Manpower Planning

The need for companies to take a searching look at their future manpower requirements has become more and
more evident, and manpower planning is more important for management than it has ever been. There are three
main arguments in favour of manpower planning. Firstly, there is considerable evidence to indicate that for
some time to come there will be a shortage of quality manpower, particularly technological and scientific
manpower, the demand for which is steadily increasing. Secondly, changes in manpower requirements in skill
terms are likely to be much more rapid in the future than they have been in the past. No longer is a man able to
learn a skill in his youth which will carry him through the whole of his working life; it is probable that the young,
and the not so young man will have to change his skill once, or even twice, in the course of his working life.
Thirdly, the ever increasing costs of manpower. Demands for higher standards of living and increased leisure are
tending to push these up at an even faster rate.

Assuming that the average stay in a company of a newly recruited graduate engineer is three years, and that
such a recruit is normal, but not exceptional; then the cost in salary alone over the three-year period is likely to
be (at current values) of the order of Rs. 8,000/- per month. If, however, one adds on the other costs of staff
pensions, various fringe benefits, accommodation and office services, etc. then the total cost is of the order of
Rs. 20,000/- per month.

No one contemplating the purchase of a piece of plant or equipment, with a similar life-span, costing that
amount would do so without the most careful study of its suitability for the purpose for which it was intended,
its capacity, the means by which that capacity could be utilized to the full, its place in the scheme of
production, and the expected return on the investment. Few companies apply the same level of criteria of
consideration to manpower. The reason for this difference in approach lies in the traditional attitude to
manpower as a cost rather than as an investment. Yet while machinery depreciates and eventually become
obsolete, properly developed manpower can continue to grow in usefulness and capacity.
The view that there is likely to be a shortage of quality staff over the longer term, or in the one that presently
exists, is not universally shared. Some take the view that there is considerable under-use of talents and
abilities, and that there is a large, as yet untapped, potential for the exercise of higher skills if only adequate
training and education can be made available. This, in itself, is a very large subject. The objective of
manpower planning is, and must be, to improve manpower utilisation and to ensure that there is available
manpower of the right number and the right quality to meet the present and future needs of the organisation. It
must, therefore, produce, a realistic recruitment policy and plan and must be very much concerned with costs
and productivity.

Role and Content of Manpower Planning

Manpower planning, in its broadest sense, covers all those activities traditionally associated with the
management of personnel – records, recruitment, selection, training and development, appraisal, career
planning, management succession and so on. But it is important, both for analytical purposes and ultimately for
executive purposes, to disentangle these activities and to think of them as a number of sequential phases. The
three main phases as illustrated in Figure 1 (below) are:

Phase 1: The development of manpower objectives: This is concerned with the development of forecasts of
the manpower necessary to fulfill the company’s corporate objectives, with looking at the totality of situations
rather than at individuals. It is concerned with detailed analysis in order to identify and foresee problem areas,
to assess future demands and to establish how those demands may be met. It is directed towards the
development of manpower strategy as an integral part of company strategy.

Phase 2: The management of manpower: In this phase, the question is one of managing manpower resources
to meet objectives and the development, in more specific and individual terms, of recruitment plans, training
and development plans, succession plans, appraisal systems, etc.

Phase 3: Control and evaluation: This concerns the continual evaluation and amendment of plans in the light of
achievement and changing circumstances. Planning starts from a given factual position and tries to look ahead
through a range of possibilities. Evaluation in this context means thoroughly checking forecasts and forecasting
methods against what eventually happens, and making such revisions as may prove necessary. Any planning
activity must have a system for this regular checking built into it. In other words, planning must be a continuing
process. The components of the second phase are fairly familiar in industry and are often taken to be
synonymous with manpower planning.
It is the ultimate aim of any complete system of manpower planning that all three phases should be fully
integrated. Manpower planning must be fully integrated with the company plan. Indeed without a company
plan, there can be no realistic manpower planning.
Figure 1: A procedure for a manpower planning

Company Objectives , Policies and Plans

Economic Organisation Strategic

Forecasts objectives plans

Manpower Analysis Manpower forecasts

(Current situation) (Future situation) Phase
- Inventory Overall Unit Budget one
Management
- Employment
manpower Manpower agreement manpower
- Productivity forecast forecast estimates
- Organisation

Top Management Manpower objectives and

Approval Policies

Manpower Plans and Programs

- Recruitment and selection Phase
two
- Redundancy
- Retirement and
remuneration
- Training
- Appraisal and development
- Efficiency investigation
Phase
three

Control and
Evaluation
The present position and the analysis of trends

In manpower planning there are three basic elements to be considered the present stock of manpower; wastage,
and future requirements for manpower. Information will be needed in a series of permutations and combinations
according to the needs of the company. The following are the basic ‘building blocks’ that will probably be
needed in most circumstances:

1. Present total manpower.

2. Manpower resources by appropriate planning groups, for example, sex, grade, function/department,
profession/skill, qualification, age group, and length of service.
3. Total manpower costs.
4. Total costs by appropriate component elements, for example, salaries, wages, pension contributions,
welfare, canteen, etc.
5. Costs by functions/departments.
6. Costs indices and ratios (see control and evaluation below).
7. Total numbers related to sales, production or such other criteria as may be appropriate, in physical and
financial terms.
8. Attrition and retention rates by appropriate groups, that is, overall, by function/department, profession,
sex, age group, etc.
9. Recruitment patterns by age, education, etc. for each function/department.
10. Resources of promotable staff.

Forecasting future manpower movements

Future manpower requirements are self-evidently governed by the company’s corporate plan and they can only
be considered in that context. Indeed, without a corporate plan there can be no realistic manpower plan. It
follows that no forecast for the forward demand of manpower can be more precise than the formulation of the
company’s overall objectives. Clearly, it is also important that a company’s objectives should be so stated as to
be interpretable in terms of manpower involvement. The factors affecting manpower demand fall into two main
groups: trading and production patterns and technological change. Some indication of the extent to which
volume and patterns of trade, and technological change affect manpower will have been gathered from the
analyses. Below illustrated is a sample of the Manpower Forecast Sheet (Fig. 2)
Figure 2 : Manpower forecast sheet

Estimates of staff numbers 1992-97

Functional sector …………………………..

Department ………………………………..

Increases and decreases in requirements and year

end balances
Categories of Actual number Expected Estimated Forecast
staff at time of number at year
estimate end 1990 1992 1993 1994 1995 1996
-+= -+= -+= -+= -+=

Totals
Brief statement of reasons for increases and or decreases:

Signed ______________________ Date__________

Departmental Manager

Signed ______________________ Date__________

General Manager

Control and Evaluation

Two broad and complementary approaches to the control and evaluation of the manpower plan are necessary,
one in terms of numerical trends and the other in terms of costs criteria.

Assuming that the planning period is of five years, then the plan prepared in 1992 would go through to the end of
1997. In the autumn of 1993, the plan should have been reviewed and up-dated where necessary and extended
to include 1998. The first step is, as has been stated, the review and up dating of the corporate plan. This
normally takes the form of a package of expectations and objectives, all of which are considered mutually
consistent and feasible. The strategy for achieving these objectives determines the form of organisation to be
used and the amount and form of resources required, including manpower.

In this review, management will want to question the degree to which the various specific goals of the manpower
plan were achieved. This can be shown by the use of a number of numerical controls and gauges, such as change
in numbers by total/department/function, changes in wastage (turnover) rates and the reasons for wastage,
changing age structures and their implications, all related to the original targets set.

Another approach, which has been found useful in giving a comparative picture of the contribution being made
by personnel to the operation of the company, is the development of cost ratios.

Conclusion
In a world of rapidly changing technology with an ever-growing demand for more and different skills, the need to
plan manpower is as great as the need to plan any other resource. The prosperity and growth of any company
rests, in the end, on the quality of its manpower and the extent to which their talents are utilized to the full.
Manpower planning is concerned with safeguarding the future, with preventing the loss of opportunities through
lack of appropriate human abilities and the wastefulness of ‘over-braining’ the organisation. It emphasizes the
need for rationalization in keeping with modern needs and technological capabilities and the development of
organisation structures to match.

Job Analysis – A Definition

Job analysis is the process of collecting, analyzing and setting out information about jobs in order to provide the
basis for a job description or role definition and data for job evaluation, performance management and other
human resource management purposes.

A distinction should be made between a job description and a role definition. A job description sets out the
purpose of a job, whether it fits in the organisation structure, the context within which the job holder functions
and the principal accountabilities of the job holders, or the main tasks they have to carry out. A role definition
additionally describes the part to be played by individuals in fulfilling their job requirements. Role definitions
refer to broader aspects of behaviour, for example, working flexibly, working with others and styles of
management. They may incorporate the results of skills or competence analysis.

Job Analysis in Practice

Job analysis is an analytical process involving gathering facts, analyzing and sorting these facts and re-
assembling them into whatever consistent format is chosen. Job analysis gets the facts about a job from
jobholders, the jobholder’s manager (preferably both) and the jobholder’s colleagues or team mates. It is not a
matter of obtaining opinions or making judgments. What goes into a job description should be what actually
happens and why, not what people would like to think happens, or what they feel people should be like to make
it happen. Thus judgmental statements such as ‘Carries out the highly skilled work of…’ should be avoided (who
is to say that the work is highly skilled and in comparison with what?)

The facts can be obtained by interviews (the best but time-consuming way) or by asking jobholders and/or their
managers to write their own job descriptions in a structured format. It is helpful in both cases to be quite clear
about the questions to be asked and answered and it is essential in the latter case to provide guidance on how
the analysis should be carried out and expressed on paper. Alternatively questionnaires can be used – either
universal questionnaires or those designed for job families:

• Universal questionnaires
Universal questionnaires are designed to cover all the jobs to be analyzed. They are typically used in association
with computer-assisted job evaluation. They should be tailored to the particular organisation and the range and
type of jobs to be covered, and they should focus on those aspects of performance and values which are
considered to be important in the organisation concerned.

• Job family questionnaires

Job family questionnaires are designed to establish the main factors which differentiate between jobs at
different levels in a job family. A job family consists of jobs in a particular function or discipline such as
research scientist, development engineer or personnel specialists which are related in terms of the fundamental
activities carried out but are differentiated by the levels of responsibility, skill or competence required. A job
family questionnaire is designed with the advice of an expert team of managers from the organisation.

Job analysis interview check lists

• What is your job title?
• To whom are you responsible?
• Who is responsible to you? (An organisation chart is helpful).
• What is the main purpose of your job? i.e. in overall terms, what are you expected to do?
• To achieve that purpose, what are your main areas of responsibility (e.g. principal accountabilities, key
result areas or main tasks)? Describe what you have to do and also indicate why you have to do it? i.e.
the results you are expected to achieve by carrying out the task.
• What are the dimensions of your job in such terms as output or sales targets, numbers of items
processed, numbers of people managed, and number of customers?
• Is there any other information you can provide about your job to amplify the above facts, such as:
- how your job fits in with other jobs in your department or in the company;
- flexibility requirements in terms of having to carry out a range of different tasks;
- how work is allocated to you and how your work is reviewed and approved;
- your decision-making authority;
- the contacts you make with others, inside and outside the company – the equipment, plant and tools
you use;
- other features of your job such as traveling or unsocial hours or unusual physical conditions;
- the major problems you meet in carrying out your work;
- the knowledge and skills you need to do your work.

The aim is to structure the job analysis interview or questionnaire in line with these headings.

Analyzing the facts

However carefully the interview or questionnaire is structured, the information is unlikely to come out neatly
and succinctly in a way which can readily be translated into a job description or role definition. It is usually
necessary to sort out, rearrange and sometimes rewrite the information.
Performance Management

The function of Management begins with, travels through and ends with Performance and its suffixes. The Oxford
English Dictionary defines performance as ‘the accomplishment, execution, carrying out, working out of anything
ordered or undertaken’ . Performance should be defined as the outcomes of work because they provide the
strongest linkage to the strategic goals of the organisation, customer satisfaction and economic contribution.

It is important to clarify what performance means because if it cannot be defined, it cannot be measured and
managed. It is a multidimensional construct and its measurement therefore varies depending on a variety of
factors. It is important to determine whether the measurement objective is to assess performance outcomes or
behaviour. Performance could therefore be regarded as behaviour – the way in which organisations, teams and
individuals get work done. Behaviours emanate from the performance and transform performance from
abstraction to action.

Performance management can be defined as a strategic and integrative approach to delivering sustained success
to organisations by improving the performance of the people who work in them and by developing the
capabilities of teams and individual contributors.

Although there are several models of performance, one that is particularly useful depicts performance as a
pyramid in which is contained the objectives and measures that connect an organisation’s corporate vision,
values and objectives to its day-to-day operations. This is as follows:

The ‘New’ Performance Paradigm will encompass:

• Internal Focus
• External Focus
• Integrated
• Global Competition
• Diffused Focus

Goals &
Values

Market Financial

Customer Flexibility Productivity

Satisfaction

Quality Delivery Cycle Waste

Time

Operations
The right-hand half of the pyramid, which reflects the organisation’s internal focus, is dominated, not
surprisingly, by traditional financial and other productivity performance concerns and measures.

These are valid and important both for the business as a whole and for its constituent parts. However, managers
are increasingly recognising that these measures represent only a partial view of the performance picture.
Alongside them, there is a need to include market-focused concerns and measures, as well as an increased
emphasis on the way in which traditional measures are converted into day-to-day operational activity.

Market share is of critical importance. Some recent Japanese successes may be attributed to their greater
emphasis on the market. The Japanese tend to measure performance in terms of current market share and ratio
of new products (future market share) rather than simply relying on return on investment as a monolithic
measure of performance. Many British and American managers focus on financial measures first, market share
second, and future market share – if at all – as a very distant third.

At the top of the pyramid is the company’s vision (goals) and values. These express its spirit, life and soul. An
organisation’s vision is nothing less than a statement of the way it wishes to do business – for example, defining
its markets and how it intends to compete, whether on price, on breadth of product range, or on the range and
quality of its services.

The second level of the pyramid – the level of the business unit – comprises the organisation’s key result areas,
objectives and measures. Most business units define success in two ways: first, by reaching short-term targets
of cash flow and profitability, and secondly, achieving longer-term goals of growth and market position. Market
measures, defined by customers, might include absolute or relative market share compared to the position of
major competitors.

The business processes at the heart of the model provide a bridge between the top-level traditional performance
indicators and the new day-to-day operational measures. This stratum includes all the internal functions,
activities, policies, procedures and supporting systems needed to develop, produce and provide specific goods
and services for specific customer needs. For example, distinct business operating processes exist for product
definition and development, for sales order processing, for customer service, and for credit control.

In this way, business processes link department performance with company strategy and performance, by
measuring not just the efficiency of single departments but also the effectiveness of all the business processes
involved.

One department may be involved in several business process – for example, a customer service department may
be involved in the sales order process as well as estimating and credit control processes. Each business process
may have very different objectives and indicators of successful performance. Understanding the operation of
each process, however, enables the development of effective departmental performance measures and
facilitates links between departmental and organisational performance.

The main business process performance indicators are likely to be customer satisfaction, flexibility, and
productivity.

At the base of the pyramid are the specific measures of performance which managers and employees can
monitor and control on a daily basis.

As the model suggests, each level of performance is linked to those above and below. High-quality products or
services and regular on-time delivery lead to customer satisfaction. The combination of externally driven
delivery (when the customer wants to take delivery) and internally driven cycle times (optimising machine
change and machine run times) defines flexibility. Productivity can be enhanced by reducing cycle times and
waste. At the departmental level, waste includes those resources and activities that add no value but are
incurred while meeting other performance objectives.

Efforts to improve performance often emphasize on dimension of performance at the expense of another – for
example, quality at any price, or improving on-time delivery by allowing the inventory to rise. Managers now
recognise a requirement to develop and manage an integrated ‘basket’ of performance measures simultaneously.
The objective of any department or function must be to manage business processes which enhance quality and
delivery while reducing cycle time and waste.

Performance measures are either internal, and therefore invisible to customers (cycle time and waste), or
external, and visible and important to customers (quality and delivery). The four core performance measures
are often managed simultaneously, sometimes by concentrating attention on one measure while merely
monitoring others. The actual focus of attention depends on a number of factors – for instance, the difference
between the company’s performance and the performance of the company’s competition, or the relative rate of
the company’s improvement in performance relative to that of the company’s competitors.

Principles of Performance Management

The principles of performance management have been well summarized as follows:

• It translates corporate goals into individual, team, department and divisional goals.
• It helps to clarify corporate goals.
• It is a continuous and evolutionary process, in which performance improves over time.
• It relies on consensus and cooperation rather than control or coercion.
• It encourages self-management of individual performance.
• It requires a management style that is open and honest and encourages two-way communication between
superiors and subordinates.
• It requires continuous feedback.
• Feedback loops enable the experience and knowledge gained on the job by individuals to modify corporate
objectives.
• It measures and assesses all performance against jointly agreed goals.
• It should apply to all staff; not primarily concerned with linking performance to financial reward.

Performance Management: A New Perspective

Another Performance Management (PM) system process starts from the employee’s view. Each employee is
issued with a complete set of the competencies that apply to their own position. This acts as a reference point,
helping the employee to build up a picture of what they should be trying to achieve. It also acts as a
development checklist, so employees and their manager can identify gaps or weaknesses that can be remedied
through training or experiential learning. The formal PM system has the following six stages:
Stage 1: At the start of the year, the managers sit down with their team to set out the team objectives for the
next period. In the pharmaceutical industry, the culture of long-term planning is highly developed, reflecting
the long-term development of medicines and commercial relationships. These are prioritized and put into a
project-planning format. Every manager is expected to use his knowledge of the company business, ambition
and strategy to put his team contribution in context.
Stage 2: Once agreed, the manager works out with individuals their own contribution to achieving these
objectives. Typically, individuals and teams will develop their ideas and plans for presentation to and review
with their manager and other teams.
Stage 3: How the individual’s contribution is to be measured is then worked out. This will be a combination of
qualitative and quantitative measures. The sources of these measures are also agreed; they are often colleagues
and internal customers.
Stage 4: During the course of the year, the employees will seek feedback from some of these sources as to how
they are doing and they will keep records of the conversations and the outcomes either in their Personal Fact
File issued to each employee or in a system they have devised themselves. The employees will also be asked to
provide feedback themselves to colleagues on a regular basis.
Stage 5: Meetings with their manager and team members take place on a regular basis, both formal and
informal, not just once a year. Information arising from the feedback provided is discussed and any
developmental needs decided then and there with no need to wait until the end of the year.

