
Advantages of Internal Sources:
The Following are The Advantages of Internal Sources:
1. Improves morale:
When an employee from inside the organisation is given the higher post, it helps in increasing the
morale of all employees. Generally every employee expects promotion to a higher post carrying more
status and pay (if he fulfills the other requirements).
2. No Error in Selection:
When an employee is selected from inside, there is a least possibility of errors in selection since every
company maintains complete record of its employees and can judge them in a better manner.
3. Promotes Loyalty:
It promotes loyalty among the employees as they feel secured on account of chances of advancement.
4. No Hasty Decision:
The chances of hasty decisions are completely eliminated as the existing employees are well tried and
can be relied upon.
5. Economy in Training Costs:
The existing employees are fully aware of the operating procedures and policies of the organisation.
The existing employees require little training and it brings economy in training costs.
6. Self-Development:
It encourages self-development among the employees as they can look forward to occupy higher posts.

Disadvantages of Internal Sources:

(i) It discourages capable persons from outside to join the concern.
(ii) It is possible that the requisite number of persons possessing qualifications for the vacant posts may
not be available in the organisation.
(iii) For posts requiring innovations and creative thinking, this method of recruitment cannot be
followed.
(iv) If only seniority is the criterion for promotion, then the person filling the vacant post may not be
really capable.
Inspite of the disadvantages, it is frequently used as a source of recruitment for lower positions. It may
lead to nepotism and favouritism. The employees may be employed on the basis of their
recommendation and not suitability.
Merits of External Sources:
1. Availability of Suitable Persons:
Internal sources, sometimes, may not be able to supply suitable persons from within. External sources do give a
wide choice to the management. A large number of applicants may be willing to join the organisation. They will
also be suitable as per the requirements of skill, training and education.
2. Brings New Ideas:
The selection of persons from outside sources will have the benefit of new ideas. The persons having
experience in other concerns will be able to suggest new things and methods. This will keep the organisation in
a competitive position.
3. Economical:
This method of recruitment can prove to be economical because new employees are already trained and
experienced and do not require much training for the jobs.

Demerits of External Sources:

1. Demoralisation:
When new persons from outside join the organisation then present employees feel demoralised because these
positions should have gone to them. There can be a heart burning among old employees. Some employees may
even leave the enterprise and go for better avenues in other concerns.
2. Lack of Co-Operation:
The old staff may not co-operate with the new employees because they feel that their right has been snatched
away by them. This problem will be acute especially when persons for higher positions are recruited from
outside.
3. Expensive:
The process of recruiting from outside is very expensive. It starts with inserting costly advertisements in the
media and then arranging written tests and conducting interviews. In spite of all this if suitable persons are not
available, then the whole process will have to be repeated.
4. Problem of Maladjustment:
There may be a possibility that the new entrants have not been able to adjust in the new environment. They
may not temperamentally adjust with the new persons. In such cases either the persons may leave themselves
or management may have to replace them. These things have adverse effect on the working of the
organisation.
Internal Recruitment - is a recruitment which takes place within the concern or organization. Internal sources
of recruitment are readily available to an organization. Internal sources are primarily three - Transfers, promotions
and Re-employment of ex-employees.
Internal recruitment may lead to increase in employee’s productivity as their motivation level increases. It also
saves time, money and efforts. But a drawback of internal recruitment is that it refrains the organization from
new blood. Also, not all the manpower requirements can be met through internal recruitment. Hiring from outside
has to be done.
Internal sources are primarily 3
Transfers : A transfer refers to lateral(sideward) movement of employees within the same grade, from one
job to another.
Transfer differs from promotion in the sense that the latter involves a change of job involving increase in
salary, authority, status and responsibility, while all these remain unchanged /stagnant in the case of
former. 
Promotions (through Internal Job Postings) : Promotion is vertical movement of an employee within
the organisation. In other words, promotion refers to the upward movement of an employee from one job
to another higher one, with increase in salary, status and responsibilities.
Re-employment of ex-employees - Re-employment of ex-employees is one of the internal sources of
recruitment in which employees can be invited and appointed to fill vacancies in the concern. There are
situations when ex-employees provide unsolicited applications also.

External Recruitment - External sources of recruitment have to be solicited from outside the organization.
External sources are external to a concern. But it involves lot of time and money. The external sources of
recruitment include - Employment at factory gate, advertisements, employment exchanges, employment
agencies, educational institutes, labour contractors, recommendations etc.
• Employment at Factory Level - This a source of external recruitment in which the applications for
vacancies are presented on bulletin boards outside the Factory or at the Gate. This kind of recruitment is
applicable generally where factory workers are to be appointed. There are people who keep on soliciting
jobs from one place to another. These applicants are called as unsolicited applicants. These types of
workers apply on their own for their job. For this kind of recruitment workers have a tendency to shift from
one factory to another and therefore they are called as “badli” workers.
• Advertisement - It is an external source which has got an important place in recruitment procedure. The
biggest advantage of advertisement is that it covers a wide area of market and scattered applicants can get
information from advertisements. Medium used is Newspapers and Television.
• Employment Exchanges - There are certain Employment exchanges which are run by government. Most
of the government undertakings and concerns employ people through such exchanges. Now-a-days
recruitment in government agencies has become compulsory through employment exchange.
• Employment Agencies - There are certain professional organizations which look towards
recruitment and employment of people, i.e. these private agencies run by private individuals
supply required manpower to needy concerns.
• Educational Institutions - There are certain professional Institutions which serves as an external
source for recruiting fresh graduates from these institutes. This kind of recruitment done through
such educational institutions, is called as Campus Recruitment. They have special recruitment cells
which helps in providing jobs to fresh candidates.
• Recommendations - There are certain people who have experience in a particular area. They
enjoy goodwill and a stand in the company. There are certain vacancies which are filled by
recommendations of such people. The biggest drawback of this source is that the company has to
rely totally on such people which can later on prove to be inefficient.
• Labour Contractors - These are the specialist people who supply manpower to the Factory or
Manufacturing plants. Through these contractors, workers are appointed on contract basis, i.e. for
a particular time period. Under conditions when these contractors leave the organization, such
people who are appointed have to also leave the concern.
Selection Process:
The selection Process takes place in following order-
•Preliminary Interviews- It is used to eliminate those candidates who do not meet the minimum eligiblity
criteria laid down by the organization. The skills, academic and family background, competencies and
interests of the candidate are examined during preliminary interview. Preliminary interviews are less
formalized and planned than the final interviews. The candidates are given a brief up about the company
and the job profile; and it is also examined how much the candidate knows about the company. Preliminary
interviews are also called screening interviews.

•Application blanks- The candidates who clear the preliminary interview are required to fill application
blank. It contains data record of the candidates such as details about age, qualifications, reason for leaving
previous job, experience, etc.

•Written Tests- Various written tests conducted during selection procedure are aptitude test, intelligence
test, reasoning test, personality test, etc. These tests are used to objectively assess the potential candidate.
They should not be biased.

•Employment Interviews- It is a one to one interaction between the interviewer and the potential
candidate. It is used to find whether the candidate is best suited for the required job or not. But such
interviews consume time and money both. Moreover the competencies of the candidate cannot be judged.
Such interviews may be biased at times. Such interviews should be conducted properly. No distractions
should be there in room. There should be an honest communication between candidate and interviewer.

•Medical examination- Medical tests are conducted to ensure physical fitness of the potential employee. It
will decrease chances of employee absenteeism.

•Appointment Letter- A reference check is made about the candidate selected and then finally he is
appointed by giving a formal appointment letter.
Selection Tests:
•Aptitude Tests:
Aptitude tests measure ability and skills of the testee. These tests measure and indicate how well a
person would be able to perform after training and not what he/she has done^. Thus, aptitude tests are
used to predict the future ability/performance of a person.
Examples of such tests are Mechanical Aptitude Test, Clerical Aptitude Test, Artistic Aptitude Test, Musical
Aptitude Test, Management Aptitude Test,

•Achievement Tests:
Achievement tests measure a person’s potential in a given area/job. In other words, these tests measure
what a person can do based on skill or knowledge already acquired by him/her. Achievement tests are
usually used for admission to specific courses in the academic institutions.
In these tests, grades in previous examinations are often used as indicators of achievement and potential
for learning.
Achievement tests are also known by the names, proficiency tests, performance, occupational or trade
tests.

•Intelligence Tests:
Intelligence tests measure general ability for intellectual performance. The core concept underlying in
intelligence test is mental age. It is presumed that with physical age, intelligence also grows. Exceptions
to this may be there. So to say, if a five year old child does the test, for six years or above his/her mental
age would be determined accordingly.
•Interest Tests:
These tests are designed to discover a person’s area of interest, and to identify the kind of work that will satisfy
him. Interest is a prerequisite to successfully perform some task. The most widely used interest test is Kuder
Reference Record. 

•Personality Tests:
These tests are also known as ‘personality inventories’. These tests are designed to measure the dimensions of
personality i.e., personality traits such as interpersonal competence, dominance- submission, extroversions-
introversions, self-confidence, ability to lead and ambition. The most well known names of personality tests are
the Minnesota Multiphasic Personality Inventory (MMPI), FIRO, and California Personality Inventory.

•Projective tests:
These tests are based on pictures or incomplete items. The testee is asked to narrate or project his own
interpretation on these. The way the testee responds reflects his /her own values, motives, attitude,
apprehensions, personality, etc. These tests are called projective because they induce the testee to put
himself/herself into the situation to project or narrate the test situation.
The most widely used tests of this type are the Rorschach Blot Test (RBT) and the Thematic Apperception Test
(TAT). 