Stage 6: More formal reviews can take place to support career development and pay review processes. However,
the emphasis is on ensuring that continuous review and assessment takes place. The HR function do not drive an
appraisal process and do not require any standard forms to be completed unless there are performance problems
where managers are required to follow best practice guidelines to monitor more formally.

Stage 7: Managers come together prior to pay reviews to discuss their assessments of staff, to agree consistent
approaches and to share information to support development moves.

The Performance Management system is one that is ‘feedback-rich’ with the intention of this supporting the
strong communication culture of the organisation. Due to the fact that the pay review is not directly connected
to the developmental aspects of the PM system, the process is not seen as one that is particularly threatening,
but one which has become a very open, informal and two-way procedure. It is also seen by employees as one
which is very supportive and encouraging. Assessments of performance and competence do contribute towards
determining pay but the PM system has been successfully positioned as first and foremost an on-going
development and monitoring tool.

Performance Motivation
The manager must be aware of how to get people to work willingly, to increase the individual’s satisfaction in
the job, and the organization’s efficiency. Every manager must:

Make People Feel Valued

• By regularly monitoring the subordinates’ work.
• By sharing an interest in whatever they hold important.
• By creating an atmosphere of approval and co-operation.
• By ensuring they understand the importance of their contribution to the team’s objectives.
• By ensuring they understand the function of their organization, and why industry matters.

Provide Scope For Development

• By setting targets
• By providing on and off the job training
• By arranging any necessary internal and external contacts
• By using people to train others in the specialist skills they may have
• By restructuring or grouping tasks to use peoples skills to the fullest.

Recognize Achievements
• By praising and communicating individual successes
• By reporting regularly on the team’s progress
• By regular meetings to monitor and counsel on an individual’s progress towards targets.
• By explaining the company results and achievements.

Provide Challenge
• By setting and communicating the team’s objectives
• By providing scope for individuals to take greater responsibility
• By training thoroughly at least one deputy
• By encouraging ideas, and where practical, by allowing staff the responsibility for implementing them.

Provide a Feeling of Personal Achievement

• By removing some controls while retaining accountability
• By assigning individuals specific or specialized tasks, enabling them to become experts.
• By increasing the accountability of individuals for own work.
• By granting additional authority to an employee in his activity; job freedom.

Factors on Performance Motivation

1. People basically motivate themselves. They are seldom motivated directly by other people. Therefore, the
correct approach to motivation is not direct, manipulation of people, but instead, creation of an atmosphere
that will spark the individual himself to greater achievement.

2. How much people are motivated within themselves depends on their current image of themselves and their
expectations of what that image should be. A person’s psychological needs affect his self-image, which is
pretty well set by the time be becomes employed. Also fairly well defined, but more easily modified, is his
image of what he would like to be. A man whose present image is less than he desires will normally be
motivated toward achievement to reduce or eliminate the large gap.

3. Achievement is a result of motivation (Desire to achieve) and talent (ability to achieve). There are many
kinds of abilities that influence an individual’s capacity too achieve – mental ability, mechanical aptitude,
social sensitivity, and creativeness are some. Both ability and desire to achieve must be considered in any
program aimed at sustained motivation.

4. An employee’s desire or ability to modify or control his behaviour patterns drives and personality when they
interfere with positive achievement is basically his responsibility. The Manager’s function is to help him
understand his motivational pattern and to provide the environment in which he can achieve.
Identification of Key Result Areas (KRA)- Goal Setting

Objective Setting – Purpose

• Ensure that each individual is working toward clearly stated objectives that tie into the division goals.
• Provides a sound basis for coaching to improve performance.
• Encourages open communication concerning expected results and progress toward results.
• Helps the individual know “How he’s/She’s doing” compared to what his/her manager expects.
• Encourages comparison on individual objectives to identify overlapping or omitted objectives.
• Essential for performance appraisal, salary, review, and self development.

The recent trend from a focus on traits on behaviours to a results-oriented approach has seen the emergence of
objective setting as a key issue. However, rather than seeking to set objectives, managers would be better
advised to attempt to agree objectives with their staff. Thus, during the course of the appraisal process the
manager and employee should seek to agree objectives for the forthcoming period which comply with the
mnemonic SMART.
Specific
Measurable
Achievable
Realistic
Time-bound

S.M.A.R.T. Criteria For Performance Goals

S.M.A.R.T. Performance Goals
Specific
States in clear terms what outcome, result or
behaviour is to be achieved.
Measurable
Includes measurable results or a description of the
desired outcome.
Criteria Checklist
• Does it specify
- Improved level of quality, quantity, time or
use of resources
- A new/innovative result, faster time line
- An improved behavioural outcome?
• Does it have a clearly stated singular result?
• Will you know from information, data or
observation when it is achieved?
• Does it specify – What? How much? How well?

Attainable • Are resources, authority level, and requisite

A realistic expectation, given time and resources skills in place?
• Does it require a stretch of effort?

Relevant • Will it matter when it is done?

There is a clear tie to goals of the department,
division, etc.
Time Bound
There is a time limit/deadline by which objective
must be achieved & there may be a time frame to
track phases of completion in an action plan.
• Does the objective support relevant goals?
• Does it deal with a key aspect of the job?
• When is the goal to be completed?
• Is there a timetable for milestones or
checkpoints?

The Purpose of Goals and Their Impact on Performance

Goals serve as benchmarks or reference points against which performance on a measure can be compared. Goals
are important for many reasons. Research has repeatedly shown that the process of setting goals and the
existence of goals has a significant relationship to improvement in the performance of individuals and groups. In
particular:
1. Specific goals (“improve performance by x percent”) result in a higher level of performance than general
goals (“do your best”) or no goals at all.
2. Difficult/ hard goals will result in higher performance than easy goals, provided the difficult goals is
accepted as worthwhile and perceived to be attainable (whether or not it is ever actually attained).
3. Although employee participation in goal setting does not necessarily result in higher performance and
improvement in goal attainment, participation does increase acceptance, particularly of difficulty / hard
goals.)

Requirements for Meaningful Goals

Based upon the research on goal setting and our own experience in working with managers in setting goals, we
feel there are several requirements that must be met if resulting goals are to be meaningful and motivational.
1. Goals should be challenging. They should represent a significant improvement of current / typical levels of
performance.
2. Although challenging, at the same time goals should be perceived as attainable. There must be a balance
between the level of difficulty and the achievability of goals. Goals that are perceived as too difficult or too
easy lose their motivational value.
3. Although participation in and of itself will not guarantee that performance will improve or goals will be
attained, there should be wide-spread employee participation in setting goals. Such participation will result
in greater acceptance of more difficult goals and in a higher commitment to goal attainment.
4. The level of difficulty of a particular goal should correspond to its relative importance in meeting compelling
business needs. Employees will accept (and quite often find a way to meet) extreme challenges when they
see a direct relationship between the goal and a compelling business reason that justifies the sacrifice to
attain that goal.
5. Multiple goals should be set for each measure to establish a range within which performance on a given
measure can be expected to vary. Scores on any given measure will vary from reporting period to reporting
period simply as a result of random fluctuation. Regardless of how well we manage, we can never
completely eliminate some variation. Even the most highly sophisticated and highly automated
manufacturing processes are inherently variable. No two products produced using the same process will be
exactly the same. As managers, a certain degree of variation is accepted in any work product. It is thus
acceptable for scores on any measure to vary to some extent from reporting period to reporting period, as
long as that variation stays within certain predefined limits. Additionally, since w know that scores on
measures will always vary to some extent from reporting period to reporting period, minor changes do not
necessarily mean that performance is “better” or “worse.” Multiple goals are important because they
specify the limits within which performance is expected to vary.

Process of setting goals if we make some assumptions

1. Purpose in setting goals is to obtain continued improvement over the long term.

2. Strive for a level of performance that is equal to or better than that of our competitors.

3. The only way to gauge how challenging or attainable a goal is would be to compare the goal to our
previous performance. At a minimum, a challenging goal for us must be something better than our
current or typical performance. And we could probably agree that a goal is attainable if we have
reached that level of performance at least once in the past.

4. Performance improvement must be continuous if we are to e competitive, our minimum expectation

should be that performance over the long term does not deteriorate, and that over the short term our
performance is not worse than any we have experienced in the past, except for normal fluctuations,
seasonality, and the like.

5. Performance organisation is designed to help us achieve our competitive requirements. One should look
to these requirements to gauge the relative importance of each measure and the relative difficulty of
the goals associated with each measure. In short, if better performance on the measure helps us to be
competitive, it is then more important to set challenging goals for the measure.

Multiple Goals are Needed for Each Measure

Traditionally in setting goals, we have focused on reaching agreement on one goal for each measure of
performance. Sometimes this goal was really the standard of minimum level of performance expected. Any
performance better than the standard was good, any worse than the standard was a problem. Sometimes,
instead of a standard, we focused upon reaching agreement on a single goal for each measure we hoped to
attain during a year, quarter, and so on. There was no minimum level of performance. Regardless of what type
of goal we set – a minimum standard, a short-term goal for a month or quarter, or a long-term goal for a year or
more – we only set one goal.

The problem with a single goal for each measure is that it ignores random fluctuations in scores. With a single
goal, we have no way of determining whether fluctuations mark significant changes in performance.

The concept of multiple goals requires setting three levels of goals for each measure of performance. These
three levels are:

1. The long term goal – The long term goal is the level of performance sought over a period of one to two years.
Usually this level is significantly better than current performance. In some cases, the long term goal is the
ultimate level of performance, such as “zero defect” or “zero absenteeism.” The long term goal can be
dictated by management without regard to past performance or to whether the long-term goal is currently
perceived as attainable.

2. The short-term goal – The short-term goal is the level of performance desired and perceived as being
attainable with some effort within a period ranging from three months to one year. At the end of that time,
short-term goals are reevaluated based upon performance. Short-term goals are negotiated. Usually
employees and lower level managers recommend and develop short-term goals subject to approval by upper
management.

3. Minimum or standard – The minimum or standard is the cut-off point for signaling the existence of or
potential for a performance problem. Like short-term goals, minimums or standards are set for a limited
period but for longer duration -- perhaps one to two years. At the end of that time, minimums / standards
are reviewed based upon performance experience, with the expectation that they will be raised. Minimums/
standards are negotiated like short-term goals and must conform to the following criteria : (1) they must be
less than or equal to current average / typical performance and (2) they cannot be worse than the worst
performance for any previous period.

The purpose of the three levels of goals for each measure – long term, short term, and minimum / standard – is
to specify the ultimate level of performance desired by management and to define a range of performance
within which scores on measures may fluctuate without triggering an exception situation, either positive or
negative. The long-term goal and minimum / standard are positive and negative cut-off points negotiated by
managers and employees. If performance equals or is better than the short-term goals, then a definite
improvement has occurred. If performance equals or is worse than the minimum / standard, performance has
declined and some corrective action is required.
Performance Appraisal

Performance Appraisal is a systematic description of an individual’s job-relevant attainments, strengths and

weaknesses, within and between employees. It is composed of two processes, (a) observation and (b) judgement
- both of which are subjective in nature.

Dale Yoder has defined performance appraisal as “all formal procedures used to evaluate personalities and
contributions and potentials of group members in a working organisation. It is a continuous process to secure
information necessary for making correct and objective decisions on employees.”

Managing is a dynamic process, concerned almost entirely with the present and the future, whereas performance
appraisal, as generally used, had been a static rating of an employee related almost entirely with the past. But
more recently, as some managements were recognising that “rating” by itself had very limited utility, they began
to appreciate that managing had evolved into an art. They saw that “management by hunch” could no longer be
tolerated, and that measurements – no matter how vague – were essential to the future development of the art
of managing.

The need for measurements gave birth to several “systems” of managing which attempted to apply
measurements of various sorts to the different aspects and elements of the manager’s job. A number of these
systems leaned on the better performance appraisal methods for their measuring devices or at least for a
starting point for measurement. In some instances, these systems expanded or broadened the meaning of
performance appraisal from a mere rating to include the whole concept of management with all its elements.

Discussion Points to Consider when establishing performance goals

Results : Specific outcome of accomplishing the task or resolving the situation; provides a ‘picture’ of what
should occur;

- Quality: The degree to which the process or result of carrying out an activity approaches
perfection in terms of either conforming to some ideal way of performing the activity, or
fulfilling the activity’s intended purpose.

- Quantity: The amount produced, expressed in monetary terms, number of units or number of
completed activity cycles.

- Timeliness: The degree to which an activity is completed or a result produced, at the earliest
time desirable from the standpoints of both coordinating with the outputs of others and of
maximising the time available for other activities.
- Cost effectiveness: The degree to which the use of organisation’s resources (e.g. human,
monetary, technological, material) is maximised in the sense of getting highest gain or reduction
in loss from each unit.

- Need for supervision: The degree to which a job performer can carry out a job function
without either having to request supervisory assistance or requiring supervisory intervention
to prevent an adverse outcome.
- Interpersonal impact: The degree to which a performer promotes feelings of self-esteem,
goodwill and cooperation among co-workers and subordinates.

Rationale : Reason for the stakeholders ( the individual, team, customer, or organization) to contribute to the
result.

Plan : Sequence of steps or activities to take to accomplish the result; usually includes ‘who’ will do ‘what’
by ‘when’.

Concern : Potential barriers to accomplishing the result; can suggest additional action items – to prevent to
reduce problems.

Resources : Identifies the money, equipment, people, and other support to accomplish the result.
Measure : How to assess progress and result completion

Manager’s Responsibilities
• Translate organisational goals into individual job goals.
• Clearly and honestly communicate expectations regarding performance standards.
• Provide on-going feedback ( both informal and formal, i.e. documented )
• Coach employees on an on-going basis.
• Fairly and objectively diagnose employee’s relative strengths and those areas needing improvement.
• Formulate a plan for improving job performance and developing the employee.

Employee’s Responsibilities
• Participate in job definition
• Identify resources needed
• Receive feedback
• Evaluation based on specific accomplishments

To aid goal setting the following steps may be adopted:

• Think over the job on the following areas:
- Routine responsibilities
- Problem solving responsibilities
- Innovative responsibilities
- Development responsibilities
• Locate key tasks in each of the above areas.

Periodic Progress Review

The intent of this review is to provide a reconfirmation of direction to maintain commitment for the balance
year. New directions may be required. Premises may have to be revised or targets may have to be increased or
decreased because conditions have either made them impossible or too easy.

Key Steps
• In advance, review notes on employee’s performance
• Discuss missions, praise achievements and identify causes of missions not being met
• Discuss performance skills, reinforce good performance and identify causes of skills not being met
• Agree on the plan for corrective actions to be taken by both
• Where necessary, revise missions
• Create a non-threatening climate and express confidence.

Joint Accountability
Management must recognise that most results are achieved through the corporate efforts of two or more people.
Therefore the management style must encourage maximum individual contribution in co-operation with others
towards the accomplishment of appropriate results.

Guidelines for Writing Performance Goals

• Where performance issues are tangible, describe expectations in terms that are measurable and
observable. (Keep in mind quantity, time and resources needed for measurement.)
• Where performance issues are intangible, such as human values or behaviours, describe what the
behaviour/value produces
• Where results are long-term in nature (longer than the performance cycle), identify the interim short-
term results that lead to long-term success.
• Write performance goals that are challenging (require a realistic ‘stretch’ to accomplish) while at the
same time provide the prospect of being exceeded. Accomplishment would prompt a rating on the
particular goal of ‘At Expectations’.
• Write performance goals with the intent that they will be stable over the performance period. However,
they should be revised when changes in priorities or responsibilities lead to the expectation of different
results.
 • The weighting of each goal should reflect the overall relative importance of the activity by giving
consideration to the proportion of time and impact of the activity.
• Performance standards for an employee newly entering job, including those who are new hires or
transfer, should be the same as those currently in the same job.
• Use a writing style in which you:
- Start with the word “To”, followed by an action verb
- Begin statements with nouns
- Describe the expected results, not personal traits or attitudes.
- Write in the present tense
- Avoid using words that are vague or easily misinterpreted.
- Specify only the “What” and “When”; avoid venturing into the “Why” and “How”
- Relate directly to the accountable Manager’s roles and missions and to higher-level roles, missions and
objectives
- Be readily understandable by those who will be contributing to its attainment

Errors To Avoid While Setting Goals/Objectives

• Objectives too high (Overload)
• Objectives too low (Under load)
• Objectives not measurable
• Cost measurement too high
• Too many objectives
• Too long a time period
• Too short a time period
• Too complex objectives
• Imbalanced Emphasis

Purpose
This project report study Goal Setting – as an integral part of human resource development, it’s meaning and
need to an organization.
The report also discusses on the new trend in goal setting i.e. Balanced Score Card.
Goal Setting
Goal setting is an important step in planning process. Moreover it is also consider as an important tool in Human
Resource Development.

As a tool for Motivation

As per Edwin Locke goal setting is simply the most directly useful motivation approach in a managerial context,
since goals are the most immediate regulator of human action and are more easily modified than values of
subconscious premises.

Locke proposed that intentions to work toward a goal are major source of work motivation. That is, goals tell an
employee what needs to be done and how much effort will need to be expended. Goal setting revolves around
the point that specific goals increase performance; those difficult goals, when accepted, results in higher
performance than do easy goals; and that feedback leads to higher performance than does non feedback.

Goals provide a directional nature to people’s behaviour and guide their thoughts and actions to one outcome
rather than another. The individual then responds and performs according to these intentions or goals, even if
the goals are not attained. Consequences, feedback, or reinforcement are the result of these responses.

As a tool for performance evaluation

The goal so set are considered at time of performance evaluation to compare them with actuals, and thus serves
a number of purposes in organization.

Management in general uses the evaluation for personnel decisions, like decisions on promotions, transfers and
terminations. Evaluations identify training and development needs. They pinpoint employee skills and
competencies that are currently inadequate but for which programs can be developed to remedy. Evaluation
also fulfills the purpose of providing feedback to employees on how the organization views their performance.