•Attitude Tests:
These tests are designed to know the testee’s tendencies towards favouring or otherwise to people, situations,
actions, and a host of such other things. Attitudes are known from the responses of the testees / respondents
because emotional overtones involved make it difficult to directly observe or measure attitude of the testee.
Test of social desirability, authoritarianism, study of values, Machiavellianism and employees morale are the
well-known examples of attitude tests.
PLACEMENT:
Placement is a process of assigning a specific job to each of the selected candidates. It involves assigning a
specific rank and responsibility to an individual. 
Importance of pLacement:
•It improves employee morale
•It helps in reducing employee turnover
•It helps in reducing absenteeism
•It helps the employee to work as per predetermined objective of the organisation
•The employee’s career goals are realised and thus the employee is motivated
•The person is chosen on a job according to his skills and thus mismanagement of job is reduced
•Since a person is assigned duties according to his calibre, full potential can be unlocked
•Gain an intelligent, cost-effective employee with valuable skills and fresh ideas
JOB CHANGES:
Mobility & flexibility in the workforce are necessary to cope with the changing requirements of an organization.

Internal mobility: Transfers, Promotions & Demotions

External mobility: Resignation, Termination & Retirement.

Reasons for Job changes:

1. Changes in organizational structure
2. Changes in technology
3. Changes in justification
4. Expansion, diversification, recession
5. Introduction of new products
6. Changes in knowledge, skills, aptitude & values
7. Changes in demand of trade unions
8. Changes in government role in HRM
9. Social & cultural change
10. Problem in maintaining interpersonal relations
11. To improve organizational effectiveness
12. To maximize employee efficiency
13. To cope with changes in operations
14. To ensure discipline

Transfers:
A transfer refers to a horizontal or lateral movement of an employee from one job to another in the same
organization without any significant change in status & pay.

Purpose of Transfers:
15. To meet organizational needs.
16. To satisfy employee needs.
17. To better utilize employees.
18. To make the employee more versatile.
19. To adjust the work force.
20. To provide relief.
21. To punish employees.
Benefits of Transfers:
1. Increase in productivity and effectiveness of the organization.
2. Greater job satisfaction to employees.
3. Stabilize fluctuating work needs .
4. Improve employee skills.
5. Remedy for faulty placements.
6. Improve labor relations.
7. Develop employees for future promotions.
8. Avoid monotony and boredom.

Promotion:
•. Promotion refers to advancement of an employee to a higher post carrying greater responsibilities,
higher status & better salary.
•. It is the upward movement of an employee in the organization’s hierarchy, to another job commanding
greater authority, higher status & better working conditions & pay.
Purpose of Promotions:
1. To recognize an employee’s performance & commitment/loyalty to motivate him towards better performance.
2. To boast the morale & sense of belonging of employees.
3. To develop a competitive spirit among employees.
4. To retain skilled & talented employees.
5. To develop a competent internal source of employees.
6. To utilize more effectively the knowledge & skills of employees.
7. To attract competent & suitable employees for the organization.
8. Feeling of content in employees
9. Job satisfaction
10. It stimulates self-development & need of training & development.
Demotion:
•Demotion implies the assignment of an employee to a job of lower rank with lower pay.
•It refers to downward movement of an employee in the organizational hierarchy with lower status & lower
salary.
•It is a downgrading process & a serious type of punishment.

Need for Demotion:

1. Adverse Business conditions
2. Incompetence
3. Technological changes
4. Disciplinary Measure
5. Economic crisis due to external factors
6. Merger & acquisition

Separations:
Separation of an employee takes place when his service agreement with organization comes to an end & the
employee leaves the organization. It may occur due to:
Resignation
Retirement
Lay-off (give up or stop doing something. a period during which someone is unable to take part in a sport or
other activity due to injury or illness.)
Retrenchment(the reduction of costs or spending in response to economic difficulty.)
Dismissal/ Termination
Unit 3
Advantages of On-the-Job Training:
It is directly in the context of job
It is often informal
It is most effective because it is learning by experience
It is least expensive
Trainees are highly motivated
It is free from artificial classroom situations
 
Disadvantages of On-the-Job Training:
Trainer may not be experienced enough to train
It is not systematically organized
Poorly conducted programs may create safety hazards

Advantages of Off-the-Job Training:

Trainers are usually experienced enough to train
It is systematically organized
Efficiently created programs may add lot of value
 
Disadvantages of Off-the-Job Training:
It is not directly in the context of job
It is often formal
It is not based on experience
It is least expensive
Trainees may not be highly motivated
It is more artificial in nature
Sensitivity Training:
Sensitivity training is a form of training with the goal of making people more aware of their own prejudices
and more sensitive to others.

Sensitivity training is a type of group training that focuses on helping organizational members to develop a
better awareness of group dynamics and their roles in the group. The training often addresses issues such as
gender and multicultural sensitivity as well as sensitivity towards the disabled. 

The Importance of Sensitivity Training

The contemporary workplace is very diverse and is becoming more so every day. Managers need to
understand, be sensitive to, and be able to adapt to the various needs, concerns, and characteristics of a
multitude of different people. Sensitivity training will help managers to personally cultivate good
interpersonal relationships with members of their team and help facilitate respective and productive group
relations among team members.

The primary objective of sensitivity training is to educate you and the other participants about more
constructive behavior that will be beneficial to you and everyone else in the organization. It helps an
individual by providing insight into your behavior and helps you develop corrective emotional and behavioral
actions.
Feedback is also an essential element of sensitivity training. Feedback from other members in the group
session will help you determine if the behavior you're exhibiting is meaningful or effective. It also provides a
means of continuously learning appropriate conduct throughout the group session. 
DESIGN OF TRAINING PROGRAMME:
Training programs need to be designed, keeping in mind the needs and requirements of
employees. Training modules ought to be precise, crisp and informative.
Training programs should not be designed just for the sake of it. Find out whether your employees really need
any kind of training or it is being conducted just as a mere formality?
Designing and Developing Effective Training Modules

•Know Your Employees: Know your employees well before you begin designing training programs for them.
Sit with them and try to find out where all they need assistance. Let them come up with their problems and
what all additional skills would help them perform better. It is essential for managers to know the strengths and
weaknesses of all his team members. Design your training program accordingly. Knowing employees well will
help you figure out the skills you need to teach them. Training programs need to be specific if you expect your
employees to benefit from the same.
•Dividing Employees into Groups: One cannot design similar training programs for each and every
employee. Divide employees into groups where employees who need to learn the same set of skills can be put
into one group. You can also group employees as per their age, work experience, departments, functional areas
and so on.
•Preparing the Information: The next step is to prepare the content of the training program. The content
needs to be informative but interesting. Include diagrams, graphs, flow charts, pictures to make your training
program interesting so that individuals do not lose interest in the middle of the session. The information needs
to be relevant and authentic. Teach them what all is necessary and would help them in their current as well as
future assignments. Prepare your training program keeping your audience in mind.
•Presenting the Information: You need to design your presentation well. Decide how would you like to
present your information? PowerPoint or word helps you design your training program. It is absolutely up to the
trainer to decide the software which he/she would like to use. Make sure there are no spelling errors. Read your
presentation twice or thrice and find out whether it has covered entire information you wish to convey or not?
Highlight important information. Make your presentation in bullets.
•Delivering Training Programs: Select your trainers carefully. Remember, the right trainer makes all the
difference. Training programs should not be a mere one way communication. As a trainer, you need to
understand that you are speaking not only for the individuals sitting in the front row but also for employees
sitting at the back. Be loud and clear. Do not speak too fast. The trainer needs to involve his/her audience and
encourage employees to come up with questions and doubts. Employees should not attend training programs
to mark their attendance. Try to gain as much as you can. Do not sit with a closed mind.
TRAINING EVALUATION:
Evaluation involves the assessment of the effectiveness of the training programs. 
This assessment is done by collecting data on whether the participants were satisfied with the deliverables of
the training program, whether they learned something from the training and are able to apply those skills at
their workplace. There are different tools for assessment of a training program depending upon the kind of
training conducted.

Benefits of Training Evaluation

Evaluation acts as a check to ensure that the training is able to fill the competency gaps within the
organisation in a cost effective way. This is specially very important in wake of the fact the organisations are
trying to cut costs and increase globally. Some of the benefits of the training evaluation are as under:
•Evaluation ensures accountability - Training evaluation ensures that training programs comply with the
competency gaps and that the deliverables are not compromised upon.
•Check the Cost - Evaluation ensures that the training programs are effective in improving the work quality,
employee behaviour, attitude and development of new skills within the employee within a certain budget.
Since globally companies are trying to cut their costs without compromising upon the quality, evaluation just
aims at achieving the same with training.
•Feedback to the Trainer / Training - Evaluation also acts as a feedback to the trainer or the facilitator and
the entire training process. Since evaluation accesses individuals at the level of their work, it gets easier to
understand the loopholes of the training and the changes required in the training methodology.
Not many organisations believe in the process of evaluation or at least do not have an evaluation system in
place. Many organisations conduct training programs year after year only as a matter of faith and not many
have a firm evaluation mechanism in place. Organisations like IBM, Motorala only, it was found out, have a firm
evaluation mechanism in place.