Goal Setting – Practical Implementation

Goal Setting has been considered generally by the organizations as a benchmark for the organization growth.
That is the target that the company wants to achieve at the end of a specified period. Then these organization
goals are broken into departmental and individual goals and targets.

In general the organizations follow the MBO (Management by Objective) concept which normally includes the
following process:
• Setting overall objectives of the organization.
• Developing the organization for an MBO system.
• Setting individual objectives and action plan.
• Periodic appraisals and feedback on progress and adjustments made.
• Final appraisal on the results.

It is a continuous process.

Target Setting and Performance Improvement

Targets are priorities – special tasks that need to be achieved over and above routine work. Target setting is a
management drill, which helps to assess and measure performance objectively as opposed to subjectively
assessing an individual’s personality. Unless people have a clear understanding of what they are trying to achieve
(which may be different from what infact they spend most of the time doing) of what standards are to be
maintained and how effectively the targets are achieved their overall performance will be significantly lower
than it could be.

Target setting is therefore concerned with:

• Human resources
• Productivity
• Profitability
• Telling people what is expected from them
• Providing a regular check

The areas for target setting are:

• To set a standard of performance
• To raise a standard performance
• To re-establish slipping targets.
• To achieve something in particular
• To line the manager’ job with the organization’s profit plan
• To innovate
• To develop the individual
• To cash in on unforeseen circumstances
• To implement new policy

Result from target setting

• Clearer objectives
• Clarity of how the individual fits into the organization and how they are getting on
• A more realistic appraisal
• Training needs more clearly defined
• The ability to identify potential and possible succession and above all better results.

Measuring Performance Against Targets

Many managers at present are assessed on the basis of impressive confidential forms filled in by their bosses with
spaces for comments on their cooperativeness, loyalty, enthusiasm and the like. It is enjoyable to act the role of
the amateur psychologist but it is also exceedingly dangerous.

Rather than assess managers on their abstract qualities, such as their personality, target setting enables them to
be assessed on the basis of performance. If they have been consulted before the targets are set, then they will
become more committed to them as interested in their achievement and prepared to be assessed on their
performance in executing them.
If the initial impetus created by the process of target setting is to be kept up, a system of progress reviews is
needed. The most effective method is given below.

At the time of establishing the first set of targets, you fix a date about three to four months ahead for a progress
review. At this review, you will go over each target in turn together and check :

• Whether it was achieved and if so, can you learn anything from the methods used to achieved it.
• If it was not achieved, was this due to;
a. failure on the subordinate’s part ( e.g. leaving it too late)
b. Failure on your part (e.g. Failure to give sufficient authority or resources to achieve it.)
c. unforeseen circumstances ( e.g. absence through sickness or extra workload)
• If it was not achieved, should the time limit be extended or something more urgent cropped up since.

Each review gives you the opportunity to discuss difficulties frankly and to identify jointly the falling, and agree
the corrective action. This is constructive assessment, and gives the opportunity for fresh targets for the next
period. At the end of each progress review it is necessary to set a date there and then, about three to four
months ahead, for the next review. This will ensure that the intervals between reviews do not become longer
and longer, with a consequent loss of crispness in the process.

Once a year you should carry out a full-scale appraisal of performance. If you have made brief notes on your
discussions at each progress review, these should be consulted. They will help to remind you of the trend of
performance during the whole year’s work and will obviate the risk of basing the appraisal only on the last few
weeks. The detailed design of your appraisal form will depend on your organization’s policy; number of staff etc.
but certainly the following items should be included.

a. Your comments on performance, using both parts of the job description as your guide.
b. An estimate of suitability for promotion, to what type of post and how soon
c. Your plan for development by coaching, planned experience, training courses, etc.
d. The subordinate’s own views about their performance, and their future wishes.
e. A space for your boss to concur with your comments, dissent from them or add any remarks.
A New Approach: Balanced Scorecard
To achieve business goals, most organizations recognize that they need quantitative metrics to tell them where
they are, how fast they are moving and when they have reached their goals. Establishing these goals and
metrics is not that easy. Market pressures cause many organizations to fixate on only one or a few goals and
measures (e.g. revenue, expansion or market perception), often to the detriment of overall long-term benefits
and frequently at the expense of employees and customers. Whereas a balanced scorecard considers multiple
interdependent perspective linked to strategic goals.

A balance scorecard requires an organization to balance its goals across multiple perspectives to reduce the
chance that one goals will dominate others to the detriment of the organization. For example, an organization
that focuses solely on earnings per share might not be investing enough in its people, may be charging its
customers too much and may not be taking enough quality and safety measures. A balanced scorecard leads to a
realistic compromise that addresses short-term goals and longer-term staying power.

Traditionally, many business intelligence solutions and applications have been rooted in business or organization –
specific indicators: calculated values based on stored data that reveal the health of an organization and help to
develop future strategies. Many of these indicators have been defined by individual organizations and have been
predominately financially based. A balanced scored takes this to the next level, injecting a process and
structure for organizations to adopt.

Balanced Scorecard Perspectives

The balanced score card approach is aimed at uncovering and dealing with conflicts. It suggests four main
perspectives of the organization, each with its own metrics.

1. The financial perspective represents the viewpoint that includes the senior executives, the board of
directors and the stockholders. Typical metrics in this perspective might be earning per share, revenue
growth or profit maximization.

2. The customer perspective represents the viewpoint of the external sources of revenue that takes the
enterprise’s information, goods and services as its raw material to create the goods and services it sell to its
customer or otherwise accomplishes its strategic objectives. Changes made to a business process output
that lowers the customer’s cost or allows the customer to achieve his or her objectives faster have value for
the customer. It is a measure of that value that should be captured by the metrics ( e.g., market share,
customer satisfaction, retention) representing this perspective.

3. The internal business process perspective represents the viewpoint of the people doing the work, and is
generally concerned with duration or efficient use of resources. Cycle time is a typical metric representing
the operational view. Other metrics includes cost of services, speed of services, job safety.

4. The learning and growth perspective is of principal interest to the CEO and the architects of the long-range
business plan. This perspective looks at how effectively the organization can redesign and implement new
business process, introduce and exploit new technology and adapt to changing conditions in general. Metrics
of this perspective can be adaptability, employee satisfaction, and a willingness to shares and gain
knowledge.

The balanced score card requires an organization to identify and balance these goals across these major
perspectives. Once this core metrics has been defined, they can be utilized by analysis techniques such as
simulation; activity based costing and value chain analysis.

Steps in Implementation of Balanced Scorecard

A balanced scorecard project can be far reaching, including : extensive consulting, which may involve
organizational analysis; process re-engineering; business modeling; and data transformation and warehousing.

The steps of implementation are :

1. Identifying and defining Key Performance Indicators from the multiple perspectives:
In Novartis Enterprises Ltd. ( NEL ) the multiple perspective were identified as : Economic performance,
Business development, Efficiency & Innovation, People and Special projects. After this the main task was to
identify the Key Performance Indicators ( KPI) in each of these multiple perspective.
2. Identifying Key Action Areas :
In Novartis, the parent company situated in Basel, Switzerland sends its Top action area to all its Regional
offices who in turn make there top action area And include the top action area of the parent company which
is concerned to there region. Then they circulate this to the companies in there areas. Thus NEL receives
Top action area of its regional head office which they have to include in their list. For this activity they
started first with identifying the key areas and they started listening down the key action in each of these
areas.
3. Implementation:
Implementation is an important stage as without this all the above stage is useless. For implementation, in
NEL it is seen that each of the above action area is allotted with a time frame and a responsibility person /
department for its completion. Even these actions in turn become a part of the individual target sheet.
4. Monitoring:
Monitoring is done by periodic review of the key action areas. Deviations if any should be corrected at the
earliest. In NEL on monthly basis a report is send to its regional head office.

Performance Review System Design and Implementation – Some Process Concerns

Introduction

A formal Performance Review system in any Organisation is part of a macro performance planning, development
and management system. Beyond the immediate context of the HRD systems, the context is a larger goal and
this goal is the achievement of the Organisation objectives. Performance review system seeks to have effective
dialogue with people in organizations as regards what is expected of them, what is their achievement / progress
in this context over the period of time, and what the organization can do to enhance this level of progress so
that its expectations are fulfilled. Being a part of a system where a formal annual performance review system is
in place is a very rich and insightful experience.

Process objectives of a Performance Review System

The uniqueness of the Performance Review system lies in the fact that every single staff of the organization is
involved in its implementation (and effectiveness). Moreover, it is a system that touches every individual within
the organisation and impacts his career not only within the particular organization but also beyond it. This
system demands competencies from every individual member of the organisation at the level of his personal self
– first and foremost an objectivity to view it in the right context, secondly the maturity to introspect and
consequently create an ability to absorb feedback, the courage to speak the truth, and a moral commitment to
contribute towards the Organisation’s growth and development.

Given this level of sensitivity and its criticality for the achievement of the Organisation’s objectives, the system
design, implementation, administration and outcome need to be managed with the utmost level of empathy,
sensitivity, gentleness and care even while retaining the consciousness of the hard business outcomes expected
from it. It becomes the responsibility of the Organisation to demonstrate these feelings and expectations and to
ensure that the system is managed in a most unthreatening environment.
The Performance Review system should serve as a positive stroke, leaving each staff member with a sense of
achievement – the knowledge and comfort of knowing where he stands vis-à-vis the expectations from him and
what he should be doing to get closer to the goal. It should also serve to uplift the performance movement
within organizations to the level of a self-driven system where every individual staff member becomes his own
driver.

Importance of Performance Review System seeks to:

• Create an understanding of the larger Organisation goals and objectives at the level of individuals within the
Organisation.
• Communicate to individuals within Organisations, the expectations from them and the linkage of these
expectations to the larger organisation goals and objectives. The concern is to build a sense of participation
and involvement in organisation achievement.
• Provide guidance with respect to the means for fulfilling these expectations.
• Invite active participation by the superior in helping individuals achieve these expectations.
• Create a sense of achievement within individuals at the level of his personal self in an organisation.
• Instill a sense of accountability for performance at all levels within the organisation, create a consciousness
that performance has to be deliberately planned and developed with dedication, cause a shift from activity
orientation to result and performance orientation.
The Process of System Design and Implementation

The role of a formal performance review system is now widely accepted and recognized in the process of
organization growth and development.

The entire process of Performance Review System involves intervention at three different levels within the
organization viz. the HRD Manager, the Organisation, the reviewer and the individual.

HRD Manager

• The performance review system is one of more crucial responsibilities of the HRD Manager. For it to be
effective, the HRD Manager must have the conviction in the system. It is this conviction that brings in a
sense of ownership, which in turns builds the responsibility and the commitment to make the system
purposeful and effective. This positive feeling and faith must be demonstrated continuously.
• It is very important for the HRD Manager to look beyond the immediate and take a long-term view of the
organization goals and business plans and what is it that the system can really contribute towards this goal.
This clarity is needed to enable an objective evaluation of system effectiveness.
• As a HRD Manager one needs to have a conviction that the Performance Review System can really help to
establish a performance culture and that it can help to steer performance towards the desired goals.
• Beyond this conviction comes the stage of preparing the organization and the decision makers in particular.
This stage needs the HRD Manager himself to be aware of all the possible questions that can arise, sharing of
professional experiences with colleagues from other organizations, how exactly will the system work to align
itself with the larger organization objectives and how exactly will the system get implemented. In this
phase, primarily a clarity of why this particular design, how to implement and why this implementation
strategy and what specifically will be achieved and in what time frame are the questions to which the HRD
Managers must seek answers from within themselves.
• Building professional competencies at the level of the self both in academic / theory and the process – would
have to remain a continuous activity at the level of the HRD Manager while this process is on. The question
to ask is “How aware am I?’ What and where are the competency gaps?” The awareness beginning with the
theoretical inputs on the performance appraisal should carry on to building an awareness of the
organisation’s culture, its people, the decision makers and their professional awareness and commitment.

Organization

The process at the level of the Organisation concerns itself mainly with communication, preparation and
information sharing.

1. Preparing the Organisation

The first question that comes to us when we conceive of a performance review system is “Is my organization
ready to or mature enough to support this system?” The answer can be “Yes”, it can be “No”. If it is “Yes” well,
just go ahead. If it is “No” then there is definitely work to be done before the system comes in.

Mature organizations have a degree of objectivity as a system, they are open to chance, there is a clarity as
regards business goals and objectives, they are goal focused, have respect for systems and above all, they are
professional.

It is vital, for the performance review system to be effective, that the organization should be mature. A high
level of maturity is needed to manage the interpersonal processes that are the essential support mechanism for
any performance review system.

2. Communication
Another process that is critical at the Organization’s level is the process of communication. Communication
must start with why do we need the system, what is the intended purpose, why this system and not any other,
what is the system going to be like, and so on and so forth.

Communication can become a complex and a unilateral process especially in large or multidivisional
organizations.

The performance review system needs line managers to play a support role to the HRD department. The
communication process should take care to build in this competency. Has he understood the system correctly?
Does he feel comfortable with it? Will he be able to communicate to his subordinates with confidence? Has he
enough information to answer all the questions that his subordinates may have to ask him? It would be these
competencies that communication process must seek to establish.

At the more junior levels, the communication process must address itself to anxieties such as how will the
information be used? How will the performance be measured?

A large part of communication at this juncture can be taken care of through training, which is more in the nature
of workshops and participative team exercises.

The objective of this process is to build the ownership of the process at the organization level and not restrict it
at the level of the HRD Manager alone. It is also a process of education that would help the line managers
visualize the role of development.

Reviewer
The Reviewer is the most critical link in the system of performance review. How he conducts the review conveys
more than the spoken word about the objectives of the system, the post exercise use of the information, its
utility to the organization. It is through the reviewer that people experience the system. It is this experience
that builds or mars the credibility of the system. When it comes to the effectiveness of the performance review
system, CREDIBILITY is the key word.

A reviewer needs to :
• Be aware of the organisation’s objectives and how each of the roles within his department/division align
with the broad objectives.
• Gain clarity of what he expects from the role of the particular staff member.
• Communicate these expectations to the staff member before the commencement of the review period.
• Give continuous feedback from incident or event to event in case on non performance during the year.
• Be aware of his own strengths and limitations.

Ideally, the performance review exercise should be treated as an opportunity to summarize and present as a
whole the feedback given and work done during the year.

It is necessary for each of the reviewers to be well informed about the Organisation’s objectives, their individual
roles, the performance expectations from them and the measurement criteria. It will be this understanding that
will percolate down the level. And it is this understanding that helps build and foster the alignment of the
performance review system with the Organisation’s business goals.

Individual
The individual who is going to experience the performance review system also needs to be prepared – especially
if he has not been used to any formal performance review.

The process begins with education and awareness – awareness as regards the organisation’s goals and objectives,
awareness as regards the different roles within the organisation and the expectations from them and how the
Performance Review System fits into the overall plan.

Performance at the individual level is often mixed up with qualities such as sincerity, dedication, job knowledge,
hard work readiness to carry out the boss’s instructions, willingness to work and learn, etc. Performance
expectations in Organisations go beyond this.

It is important for every individual within the Organisation to realize that individual performance cannot exist or
occur in isolation. It has to occur in a context – and the given context is the achievement of the Organisation’s
objectives. The collectivity of individual performance must lead to the achievement of the Organization
objectives. It is for this reason alone that all individual performance has to be seen in the context of its
contribution to the achievement of the organisation’s objectives.

This involves a chance of mindset, a paradigm shift from an isolated view of the self to a collective view of the
team and then the Organization.

The very fact that performance will be reviewed against objective criteria might sound threatening to some
individuals. While the Organization would take care of such discomfort at the wider level, it also calls for
interventions at the level of the individual to absorb negative feedback and create competencies to understand
the process.

Conclusion
The process outcomes are largely dependent on the care, concern and commitment that is demonstrated for the
individual and Organisation development as also the faith and conviction in the system at different levels within
the Organisation.

• The performance review system is a continuous process of directing individual performance in organizations
towards the achievement of the organization performance objectives through a reiterative process of
communicating the performance expectations and its measurement criteria to the different role holders and
thereafter providing constructive feedback to them. It also involves the setting up of enabling systems to
facilitate the performance achievement.

Performance review is a process that involves performance planning, performance development,

performance management and performance appraisal.

• To the extent that any review involves an evaluation and appraisal there is an inbuilt element of subjectivity
in the system. The system can be tailored to reduce this element by evolving as objective standards as
possible and by making it as transparent and open as is feasible. The element of transparency and
objectivity has to gradually increase. All concerned must perceive it as being fair and objective. It is this
credibility of the system that alone can make it effective.

• The process of inducing this objectivity in the system consists of a shift from control to development focus,
from confidentiality to openness and from traits to more quantifiable targets and achievements.

The Reviewers and the decision makers at all levels within the Organisation have to become instrumental in
establishing this credibility of the system.

• The process objectives of a Performance Review system are

- Establishing system credibility
- Communicating the sincerity of purpose both for the individual and for the organization.
- Provide a sense of direction and assist in focusing efforts
- Create and empowering environment
- Create a process ownership
- Create performance culture
- Encourage participation through dialogue
- Build competencies

• The implementation process can be facilitated through

- A visible commitment, support by top management
- A change in the mindset of the personnel involved, beginning with the HRD Manager
- Setting of clear business goals leading to firm performance expectations from different levels.
- Role Analysis of each of the critical roles within the organization.
- Continuous dialogue and information sharing to reinforce they system and also to monitor its
effectiveness.

• When the system is effective the organization really benefits in the following ways :
- Individual performance begins to be seen in the context of its contribution to the organisation
objectives.
- Consequently, individual performance does exist in isolation – the collective performance of all has to
result in organization achievement.
- A performance culture is established.
- It provides the organization with an opportunity to be more system focused, objective and professional.
Performance Review Discussion

The Basis of an Appraisal Discussion

An appraiser and an appraisee get together to engage in a dialogue about the appraisee’s performance and
development. An appraisal discussion is not an interview in which one person asks the questions and the other
provides the answers. It is more like a meeting in which views are exchanged so that an agreed conclusion can
be reached. The formal appraisal meeting is referred as discussion because there is a free-flowing affair in
which both parties are fully involved.