The Way Forward:

There are many methods and tools available for evaluating the effectiveness of training programs. Their
usability depends on the kind of training program that is under evaluation. Generally most of the organisations
use the Kirk Patrick model for training evaluations which evaluates training at four levels - reactions, learning,
behaviour and results.
After it was found out that training costs organisations a lot of money and no evaluation measures the return
on investment for training, the fifth level for training evaluation was added to the training evaluation model by
Kirk Patrick which is called as the ROI.
Most of the evaluations contain themselves to the reaction data, only few collected the learning data, still
lesser measured and analysed the change in behaviour and very few took it to the level of increase in business
results. The evaluation tools including the Kirk Patrick model will be discussed in detail in other articles.
EXECUTIVE DEVELOPMENT:
Accordingly, executive development means not only improvement in job performance, but also improvement
in knowledge, personality, attitude, behaviourism of an executive, etc.
It means that executive development focuses more on the executive’s personal growth. Thus, executive
development consists of all the means that improve his/her performance and behaviour. Executive
development helps understand cause and effect relationship, synthesizes from experience, visualizes
relationships or thinks logically. 

Process:
•Identifying Development Needs:
Once the launching of an executive development programme (EDP) is decided, its implementation begins with
identifying the developmental needs of the organisation concern. For this, first of all, the present and future
developmental needs for executives/ managers ascertained by identifying how many and what type of
executives will be required in the organisation at present and in future.
This needs to be seen in the context of organisational as well as individual, i.e. manager needs. While
organisational needs may be identified by making organisational analysis in terms of organisation’s growth
plan, strategies, competitive environment, etc., individual needs to be identified by the individual career
planning and appraisal.

•Appraisal of Present Managerial Talent:

The second step is an appraisal of the present managerial talent for the organisation. For this purpose, a
qualitative assessment of the existing executives/managers in the organisation is made. Then, the
performance of every executive is compared with the standard expected of him.

•Inventory of Executive Manpower:

Based on information gathered from human resource planning, an inventory is prepared to have complete
information about each executive in each position. Information on the executive’s age, education, experience,
health record, psychological test results, performance appraisal data, etc. is collected and the same is
maintained on cards and replacement tables.
An analysis of such inventory shows the strengths and also discloses the deficiencies and weaknesses of the
executives in certain functions relative to the future needs of the concern organisation. From this executive
inventory, we can begin the fourth step involved in the executive development process.

•Developing Development Programmes:

Having delineated strengths and weaknesses of each executive, the development programmes are tailored to
•Conducting Development Programmes:
At this stage, the manager actually participates in development programmes. It is worth mentioning that no
single development programme can be adequate for all managers. The reason is that each manager has a
unique set of physical, intellectual and emotional characteristics.
As such, there can be different development programmes to uniquely suit to the needs of an executive/
manager. These development programmes may be on-the-job or off-the-job programmes organised either by
the organisation itself or by some outside agencies.

•Evaluating Development Programmes:

Just as with employee training programme, executive development programme is evaluated to see changes
in behaviour and executive performance. Evaluation of programme enables to appraise programme’s
effectiveness, highlight its weaknesses and aids to determine whether the development should be continued
or how it can be improved.
Objectives:
1. Improve the performance of managers at all levels.
2. Identify the persons in the organisation with the required potential and prepare them for higher positions
in future.
3. Ensure availability of required number of executives / managers succession who can take over in case of
contingencies as and when these arise in future.
4. Prevent obsolescence of executives by exposing them to the latest concepts and techniques in their
respective areas of specialisation.
5. Replace elderly executives who have risen from the ranks by highly competent and academically qualified
professionals.
6. Improve the thought processes and analytical abilities.
7. Provide opportunities to executives to fulfill their career aspirations.
8. Understand the problems of human relations and improve human relation skills.

Importance:
The importance of executive development is appreciated in more orderly manner in the succeed
ing paragraphs:
1. Change in organisations has become sine quo non with rapid changes in the total environment. A
manager, therefore, requires to be imparted training to abreast of and cope with on-going changes in his /
her organisation. Otherwise, the manager becomes obsolete. In this context, Dale Yoder views that “without
training, the executives lose their punch and drive and they die on the vine. Training and development are
the only ways of overcoming the executive dropouts”.
2. With the recognition that managers are made not born, there has been noticeable shift from owner
managed to professionally managed enterprises, even in family business houses like Tata. That is also
indicated by the lavish expenditure incurred on executive training by most of the enterprises these days.
3. Given the knowledge era, labour management relations are becoming increasingly complex. In such
situation, managers not only need job skills but also behavioural skills in union negotiations, collective
bargaining, grievance redressal, etc. These skills are learned through training and development
programmes.
4. The nature and number of problems change along with increase in the size and structure of enterprise
from small to large. This underlines the need for developing managerial skills to handle the problems of big,
giant and complex organisations.
Methods/Techniques of Executive Development:
1) On the job development or executive development: it means increasing the ability of the
executives while performing their duties, to develop them in real work situation. It includes the following
methods:
a) On the job coaching: under this method superior only guides his subordinate about various methods
and skill required to do the job. Here the superior only guides his subordinate he gives his assistance
whenever required. The main purpose of this type of training is not only to learn the necessary skills but to
give them diversified knowledge to grow in future. The superior is responsible for subordinate’s
performance. So the superior must always provide the subordinate necessary assistance whenever
required.
b) Understudy: under this method of development the trainee is prepared to fill the position of his
superior. He in the near future will assume to do the duties of his superior when he leaves the job due to
retirement, transfer or promotion.
c) Job rotation: here the executive is transferred from one job to another or from one plant to other. The
trainee learns the significance of the management principles by transferring learning from one job to
another. This method helps in injecting new ideas into different departments of the organization.
d) Committee assignment: under this method committee is constituted and assigned a subject to give
recommendations. The committee makes a study of the problem and gives suggestions to the
departmental head. It helps the trainees because every member of the committee gets a chance to learn
from others.

2) Off the job development or executive development: here the executives gets the training off the
job means not when they are doing the job. It involves following methods:
a) Special courses: here the executives attend the special courses which are organized by the
organization. Under this experts from professional institutions provide them the training. Now days it is
becoming popular but it is difficult to say whether these courses improve the performance of the
employees or not.
b) Specific readings: here the human resource development manager provides copies of specific articles
published in the journals to the executives to improve their knowledge. The executives study such books
or articles to enhance their knowledge.
c) Special projects: under this method the trainee is given a project related to the objective of the
department. The project helps the trainee in acquiring the knowledge of the particular topic.
d) Conference training: here the organization conducts a group meeting. In which the executive learn
from the others by comparing his opinion with others.
e) Sensitivity training: it is also known as T group training or laboratory training. It is conducted under
controlled conditions. T group help in learning certain things, they help the participants to understand how
CAREER PLANNING:
•‘Career planning is a process of systematically matching career goals and individual capabilities with
opportunities for their fulfillment’.
•It is a crucial phase of human resource development that helps the employees in making strategy for
work-life balance.
•Career planning is the process by which one selects career goals and the path to these goals. 

Features:
Features of Career Planning and Career Development:
1. It is an ongoing process.
2. It helps individuals develop skills required to fulfill different career roles.
3. It strengthens work-related activities in the organization.
4. It defines life, career, abilities, and interests of the employees.
5. It can also give professional directions, as they relate to career goals.

Objectives:
1. To identify positive characteristics of the employees.
2. To develop awareness about each employee’s uniqueness.
3. To respect feelings of other employees.
4. To attract talented employees to the organization.
5. To train employees towards team-building skills.
6. To create healthy ways of dealing with conflicts, emotions, and stress.

Benefits of Career Planning:

1. Career planning ensures a constant supply of promotable employees.
2. It helps in improving the loyalty of employees.
3. Career planning encourages an employee’s growth and development.
4. It discourages the negative attitude of superiors who are interested in suppressing the growth of the
subordinates.
5. It ensures that senior management knows about the calibre and capacity of the employees who can
move upwards.
6. It can always create a team of employees prepared enough to meet any contingency.
7. Career planning reduces labour turnover.
8. Every organization prepares succession planning towards which career planning is the first step.
Career Planning Process:
The four steps involved in career planning process are as follows: 1. Analysing employee needs and
aspirations 2. Analysing Career Opportunities 3. Identifying congruence and incongruence 4. Action plans
and periodic review.

The career planning as a process involves the following steps:

1. Analysing employee needs and aspirations:
Sometimes, most of the employees do not know their career anchors and aspirations. Organisations also
assume the career goals and aspirations of employees which need not be in tune with the reality. Therefore,
first of all, an analysis of the employee career anchors, aspirations and goals must be done through
objective assessment.
This assessment is based on personnel inventory. Since most employees do not have a clear idea of their
career anchors and aspirations, they, therefore, need to be provided as much information about these
matters as possible informing what kind of work would suit the employee most considering his/her skills,
experience and aptitude into account.

2. Analysing Career Opportunities:

Once career aspirations and goals of employee are known, there is a need to analyse various career
opportunities available to offer under prevailing career paths in the organisation. Career paths indicate
career progression. Here also, since many employees may not be aware of their own career progression
path, this needs to be made known to them.
Sometimes organisations may offer career progression at a particular level for both young direct recruits and
own older employees through promotions. Recognizing varying kinds of career anchors and aspirations of
the two types of employees, organisations need to outline career paths striking a balance between those of
internal employees with experience but without professional degree and those new recruits with excellent
professional degree but lacking experience.

3. Identifying congruence and incongruence:

At this stage, a mechanism for identifying congruence between employee career aspirations and
organisational career system is developed. This helps identify specific areas where mismatch or
incongruence prevails. This is done through relating different jobs to different career opportunities. Such a
mechanism of match and mismatch between career aspirations and opportunities enables the organisation
to develop realistic career goals, both long-term and short-term.