The appraisal discussion provides the means through which the five key elements of performance appraisal can
be achieved. These are:

1. Measurement: It assesses results against agreed targets and standards.

2. Feedback: It gives the appraisee information on how he or she has been doing.
3. Positive reinforcement: It emphasizes what has been done so that it will be done even better in the future.
A constructive criticism is done i.e. points that help in improving are given.
4. Exchange of view: It ensures that the discussion involves a full, free and frank exchange of views about
what has been achieved, what needs to be done to achieve more, what appraisees think about their work,
the way they are guided and managed and their aspirations.
5. Agreement: Both parties jointly arrive at an understanding about what has to be done in order to improve
performance and overcome any work problems raised during the discussion.

The importance of performance reviews

Performance reviews are important for four reasons:

• They are instrumental in keeping everyone’s focus on the performance plans.
• They provide an opportunity for dealing with difficulties that might be preventing people from
performing at their best.
• They provide managers with an opportunity to acknowledge the progress performers are making towards
achievement of their performance plans.
• They provide an opportunity for dealing with changing circumstances.
Performance Counseling and Coaching
Performance Counseling
Our present organisational environment is usually stressful and competitive. Every employee’s life is filled with
various complexities, physical strains, worries about the future, questions about ethics, social responsibilities,
anxiety associated with interpersonal relationships, difficulties connected with performance assessment,
problems of modern life-style etc, due to which he feels frustrated and confused. In order to deal with these
feelings and concerns, the organisation adopts the technique of counseling.

Counseling is a technique for removing tensions and solving problems. Its basic task is to assist others to
make changes in their work life or to accept or adjust to the change. It is a self-helping process in which a
set of techniques, skills and attitudes is applied to help people draw on their own strengths and mobilize
their own energies, to make changes and take effective actions.

Counseling is central to the management and development of people. All managers engage in some activity
which could be termed as counseling as part of their normal working life. It is therefore a natural component of
management – an everyday activity which can arise from immediate feedback.

Counseling is a concentrated form of interpersonal communication. In a counseling program the interchange of

idea between the parties involved (manager and his subordinate) is directed toward a problem or a need that
requires in-depth attention. As such during a performance counseling session, the primary focus, of course,
would be on performance review and improvement.

In this context, performance counseling may serve at least four basic functions:
Corrective or remedial: It may identify conditions, attitudes, or behaviour patterns that precipitate problems
and give advanced set of actions that result in improved performance.
Therapeutic: It may diagnose personal or organizational ills and prescribe and apply medicine to the wounds so
that some form of normality is restored.
Informational: May serve the purpose of conveying information and exchange ideas to prevail problems than
diagnose those already in existence.
Developmental: Help individuals to more fully utilize their capabilities and to more completely achieve their
own potential and higher level of efficiency.

Performance counselling assistance, when given to an employee, helps him to determine his existing capabilities,
to establish goals for future development, to determine if the goals he has in mind are realistically compatible
with his existing abilities and his aptitude to develop, and to work out a plan of action through which realistic
development can occur.

The personal value of these advantages is obvious, but they may also be translated into organisational
advantages. Performance Counselling may reduce absenteeism, turnover, lack of cooperation patterns, and may
otherwise result in improvement for the organisation.

Performance counselling is a creative management art. Every superior who performs the role of a counsellor
during performance communication session plays a vital role in the subordinate’s world.

Principles of Counseling

The principles on which the process of counseling is based are:

• It involves a face – to – face relationship between two persons and is not just an experience of the person
who is undergoing it. The relationship as well as the techniques used make the difference in the
counselee’s thinking and behaviour.
• Counseling concerns itself with the attitudes as well as action. It is emotional rather than purely
intellectual attitude. Information and intellectual understanding have their place in the counseling
process but the emotional feelings are most important.
• Counseling is more than advice giving. The progress comes, through the thinking that a person with a
problem does for himself, rather than through solutions suggested by the counselor.
• It involves something more than the solution to an immediate problem. Its function is to produce
changes in the individual that will enable him to make wise future decisions as well as resolve his
immediate problems:
Approaches to Performance Counseling

The tell and sell approach in which appraisers seek first to let appraisees known how they are doing, then gain
their acceptance of the evaluation and, finally, get them to follow a plan outlined for their improvement. The
problem with this method is that considerable skills is required to get people to accept criticisms delivered in
this way and to change in the required manner. There are occasions when people have to be told what to do,
but it may always be possible to provide the motivation for change, unless resort is made to crude inducements
or threats.

The tell and listen approach in which the evaluation is communicated to appraisee who is then allowed to
respond to it. Instead of appraisers dominating the discussion they sit back and become non-directive
counsellors during the second part of the meeting. Appraisees are encouraged to think things out for themselves
and to decide on what needs to be done. The assumption is made that they are more likely to change in these
circumstances than if they had been told what to do.

An advantage of this approach is that appraisers can profit more from the discussion by receiving feedback from
appraisees on how improvements can be achieved with regard to management, work methods, the provision of
resources, dealing with problems outside the control of appraisees and job assignments. However, this method
also requires skill on the part of appraisers in listening, reflecting feelings and summarizing, opinions.

The problem-solving approach This requires appraisers to start by encouraging appraisee to identify problem
areas and then exchange ideas about solutions. An appraisee therefore plays an active part in reviewing problem
areas and in deciding what should be done about them. The evaluation of performance emerges from this
discussion rather than being imposed on an appraisee. In this approach the emphasis is less on what went right
or wrong with performance in the past and more on ensuring that steps are taken to improve performance in the
future.

This method motivates original thinking and provides the intrinsic motivation that can be derived from the work
itself and the process of overcoming work problems. Job satisfaction can be improved by reorganising or
enriching the job by changing the appraisees’ perception of their role and by increasing the appraisers’ ability to
provide guidance and help in the form it is needed.

Coaching
Coaching is a cycle of activities which focuses on the whole or just a part of the job of the person being coached.
The focus is often decided upon as a result of a performance review.

In fact the assessment stage in the coaching cycle is a performance review. The coaching cycle consists of five
stages:

Agreeing aims
The first stage of the coaching process is to agree the aims of the coaching activity, which need not be a lengthy
process. The focus should be on that part of the individual’s performance that has been selected for attention,
and the primary aim will be to improve performance. For coaching to be successful, agree upon more detailed
specific aims for the various elements which make up the area identified for improvement. These aims should
be measurable and have agreed completion dates.

Awareness
Managers who are operating as coaches, and the recipients of the coaching, should be aware of what is
happening as the performer performs. One role for coaches is to guide performers to a clearer understanding of
what they are doing. Making assumptions does not help to increase awareness, in fact it can deflect attention
away from where it is most needed. Coaches should talk with the people being coached about what they see
happening and try to get performers to understand and agree.

Clarity about what is happening at the moment is perhaps the most important aspect of coaching. It is not
necessary to know why it is happening, but how we can do things differently to improve. Knowing what is
happening now is the starting point in recognizing the ‘performance gap’ between where we are and where we
want to be, and in identifying the missing ingredients.

Analysis
Analysing what has been observed and what the performer has experienced is the next step. From this analysis
coaches and performers can discuss and evaluate the options to determine what can be done differently to
improve.

If the analysis is an effective two-way interaction between the coach and the performer, there is every chance
that performers will recognize what they can do for themselves.

Remember, during the analysis stage it is essential that both coach and performer learn from the experience. It
is not about finding fault or focusing on errors.

Action
The ‘action’ stage of coaching is an opportunity to learn rather than a test of ability. To make the action
effective performers should know clearly what is expected of them and have the support and experience of their
coach. The encouragement to try new skills is essential for improving performance. Taking action is the
essence of performance.

Assessment
The final stage of the coaching process is the assessment of the performance in a form that will help performers
to improve. Positive encouragement, by being honest and giving non-critical feedback, is important.

Whatever system of assessment is agreed and understood it should be used as a review mechanism to evaluate
the degree of success achieved, the learning experienced and further opportunities for improvement. The
assessment also enables coaches to reflect on their own learning and development.

Try to recognize that the people who are being coached may often have greater skill and ability than the coach,
but that without the critical eye and the knowing experience of the coach they may find it difficult to improve.
For example, Wimbledon finalists are usually far better tennis players than their coaches, but the coaching can
make all the difference. The idea of coaching is that someone who has knowledge and experience is trusted to
help someone less experienced but with skill and talent to develop.

The Coaching Process

Process Stage Questions asked leading to Information gained

Agreeing aims What are we trying to achieve? Clear objectives

When are we going to do it? Agreed dates
How will we know we’ve succeeded? Measurement
Awareness What is happening now? Clear picture of current
What have you done so far? actions
What are the consequences? Effect of current action
What do we want to be different? Gap between where we are
and where we want to be
Analysis What can we change? Identify possibilities
What are the options? Broaden vision
How can we change it? Seek solutions
What are the risks? Evaluate choices
What are the barriers? Obstacles to overcome
Action What are we going to do? Clear action steps
Who is going to do what? Agree responsibilities
When are we going to do it? Agree milestones
What do we need to help us? Determine support
NOW DO IT
Assessment What actually happened? Clarify outcomes
Was this what we wanted? Evaluate degrees of success
Discoveries made
 What have we learned? Establish further potential
How can we improve?

Performance Appraisal
Performance Appraisal is the most significant and indispensable tool for an organisation. It provides information,
which helps in taking important decisions for the development of an individual and the organisation. A
systematic and periodic appraisal of subordinates by superiors is deemed to be an essential part of any
executive’s job.

Whether an organisation accepts or denies the usefulness of performance appraisal, whether it adopts a formal
appraisal system or not, top management is constantly appraising the performance of its subordinate managers.
The latter are doing the same to their own subordinates. They are doing so because performance appraisal,
formal or informal, lies at the heart of the art of managing. Good managers do it well; poor managers do it less
satisfactorily; only bad managers do not do it at all.

Formal performance appraisal programs for managers have been introduced into many companies for a number
of reasons. These include the need to develop managers, identify ‘promotable’ managers, motivate managers,
improve managerial performance, and most frequently, determine annual salary increases (‘merit rating’).

Each of these reasons is directly related to some normal “managing” concern. The programs are intended to
ensure that no manager can neglect his accountability for that concern, to raise the standards of performance to
a uniformly high level throughout the organisation, and to provide all subordinates with relatively equitable and
just treatment. The weakness of many programs stems from their limited objectives - their emphasis on a single
concern as if it were separate and distinct from the other elements of managing.

Managing is a dynamic process, concerned almost entirely with the present and the future, whereas performance
appraisal, as generally used, has been a static rating of an employee related almost entirely with the past.
Recently, some management’s have recognised that “rating” by itself has a limited utility, they began to
appreciate that managing has evolved into an art. They saw that “management by hunch” could no longer be
tolerated, and that measurements - no matter how vague - were essential to the future development of the art
of managing.

The need for measurements gave birth to several “systems” of managing which attempted to apply
measurements of various sorts to the different aspects and elements of the manager’s job. A number of these
systems leaned on the better performance appraisal methods for their measuring devices or at least for a
starting point for measurement. In some instances, these systems expanded or broadened the meaning of
performance appraisal from a mere rating to include the whole concept of management with all its elements.

Performance Appraisal is a systematic description of an individual’s job - relevant attainments, strengths and
weaknesses, within and between employees. It is composed of two processes, (a) observation and (b) judgement
- both of which are subject to human bias.

Performance Appraisal has been defined by Heyel as “a process of evaluating the performance and qualities of
an employee in relation to his job requirements for which he is employed, for purposes of administration
including placement, promotions, rewards and other actions, requiring differential treatment amongst the
members of a group as distinguished from actions affecting all members equally.”

Why Study Performance Appraisal ?

The study of Performance Appraisal results in benefits for the organisation, the appraiser, and the appraisee
which are summed up below :

For the organisation:

­ Improved performance throughout the organisation due to:
­ effective communication of organisation’s objectives and values.
­ increased sense of cohesiveness and loyalty.
­ managers are better equipped to use their leadership skills and to develop their staff.
­ Improved overview of tasks performed by each member of a group.
­ Identification of ideas for improvement.
­ Development of expectations and long-term views.
 ­ Identification of training and development needs.
­ Creation and maintenance of a culture of continuous improvement.
­ Communication to people that they are valued.

For the appraiser:

­ Opportunity to develop an overview of individual jobs.
­ Identification of ideas for improvements.
­ Increased job satisfaction.
­ Increased sense of personal value.
­ Opportunity to link team and individual objectives with department & organisational objectives.
­ Opportunity to clarify expectations that the manager has from teams and individuals.
­ Opportunity to re-prioritize targets.
­ Means of forming a more productive relationship with staff based on mutual trust and understanding.

For the appraisee:

­ Increased motivation.
­ Increased job satisfaction.
­ Increased sense of personal value.
­ Clear understanding of what is expected and what needs to be done to meet expectations.
­ Opportunity to discuss work problems and how they can be overcome.
­ Opportunity to discuss aspirations and any guidance, support or training needed to fulfill these aspirations.
­ Improved working relationships with the manager.

Appraisals are used as criteria in test validation. That is, test results are correlated with appraisal results to
evaluate the hypothesis that test scores predict job performance. However, if appraisals are not done carefully,
or if considerations other than performance influence appraisal results, the appraisals cannot legitimately be
used for any purpose. As a result of the proper specifications of performance levels, appraisals can help
diagnose organisational problems. They also provide a basis for distinguishing between effective and ineffective
performers. Appraisal therefore represents the beginning of a process, rather than an end product.

Objectives of Performance Appraisal Systems

A number of important objectives can be achieved simultaneously, with well-designed performance appraisals.
These objectives include: role clarity, increased communication, performance planning, strengthening superior-
subordinate relationships, data generation for personnel decisions, performance improvement, identifying
developmental needs, improving executive effectiveness etc.

The objectives of performance appraisals can be classified broadly into four categories :

Performance Planning
­ Enable managers to develop role clarity continuously and consequently do the right things and avoid
wastage of time.
­ Develop a discipline of systematic planning and review of one’s own performance. Such planning and
review forms a basis for subsequent development efforts.

Performance Development
­ Enable managers to gain more insights into their own competencies (strengths, weaknesses etc.) in relation
to their jobs.
­ Help identify developmental needs of appraisees.
­ Increase mutuality between each employee and his supervising officer and strengthen relationships.
­ Mechanisms of increased upward and downward communication which further facilitates performance
development
­ Assist in preparing employees to perform higher level jobs by continuously reinforcing the development of
qualities required to handle level responsibilities.

Culture Building
­ Instruments for promoting self-appraisal, reflection and motivation.
 ­ Will help employees to internalize the norms, culture and values of the organisations.
­ Instruments for creating a positive, problem-solving, collaborative and healthy culture in the organisation.

Performance Monitoring and Control

­ Instruments to ensure that every employee gives a desired level of performance by attaching rewards and
punishments for variations in performance levels.
­ Used by senior/higher level executives as tools to control the behaviour and output of subordinates due to
the control over assessment and ratings.

Performance Management Defined

Performance Management can be defined as a strategic and integrated approach to delivering sustained success
to organization by improving the performance of the people who work in them and by developing the capabilities
of teams and individual contributors.

Performance Management is strategic in the sense that it is concerned with the broader issues facing the
business if it is to function effectively in its environment, and with the general direction in which it intends to go
to achieve longer-term goals. It is integrated in four senses :
­ Vertical integration – linking or aligning business, team and individual objectives;
­ Functional integration – linking functional strategies in different parts of the business;
­ HR integration – linking different aspects of human resource management, especially organizational
development, human resource development and reward, to achieve a coherent approach to the
management and development of people; and
­ Integration of individual needs with those of the organization, as far as this is possible.

Purpose of Performance Management

Performance Management is a means of getting better results from the organization, teams and individuals by
understanding and managing performance within an agreed framework of planned goals, standards and
competence requirements. It is a process for establishing shared understanding about what is to be achieved,
and an approach to managing and developing people in a way that increases the probability that it will be
achieved in the short and long term. It is owned and driven by line management.

Principles of Performance Management

The principles of performance management are as follows :
­ Translates corporate goals into individual, team, department and divisional goals.
­ Helps to clarify corporate goals.
­ Continuous and evolutionary process, in which performance improves over time.
­ Relies on consensus and cooperation rather than control or coercion.
­ Encourages self-management of individual performance.
­ Requires a management style that is open and honest and encourages two-way communication between
superiors and subordinates.
­ Requires continuous feedback.
­ Feedback loops enable the experiences and knowledge gained on the job by individuals to modify corporate
objectives.
­ Measures and assesses all performance against jointly agreed goals.
­ Should apply to all staff; and it is not primarily concerned with linking performance to financial reward.

The Scope of Performance Management

Performance management is about managing the organization. It is a natural process of management, not a
system or a technique. It is also about managing within the context of the business ( its internal and external
environment). This will affect how it is developed, what it sets out to do and how it operates. The context is
as important as saying that it is ‘managing context, not performance’.

Performance management concerns everyone in the business – not just managers. It rejects the cultural
assumption that only managers are accountable for the performance of their teams and replaces it with the
belief that responsibility is shared between managers and team members.
In a sense, managers should regard the people who report to them as customers for the managerial contribution
and services they can provide. Managers and their teams are jointly accountable for results and are jointly
involved in agreeing what they need to do and how they need to do it, in monitoring performance and in taking
action. Performance management processes are part of a holistic approach to managing for performance which
is the concern of everyone in the organization.

The Process of Performance Management

Performance management is a continuous and flexible process that involves managers and those whom they
manage acting as partners within a framework that sets out how they can best work together to achieve the
required results. It focuses on future performance planning and improvement rather than on retrospective
performance appraisal. It provides the basis for regular and frequent dialogues between managers and
individuals or teams about performance and development needs. Performance management is mainly
concerned with individual performance and development but it can also be applied to teams.

Performance management reviews provide the inputs required to create personal or team development plans,
and to many, performance management is essentially a developmental process and they prefer to talk about
performance and development reviews rather than performance management. Performance reviews can,
however, produce data in the form of individual ratings, which may be used as the basis for performance-related
pay decisions.

Performance management is a process for measuring outputs in the shape of delivered performance compared
with expectations expressed as objectives. In this respect, it focuses on targets, standards and performance
measures or indicators. But it is also concerned with inputs – the knowledge, skills and competencies required to
produce the expected results. It is by defining these input requirements and assessing the extent to which the
expected levels of performance have been achieved by using skills and competencies effectively that
developmental needs are identified.

Thus performance management is not a top-down, backward-looking form of appraising people. Neither is it just
a method of generating information for pay decisions. Performance management is forward looking and
developmental. It provides a framework in which managers can support their team members rather than dictate
to them, and its impact on results will be much more significant if it is regarded as a transformational rather
than as an appraisal process.

Managing Performance Throughout the Year

Perhaps one of the most important concepts of Performance management is that it is a continuous process which
reflects normal good management practices of setting direction, monitoring and measuring performance, and
taking action accordingly. Performance management should not be imposed on managers as something ‘special’
they have to do. It should be treated as a natural process that all good managers follow. The sequence of
performance management activities does no more than provide a framework within which managers, individuals
and teams work together in whatever ways best suit them to gain better understanding of what is to be done,
how it is to be done and what has been achieved. This framework and the philosophy that supports it can form
the basis for training newly appointed or would-be managers in this key area of their responsibilities.

It can also help in improving the performance of management who are not up to standard in this respect. A
formal, often annual review is still an important part of a performance management framework but it is not the
most important part. Equal, indeed more, prominence is given to the performance agreement and the
continuous process of performance management.

The Continuing Process of Performance Management

Performance management should be regarded as an integral part of the continuing process of management. This
is based on a philosophy that emphasizes :
­ the achievement of sustained improvements in performance;
­ continuous development of skills and overall competence;
­ that the organization is a ‘learning organization’.
Monitoring and Evaluating Performance Management
It is important to monitor the introduction of Performance management very carefully but it is equally vital to
continue to monitor and evaluate it regularly, especially after its first year of operation.

The best method of monitoring and evaluation is to ask those involved – managers, individuals and teams – how it
worked. It is also desirable to scrutinize a sample of completed forms to check on how well and thoroughly they
have been completed. The evaluation can be carried out by members of the project team and / or by the
personnel function. An independent consultant or adviser can be used to conduct a special review.

Individual and group discussions can be supplemented by a special survey of reactions to Performance
management, which could be completed anonymously by all managers and staff. The results should be fed back
to all concerned and analysed to assess the need for any amendments to the process or further training
requirements.

The ultimate test, of course, is analyzing organizational performance to establish the extent to which
improvements can be attributed to performance management. It may be difficult to establish a direct
connection but more detailed assessments with managers and staff on the impact of the process may reveal
specific areas in which performance has been improved, which could be linked to an overall performance
measure.
Contents of a Performance Appraisal System

The components used in a performance appraisal system flow directly from the specific objectives of appraisal.
The key components used in a number of organizations include:
• Key Performance Areas (KPAs)/ Key Result Areas (KRAs)
• Attributes / Qualities / Traits
• Self-appraisal
• Performance Review Discussion
• Performance Counseling
• Potential Appraisal
• Identification of Training / Development needs.

• KPAs for Role Clarity and KRAs for Accountability

Identifying KPAs/KRAs /tasks/targets / etc. are mechanisms which facilitate a planning process. While key
performance areas stress what main functions the appraisee as an individual is expected to perform during the
year or the performance period, KRAs emphasize the accountability or the results the appraisee is expected to
achieve in the performance period. The process of identification of KPAs / KRAs /tasks/targets itself facilitates
development of role clarity, if carried out properly. This process should consist of the appraisee and the
appraiser discussing jointly what is expected from the appraisee and the appraiser in the coming year and
planning for bettering their performance or setting realistic and challenging goals. This process and the time
spent on it are more important than whether the component is called KPA or KRA. However, given the choice
between the two, KPAs are to be preferred over KRAs as KPAs emphasize what the appraisee should ‘do’ and the
effort he has to put in.

• Attributes / Qualities /Traits

Another component of the currently practiced appraisal systems is identification and assessment of critical
attributes (qualities, competencies, traits etc.) required to be shown by the executive on the job. Attributes as
a part of performance appraisal help in reinforcing the behaviors /qualities/competencies that are required or
are to be developed by the executives. Hence it is useful to have them as a part of performance appraisals.
Irrespective of the way the attributes are identified, a common experience with most organizations is the
neglect in providing a clear picture or outline of these attributes. Both the appraisee and appraiser should have
a shared understanding of what each quality means, how important it is for the appraisee’s job or for the
organization, and how the quality can be exhibited and measured (performance standards) in a given job. This is
possible only through some discussion between the appraisee and appraiser periodically and at least once a year
alongwith the performance planning exercise.

• Self-Appraisal
Development or change takes place only if the appraisee is interested in development or change. Such a desire
is normally an outcome of self-review or reflection. Self appraisal as a component of performance appraisal
aims at promoting such a review and sets the stage for development. In addition, it is an opportunity for the
appraisee to recapitulate and the extent to which other factors have contributed to his successes or failures.
The most important part of self-appraisal is the process of review and reflection through performance analysis.
Such performance analysis should be done both by the appraisee and appraiser separately and exchanged during
review discussions.

• Performance Review Discussion

How Performance Appraisal is conducted?

Steps - Formal appraisals

­ Conduct the appraisal discussion.
­ Overcome any problems emerging during the appraisal.
­ Conclude the appraisal by recording the results.
­ Agree on an action plan and, if necessary, obtain another view from the appraiser’s manager, to ensure that
a fair and thorough appraisal has taken place.

Steps - Informal appraisals

­ Informal discussion takes place as and when required wherein, updating the objectives or performance
plans are carried out.
 ­ The processes of coaching and Counseling, which help to implement the developmental and performance
improvement programs take place.

Appraisal discussions form a basis of making plans for the future. An overall view is taken of the progress made.
Obtaining historical perspective through analysis is a necessary part of an appraisal discussion but reaching
agreement about what should be done in the future is what the discussion is really all about.

The Basis of an Appraisal Discussion

An appraiser and an appraisee get together to engage in a dialogue about the appraisee’s performance and
development. An appraisal discussion is not an interview in which one person asks the questions and the other
provides the answers. It is more like a meeting in which views are exchanged so that an agreed conclusion can
be reached. The formal appraisal meeting is referred as discussion because there is a free-flowing affair in
which both parties are fully involved.

The appraisal discussion provides the means through which the five key elements of performance appraisal can
be achieved. These are:
6. Measurement: It assesses results against agreed targets and standards.
7. Feedback: It gives the appraisee information on how he or she has been doing.
8. Positive reinforcement: It emphasizes what has been done so that it will be done even better in the future.
A constructive criticism is done. i.e. points that help in improving are given.
9. Exchange of view: It ensures that the discussion involves a full, free and frank exchange of views about
what has been achieved, what needs to be done to achieve more, what appraisees think about their work,
the way they are guided & managed and their aspirations.
10. Agreement: Both parties jointly arrive at an understanding about what has to be done in order to improve
performance and overcome any work problems raised during the discussion.

Opening the Discussion

The best position for the appraiser and the appraisee is to sit opposite to one another. The appraisers aim
should be to build up good trust level during the discussion with the appraisee. The following approach will
guide the appraiser to open a discussion:
­ Start by reminding the appraisee of the purpose of discussion, stressing that this is not to dwell unduly on
the past but to look to the future.
­ Let the appraisee know how much time you have set aside for the discussion to demonstrate that you are
not going to rush through it.
­ Continue by explaining that the aim is to come to an agreement on what has been achieved since the last
meeting and what is to be achieved in the future.
­ This should be followed by a brief exchange in which each party itemizes the key points they want to
discuss - setting the agenda.
­ The discussion can then begin, probably with an invitation from the appraiser to the appraisee to talk
generally about the progress he or she has been making during the year with reference to notes made prior
to the meeting or a completed preparation form.

General Guidelines
There are a number of general guidelines on how the appraisal discussion may be conducted. Each of them
should be applied according to the circumstances in which the discussion is taking place and the personalities of
those involved - there is no one right way to conduct an appraisal discussion.

Let the appraisee do most of the talking

­ Appraisal discussion is a process during which information is sought from the appraisee. To do this there is
a need to encourage them to do most of the talking.
­ If you give appraisees plenty of time to talk through the issues and put forward their own solutions to
problems you are much more likely to obtain willing agreement to revised objectives and performance
improvement plans.
­ The appraiser should reinforce the fact that he wants to hear the apraisee’s views, so that they can work
together to work out solutions to any problems which have been met in carrying out work.
­ Ask appraisees to expand on any comments they make about their achievements, and suggest that they
give examples.

Encourage self-appraisal
 ­ One way of getting participation is to encourage self-appraisal. This means getting individuals to analyse
and assess their own performance as a basis for discussion.
­ Research has shown that when an element of self-appraisal is incorporated, the appraisal process is likely
to generate less inhibited and more positive discussion.
­ Self-appraisal can reduce defensiveness by encouraging appraisees to take the lead in reviewing their own
performance, rather than having an assessment imposed on them.

Keep the whole period under review

­ Both appraisers and appraisees should keep the whole period under review. They should not refer just to
recent events.
­ It is a great temptation to concentrate on the most obvious successes or failures in the weeks before the
appraisal discussion since they are all fresh in their minds and are making the most impact on current
results.

No surprises
­ Do not deliver unexpected criticisms - there should be no surprises.
­ The discussion should be concerned only with events or behaviours which have been noted at the time they
take place.

Recognise achievements and reinforce strengths

­ Wherever possible the appraiser should begin with praise for some specific achievement.
­ Everyone needs encouragement, appreciation and praise which helps people to relax in what are
potentially the sticky moments at the start of an appraisal discussion.
­ Praise must be sincere and deserved. There must reference to actual achievements.

Criticize constructively
­ Praise is important but the appraisal discussion must also cover those aspects of performance, which have
not met expectations, tackling any issues which arise because objectives have not been achieved.
­ Managers often are reluctant to criticize because it makes them uncomfortable or they fear a hostile and
defensive reaction, they want to retain their ‘nice’ image.
­ Most individuals appreciate feedback on areas where they have not done so well so that they get the
opportunity of putting the record straight.
­ Confine your comments to weaknesses that can be put right, do not try to alter the appraisee’s personality.
­ Let appraisees know that you appreciate their frankness in identifying any shortcomings.

Listen carefully
An appraisal discussion is a dialogue. Both parties are communicating information and ideas to one another to
achieve the purpose of the meeting.

Good listeners concentrate on the speaker. They respond quickly to points made by the speaker, ask questions
frequently to elucidate meaning, give the speaker an opportunity to rephrase or underline a point, comment on
the points made by the speaker without interrupting the flow of conversation.

Body language
Words are not the only means of communication. The ways in which the appraiser presents himself and reacts
physically can convey very clearly the extent to which he is really listening to what the appraisee has to say.
This is sometimes called physical attending and involves maintaining good eye contact during the discussion,
maintaining an open posture to demonstrate receptivity to the appraisee’s ideas, smiling / nodding
encouragingly from time to time etc.

Reaching agreement
Agreement on a performance issue or an improvement plan is most likely to be achieved if the appraiser
recognises the other person’s concerns and feelings, obtains and listens carefully to their views and adopts a
joint problem-analysis and problem-solving approach. Appraiser will have to use his influencing skills to obtain
agreement.

• Performance Counseling
Our present industrial environment is usually stressful and competitive. Every employee’s life is filled with
various complexities, physical strains, worries about the future, questions about ethics, social responsibilities,
anxiety associated with interpersonal relationships, difficulties connected with performance assessment,
problems of modern life-style etc, due to which he feels frustrated and confused. In order to deal with these
feelings and concerns, the organisation adopts the technique of Counseling.

Counseling is a technique for removing tensions and solving problems. Its basic task is to assist others to make
changes in their work life or to accept or adjust to the change. It is a self-helping process in which a set of
techniques, skills and attitudes is applied to help people draw on their own strengths and mobilize their own
energies, to make changes and take effective actions. Counseling is central to the management and
development of people. All managers engage in some activity which could be termed as Counseling as part of
their normal working life. It is therefore a natural component of management – an everyday activity which can
arise from immediate feedback.

Counseling and Performance Appraisal

Every manager has to appraise the performance of his subordinates and this usually involves a formal interview.
Company appraisal schemes can be very time-consuming and if they are to be useful, they must be client-
centered. This means that appraisal interviews must be linked with Counseling, so that the subordinate can use
the appraisal information positively.

An appraisal and Counseling interview is more likely to be effective if the following points are borne in mind:
­ The manager should show his subordinate everything that he has written about him and share it with him.
Anything else breeds suspicion. This is especially true of poor performance, and it is the only way in which
improvements are likely to be made.

­ The appraisal report should be finalised in the presence of the subordinate. This allows him to know
exactly what is being placed on file and provides him with the opportunity, if he wishes, to record any
disagreement he may have with the report.
­ The subordinate should contribute a large part of through self appraisal. Self-appraisal is particularly
effective in two areas : (a) Poor performance. In a Counseling relationship people can exercise self-
criticism, which is a prerequisite of change and improvement. (b) Career progression. Self-appraisal
allows a person to explore his career aspirations so that appropriate training and work experience can be
planned
­ Both manager and subordinate can feel anxious and apprehensive about an appraisal interview. An analysis
of the emotional dynamics in these situations can help both parties to understand the reasons for this and
to cope better.

Performance Counseling
Counseling is a concentrated form of interpersonal communication. In a Counseling program the interchange of
idea between the parties involved (manager and his subordinate) is directed toward a problem or a need that
requires in-depth attention. As such during a performance Counseling session, the primary focus, of course,
would be on performance review and improvement.

In this context, Performance Counseling may serve at least four basic functions:
­ Corrective or remedial: It may identify conditions, attitudes, or behaviour patterns that precipitate
problems and give advanced set of actions that result in improved performance.
­ Therapeutic: It may diagnose personal or organisational ills and prescribe and apply medicine to the
wounds so that some form of normality is restored.
­ Informational: May serve the purpose of conveying information and exchange ideas to prevail problems
than diagnose those already in existence.
­ Developmental: Help individuals to more fully utilise their capabilities and to more completely achieve
their own potential and higher level of efficiency.

Performance Counseling assistance, helps the employee to determine his existing capabilities, to establish goals
for future development, to determine if the goals he has in mind are realistically compatible with his existing
abilities and his aptitude to develop, and to work out a plan of action through which realistic development can
occur. The personal value of these advantages is obvious, but they may also be translated into organisational
advantages. Performance Counseling may reduce absenteeism, turnover, lack of cooperation patterns, and may
otherwise result in improvement for the organisation.
Performance Counseling is a creative management art. Every superior who performs the role of a counselor
during performance communication session plays a vital role in the subordinate’s world. A manager would be a
more effective and successful performance counselor if he tries to cultivate some of the qualities of a good
counselor. These qualities are:
1. The counselor perceives:
­ From an internal view rather than an external one
­ In terms of people rather than things.

2. Counselors see others as:

­ Able rather than unable
­ Dependable rather than undependable
­ Friendly rather than unfriendly
­ Worthy rather than unworthy

3. Counselors perceive themselves as:

­ Identifying with people rather than being apart from them
­ Having enough rather than wanting
­ Self-revealing rather than self-concealing

4. Counselors, perceive their goals to be:

­ Freeing rather than controlling
­ Unselfish rather than self-serving
­ Concerned with larger rather than smaller meanings.

The Counselor’s approach

Trainees vary in their approach to counselees and their personal problems. An analysis of the various ways in
which counselors respond to counselees reveals the following approaches:

­ Evaluative: The counselor passes judgement on what the counselee says, “This is right and that is wrong”,
“If you do this, that will happen, you ought to do this and avoid that”.
­ Interpretive: The counselor assigns causes to the problem the counselee is talking about. He teaches the
counselee how she ought to think.
­ Supportive: The counselor pacifies and reassures the counselee. He reduces the counselor’s intensity of
feeling, telling her that she need not feel the way she does.
­ Probing: The counselor asks for further information to know more about certain things.
­ Understanding: The counselor tries to understand correctly how the counselee feels, how she looks upon
her problem, and what she has to say about it.

Counseling poor performance

The reasons for poor performance may be either genuine, due to lack of abilities or organisational support or
may be attitudinal. Counseling those with poor performance requires more understanding, patience and more
personalized attention by the managers.

In case of lack of abilities the manager could help the employee develop these abilities by guiding and training
him. If the employee is not capable of acquiring these, the related functions should be taken away from him
and he could be given functions he can perform. Keeping him continuously in the same role may have
demoralizing effects on him. If support is lacking, the supervisor should understand the support requirements
and try to provide the support needed.

In case of attitudinal problems, the manager should make appropriate interventions. If it is a problem of
recognition, promotion etc., the manager should help him realize the reality. The reality may be that there are
no opportunities or that there are more capable people waiting for promotion. The manager should counsel him
rather than simply telling him the factual position. If he genuinely feels good about his performance, he could
empathize with him.

Quite often, a poor performer is withdrawn and sulks like a rejected child. His problem may be of taking
initiative and getting some more guidance. Such an employee is also likely to get discouraged very easily and
needs empathy. Advice must be given with care. The employee with this personality style is accustomed to
warding off evaluative comments as condemning rather than as helpful to him. Guidance of such employee is a
slow process. After the employee understands his problem to be one of withdrawal and self-assertiveness and
greater involvement. The employee should view himself as a social being, a family provider and member of an
organisation. The goal of this counseling is to help the employee realize how his attitudes and behaviour hinder
him in becoming a fuller person.

Approaches to Performance Counseling

The tell and sell approach in which appraisers seek first to let appraisees know how they are doing, then gain
their acceptance of the evaluation and, finally, get them to follow a plan outlined for their improvement. The
problem with this method is that considerable skill is required to get people to accept criticism delivered in this
way and to change in the required manner. There are occasions when people have to be told what to do.
The tell and listen approach in which the evaluation is communicated to appraisee who is then allowed to
respond to it. Instead of appraisers dominating the discussion they sit back and become non-directive
counsellors during the second part of the meeting. Appraisees are encouraged to think things out for themselves
and to decide on what needs to be done. The assumption is made that they are more likely to change in these
circumstances than if they had been told what to do. An advantage of this approach is that appraisers can profit
more from the discussion by receiving feedback from appraisees on how improvements can be achieved with
regard to management, work methods, the provision of resources, dealing with problems outside the control of
appraisees and job assignments. However, this method also requires skill on the part of appraisers in listening,
reflecting feelings and summarizing, opinions.
The problem-solving approach – this requires appraisers to start by encouraging appraisee to identify problem
areas and then exchange ideas about solutions. An appraisee therefore plays an active part in reviewing problem
areas and in deciding what should be done about them. The evaluation of performance emerges from this
discussion rather than being imposed on an appraisee. In this approach the emphasis is less on what went right
or wrong with performance in the past and more on ensuring that steps are taken to improve performance in the
future. This method motivates original thinking and provides the intrinsic motivation that can be derived from
the work itself and the process of overcoming work problems. Job satisfaction can be improved by reorganising
or enriching the job by changing the appraisees’ perception of their role and by increasing the appraisers’ ability
to provide guidance and help in the form it is needed.