4. Action plans and periodic review:

Having identified the mismatch, now it is necessary to formulate an alternative strategy to deal with the
 (b) Change in the employee’s hopes and aspirations by creating new needs, new goals and new aspirations.
(c) Seek new basis of integration through problem solving, negotiations, compromises, etc.

After initiating these strategies, it is also necessary to review the same every now and then. Such a review
will enable the organisation to know whether the plans are contributing to effective utilization of human
resources by matching employee aspirations to job needs.
This will also help the employee know in which direction he/she is moving and what kind of skills he needs to
face the emerging and challenging organisational situations. Alpin and Gester have suggested a framework
of career planning process aimed at integrating the individual and organisational needs. This is presented in
Figure 9.2.
DEVELOPMENT:
Employee development is defined as a process where the employee with the support of his/her employer
undergoes various training programs to enhance his/her skills and acquire new knowledge and skills.

Benefits of T & D:
Increased productivity
Less supervision
Job satisfaction
Skills Development
 Unit 4

Job Evaluation:
In simple words, job evaluation is the rating of jobs in an organisation. This is the process of establishing the
value or worth of jobs in a job hierarchy. It attempts to compare the relative intrinsic value or worth of jobs within
an organisation. Thus, job evaluation is a comparative process. Job evaluation provides basis for developing job
hierarchy and fixing a pay structure.
Objectives of Job Evaluation:
1. Provide a standard procedure for determining the relative worth of each job in a plant.
2. Determine equitable wage differentials between different jobs in the organisation.
3. Eliminate wage inequalities.
4. Ensure that like wages are paid to all qualified employees for like work.
5. Form a basis for fixing incentives and different bonus plans.
6. Serve as a useful reference for setting individual grievances regarding wage rates.
7. Provide information for work organisation, employees’ selection, placement, training and numerous
other similar problems.
8. Provide a benchmark for making career planning for the employees in the organisation.

Procedure/Process of Job Evaluation:

1. Preliminary Stage:
This is the stage setting for job evaluation programme. In this stage, the required information’s obtained
about present arrangements, decisions are made on the need for a new programme or revision of an
existing one and a clear cut choice is made of the type of programme is to be used by the organisation.
2. Planning Stage:
In this stage, the evaluation programme is drawn up and the job holders to be affected are informed. Due
arrangements are made for setting up joint working parties and the sample of jobs to be evaluated is
selected.
3. Analysis Stage:
This is the stage when required information about the sample of jobs is collected. This information serves
as a basis for the internal and external evaluation of jobs.
4. Internal Evaluation Stage:
Next to analysis stage is internal evaluation stage. In the internal evaluation stage, the sample of bench-
mark jobs are ranked by means of the chosen evaluation scheme as drawn up at the planning stage. Jobs
are then graded on the basis of data pending the collection of market rate data. Relative worth of jobs is
ascertained by comparing grades between the jobs.
5. External Evaluation Stage:
In this stage, information is collected on market rates at that time.
6. Design Stage:
Having ascertained grades for jobs, salary structure is designed in this stage.
7. Grading Stage:
This is the stage in which different jobs are slotted into the salary structure as designed in the preceding
stage 6.
In India, the Indian Institute of Personnel Management, Kolkata has suggested the following
five steps to be taken to develop a job evaluation programme:
1. Analyse and Prepare Job Description
2. Select and Prepare a Job Evaluation Programme/Plan
3. Classify Jobs
4. Install the Programme
5. Maintain the Programme
These steps are self-explanatory. Hence are not discussed in detail.

Advantages:
1. Job evaluation being a logical process and objective technique helps in developing an equitable and
consistent wage and salary structure based on the relative worth of jobs in an organisation.
2. By eliminating wage differentials within the organisation, job evaluation helps in minimizing conflict
between labour unions and management and, in turn, helps in promoting harmonious relations between
them.
3. Job evaluation simplifies wage administration by establishing uniformity in wage rates.
4. It provides a logical basis for wage negotiations and collective bargaining.
5. In the case of new jobs, job evaluation facilitates spotting them into the existing wage and salary
structure.
6. In the modem times of mechanisation, performance depends much on the machines than on the
worker himself/herself. In such cases, job evaluation provides the realistic basis for determination of
wages.
7. The information generated by job evaluation may also be used for improvement of selection, transfer
and promotion procedures on the basis of comparative job requirements.
8. Job evaluation rates the job, not the workers. Organisations have large number of jobs with
specialisations. It is job evaluation here again which helps in rating all these jobs and determining the
wages and salary and also removing ambiguity in them.

Drawbacks of job evaluation:

In spite of many advantages, job evaluation suffers from the following drawbacks/limitations:
1. Job evaluation is susceptible because of human error and subjective judgment. While there is no
standard list of factors to be considered for job evaluation, there are some factors that cannot be
measured accurately.
2. There is a variation between wages fixed through job evaluation and market forces. Say Kerr and
Fisher, the jobs which tend to rate high as compared with the market are those of junior, nurse and typist,
4. Job evaluation methods being lacking in scientific basis are often looked upon as suspicious about the
efficacy of methods of job evaluation.
5. Job evaluation is a time-consuming process requiring specialised technical personnel to undertake it and,
thus, is likely to be costly also.
6. Job evaluation is not found suitable for establishing the relative worth of the managerial jobs which are
skill-oriented. But, these skills cannot be measured in quantitative terms.
7. Given the changes in job contents and work conditions, frequent evaluation of jobs is essential. This is
not always so easy and simple.
8. Job evaluation leads to frequent and substantial changes in wage and salary structures. This, in turn,
creates financial burden on organisation.

COMPENSATION:
the money received by an employee from an employer as a salary or wages.
The term compensation is used to indicate the employee’s gross earnings in the form of financial rewards
and benefits.
A system of rewards that can motivate the employees to perform.
Compensation means the reward that is received by an employee for the work performed in an
organization.
Financial compensation includes salary, bonus, and all the benefits and incentives, whereas non-financial
compensation includes awards, rewards, citation, praise, recognition, which can motivate the employees
towards highest productivity.

Compensation System:
Compensation is a tool used by management for safeguarding the existence of the company. Compensation
can be of two types—direct and indirect.
Direct Compensation:
1. Basic pay, dearness allowance, cash allowance
2. Incentive pay, bonus, commission, profit sharing, stock option
Indirect Compensation:
1. Legal requirement
a. Provident fund
b. Gravidity
c. Pension
d. Insurance
e. Medical leave
The main characteristics of the compensation system are as follows:
1. A hierarchy of pay levels
2. A hierarchy of jobs
3. A set of rules and procedures
4. Qualities required for movement from one level to other

Objectives of Compensation:
1. The compensation should be paid to each employee on the basis of their abilities and training.
2. Compensation should be in the form of package.
3. It should motivate the employees towards increasing productivity.
4. It should be capable of taking care of employees for safety and security needs also.
5. It should be flexible and clear.
6. It should not be excessive.
7. Compensation should be decided by the management as per the norms fixed by the legislations in
consultation with the union.
Components of Employee Remuneration – Base and Supplementary:
(a) Basic Compensation:
Basic compensation refers to the basic pay of an employee which is usually expressed in terms of a pay
scale e.g. 5,000-200-10,000- 500 -20000 etc. This pay scale implies that an employee will get a basic pay
of Rs. 5000 per month on joining the organization.
The employee will get an increment of Rs. 200 per year till he/ she reaches the basic pay of Rs. 10,000
and after wards will be entitled to an increment of Rs.500 per year till he / she reaches the pay of Rs.
20,000 per month and so on. Basic pay for a job is decided though a process of systematic job evaluation.
In many cases, Government fixed pay scales apply which employers have to accept and implement.
(b) Supplementary Compensation:
Supplementary compensation refers to payment of allowances and provision of perks or perquisites.
Allowances refers to amounts of money which are given to employees regularly for particular purposes;
while perks refer to privileges enjoyed by a person because of his/her organizational status and
paid/provided in addition to wages/ salaries.
Following is an account of popular types of allowances and perks:
Allowances:
(i) House Rent Allowances (HRA):
HRA is given by the employers to the employee to meet the expenses in connection with the rent of the
accommodation, which the employee might have to take.
(ii) Dearness Allowances (DA):
DA is paid to employees to compensate them, at least partially, against the phenomenon of rising prices.
DA is decided as per an agreed formula, taking into account the increase, in the cost of living.
(iii) City Compensatory Allowance (CCA):
CCA is paid to employees to compensate them partly for higher cost of living in cities, which differs from
one type of city to another.
(iv) Conveyance Allowance:
Conveyance allowance is an allowance granted to employees to meet the expenditure incurred on
conveyance in performance of duties of job; when free conveyance is not provided by the employer.
(v) Uniform Allowance:
It is an allowance which is granted to meet the expenditure incurred on the purchase or maintenance of
uniform for wear during the performance of duties of job.
(vi) Children Education Allowance:
Amount paid at the rate of certain amount per child to meet the cost of education of children (subject to a
maximum of two children or more as per rules of the organisation) is called children education allowance.,
(vii) Underground Allowance:
This allowance is granted to an employee who is working in uncongenial, unnatural climate in underground
coal mines.
(viii) Miscellaneous Allowances:
Some other allowances payable to employees may be:
1. Medical allowance
2. Lunch / Tiffin allowance
3. Overtime allowance
4. Non-practicing allowance (in case of doctors)
5. Servant allowance etc.
Perquisites/Perks:
(i) Rent free accommodation or accommodation provided to employees at concessional rate. The
accommodation may be furnished or unfurnished.
(ii) Gas, electricity bill of employees paid or reimbursed.
(iii) Interest free or concessional loans to employees.
(iv) Leave Travel Concession (LTC) to employees.
(v) Free meals, tea and snacks, provided to employees.
(vi) Payment or reimbursement by the employer of club membership of the employee and expenses
incurred in a club by the employee.
(vii) Use of laptops and computers by employees, belonging to the employer.
(viii) Motor car/ other vehicles, provided by the employer to specified employees.
(ix) Provision by the employer of services of a sweeper, a gardener, a watchman or a personal attendant to
specified employees.
(x) Re-imbursement of medical treatment expenses, incurred on employee or members of his / her family.
(xi) Contribution by the employer to recognised provident fund, kept for the benefit of employees.
Point of comment:
In addition to allowances and perks as described above, there may be many more varieties of allowances
and perks, in the present-day-times.
Job Analysis Methods:
Quantitative Method and Qualitative Method
The two methods of job evaluation are as follows: 1. Qualitative Methods 2. Quantitative Methods!
Job evaluation methods can be divided into two categories i.e. Non quantitative methods and quantitative
methods. 
1. Qualitative Methods:
Following qualitative methods are generally used in job evaluation:
I. Ranking Method
II. Job Grading Method
I. Ranking Method:
All the jobs are ranked in order of their importance from simplest to the toughest order, each job being higher
than the previous one in the sequences. A committee of several executives is constituted, which analyze the
description of jobs and ranks them in order of importance.
The committee does not have specific factors before it but the things like nature of job, working conditions,
supervision required, responsibilities involved etc. are considered while raking the jobs. These factors are not
given any weight age. Following steps are taken in ranking.