• Potential Appraisal
This is the most difficult of all the appraiser’s tasks. Whilst it may be simple to predict that what a man “will
do” in future at his present level and task is what he “has done” at that level in the past; it is by no means easy
to see what he will do at a higher level. Very few new ideas have been forthcoming on this aspect of the subject
– and it seems that a great deal of research needs to be done. In the meanwhile, it is suggested that this
“hunch” that one may form about a subordinate could best be tested by asking oneself a series of questions,
such as:
­ Does he seem to show a mental vitality backed by physical energy which makes him strain at the leash, so
to speak, at the present level
­ Is he able to sort out the essentials from the non-essentials, and hit the nail on the head? Has he a
progressive and flexible mind?
­ Do you see him at least as a mental equal to those who will become his colleagues at the higher level?
­ By virtue of integrity, ability and personality, do you see him earning the respect and cooperation of those
who will not become his new subordinates and new superiors?
­ Is he prepared to go ahead and take risks or does he prefer to have the “easy life”?
­ How does he react to “stress” conditions, of which he must bear a greater burden?

It will be seen that there are in fact personal qualities and “traits” which a man has revealed in the process of
performing his current tasks. Therefore, although potential should be treated separately from performance, its
evaluation must be largely based on performance. Furthermore, if differential treatment in regard to monetary
rewards is one of the objectives of performance appraisal, and if salary progression with years to a job value is
an accepted system as in our case, some consideration of potential becomes inevitable along with performance
in deciding the quantum of increments.

Potential, as the word itself suggests, is the inner basic core of a man waiting to find full expression or to use a
horticultural term, it is the “seed” of a person. A detailed discussion of these qualities with the appraisee
should be avoided as a subject on its own. In the course of conversing about performance, it is inevitable that
some of these aspects will crop up, but then it will have the advantage of being linked to an actual task situation
fresh in the minds of both.

Although potential is basic to man, the seed cannot blossom out to its full potential unless the right kind of
environment is provided and proper inputs are fed to it. Therefore, only a combined consideration of a man’s
performance and potential can lead to a proper identification of what developmental or corrective action is
needed. This can be broken up into two parts:
­ What is needed to realise the appraisee’s full potential which the current job demands can accommodate?
­ What is needed to groom his potential for a higher post?
Review and Career Planning
Having made a comprehensive assessment of performance and potential, and the steps to be taken, it is then
necessary that such an appraisal should be reviewed by an appropriate member of top management who has the
experience and knowledge to examine this performance and relate the indications of higher potential. This is
what Management Review tries to do.

Out of the Review, a development and career pattern will emerge. For each person a separate action card can
be maintained giving details of action proposed and action implemented, together with reasons for deviation if
any. In very promising cases, it should also be possible to lay down a sequence of movements as foreseen at
present making up a definite career. At the same time it should be possible to look at each position and
determine the most likely successor at the time. In a rapidly changing business world, no doubt, there will be
many changes, but it would be worthwhile to record the reasons for changes.

After all this has been done, any developmental action actually sanctioned should be communicated to the
person concerned. But he should be told that all this is just a “grooming” process–whether he wins in the race is
up to him, for there are others who are also being groomed.

• Identification of Training / Developmental Needs

Appraisals provide a good opportunity to identify the developmental needs of an employee. Development needs
should flow from performance analysis. Performance gaps may be indicative of developmental needs. It is
important to identify the ‘competency’ or ‘capability’ the appraisee needs to develop in order to perform a
given task better. Thus training needs should be in terms of competencies rather than training program titles.
­ A statement of a developmental need by an appraiser or appraisee does not automatically ensure that the
organization will take care of it, because the organization may have some constraints or some other
priorities.
­ Someone in the HRD department should consolidate and follow up the developmental needs expressed in
the annual appraisals.

Techniques/Methods of Performance Appraisal

There are different types of systems for measuring the excellence of an employee. Each type has its own
advantages and disadvantages. The earlier developed methods, still being used, are Traditional Methods. There
are also the Modern Methods of Evaluation of Performance.

Methods of Performance

Ranking Management by Objectives

360 Degree Appraisal

Paired Comparison

Balance Score Card

Grading

Graphic Ratings Scales

Check Lists
 Essay Method

Confidential Reporting

Critical Incident Reporting

Forced Choice Description

Behaviourally Anchored Rating

Scales (BARS)

Traditional Methods
Ranking
In this, the superior ranks his/her subordinates in order of their merit, from best to worst.
­ It is done in a competitive group.
­ It is done by placing the appraisee on numerical scales. i.e. 1st , 2nd , 3rd etc. in the total group.
­ Ranking of an appraisee on his job performance/traits against that of another member.

Person-to-Person / Paired Comparison

Under this method the appraiser compares each employee with every other employee, one at a time.
­ Certain key performance areas/traits are developed. E.g.: Leadership, Creativity, Initiative etc.
­ A scale for each factor is designed.
­ A scale of people is also created for each factor.
­ Each appraisee is compared to every other person on the scale.
­ Certain scores for each factor are awarded to the appraisee.

Grading
­ Certain categories of traits/performance criteria, which are worth of appraising, are established. E.g.
cooperativeness, self-expression, dependability, job knowledge etc.
­ The actual performance (Key performance area) of an employee is then compared to the predetermined
grade definitions.
­ The appraisee is allotted a grade, which describes his performance in the best possible manner.
­ Any grade that is selected should be well defined.

Graphic Scales
­ A printed form, one for each person to be rated is used.
­ The factors included in the form are Employee characteristics such as leadership, cooperativeness,
enthusiasm, loyalty etc. or Employee contribution which includes quantity and quality of work, specific
goals achieved, regularity of attendance, responsibility assumed etc.
­ The traits can be evaluated on continuous scale, wherein the appraiser places a mark along a continuum.
­ The best method to use is the “multiple” type of scale wherein one has to “tick off” the box which suits
the description of an appraisee’s performance.
­ Certain types of graphs are prepared based on these derived ratings.

Checklist
­ A series of questions are presented concerning an appraisee’s behaviour.
­ The appraiser has to reply to the questions in either negative or positive tone - (Yes/No).
 ­ The value of each question may be weighed i.e. one can have predetermined scale and scoring to those
questions.

Essay
­ A blank form is given to the appraiser.
­ The form contains main heading such as employees’ characteristics, attitudes, job knowledge, potential
etc.
­ The appraiser is asked to put in words his impressions about the employee.
­ It contains factual and concrete knowledge.
­ It gives specific information about the employee.

Confidential Reporting
­ It is the most traditional way of appraising employee’s performance. The basic assumption here is that
since the superior is in direct contact he knows his subordinates better than any other and hence his
appraisal would be more appropriate.
­ The superior writes a paragraph or so about his subordinate’s strengths, weaknesses, intelligence, attitude
to work, attendance, conduct and character, work efficiency, etc.

Critical Incident Method

­ Initially a set of noteworthy (good or bad) on-the-job behaviours is prepared. This is usually in the form of
incidents.
­ These incidents are given to a group of experts who assign scale values depending upon the degree of
desirability for the job.
­ This checklist is used by superiors for evaluating the employees.
­ This method helps in identifying the key areas where the employees are weak or strong.
­ It emphasizes rating on objective evidence and helps in counseling.

Forced Choice Technique

­ In forced choice system the rater is forced to choose one from among a group of 4 statements which best
fits the individual being rated and one which least fits him.
­ Each statement is given a value or a score.
­ The evaluator does not know the score value of statements, hence he cannot show any favour towards the
appraisee.
­ The method of arranging the traits involves a long process from getting the description of “good” or “bad”
employees to establishing their validity and reliability.

Behaviorally Anchored Rating Scales (BARS)

Behaviorally Anchored Rating Scales (BARS) are descriptions of various degrees of behaviour with regard to a
specific performance dimension. The behaviours, specifically defined, provide the anchors for rating scales.
Although these scales represent job-relevant dimensions of performance, they still pose problems in determining
which actually observed behaviours match with specifically anchored performance scales. Despite this difficulty,
BARS are a significant improvement, since they require less inference on the appraiser’s part as against
traditional rating approaches.

The BARS procedure typically involves five steps:

1. Generate Critical Incidents
2. Develop Performance Dimensions
3. Retranslate/Reallocate Incidents
4. Scaling Incidents
5. Develop Final Instrument

New Methods

Management By Objectives (MBO)

Management by Objectives is basically a process whereby the superior and the subordinate managers of an
enterprise jointly identify its common goals, define each individual’s major areas of responsibility in terms of the
results expected of him, and use these measures as guides for operating the unit and assessing the contribution
of each of its members. A number of companies have had significant success in broadening individual
responsibility and involvement in work planning at the lowest organisational levels. The concept rests on a
philosophy on management that emphasizes an integrated between external control (by managers) and self-
control (by subordinates). It can apply to any manager or individual no matter what level or function, and to any
organisation, regardless of size.

The smooth functioning of this system is an agreement between a manager and subordinate about that
subordinate’s own or group performance goals during a stated time period. These goals can emphasize output
variables or intervening variables, or a combination of both. The important thing is that goals are jointly
established and agreed upon in advance. This is followed by a review of the subordinate’s performance in
relation to accepted goals at the end of the time period. Both superior and subordinates participate in this
review and in any other evaluation that takes place. Consultation and participation in this area tend to establish
personal risk for the attainment of the formulated objective by those who actually perform the task.

Prior to settling individual objectives, the common goals of the entire organisation should be clarified, and at
this time, any appropriate changes in the organisation structure should be made: changes in titles, duties,
relationships, authority, responsibility, span of control, and so forth.

Throughout the time period what is to be accomplished by the entire organisation should be compared with what
is being accomplished; necessary adjustments should be made and inappropriate goals discarded. At the end of
the time period a final mutual review of objectives and performance takes place. If there is discrepancy
between the two, efforts are initiated to determine what steps can be taken to overcome these problems. This
sets the stage for the determination of objectives for the next period.

360 Degree Feedback and Appraisal

Leaders and employees at all levels of organisations are changing the way they receive feedback in order to
improve the quality of information. The new model for performance feedback and appraisal turns the
assessment process upside down. People are asking for performance feedback from those in their own circle of
influence, that is, those with knowledge of their own behaviours, as well as from their supervisor. This
information that comes from many people rather than just one is more honest, reliable, and valid than
traditional appraisals from the supervisor only. Moreover, feedback from these multiple sources has a more
powerful impact on people than information from a single source, such as a supervisor. In fact, no organisational
action has more power for motivating employee behaviour change than feedback from credible work associates.

The 360°feedback process, also called multi-source assessment, taps the collective wisdom of those who work
most closely with the employee: superiors, colleagues(peers), direct reports and possibly internal and often
external customers. The collective intelligence these people provide on critical competencies or specific
behaviours and skills gives the employee a clear understanding of personal strengths and areas ripe for
development. Employees also view this performance information from multiple perspectives as fair, accurate,
credible, and motivating. Employees are often more strongly motivated to change their work behaviours to
attain the esteem of their coworkers than to win the respect of their supervisor alone.

As the 360° feedback process better serves the needs of employees, it serves the changing needs of their
organisations too. Organisations are reducing hierarchy by removing layers of management and putting more
emphasis on empowerment, teamwork, continuous learning, individual development, and self-responsibility. The
360° Feedback Model aligns with these organisational goals to create opportunities for personal and career
development and for aligning individual performance expectations with corporate values.

Well-designed 360° feedback systems serve the many needs of employees substantially better than the
traditional hierarchical, single-source assessments employees are so familiar with, such as Management by
Objectives or Results-only measures. Change agents, line and staff managers, team members, and employees in
all disciplines are designing and implementing multi-source assessment systems that work for people in nearly all
kinds of jobs: nurses, lawyers, production workers, union members, hospitality personnel, engineers, military
units, school teachers, librarians, research and development managers, and public safety officers, among many
others. Any employee who needs better performance information may ask for and even implement a 360°
feedback process.

Balanced Score Card

To achieve business goals, most organizations recognize that they need quantitative metrics to tell them where
they are, how fast they are moving and when they have reached their goals. Establishing these goals and
metrics is not that easy. Market pressures cause many organizations to fixate on only one or a few goals and
measures (e.g. revenue, expansion or market perception), often to the detriment of overall long-term benefits
and frequently at the expense of employees and customers. Whereas a balanced scorecard considers multiple
interdependent perspective linked to strategic goals.

A balanced scorecard requires an organization to balance its goals across multiple perspectives to reduce the
chance that ones goals will dominate others to the detriment of the organization. For example, an organization
that focuses solely on earnings per share might not be investing enough in its people, may be charging its
customers too much and may not be taking enough quality and safety measures. A balanced scorecard leads to a
realistic compromise that addresses short-term goals and longer-term staying power.

Traditionally, many business intelligence solutions and applications have been rooted in business or organization –
specific indicators: calculated values based on stored data that reveal the health of an organization and help to
develop future strategies. Many of these indicators have been defined by individual organizations and have been
predominately financially based. A balanced scored takes this to the next level, injecting a process and
structure for organizations to adopt.

Balanced Scorecard Perspectives

The balanced score card approach is aimed at uncovering and dealing with conflicts. It suggests four main
perspectives of the organization, each with its own metrics.
5. The financial perspective represents the viewpoint that includes the senior executives, the board of
directors and the stockholders. Typical metrics in this perspective might be earning per share, revenue
growth or profit maximization.
6. The customer perspective represents the viewpoint of the external sources of revenue that takes the
enterprise’s information, goods and services as its raw material to create the goods and services it sell to its
customer or otherwise accomplishes its strategic objectives. Changes made to a business process output
that lowers the customer’s cost or allows the customer to achieve his or her objectives faster have value for
the customer. It is a measure of that value that should be captured by the metrics ( e.g., market share,
customer satisfaction, retention) representing this perspective.
7. The internal business process perspective represents the viewpoint of the people doing the work, and is
generally concerned with duration or efficient use of resources. Cycle time is a typical metric representing
the operational view. Other metrics includes cost of services, speed of services, job safety.
8. The learning and growth perspective is of principal interest to the CEO and the architects of the long-range
business plan. This perspective looks at how effectively the organization can redesign and implement new
business process, introduce and exploit new technology and adapt to changing conditions in general. Metrics
of this perspective can be adaptability, employee satisfaction, and a willingness to shares and gain
knowledge.

The balanced score card requires an organization to identify and balance these goals across these major
perspectives. Once this core metrics has been defined, they can be utilized by analysis techniques such as
simulation; activity based costing and value chain analysis.

Steps in Implementation of Balanced Scorecard

A balanced scorecard project can be far reaching, including : extensive consulting, which may involve
organizational analysis; process re-engineering; business modeling; and data transformation and warehousing.

The steps of implementation are :

5. Identifying and defining Key Performance Indicators from the multiple perspectives:
In Novartis Enterprises Ltd. ( NEL ) the multiple perspective were identified as : Economic performance,
Business development, Efficiency & Innovation, People and Special projects. After this the main task was to
identify the Key Performance Indicators ( KPI) in each of these multiple perspective.
6. Identifying Key Action Areas :
In Novartis, the parent company situated in Basel, Switzerland sends its Top action area to all its Regional
offices who in turn make there top action area And include the top action area of the parent company which
is concerned to there region. Then they circulate this to the companies in there areas. Thus NEL receives
Top action area of its regional head office which they have to include in their list. For this activity they
started first with identifying the key areas and they started listening down the key action in each of these
areas.
7. Implementation:
Implementation is an important stage as without this all the above stage is useless. For implementation, in
NEL it is seen that each of the above action area is allotted with a time frame and a responsibility person /
department for its completion. Even these actions in turn become a part of the individual target sheet.
8. Monitoring:
 Monitoring is done by periodic review of the key action areas. Deviations if any should be corrected at the
earliest. In NEL on monthly basis a report is send to its regional head office.

Biases/Problems related to Performance Appraisal

An ideal performance appraisal is done when the evaluation is free from biases and idiosyncrasies of the
evaluator. There are many factors of appraisal that lead to failure of the system:
• Negative Attitude towards Performance Appraisal. There is a large population of managers who are hostile
or indifferent to the performance appraisal processes and/or do it badly if they do it at all.
­ Hostility from the appraiser: The appraiser reacts indifferently to the appraising system because he
believes that it is a waste of time. At times they feel that the scheme has nothing to do with their own
needs and it exists to feed the personnel database.
­ Hostility from the appraisee: Hostility from the people at the receiving end arises because they feel
performance appraisal is simply another method in the hands of the managers to exercise their command
and control prerogatives. They feel that the data collected will be utilized as evidence against them.
• Halo Error: Under this type of error, one marked characteristic of the appraisee (either favourable or
unfavourable) may be allowed to dominate the appraisal of his entire personality. Physical appearance, his
brilliant scholastic record, his fluency or lack of it in language, experience as a sportsman, etc. any one of
these qualities may create a halo effect.
• Logical Error: This is a dangerous pitfall for the inexperienced appraiser. He is very often inclined to arrive
at similar assessments in respect of qualities that seem logically related. Thus, for example, he may believe
that a person is competent if he looks neat (which may not be necessarily so) and this may bias his
judgement.
• Constant Error: When an appraisee is rated by two appraisers their ratings may be different. One may show
consistent leniency by giving him high scores, the other may consistently rate him by giving low scores. The
constant error is usually associated with lack of confidence and interest in rating on the part of the
appraiser.
• Central Tendency: It is also called as “Average Ratings”. Here, the appraiser tends to avoid giving frank
views to the question asked or the appraiser is in doubt or he has inadequate information. Such tendency is
useless while taking important decisions like promotions or training etc.
• Mirror-Image Error or Projection Error: This error arises when an appraiser expects his own qualities, skills,
and values in an appraisee. The appraiser may falsely believe that if the appraisee is good he has to be like
him (appraiser) because the appraiser considers himself as the standard. For e.g.- The appraiser who
himself is aggressive may tend to give higher rating to that appraisee who is also aggressive. Those depicting
such characteristics may stand to benefit but others who do not depict any such behaviour may suffer.
• Contrast Error: This error occurs in the sequencing of ratings. If superior performers are rated first, average
performers are rated down, if poorer performers come first, the average performers will be rated more
highly. For e.g.- If one appraisee is from the corporate office and the other from regional office/ factory,
there is a tendency to rate the employee from corporate office much higher than the one from regional
office/ factory.
• Biases of Position, Sex, Race, Religion & Nationality: There is a tendency to rate the occupant at a higher
position more favourably than the person in a lower position. This may be the case while rating for male or
female, or people of different religion or nationality.
• Lack of Skill in Conducting Appraisal Discussions. Conducting performance appraisal discussions require
certain skills and training. Some managers can make the following mistakes while conducting appraisal
discussion without adequate training.
­ Antagonising appraisees by making critical comments.
­ Allowing the meeting to drift in a formless way.
­ Concentrating on blaming people for mistakes rather than working towards a solution.
­ Talking too much and not listening attentively.
­ Not probing sufficiently to get to the root of a problem.
­ Allowing the appraisee to dominate the proceedings.
­ Making accusations without backing them up with evidence.
­ Reacting over-defensively if the appraisee makes a critical comment about the appraiser.
­ Imposing solutions on appraisee, ignoring the fact that they will probably have ideas of their own which
should be listened to.
 ­ Not concluding a clear agreement with the appraisee about the path ahead.

Overcoming Biases
The best way to overcome the problems is to give training to the appraiser. Not that training is a “cure-all” for
all ills of appraisal systems. From a practical point of view, factors such as the extent to which pay is related to
performance ratings, union pressure, turnover rates, time constraints and the need to justify ratings may be
more important in influencing the ratings than training. This means that improving rating systems involves not
just training the appraiser but remedying outside, real life factors such as union pressure.

Training can help improve the appraisal system to the extent that distortion occurs due to rater errors such as
halo, leniency, central tendency and bias.

• Factors that help to improve accuracy:

­ The appraiser has observed and is familiar with behaviours to be appraised.
­ The appraiser has documented behaviours to improve the recall.
­ The appraiser has a checklist to obtain and review job-related information.
­ The appraiser is aware of personal biases and is willing to take action to minimise their effort.
­ Rating scores by raters of one group or organisation are summarised and compared with those by other
raters.
­ The appraiser focuses attention on performance related behaviours over which he has better control than
on other aspects of evaluation.
­ Higher levels of management are held accountable for reviewing all ratings.

• Factors that may lower accuracy:

­ The appraiser rates only when administrative actions are contemplated.
­ The appraiser is unable to express him/herself honestly and unambiguously.
­ Appraisal systems, processes and instruments fail to support the appraiser.
­ The rater is unaware of causes of rating errors.
­ The rater has to rate employees on factors that are poorly defined.

Parties involved in Performance Appraisal

Raters can be immediate superiors, specialists from the human resource department, subordinates, peers,
committees, clients, self-appraisals or a combination of several.

Immediate superior is the fit candidate to appraise the performance of his or her subordinate. There are three
reasons in support of this choice. No one is more familiar with the subordinate’s performance than his or her
superior. Secondly, the superior has the responsibility of managing a particular unit. When the task of evaluating
a subordinate is given to another person, the superior authority may be undermined. Finally, training and
development of subordinates is an important element in every manager’s job. Since appraisal programs are
often clearly linked to training and development, the immediate superior may be the logical choice to conduct
the performance evaluation.

Subordinates can assess the performance of their superiors. The use of this choice may be useful in assessing an
employee’s ability to communicate, delegate work, allocate resources, disseminate information, resolve
interpersonal conflict and deal with employees on a fair basis. But the problem with subordinate evaluation is
that the superiors tend to become more popular, not by effective leadership but by gimmicks.

Peers are in a better position to evaluate certain facts of job performance which the subordinates or superiors
cannot do due to closeness of the working relationship and amount of personal contacts. Such facts include
contribution to workgroup projects, interpersonal effectiveness, communication skills, reliability and initiative.
Unfortunately, friendship or animosity may result in distortion of evaluation. Further, when reward allocation is
based on peer evaluation, serious conflicts among coworkers may develop. Finally, all the peers may join
together to rate each other high.

Although Clients are seldom used for rating employee performance, nothing prevents an organisation from using
this source. Clients may be members within the organisation who have direct contact with the appraisee and
make use of an output (goods or service) this employee provides. Interest, courtesy, dependability and
innovativeness are few qualities for which clients can offer rating information. Clients, external to the
organisation, can also offer similar kind of information.
A Complete Pay Program

Many types of pay are required for a complete economic reward system. Job evaluation rates the job, relating
one job to another according to level of responsibility. Performance appraisal and incentives, rate employees in
their performance and give them more reward. Profit sharing rates the organisation in terms of its general
economic performance, and rewards employees as partners in it. Together these three systems are the incentive
foundation of a complete pay program. Each can contribute something to the employee’s economic reward.
The three systems are complementary because each reflects a different set of factors in the total situation. Base
pay motivates employees to progress to jobs of higher skills and responsibility; and as a matter of security, this
base may be protected by a cost-of-living adjustment that keeps the real pay relatively constant for a certain
period. Performance pay increases are an incentive to improve performance on one’s job. Profit sharing
motivates toward teamwork to improve an organisation’s performance.

Other payments, primarily non-incentive in nature, are added to the incentive foundation. Seniority pay
adjustments are made to reward workers for extended service and to encourage them to remain with their
employer. If an employer asks workers to sacrifice by working overtime, working on their day off, or working at
undesirable hours, the workers may be paid extra for this inconvenience. Other payments are given when an
employee does not work, such as vacations, holidays, jury service, and layoffs subject to guaranteed pay. These
additions to the incentive foundation of the pay pyramid have little direct incentive value because they do not
increase according to improved job performance. Some of these additions may result in indirect incentive
through better attitudes. Other additions, such as seniority pay, actually may decrease worker incentive. It is
clear that not one but many factors enter into computation of a modern worker’s paycheck. Some of these
factors are related less to incentive than they are to such broad objectives as security, equity, and social justice.
An Effective program of economic rewards is a balance of most of these factors. In this way a variety of
employee needs are served.

The particular combination of economic rewards that an employer uses is contingent on the needs of employees,
type of work, and organisational environment. In order to serve employee needs in a better way, some
organisations are providing variable benefit pay plans, also called cafeteria pay plans because they allow
employees to select their individual combination of benefits as they would select food in a cafeteria. Each
employee receives a certain total economic allowance for a job, and then within a range of choices available the
employee selects a preferred combination of economic rewards that use the allowed total. For example, a
young employee may choose more pay and less money placed into a retirement program.

Because of their complexity, variable benefit plans tend to be used mostly with higher-level managers and
professionals, where different choices might have a significant influence on recruiting and retaining the
employees.

Linkage between Performance and Pay

More articles have been written about the issue of performance pay than any other reward topic and it still
continues to generate heated debate. When it is asked whether the high performing employee should be paid
more than the low performing employee doing the same job, then nearly all of us would say ‘yes’, because we
see that as equitable treatment and because it reflects the market economy in which 85 per cent of us work.

There remains, however, a minority view that the high performers should be rewarded but not in pay terms.
They should have intrinsic rewards – personal satisfaction, more authority on the way that the work is carried
out, acknowledgement by the power-that-be in public and in writing, a greater chance of promotion and more
freedom and flexibility in their personal terms and conditions. This view holds that we should make every effort
to raise the performance of the low performer through training and Counseling.

Increasingly, all organisations – public, private and voluntary – are attempting to develop a high performance
culture with the expressed support of their employees. In this situation, pay as a motivator is one of the
preferred vehicles. Differential payments are seen as both motivators/incentives and as rewards.
Changing nature of performance pay
This concept has a long history. It used to be called piece work or a productivity scheme. It was purely
individual or sectional and limited to one measure (usually sales or output). It had little or no relationship with
the overall performance of the organisation and the customer rarely came into the equation.

The history of such schemes is littered with the remnants of inter-sectional disputes, over-payments to ingenious
employees who managed to circumvent the system and a wide range of dysfunctional behaviour due to a narrow
focus – poor quality, late delivery and contempt for customer preferences being just a few examples.

In recent years, it has been approached more intelligently. It has a much wider focus and tries to cover large
areas of the organisation’s aims and objectives. Serious attempts are made to involve employees in the whole
process from initial consultation to wide evaluation after the even. Usually, most employees are included in the
scheme. The judgement of performance is often based on a sophisticated performance management scheme.

Reasons for failure have been registered by many commentators. A study conducted listed out 15 issues causing
concern, including the over-emphasis on individual achievement (the ‘back-stabbers’ charter), poor or
misunderstood communication about what the whole process involved and how annual reporting or appraisal
procedures did not relate logically and defensibly to eventual performance rewards.

Performance Related Pay (PRP) in practice

It was found that, a whole raft of HRM initiatives took place at Associated Telecommunications alongside the
payment changes, leading to an integrated approach to employment and reward. Here, the scheme received a
much greater amount of employee support and has proved successful in leading to higher performance levels by
individuals and the company as a whole.

There is no doubt the system of PRP must be made to fit the culture of the organisation. This either means that
the existing culture can be receptive to the competitive and individual elements of PRP or the culture has to be
changed. PRP can be used as part of the change process but, on its own, it is unlikely to be powerful enough to
prove successful.

It is amongst the sales force that the concept more naturally feels at home. The psyche of most sales forces is
aligned with the individualistic, competitive and incentive driven characteristics familiar in PRP.

Performance Related Pay (PRP) – a judgement?

The question is often asked, does Performance Related Pay work? Conclusions are difficult in all management
issues where scientific experiment using control groups is practically impossible and PRP is no exception. Most
experience in the United States is that greater use of performance pay results in improved organisational
performance as measured by return on capital employed, particularly when applied to managerial pay. In the
United Kingdom, the few studies have been largely negative or inconclusive.

Finally, all research has confirmed that employees regard positively the concept of PRP but deny quite strongly
that it acts as a motivator for them in practice, and are mostly critical of the resulting procedural and
distributive justice. It can be concluded that employees may work harder, in a more focused way and get better
results through a PRP system which is underprinted by a robust performance management scheme but employees
may do this through a mixture of necessity and fear, rather than a genuine desire to do so.

Objectives for a performance management system and PRP

­ to distribute pay increases in line with employee contribution;
­ to increase employee morale and commitment;
­ to motivate the work force by letting them have influence over their achievement of targets and
thereby having an influence on their financial rewards;
­ to instill a positive message about performance expectations and the achievement of company objectives
for the good of all thereby making employees feel more secure with the company;
­ to focus attention on increased Company results and profits; and
­ to offer a competitive salary and benefits package in comparison with rival companies in order to reduce
staff turnover and attract a higher caliber of staff.
Implementing performance-related pay (PRP)
There are five steps in setting up a successful PRP system:

1. Create ‘Job profiles’ which show what is expected for:

­ what we bring
­ what we do
­ what we produce
2. Evaluate the pay levels for:
­ what we bring
­ what we do.
3. Calculate ‘values generated’ for:
­ what we produce
4. Decide the proportion of ‘value generated’ to be shared with performers.
5. Determine the ‘financial reward package’ that equates with the total pay agreed and which reflects
individual preference and need.

This may seem an awesome exercise to carry out in terms of time and effort. However, it can be achieved
relatively quickly and efficiently by involving everyone in the process. Every performer, from the front-line
workers to the boardroom, completes their own ‘PRP preparation worksheet’ which is reviewed by their
immediate manager and then by the PRP implementation group. In this way not only is the work shared,
everyone also feels involved in the whole process. The level of involvement is very important in developing and
implementing PRP.

The Timing Of Performance-Related Pay

The first golden rule for successful PRP is: Payment for performance should be made as close as possible to the
moment of achievement. The world moves on very fast and waiting to be paid for achievements that happened
in the past keeps performers focused backwards instead of on the next performance ‘ stagepost’. It is almost
impossible to build performance bridges while looking backwards. If we want to bridge the performance gap we
have to pay for each step forward as it happens.
Annual performance-related pay systems do not work because the time gap is too great for people to make the
link between their performance and what they receive in terms of bonus. Some organisations are of the opinion
‘that until the values generated by individual performance work their way through to the bottom line we don’t
know how much we can afford to pay’. The answer is simple, work it out monthly, or weekly. The technology
exists to do it.
It was recognised that improving employee performance comes first and PRP is a mechanism for stimulating and
reinforcing this performance improvement. So any PRP scheme is heavily dependent upon a robust performance
management scheme.

Use of Appraisal Data and Linkage with other Systems

There are a variety of ways in which appraisal data can be used. The following are some of these:
• Role Analysis Directories : If KPAs/KRAs/tasks form an integral part of the appraisal system the
KPAs/KRAs/tasks identified for every executive through discussion with his supervising executives can be
collected and a directory prepared. Such directories serve many useful purposes. The information
contained there may be useful for transfers, job rotation and promotion decisions. They are also useful for
structural changes and manpower planning.
• Identifying Developmental Needs : Each appraiser – appraisee pair identify developmental needs and state
the same in the appraisal format. This information as well as performance ratings could be used for planning
development programs and taking development decisions. Trends on attributes can be analyzed and training
programs can be planned. E.g if most executives score low on ‘initiative’ or ‘team spirit’, programs to
enhance the same could be organized. The training needs identified by reporting officers could be tabulated
department-wise or level-wise, analysed and a training plan could be evolved. Thus the training sub-system
should draw from appraisal reports.
• OD Interventions: The performance analysis done by the appraisees can also give significant inputs about
the sources of facilitation or frustration of the working of executives. An analysis of theses factors
department-wise or organisation-wise can be a good diagnostic tool.
These data can be used to identify problem areas. Reports can be prepared and discussed in departmental
meetings and decisions taken to facilitate executive functioning.
• Potential Development : When an organisation has plans of fast growth, it may develop a policy of internal
promotions and career development. In such cases, appraisal data can throw up insights about areas where
potential needs to be developed. Example, an organisation may decide that in the case of some executives
who are likely to be given charge of new sections/departments, planning and coordinating skills needs to be
strengthened. The appraisal reports may help in identifying such individuals.

• Rewards and Incentives: The appraisal data is also useful in deciding rewards for executives who do a good
job. While it is useful to collect data separately for reward and salary administration, the data from
development-oriented appraisal systems can be used as supplementary information.

Thus appraisal data can be use in a variety of ways and form links with other sub-systems of human resource
development.

Manpower Planning
The need for companies to take a searching look at their future manpower requirements has become more and
more evident, and manpower planning is more important for management than it has ever been. There are three
main arguments in favour of manpower planning. Firstly, there is considerable evidence to indicate that for
some time to come there will be a shortage of quality manpower, particularly technological and scientific
manpower, the demand for which is steadily increasing. Secondly, changes in manpower requirements in skill
terms are likely to be much more rapid in the future than they have been in the past. No longer is a man able to
learn a skill in his youth which will carry him through the whole of his working life; it is probable that the young
and the not so young man will have to change his skill once, or even twice, in the course of his working life.
Thirdly, the ever increasing costs of manpower. Demands for higher standards of living and increased leisure are
tending to push these up at an even faster rate.

Assuming that the average stay in a company of a newly recruited graduate engineer is three years, and that
such a recruit is normal, but not exceptional; then the cost in salary alone over the three-year period is likely to
be (at current values) of the order of Rs. 8,000/- per month. If, however, one adds on the other costs of staff
pensions, various fringe benefits, accommodation and office services, etc. then the total cost is of the order of
Rs. 20,000/- per month.

No one contemplating the purchase of a piece of plant or equipment, with a similar life-span, costing that
amount would do so without the most careful study of its suitability for the purpose for which it was intended,
its capacity, the means by which that capacity could be utilized to the full, its place in the scheme of
production, and the expected return on the investment. Few companies apply the same level of criteria of
consideration to manpower. The reason for this difference in approach lies in the traditional attitude to
manpower as a cost rather than as an investment. Yet while machinery depreciates and eventually become
obsolete, properly developed manpower can continue to grow in usefulness and capacity.
The view that there is likely to be a shortage of quality staff over the longer term, or in the one that presently
exists, is not universally shared. Some take the view that there is considerable under-use of talents and
abilities, and that there is a large, as yet untapped, potential for the exercise of higher skills if only adequate
training and education can be made available. This, in itself, is a very large subject. The objective of
manpower planning is, and must be, to improve manpower utilisation and to ensure that there is available
manpower of the right number and the right quality to meet the present and future needs of the organisation. It
must, therefore, produce, a realistic recruitment policy and plan and must be very much concerned with costs
and productivity.

Role and Content of Manpower Planning

Manpower planning, in its broadest sense, covers all those activities traditionally associated with the
management of personnel – records, recruitment, selection, training and development, appraisal, career
planning, management succession and so on. But it is important, both for analytical purposes and ultimately for
executive purposes, to disentangle these activities and to think of them as a number of sequential phases. The
three main phases as illustrated in Figure 1 (below) are:

Phase 1: The development of manpower objectives: This is concerned with the development of forecasts of
the manpower necessary to fulfill the company’s corporate objectives, with looking at the totality of situations
rather than at individuals. It is concerned with detailed analysis in order to identify and foresee problem areas,
to assess future demands and to establish how those demands may be met. It is directed towards the
development of manpower strategy as an integral part of company strategy.
Phase 2: The management of manpower: In this phase, the question is one of managing manpower resources
to meet objectives and the development, in more specific and individual terms, of recruitment plans, training
and development plans, succession plans, appraisal systems, etc.

Phase 3: Control and evaluation: This concerns the continual evaluation and amendment of plans in the light of
achievement and changing circumstances. Planning starts from a given factual position and tries to look ahead
through a range of possibilities. Evaluation in this context means thoroughly checking forecasts and forecasting
methods against what eventually happens, and making such revisions as may prove necessary. Any planning
activity must have a system for this regular checking built into it. In other words, planning must be a continuing
process. The components of the second phase are fairly familiar in industry and are often taken to be
synonymous with manpower planning.