(a) Preparation of Job Description:

The first step in job evaluation procedure is the preparation of job description. Though it is not essential to
prepare job description under ranking system but it is better and helpful in this system. Many people
assigned with the job of ranking will give different ranking to the jobs.
(b) Selection of Raters:
The next step in the process of raining is the selection of raters. The jobs may be ranked department wise or
in groups of workmen (Factory jobs, clerical jobs, unskilled jobs). Factory jobs should not be compared with
clerical jobs or unskilled jobs because of their different nature.
(c) Selection of Rates and Key Jobs:
First of all certain key jobs are identified, selected and then compared with other jobs. The key jobs are
carefully chosen from major departments or main functions.
(d) Ranking of all Jobs:
Comparison of similar jobs is made to establish its exact ranking in the scale. All the jobs are then ranked
from lowest to highest or vice-versa.
Suitability:
The ranking method is suitable in small concerns only where each job can be compared with the other for
determining their ranks.
Advantages:
Ranking method of job evaluation has the following benefits:
1. It is very easy to understand and easy to explain to employees.
2. This method is economical in operation as compared to other methods.
3. It can be installed without any delay as it requires minimum time.
Limitations:
This method suffers form the following drawbacks:
1. The ranking is not based on standard criterion so human bias due to presences of human factor can not ruled
out.
2. Because factors like skill, responsibility, efforts etc. are not analyed separately, the wage rate paid for different
jobs influence the rates.
3. Under this system the jobs are only ranked in some order and the exact difference between different jobs is not
determined.
4. The chance of inaccurate ranking cannot be neglected.
5. The employees/workers may resent arbitrary ranking of jobs.

II. Job Grading Method:

In this method jobs are classified or graded in groups and each job is assigned to one of the grades or classes.
With the help of job analysis, information about different jobs is collected and they are put under different grades
as per their nature, importance, responsibility and other requirements.
For each grade or class there is different rate of wages. The jobs may be graded as skilled, unskilled, clerical,
administrative, etc. This method is considered to be an improvement over ranking method in that a predetermined
scale of values is provided.
1. Preparation of Grade Descriptions:
The first step involved in this method is to prepare grade description to evolve classification of jobs. A number of
grades, different from each other, are selected. The grading should be done by considering the nature of duties
required for the job, supervising responsibilities etc. Each job is then, attached to an appropriate grade.
2. Selection of Grades and Key Jobs:
A number of jobs are graded, normally between 10 to 20 are selected. Key jobs are carefully chosen form
important functions and major departments.
3. Grading the Key Jobs:
Key jobs are assigned appropriate grade level and their relationship with each other is studied.
4. All the Jobs are put in Relevant Grades or Classifications:
Advantages:
1. A systematic criterion is followed in grading various jobs. It is easy for the workers to understand the
standard used for classification.
2. The method is simple to understand and easy to operate. It does not require any technical background.
3. It is easy to determine and implement pay scales for various grades or classes.
4. This method is successfully used in government departments.
Limitations:
1. The classification of jobs is done by some of the executives, human bias exist in this method because no set
standards are available for classification.
2. No job analysis is essential in this method; there is a possibility of wrong classification for jobs.
3. With the increase in number of jobs, the system becomes difficult to implement.
4. The system is not suitable for large organizations because of its not- flexibility.

2. Quantitative Methods:
Following quantitative methods are used in job evaluation:
(a) Point systems
(b) Factor Comparison Method
1. Point System:
This is the most widely used technique of job evaluation. It involves quantitative and analytical approach to the
measurement of job value. A number of important factors to be considered in each job are identified. The
degree of each factor is also determined for assigning points.Various factors are assigned points and sum of
them gives us an index for the relative importance or weight age of the job that are related. The point system is
based on these assumptions that important factors of each job can be determined for evaluating it. The points
of different jobs are later on , converted into wage rates.

Following steps are taken for job evaluation:

1. Type of jobs to be Evaluated:
There are number of jobs in every organization and these may range form top executive to unskilled one.
Similar jobs should be put in the same class or category for evaluation purpose. There should be separate
evaluation procedure for each class because the factors affecting them will be different. The job requirement of
supervisor will be different from that of an unskilled worker or semi skilled labour.
2. Number of Factors to be used:
It is very difficult to select the number of factors required for evaluating a job. The number of factors should be
such that all aspects of a job are evaluated. The number of factors to be used varies form enterprise to
enterprise ranking from 3 to as many as 50. The common factors to be selected are education, job conditions
and other similar requirements training skills physical ability, mental requirements, responsibility.
3. Determination of Degrees:
Each factor of evaluation should be further subdivided into degrees for example, experience which is
commonly used factor in each job may be subdivided into five degrees. The first degree may have
experience of 3 to 6 month with 5 point, second degree points having experience from 6 months to 1 year
with 10 points 15 for experience between 1 to 2 years, 20 points for experience of 2 to 4 years and 25
points for experience of over 4 years and so on.
4. Assigning of Weights:
Each factor may be assigned a weight as per its significance. For executives mental requirements will have
more weight age than physical requirements.
Assigning Money Values to points:
The points assigned to each factor are summed up for finding out the value of job. The value of jobs is
translated into terms of money with a predetermined formula. “If it is assumed that 1 point is equal to Rs. 20
the 160 points are equivalent to Rs. 3200 in money value. In this manner, the evaluation is done in the point
system”.

Advantages:
Point system has the following merits:
1. It gives us a numerical basis for wage differentials.
2. The scale, once decided can be used for fairly a long period.
3. A job can easily be evaluated in money terms as these are assigned according to points connected with
that job.
4. The system of job evaluation being systematic and objective is more acceptable to workers as well as
management.
5. The element of human basis is reduced to minimum level.
6. This method is useful even if the number of jobs is very large. The system enjoys stability so as factors
remain relevant to these methods.
7. This method is more accurate as compared to earlier methods adopted for evaluation.
Limitations:
The point system of job evaluation suffers from the following limitations:
1. The use of this method involves high cost, it cannot be adopted by medium or small scale units.
2. The task of defining job factors and then degree of factors is a time consuming task.
3. The selection of factors and then sub factors is a difficult proposition.
4. The allotting of marks to various factors and sub – factors is also a difficult job.
2. Factor Comparison Method:
This method is a combination ranking and point system of job evaluation. It was first developed by E.J. Benge in
1926. In this method the relative rank of the various jobs is evaluated in relation of monetary scale some key jobs
are identified in the organization at the first instance and then ranked considering one factor at a time, in this
method five factors are generally evaluated for each job i.e. mental efforts, skill, physical effort, responsibilities
and working conditions. Following steps are taken under factor comparison method.
1. Selecting factors to be used:
The first step under this method is the selection of factors to be utilized for evaluation. The persons preparing the
job descriptions should be given the proper explanation of these factors.
The universally used factors are:
(i) mental efforts
(ii) Physical efforts
(iii) skill needed
(iv) responsibility and
(v) working conditions.
2. Selection of key jobs:
The selection of key jobs is the next very important step. They constitute a standard and all other jobs are to be
compared with key jobs. All key jobs should be exact and well understood and there should be no conflict
between management and employees about them. The job so identified should cover the range from lowest to
the highest paid ones etc.
3. Ranking of key jobs:
The various jobs are ranked on the basis of each of the five factors given earlier.
4. Valuing the factors:
Each factor of key job is then allocated a basic pay. The pay for such jobs should range from the lowest to the
highest.
5. Comparison of Jobs:
All jobs are compared with key job factor by factor to find out their relative importance and position in the scale of
jobs. The money value of jobs is also determined with this comparison.
6. Establishing wage structure:
By assigning money value to each factor of various jobs, a wage structure is determined by summing up the
various values.
Advantages:
Factor comparison method enjoys the following advantages:
1. This system is systematic where every job factor is quantified.
2. It can easily be explained to workers.
3. The relative value of each job is determined by comparison with some key job.
4. The number of factors used being limited, it helps in avoiding overlapping.
5. It can be used for evaluation of unlike jobs.
Limitations:
This system suffers from the following draw backs :
1. It is difficult to operate as selection of unfairly paid jobs as key jobs can result in considerable error.
2. There may be frequent changes in wage levels requiring adjustment in key jobs.
3. The system is complex and cannot be easily understood by non- supervisory staff or unskilled labour.
4. This method is expensive and small units cannot afford to use it.
Quantitative and Qualitative aspects of HRP:
Quantitative aspect of human resource planning involves demand forecasting and supply forecasting.

1. Demand forecasting: as discussed above demand forecasting means estimating the future requirement of
the employees. It can be done on the basis of estimating sales, number of proposals company get or on the basis
of estimating the number of orders the company has.
The main three methods of demand forecasting are:
a) Statistical techniques: it is one of the reliable source for long range forecasting of employees. The
important tools for forecasting are:
i) Regression analysis: it is used to estimate the future requirement of the employees on the basis of sales,
output, etc., when dependent and independent variable are related to each other.
ii) Ratio and trend analysis: in this method the ratio is calculated on the basis of past data. Future ratios are
calculated on the basis of changes expected in the human resources.
b) Managerial judgment: in small companies generally this method is used where the managers sit down,
think about the future work load and decide how many people they need. It can be done on bottom up basis
where managers give the proposal to the top management and can be done on  the top down basis where top
management make the forecast and give it to the departmental managers for review.
c) Work load forecasting: it means how long the operation would take and how much labor is required.

2. Supply forecasting: Supply forecasting is another quantitative aspect of human resource planning. It is

concerned with estimating the supply of manpower by analyzing the current resources and future availability. For
this purpose the external supply and internal supply of manpower must be considered by human resource
planner.
a) Simulation technique: it means alternative flows which are examined for effects on future manpower
supplies.
b) Renewal analysis: this technique measures future flow and supplies of manpower by calculating vacancies
created by the organization.
c) Goal programming: here the planner tends to optimize the goal.
d) Markov analysis: in this method the likelihood of a person in a particular job is estimated.
Qualitative Method of HRP:
Qualitative aspect of human resource planning means that after determining the number of personnel for
each department in the organization, it is required to determine the nature of job, which will further help in
the minimum acceptable qualities required by the personnel. Determining the nature of job along with the
minimum acceptable qualities of the personnel is called job analysis.

Job analysis is divided into two parts:

Job description: This contains the information relating to the job
Job specification: This contains the information relating to physical, educational, and other qualification
required by the individual to perform the job.
Thus, it is about studying the information relating to a particular job and then the requirement by personnel
to achieve the goal of the organization.
Performance Appraisal:
Performance Appraisal is the systematic evaluation of the performance of employees and to understand the
abilities of a person for further growth and development.

Objectives of Performance Appraisal

Performance Appraisal can be done with following objectives in mind:
•To maintain records in order to determine compensation packages, wage structure, salaries raises, etc.
•To identify the strengths and weaknesses of employees to place right men on right job.
•To maintain and assess the potential present in a person for further growth and development.
•To provide a feedback to employees regarding their performance and related status.
•To provide a feedback to employees regarding their performance and related status.
•It serves as a basis for influencing working habits of the employees.
•To review and retain the promotional and other training programmes.
•Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for efficient
employees. In this regards, inefficient workers can be dismissed or demoted in case.
•Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit
rating is possible through performance appraisal. Performance Appraisal tries to give worth to a performance.
Compensation packages which includes bonus, high salary rates, extra benefits, allowances and pre-requisites
are dependent on performance appraisal. The criteria should be merit rather than seniority.
•Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame
training policies and programmes. It helps to analyse strengths and weaknesses of employees so that new jobs
can be designed for efficient employees. It also helps in framing future development programmes.
•Selection Validation: Performance Appraisal helps the supervisors to understand the validity and importance
of the selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses
of selection procedure. Future changes in selection methods can be made in this regard.
•Communication: For an organization, effective communication between employees and employers is very
important. Through performance appraisal, communication can be sought for in the following ways:
Through performance appraisal, the employers can understand and accept skills of subordinates.
The subordinates can also understand and create a trust and confidence in superiors.
It also helps in maintaining cordial and congenial labour management relationship.
It develops the spirit of work and boosts the morale of employees.
All the above factors ensure effective communication.
•Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of employees,
a person’s efficiency can be determined if the targets are achieved. This very well motivates a person for better
job and helps him to improve his performance in the future.
Traditional and Modern Performance Appraisal Methods:
While traditional methods lay emphasis on the rating of the individual’s personality traits, such as initiative,
dependability, drive creativity, integrity, intelligence, leadership potential, etc.; the modem methods, on the
other hand, place more emphasis on the evaluation of work results, i.e., job achievements than the personal
traits! Modem methods tend to be more objective and worthwhile. 
Traditional Methods:
•Ranking Method:
It is the oldest and simplest formal systematic method of performance appraisal in which employee is
compared with all others for the purpose of placing order of worth. The employees are ranked from the highest
to the lowest or from the best to the worst.
In doing this the employee who is the highest on the characteristic being measured and also the one who is L
lowest, are indicated. Then, the next highest and the next lowest between next highest and lowest until all the
employees to be rated have been ranked. Thus, if there are ten employees to be appraised, there will be ten
ranks from 1 to 10.
However, the greatest limitations of this appraisal method are that:
(i) It does not tell that how much better or worse one is than another,
(ii) The task of ranking individuals is difficult when a large number of employees are rated, and

(iii) It is very difficult to compare one individual with others having varying behavioural traits. To remedy these
defects, the paired comparison method of performance appraisal has been evolved.
•Paired Comparison:
In this method, each employee is compared with other employees on one- on one basis, usually based on one
trait only. The rater is provided with a bunch of slips each coining pair of names, the rater puts a tick mark
against the employee whom he insiders the better of the two. The number of times this employee is compared
as better with others determines his or her final ranking.

Thus, the pairs so ascertained give the maximum possible permutations and combinations. The number of
times a worker is considered better makes his/her score. Such scores are determined for each worker and
he/she is ranked according to his/her score. One obvious disadvantage of this method is that the method can
become unwieldy when large numbers of employees are being compared.
•Grading Method:
In this method, certain categories of worth are established in advance and carefully defined. There can be
three categories established for employees: outstanding, satisfactory and unsatisfactory. There can be more
than three grades. Employee performance is compared with grade definitions. The employee is, then,
allocated to the grade that best describes his or her performance.
•Forced Distribution Method:
This method was evolved by Tiffen to eliminate the central tendency of rating most of the employees at a
higher end of the scale. The method assumes that employees’ performance level confirms to a normal
statistical distribution i.e., 10,20,40,20 and 10 per cent. This is useful for rating a large number of employees’
job performance and promo ability. It tends to eliminate or reduce bias.
It is also highly simple to understand and easy to apply in appraising the performance of employees in
organisations. It suffer from the drawback that improve similarly, no single grade would rise in a ratings.

•Forced-Choice Method:
The forced-choice method is developed by J. P. Guilford. It contains a series of groups of statements, and rater
rates how effectively a statement describes each individual being evaluated. Common method of forced-
choice method contains two statements, both positive and negative.
Examples of positive statements are:
1. Gives good and clear instructions to the subordinates.
2. Can be depended upon to complete any job assigned.
A pair of negative statements may be as follows:
1. Makes promises beyond his limit to keep these.
2. Inclines to favour some employees.
Each statement carries a score or weight, which is not made known to the rater. The human resource section
does rating for all sets of statements— both positive and negative. The final rating is done on the basis of all
sets of statements. Thus, employee rating in this manner makes the method more objective. The only problem
associated with this method is that the actual constructing of several evaluative statements also called
‘forced-choice scales’, takes a lot of time and effort.

•Check-List Method:
The basic purpose of utilizing check-list method is to ease the evaluation burden upon the rater. In this
method, a series of statements, i.e., questions with their answers in ‘yes’ or ‘no’ are prepared by the HR
department (see Figure 28-2). The check-list is, then, presented to the rater to tick appropriate answers
relevant to the appraisee. Each question carries a weight-age in relationship to their importance.
When the check-list is completed, it is sent to the HR department to prepare the final scores for all appraises
based on all questions. While preparing questions an attempt is made to determine the degree of consistency
of the rater by asking the same question twice but in a different manner (see, numbers 3 and 6 in Figure 28-2).
However, one of the disadvantages of the check-list method is that it is difficult to assemble, analyse and
weigh a number of statements about employee characteristics and contributions From a cost stand point also,
this method may be inefficient particularly if there are a number of job categories in the organisation, because
a check-list of questions must be prepared for each category of job. It will involve a lot of money, time and
•Critical Incidents Method:
In this method, the rater focuses his or her attention on those key or critical behaviours that make the difference
between performing a job in a noteworthy manner (effectively or ineffectively). There are three steps involved in
appraising employees using this method.
First, a list of noteworthy (good or bad) on-the-job behaviour of specific incidents is prepared. Second, a group of
experts then assigns weightage or score to these incidents, depending upon their degree of desirability to perform
a job. Third, finally a check-list indicating incidents that describe workers as “good” or “bad” is constructed. Then,
the check-list is given to the rater for evaluating the workers.
The basic idea behind this rating is to apprise the workers who can perform their jobs effectively in critical
situations. This is so because most people work alike in normal situation. The strength of critical incident method is
that it focuses on behaviours and, thus, judge’s performance rather than personalities.
Its drawbacks are to regularly write down the critical incidents which become time-consuming and burdensome for
evaluators, i.e., managers. Generally, negative incidents are positive ones. It is rater’s inference that determines
which incidents are critical to job performance. Hence, the method is subject to all the limitations relating to
subjective judgments.

•Graphic Rating Scale Method:

The graphic rating scale is one of the most popular and simplest techniques for appraising performance. It is also
known as linear rating scale. In this method, the printed appraisal form is used to appraise each employee.
The form lists traits (such as quality and reliability) and a range of job performance characteristics (from
unsatisfactory to outstanding) for each trait. The rating is done on the basis of points on the continuum. The
common practice is to follow five points scale.
The rater rates each appraisee by checking the score that best describes his or her performance for each trait all
assigned values for the traits are then totaled. Figure 28-3 shows a typical graphic rating scale.
This method is good for measuring various job behaviours of an employee. However, it is also subjected to rater’s
bias while rating employee’s behaviour at job. Occurrence of ambiguity in design- mg the graphic scale results in
bias in appraising employee’s performance. A graphic rating scale lists a series of traits that the company
deems to be valuable for the effective performance, and the rater rates the employee along a scale depending
upon how well the employee has exhibited the trait. 

Essay Method:
Essay method is the simplest one among various appraisal methods available. In this method, the rater writes a
narrative description on an employee’s strengths, weaknesses, past performance, potential and suggestions for
improvement. Its positive point is that it is simple in use. It does not require complex formats and
extensive/specific training to complete it.
However, essay method, like other methods, is not free from drawbacks. In the absence of any prescribed
Graphic Rating Scale Method
•Field Review Method:
When there is a reason to suspect rater’s biasedness or his or her rating appears to be quite higher than others,
these are neutralised with the help of a review process. The review process is usually conducted by the personnel
officer in the HR department.
The review process involves the following activities:
(a) Identify areas of inter-rater disagreement.
(b) Help the group arrive at a consensus.
(c) Ensure that each rater conceives of the standard similarity.
However, the process is a time-consuming one. The supervisors generally resent what they consider the staff
interference. Hence, the method is not widely used.

•Confidential Report:
It is the traditional way of appraising employees mainly in the Government Departments. Evaluation is made by the
immediate boss or supervisor for giving effect to promotion and transfer. Usually a structured format is devised
Modern Methods:
Management by Objectives:
process whereby the superior and subordinate managers of an organization jointly identify its common
goals, define each individual’s major areas of responsibility in terms of results expected of him and use
these measures as guides for operating the unit and assessing the contribution of each its members”.
In other words, stripped to its essentials, MBO requires the manager to goals with each employee and then
periodically discuss his or her progress toward these goals.
In fact, MBO is not only a method of performance evaluation. It is viewed by the Practicing managers and
pedagogues as a philosophy of managerial practice because .t .s a method by wh.ch managers and
subordinates plan, organise, communicate, control and debate.
An MBO programme consists of four main steps: goal setting, performance standard, comparison, and
periodic review.
Limitation of MBO:
MBO is not a panacea, cure for all organisational problems.
As with other methods, it also suffers from some limitations as catalogued below:
(i) Setting Un-measurable Objectives:
One of the problems MBO suffers from is unclear and un-measurable objectives set for attainment. An objective
such as “will do a better job of training” is useless as it is un-measurable. Instead, “well have four subordinates
promoted during the year” is a clear and measurable objective.
(ii) Time-consuming:
The activities involved in an MBO programme such as setting goals, measuring progress, and providing feedback
can take a great deal of time.
(iii) Tug of War:
Setting objectives with the subordinates sometimes turns into a tug of war in the sense that the manager pushes
for higher quotas and the subordinates push for lower ones. As such, goals so set are likely to be unrealistic.
(iv) Lack of Trust:
MBO is likely to be ineffective in an environment where management has little trust in its employees. Or say,
management makes decisions autocratically and relies heavily on external controls.

BARS METHOD:
The problem of judgmental performance evaluation inherent in the traditional methods of performance evaluation
led to some organisations to go for objective evaluation by developing a technique known as “Behaviourally
Anchored Rating Scales (BARS)” around 1960s. BARS are descriptions of various degrees of behaviour with regard
to a specific performance dimension.
It combines the benefits of narratives, critical incidents, and quantified ratings by anchoring a quantified scale
with specific behavioural examples of good or poor performance. 
BARS compare an individual’s performance against specific examples of behaviour that are anchored to
numerical ratings.
For example, a level four rating for a nurse may require them to show sympathy to patients while a level six
rating may require them to show higher levels of empathy and ensure this comes across in all dealings with the
patient.
The behavioural examples used as anchor points are often collected using Critical Incident Techniques (CIT),
which are procedures used for documenting human behaviour that have significance in a particular area.
1. Knowledge and Judgment
2. Conscientiousness
3. Skill in Human Relations
4. Skill in Operation of Register
5. Skill in Bagging
It is very difficult to develop this method because you need to identify what is “good level” etc. This
method needs a scale to work. It is not independent from scale.
BARS method of performance appraisal is considered better than the traditional ones because it provides
advantages like a more accurate gauge, clearer standards, better feedback, and consistency in
evaluation. However, BARS is not free from limitations.
Assessment Centres:
In business field, assessment centres are mainly used for evaluating executive or supervisory potential. By
definition, an assessment centre is a central location where managers come together to participate in well-
designed simulated exercises. They are assessed by senior managers supplemented by the psychologists
and the HR specialists for 2-3 days.
Assessee is asked to participate in in-basket exercises, work groups, simulations, and role playing which are
essential for successful performance of actual job. Having recorded the assessee’s behaviour the raters
meet to discuss their pooled information and observations and, based on it, they give their assessment
about the assesee. At the end of the process, feedback in terms of strengths and weaknesses is also
provided to the assesees.
The distinct advantages the assessment centres provide include more accurate evaluation, minimum
biasedness, right selection and promotion of executives, and so on. Nonetheless, the technique of
assessment centres is also plagued by certain limitations and problems. The technique is relatively costly
and time consuming, causes suffocation to the solid performers, discourages to the poor performers
(rejected), breeds unhealthy competition among the assessees, and bears adverse effects on those not
selected for assessment.

360 degree appraisal method:

This feedback based method is generally used for ascertaining training and development requirements,
rather than for pay increases.
Under 360 – degree appraisal, performance information such as employee’s skills, abilities and behaviours,
is collected “all around” an employee, i.e., from his/her supervisors, subordinates, peers and even customers
and clients.
In other worlds, in 360-degree feedback appraisal system, an employee is appraised by his supervisor,
subordinates, peers, and customers with whom he interacts in the course of his job performance. All these
appraisers provide information or feedback on an employee by completing survey questionnaires designed
for this purpose.
All information so gathered is then compiled through the computerized system to prepare individualized
reports. These reports are presented to me employees being rated. They then meet me appraiser—be it
one’s superior, subordinates or peers—and share the information they feel as pertinent and useful for
developing a self-improvement plan.
In 360 – degree feedback, performance appraisal being based on feedback “all around”, an employee is
likely to be more correct and realistic. Nonetheless, like other traditional methods, this method is also
subject to suffer from the subjectivity on the part of the appraiser. For example, while supervisor may
penalise the employee by providing negative feedback, a peer, being influenced by ‘give and take feeling’
Cost Accounting Method:
This method evaluates an employee’s performance from the monetary benefits the employee yields to
his/her organisation. This is ascertained by establishing a relationship between the costs involved in
retaining the employee, and the benefits an organisation derives from Him/her.
While evaluating an employee’s performance under this method, the following factors are also
taken into consideration:
1. Unit wise average value of production or service.
2. Quality of product produced or service rendered.
3. Overhead cost incurred.
4. Accidents, damages, errors, spoilage, wastage caused through unusual wear and tear.
5. Human relationship with others.
6. Cost of the time supervisor spent in appraising the employee.

more dependent upon cost and benefit analysis.

360 Degree Appraisal Technique

•360 degree feedback is also known as multi-rater feedback or multi-dimensional feedback or multi-
source feedback. It is a very good means of improving an individual’s effectiveness (as a leader and as a
manager). It is a system by which an individual gets a comprehensive/collective feedback from his superiors,
subordinates, peers/co-workers, customers and various other members with whom he interacts.
•The feedback form is in a questionnaire format, which contains questions that are significant to both individual as
well as organization from performance aspect. It is filled by anonymous people. The number of people from whom
feedback is taken can range from 6 - 20. The individual’s own feedback is also taken, i.e., he self-rates himself
and then his rating is compared with other individuals ratings. Self ratings compel the individual to sit down and
think about his own strengths and weaknesses.
•The primary aim of a 360 degree feedback is to assist an individual to identify his strengths and build upon them,
to recognize priority fields of improvement, to encourage communication and people’s participation at all levels in
an organization, to examine the acceptance of any change by the employees in an organization and to promote
self-development in an individual. It must be noted that the assessment of individual by other people is
subjective.
•A 360-degree feedback is challenging, promoting and analytical. It should not be regarded as ultimate and
concluding. It is a beginning point. Self-assessment is an ongoing process.
•360 degree feedback provides a comprehensive view of the skills and competencies of the
individual as a manager or as a leader. The individual gets a feedback on how other people perceive and
assess him as an employee.
•360 degree feedback is beneficial to both an individual as well as organization. It leads to pooling of information
between individual and other organizational members. It encourages teamwork as there is full involvement of all
the top managers and other individuals in the organization.
•It stresses upon internal customer satisfaction. It develops an environment of continuous learning in an
organization. Based on a 360 degree feedback, the individual goals and the group goals can be correlated to the
organizational strategy, i.e., the individual and the group can synchronize their goals with the organizational
goals.
•The feedback must be confidential so as to ensure it’s reliability and legitimacy. The feedback must be accepted
with positivity and an open-mind. The effectiveness of the feedback must be evaluated and analyzed on a regular
basis.
Advantages of 360 Degree Feedback
•It encourages participation of all and thus makes HR decisions more qualitative.
•It pinpoints the favoritism and biases of the supervisors present in conventional appraisal systems.
•The employees find 360 degree feedback more acceptable than the traditional feedback approaches.
•360 degree feedback is more impartial and objective than a one-to-one assessment of employee traits.
•It concentrates and stresses upon internal customer satisfaction.
•It broadens the scope for employees to get various says for enhancing their job role, performance, and views.
•It can act as a supplement and not replacement to the conventional appraisal system.
•It can be motivating for the employees who undervalue themselves.
•It encourages teamwork.
•It is more credible as various people give almost same feedback from various sources.
•It brings into limelight the areas of employee development as it confirms the employee strengths and identifies
his weaknesses on which he can work upon.
•It creates an environment of trust and loyalty in an organization.
EMPLOYEE WELFARE:
labour welfare as a term which is understood to include such services, facilities and amenities as may be
established in or in the vicinity of undertakings to enable the persons employed in them to perform their
work in healthy, congenial surroundings and to provide them with amenities conducive to good health and
high morale.
Welfare includes anything that is done for the comfort and improvement of employees and is provided over
and above the wages. Welfare helps in keeping the morale and motivation of the employees high so as to
retain the employees for longer duration. The welfare measures need not be in monetary terms only but in
any kind/forms. Employee welfare includes monitoring of working conditions, creation of industrial harmony
through infrastructure for health, industrial relations and insurance against disease, accident and
unemployment for the workers and their families.
Labor welfare entails all those activities of employer which are directed towards providing the employees
with certain facilities and services in addition to wages or salaries.
Labor welfare has the following objectives:
:-: To provide better life and health to the workers
:-: To make the workers happy and satisfied
:-: To relieve workers from industrial fatigue and to improve intellectual, cultural and material conditions of
living of the workers.
The basic features of labor welfare measures are as follows:
:-: Labor welfare includes various facilities, services and amenities provided to workers for improving their
health, efficiency, economic betterment and social status.
:-: Welfare measures are in addition to regular wages and other economic benefits available to workers due
to legal provisions and collective bargainin.
:-: Labor welfare schemes are flexible and ever-changing. New welfare measures are added to the existing
ones from time to time.
:-: Welfare measures may be introduced by the employers, government, employees or by any social or
charitable agency.
:-: The purpose of labor welfare is to bring about the development of the whole personality of the workers to
make a better workforce.
The very logic behind providing welfare schemes is to create efficient, healthy, loyal and satisfied labor force
for the organization. The purpose of providing such facilities is to make their work life better and also to
raise their standard of living. The important benefits of welfare measures can be summarized as follows:
:-: They provide better physical and mental health to workers and thus promote a healthy work environment
:-: Facilities like housing schemes, medical benefits, and education and recreation facilities for workers’
families help in raising their standards of living. This makes workers to pay more attention towards work and
HEALTH AND SAFETY:
Health and Safety programs can minimize the loss and damage caused to persons and property by eliminating
the risk of industrial accidents. In addition to it, the employee safety programs can result in substantial cost
savings, increased productivity and establishing harmonious relations with workers.
For designing effective safety plans and implementing them requires thorough analysis of workplace conditions
and determining the level of protection required. The degree of protection depends upon the degree of risk
involved in any job. For example, people working in mines require more safety that those working in a BPO. It
also depends on the kind of job the person is engaged in. Sales personnel may require higher level of protection
than the one in any administrative job.
Workplace safety programs are not only effective in eliminating the risk of damage caused to
person but is also an effective tool in retaining the existing and attracting new talent from the
industry. Who doesn’t want a safe and healthy work environment? Around 90 percent of working professionals
seek safety at workplace rather than a fat package.
Organizations can reduce the risk of accidents at workplace by identifying the level of risk, modifying the already
existing policy and implementing it effectively. For this, it needs to design proper and efficient management
programs to improve physical environment employee assistance programs to help them diagnose and treat their
stress-related problems.
Here is a mention of few workplace safety programs that are implemented by top-notch organizations to ensure
workers’ physical and mental safety:
•Safety Policy: It contains a declaration of the employer’s intent towards the safety of employees and means to
realize it. It includes causes, extent and remedies for accidents at workplace. The policy specifies the company’s
goals and responsibilities and caveats and sanctions for failing to fulfill them.
•Provision of Physical Health Services: Many organizations render periodical physical health check-up
services to their employees. Regular medical check-ups of employees help detect the signs and symptoms of
tension, stress, ulcers, depression and other diseases resulting from the exposure to harmful gases or other
irritants.
It is considered as one of the major steps to control occupational health hazards and treat them before they
become worse. In addition to this, it helps managers in rehabilitating the employees by redesigning their jobs in
order to eliminate the further damage to their health.
•Mental Health Services: In order to reduce the risk of mental breakdowns because of tension, pressure and
depression and mental illness, a mental health service is provided to the employees in different ways such as
psychiatric counseling, co-operation and consultation with specialists, educating employees about the
importance of mental health and establishment, development and maintenance of harmonious human relations
at workplace.
•Employee Assistance Programs: These are specially designed to deal with stress-related problems of
the employees and help in diagnosis, treatment, screening and prevention of both work and non-work
related problems. These programs provide real help to professionals and do not carry any negative
implications.
•Fitness Programs: These programs focus on overall health of employees and include both disease
identification as well as lifestyle modification. The most common programs carried out by the
organizations are hypertension identification, physical fitness, exercise, nutrition, smoking and drinking
cessation, diet control and personal and work-related stress management.
•Awareness Programs: Conducting the workshops about sexually transmitted diseases such as HIV AIDS
help a lot in raising the awareness of employees towards such dreadful diseases. Such programs clear out
the confusion and disruption in the workforce.
We all must have heard of a simple phrase, “Health is Wealth.” This is true for individuals as well as
organizations. Understanding, developing, implementing and evaluating workplace safety programs not
only helps individuals in maintaining their health but also helps organizations in retaining their resources.
SOCIAL SECURITY:
social security refers to measures of protection afforded to the needy citizens by means of schemes evolved
by democratic processes consistent with resources of the State.
Concept:
In general sense, social security refers to protection provided by the society to its members against
providential mishaps over which a person has no control. The underlying philosophy of social security is that
the State shall make itself responsible for ensuring a minimum standard of material welfare to all its citizens
on a basis wide enough to cover all the main contingencies of life. In other sense, social security is primarily
an instrument of social and economic justice.
The objectives of social security can be sub-summed under three, categories:
1. Compensation
2. Restoration
3. Prevention
A brief description of these is given as under:
Compensation:
Compensation ensures security of income. It is based on this consideration that during the period of
contingency of risks, the individual and his/her family should not be subjected to a double calamity, i.e.,
destitution and loss of health, limb, life or work.
Restoration:
It connotates cure of one’s sickness, reemployment so as to restore him/her to earlier condition. In a sense, it
is an extension of compensation.
Prevention:
These measures imply to avoid the loss of productive capacity due to sickness, unemployment or invalidity to
earn income. In other words, these measures are designed with an objective to increase the material,
intellectual and moral well-being of the community by rendering available resources which are used up by
avoidable disease and idleness.
Scope:
The term ‘social security’ is all embracing. The scope of social security is, therefore, very wide. It covers the aspects
relating to social and economic justice.
All social security schemes furnished by the government are broadly classified into two types:
(i) Social Assistance, and
(ii) Social Insurance.
According to the Social Security (Minimum Standards) Convention (No. 102) adopted by the ILO in
1952, the following are the nine components of social security that configure its scope:
(i) Medical care,
(ii) Sickness benefit,
(iii) Unemployment benefit.
(iv) Old age benefit,
(v) Employment injury benefit,
(vi) Family benefit,
(vii) Maternity benefit,
(viii) Invalidity benefit, and
(ix) Survivor’s benefit
One moot question to be answered is why there is a need for social security especially in India. As has already been
mentioned, the underlying philosophy of social security is to ensure a minimum level of material living to the needy
or helpless ones of the society by the State.
Our accumulated experience reveals that in an industrial economy, the workers have been subjected to periodic
unemployment due to cyclical fluctuations in business, sickness, industrial accidents and old age. In fact, there is
nothing more disconcerting to worker and his/her family than unemployment.
Similarly, while sickness suspends earning capacity of a worker temporarily, industrial accidents may disable
him/her partially or even permanently, and old age may put a stop to his/her ability to earn and support
himself/herself and the family. The capitalist having sufficient resources have no problem in facing such risks of life.
But, the worker does not have resources required to face the risks caused by sickness, accidents, unemployment
and old age.
Nor has he/she alternative sources of livelihood or accumulated property to overcome the period of adversity. Such a
situation underlines the need for social security to be provided to such needy workers/people. Naturally, the
Government has, then, the obligation to help the needy and helpless workers and provide them security to pass
through in period of adversity.
Thus, the need for a comprehensive programme of social security in India is so strong that it needs no more proof or
evidence. It is must to ensure a minimum level of living for those who are helpless on various counts.