It is the ultimate aim of any complete system of manpower planning that all three phases should be fully
integrated. Manpower planning must be fully integrated with the company plan. Indeed without a company
plan, there can be no realistic manpower planning.
Figure 1: A procedure for a manpower planning

Company Objectives , Policies and Plans

Economic Organisation Strategic

Forecasts objectives plans

Manpower Analysis Manpower forecasts

(Current situation) (Future situation) Phase
- Inventory Overall Unit Budget one
Management
- Employment
manpower Manpower agreement manpower
- Productivity forecast forecast estimates
- Organisation

Top Management Manpower objectives and

Approval Policies

Manpower Plans and Programs

- Recruitment and selection Phase
two
- Redundancy
- Retirement and
remuneration
- Training
- Appraisal and development
- Efficiency investigation
Phase
three

Control and
Evaluation

The present position and the analysis of trends

In manpower planning there are three basic elements to be considered the present stock of manpower; wastage,
and future requirements for manpower. Information will be needed in a series of permutations and combinations
according to the needs of the company. The following are the basic ‘building blocks’ that will probably be
needed in most circumstances:
11. Present total manpower.
12. Manpower resources by appropriate planning groups, for example, sex, grade, function/department,
profession/skill, qualification, age group, and length of service.
13. Total manpower costs.
14. Total costs by appropriate component elements, for example, salaries, wages, pension contributions,
welfare, canteen, etc.
15. Costs by functions/departments.
16. Costs indices and ratios (see control and evaluation below).
17. Total numbers related to sales, production or such other criteria as may be appropriate, in physical and
financial terms.
18. Attrition and retention rates by appropriate groups, that is, overall, by function/department, profession,
sex, age group, etc.
19. Recruitment patterns by age, education, etc. for each function/department.
20. Resources of promotable staff.

Forecasting future manpower movements

Future manpower requirements are self-evidently governed by the company’s corporate plan and they can only
be considered in that context. Indeed, without a corporate plan there can be no realistic manpower plan. It
follows that no forecast for the forward demand of manpower can be more precise than the formulation of the
company’s overall objectives. Clearly, it is also important that a company’s objectives should be so stated as to
be interpretable in terms of manpower involvement. The factors affecting manpower demand fall into two main
groups: trading and production patterns and technological change. Some indication of the extent to which
volume and patterns of trade, and technological change affect manpower will have been gathered from the
analyses.

Control and Evaluation

Two broad and complementary approaches to the control and evaluation of the manpower plan are necessary,
one in terms of numerical trends and the other in terms of costs criteria.

Assuming that the planning period is of five years, then the plan prepared in 1992 would go through to the end of
1997. In the autumn of 1993, the plan should have been reviewed and up-dated where necessary and extended
to include 1998. The first step is, as has been stated, the review and up dating of the corporate plan. This
normally takes the form of a package of expectations and objectives, all of which are considered mutually
consistent and feasible. The strategy for achieving these objectives determines the form of organisation to be
used and the amount and form of resources required, including manpower.

In this review, management will want to question the degree to which the various specific goals of the manpower
plan were achieved. This can be shown by the use of a number of numerical controls and gauges, such as change
in numbers by total/department/function, changes in wastage (turnover) rates and the reasons for wastage,
changing age structures and their implications, all related to the original targets set.

Another approach, which has been found useful in giving a comparative picture of the contribution being made
by personnel to the operation of the company, is the development of cost ratios.

Conclusion
In a world of rapidly changing technology with an ever-growing demand for more and different skills, the need to
plan manpower is as great as the need to plan any other resource. The prosperity and growth of any company
rests, in the end, on the quality of its manpower and the extent to which their talents are utilized to the full.

Manpower planning is concerned with safeguarding the future, with preventing the loss of opportunities through
lack of appropriate human abilities and the wastefulness of ‘over-braining’ the organisation. It emphasizes the
need for rationalization in keeping with modern needs and technological capabilities and the development of
organisation structures to match.

Job Analysis – A Definition

Job analysis is the process of collecting, analyzing and setting out information about jobs in order to provide the
basis for a job description or role definition and data for job evaluation, performance management and other
human resource management purposes.
A distinction should be made between a job description and a role definition. A job description sets out the
purpose of a job, whether it fits in the organisation structure, the context within which the job holder functions
and the principal accountabilities of the job holders, or the main tasks they have to carry out. A role definition
additionally describes the part to be played by individuals in fulfilling their job requirements. Role definitions
refer to broader aspects of behaviour, for example, working flexibly, working with others and styles of
management. They may incorporate the results of skills or competence analysis.

Job Analysis in Practice

Job analysis is an analytical process involving gathering facts, analyzing and sorting these facts and re-
assembling them into whatever consistent format is chosen. Job analysis gets the facts about a job from
jobholders, the jobholder’s manager (preferably both) and the jobholder’s colleagues or team mates. It is not a
matter of obtaining opinions or making judgments. What goes into a job description should be what actually
happens and why, not what people would like to think happens, or what they feel people should be like to make
it happen. Thus judgmental statements such as ‘Carries out the highly skilled work of…’ should be avoided (who
is to say that the work is highly skilled and in comparison with what?)

The facts can be obtained by interviews (the best but time-consuming way) or by asking jobholders and/or their
managers to write their own job descriptions in a structured format. It is helpful in both cases to be quite clear
about the questions to be asked and answered and it is essential in the latter case to provide guidance on how
the analysis should be carried out and expressed on paper. Alternatively questionnaires can be used – either
universal questionnaires or those designed for job families:

• Universal questionnaires
Universal questionnaires are designed to cover all the jobs to be analyzed. They are typically used in association
with computer-assisted job evaluation. They should be tailored to the particular organisation and the range and
type of jobs to be covered, and they should focus on those aspects of performance and values which are
considered to be important in the organisation concerned.

• Job family questionnaires

Job family questionnaires are designed to establish the main factors which differentiate between jobs at
different levels in a job family. A job family consists of jobs in a particular function or discipline such as
research scientist, development engineer or personnel specialists which are related in terms of the fundamental
activities carried out but are differentiated by the levels of responsibility, skill or competence required. A job
family questionnaire is designed with the advice of an expert team of managers from the organisation.

Job analysis interview check lists

• What is your job title?
• To whom are you responsible?
• Who is responsible to you? (An organisation chart is helpful).
• What is the main purpose of your job? i.e. in overall terms, what are you expected to do?
• To achieve that purpose, what are your main areas of responsibility (e.g. principal accountabilities, key
result areas or main tasks)? Describe what you have to do and also indicate why you have to do it? i.e.
the results you are expected to achieve by carrying out the task.
• What are the dimensions of your job in such terms as output or sales targets, numbers of items
processed, numbers of people managed, and number of customers?
• Is there any other information you can provide about your job to amplify the above facts, such as:
- how your job fits in with other jobs in your department or in the company;
- flexibility requirements in terms of having to carry out a range of different tasks;
- how work is allocated to you and how your work is reviewed and approved;
- your decision-making authority;
- the contacts you make with others, inside and outside the company – the equipment, plant and tools
you use;
- other features of your job such as traveling or unsocial hours or unusual physical conditions;
- the major problems you meet in carrying out your work;
- the knowledge and skills you need to do your work.

The aim is to structure the job analysis interview or questionnaire in line with these headings.

Analyzing the facts

However carefully the interview or questionnaire is structured, the information is unlikely to come out neatly
and succinctly in a way which can readily be translated into a job description or role definition. It is usually
necessary to sort out, rearrange and sometimes rewrite the information.

Management By Objectives (MBO)

Management by Objectives is basically a process whereby the superior and the subordinate managers of an
enterprise jointly identify its common goals, define each individual’s major areas of responsibility in terms of the
results expected of him, and use these measures as guides for operating the unit and assessing the contribution
of each of its members. A number of companies have had significant success in broadening individual
responsibility and involvement in work planning at the lowest organisational levels. The concept rests on a
philosophy on management that emphasizes an integrated between external control (by managers) and self-
control (by subordinates). It can apply to any manager or individual no matter what level or function, and to any
organisation, regardless of size.

The smooth functioning of this system is an agreement between a manager and subordinate about that
subordinate’s own or group performance goals during a stated time period. These goals can emphasize output
variables or intervening variables, or a combination of both. The important thing is that goals are jointly
established and agreed upon in advance. This is followed by a review of the subordinate’s performance in
relation to accepted goals at the end of the time period. Both superior and subordinates participate in this
review and in any other evaluation that takes place. Consultation and participation in this area tend to establish
personal risk for the attainment of the formulated objective by those who actually perform the task.

Prior to settling individual objectives, the common goals of the entire organisation should be clarified, and at
this time, any appropriate changes in the organisation structure should be made: changes in titles, duties,
relationships, authority, responsibility, span of control, and so forth.

Throughout the time period what is to be accomplished by the entire organisation should be compared with what
is being accomplished; necessary adjustments should be made and inappropriate goals discarded. At the end of
the time period a final mutual review of objectives and performance takes place. If there is discrepancy
between the two, efforts are initiated to determine what steps can be taken to overcome these problems. This
sets the stage for the determination of objectives for the next period.

• Theories of Motivation
There is no simple formula to motivate people. But if you look at the theoretical emphasis of the behavioural
scientists who have been studying motivation, there is a surprising degree of agreement.
• Maslow
• Hierarchy of Needs or Deficient Theory of Motivation
Needs are arranged in a definite sequence of domination i.e., unless the needs of lower order are reasonably
satisfied, those of the higher order do not dominate.

Lower/primary order needs includes basic physiological needs & safety and security. Higher/secondary needs
are belonging or social needs, esteem and self-actualization needs.
Self-actualization
Esteem
Belonging
Safety
Physiological

McClelland
Achievement Theory of Motivation
• We have three basic social needs: affiliation, power & achievement.
• Need for achievement : The drive to excel, to achieve in relation to a set of standards, to strive to
succeed.
• Need for affiliation : The drive for friendly and close interpersonal relationships.
• Need for power : The need to make others behave in a way that they would not have behaved
otherwise.

Herzberg’s Two-Factor Theory of Motivation

In the first category are Maintenance or Hygiene factors, which are necessary to maintain a reasonable level of
job satisfaction. Absence of these factors may dissatisfy the employee but will not demotivate them. In the
Second category are the Motivators since they seem to be effective in motivating people to superior
performance.

Hygiene/Maintenance Motivators

• Company policy & Adm. • Achievement

• Relationship with supervisor • Recognition
• Working conditions • Work
• Salary • Responsibility
• Relationship with peers • Advancement
• Personal life • Growth
• Relationship with subordinates
• Status
• Job security
• Technical supervision

McGregor’s Theory X and Theory Y

Theory X emphasizes on discipline, incentive programs, welfare measures, close supervision, pension and other
benefit programs.

Theory Y represents the democratic approach and gives to the employees scope for creativity and responsibility.
It stresses man’s need for work, responsibility and involvement in serious endeavour; work force is a reservoir of
untapped imagination, intelligence and commitment.

Motivating Climate
Even if all your subordinates have high potential for self motivation, a climate should be provided to flourish it.
Some suggestions on how to develop such an atmosphere:
• Establish clear-cut objectives and standards. The individual must know what is expected of him.
• Evaluate the employee’s progress against these yardsticks.
• Discuss his progress with him as often as possible - help him to make necessary adjustments.
• Take prompt corrective action - including disciplinary action when necessary. Good discipline is essential to
any healthy environment.
• Use rewards promptly. Rewards must be tied to the specific result and commensurate with the contribution.
There must be some differentiation between those who contribute and those who do not. Otherwise, there
is no advantage in turning out a superior performance.
• Encourage and appreciate excellence among your people. Frequently when you expect great things of
people, they will deliver beyond their own expectations.
• Try to assign intermediate goals to give the feeling of achievement. A series of small successes can build
confidence and expand their horizons.
• Give a man difficult challenges on occasion, particularly in less critical areas and after he has had a few
successes to build his ego.
• Give him an understanding of the organisation’s total goal and the part that he is contributing. This provides
him with a sense of involvement essential to his need to grow and develop.

Non-Financial Motivators
Appraisal, Praise or Recognition
Praise has its greatest value when it is given and received as recognition. An employee would naturally want to
be praised by his boss and his colleagues for any work done well. Recognition satisfies human need for esteem
by others and his self-esteem. It can be shown in the form of:
- Pat on the back
- Recommendation for a pay raise
- Promotion
- Assignment of more interesting tasks
- Awards
- Banquets honoring certain individual
- Certificates, Plaques etc
Status and Pride
Pride is regarded as a powerful and valuable motivator towards higher productivity. Status refers to “the social
rank of a person”. It satisfies the social and egoistic needs. Management can satisfy this need by establishing
status symbol and distinctions in the organisation by providing:
- Good furniture/artistic curtains for the office
- Private lockers
- Separate cabins/chambers
- Suitable desks with drawers etc.

Competition
Competition to certain extent should be encouraged in the organisation. It may be in regards to sales,
production or safety measures. However, competition leading to jealousy and hostility among the competing
members and giving rise to a sense of frustration should not be encouraged.

Delegation of Authority
An individual entrusted with authority has the right to act, to direct and to requisition resources needed to
perform a designated activity. The delegation of substantial amount of responsibility to execute a given task
often proves to be a strong motivating force.

Participation
Management must encourage its employees to participate in areas such as decision making to improve the
working conditions. This will satisfy the employee’s ego and self-esteem. It will also give an outlet to creativity
and initiatives.

Job Security
Job security implies that an employee would continue on the job in the same plant or elsewhere and that he
shall enjoy economic, social security through health and welfare programs. The welfare programs should
provide security against sickness, unemployment, disability, old age and death. Job security should make
arrangements to accommodate surplus manpower in the organisation.

Job Enlargement
It is a process of increasing the complexity of job in order to appeal to the higher-order needs of the employees.
Job enlargement implies that the employee performs more varied tasks, which are all on the same level. The
idea is to make the job less monotonous. The basic principle in job enlargement is to provide employees with
opportunities to make greater use of their minds and skills so that they are able to satisfy their need for self-
esteem and dignity.

Job Rotation
The basic objective of job rotation is to increase the skill and knowledge of an employee about related jobs. It
is basically shifting an employee from one job to another so that monotony and boredom is reduced. An
employee learns to do all the different activities necessary for an operation or unit of work.

Job Loading
To make a job more interesting Horizontal or Vertical job loading is done. In Horizontal job loading, the
employee is given more work at the same level at which he is currently performing. In Vertical job loading, jobs
are restructured to include larger areas of responsibility and make it intrinsically more interesting.

Job Enrichment
Job Enrichment is usually more successfully in improving quality of the work than its quantity. The job to be
performed should be less structured and less routine. The quality of work is of prime consideration for enriching
a job. The goal of this exercise is not merely to make the work more varied but to make “every employee a
manager”. The job is made to deal with the higher order needs of an employee such as need for advancement,
recognition, growth and responsibility.

Quality of Work Life

The term “Quality of Work Life” means different things to different people. In reference to the work and its
environment in which the employee performs his job, the following are few factors which will improve the
quality of work life:
- Adequate and fair compensation
- Security and growth opportunity
- Safe and healthy working conditions
- Opportunity to use and develop creativity
- Respect for the individual’s personal rights
- Work and family life

Job Sharing or Twinning

It is novel system, in which two employees prefer to divide one full-time job, especially:
- mother and father who want to spend more time with their families
- the older people - who want to retire gradually
- those with physical limitations
- Students
• In such system, the hours of work, salary and other fringe benefits are shared between both the parties.

Flexitime or Flexible Working Hours

For flexitime employees have the freedom to choose within certain limitations, what time they begin and finish
their job each day. It wipes out the 9 to 5 syndrome faced by many employees and enables them to enjoy hours
that closely match their personal styles. It improves morale, increases productivity and gives employees a
greater sense of control over their own lives.

Change Management
“To improve is to change. To be perfect is to change often”.
- Winston Churchill

Change
Change is the name of the game in management today. Market, product and competitive conditions are rapidly
changing. Change is an alteration in the existing field of forces (external & internal) that tends to affect the
equilibrium of an organisation.

In an era of accelerating change, organization’s degree to excellence is judged by its ability to cope with these
changes. Organizations either become more adaptive, flexible and anticipative or they become rigid, stagnant
and react to change after the fact, often when it is too late. Therefore, Managers must do more than just
react; they must be able to anticipate the changing patterns of people, markets, products, services and
technology.

Levels of Change
1. Knowledge Changes
2. Attitudinal Changes
3. Individual Behaviour Changes
4. Group or Organisational Performance Changes

Changes in knowledge tend to be the easiest to make; they can occur as a result of reading a book or an article
or hearing something new from a respected person. Attitude structures differ from knowledge structures in that
they are emotionally charged in a positive or a negative way. Changes in individual behaviour seem to be
significantly more difficult and time consuming. While individual behaviour is difficult enough to change, it
becomes even more complicated when you try to implement change within groups or organisations.

Types Of Changes in Organizations

Macro level
• Change in Structure : e. g., amendments to the Constitution; nationalisation of banks.
• Change in Methodology : e.g., Automation in industry : irrigation, chemical fertilizers and crop rotation in
agriculture.
• Change in Behaviour : e.g., family planning program; patriotism and social discipline in time of war or
emergencies.
• Change in Assumptions and Values: e. g., desire for socialistic pattern of society; liberation movements.

Cycles of Change
The levels of change become very significant when you examine two different change cycles
- Participative Change Cycle
- Directive Change Cycle
Participative Change
A participative change cycle is implemented when new knowledge is made available to the individual or group.
It is hoped that the group will accept the data and will develop a positive attitude and commitment in the
direction of the desired change. The next step will be to attempt to translate this commitment into actual
behaviour. This step is significantly more difficult to achieve. An effective strategy may be to identify the
informal and formal leaders among the work group(s) and concentrate on gaining their behavioral support for
the desired change.

Once this is accomplished, organisational change may be effected by getting other people to begin to pattern
their behaviour.

Directive Change
This change cycle begins by change being imposed on the total organisation by some external force, such as
higher management, the community, new laws. The new contacts and modes of behaviour create new
knowledge, which tend to develop predispositions towards or against the change.

Three Dimensions of Change

1. Logical Dimension: Based on the technical evidence of economics and science. This evidence needs to be
presented to employees so that they can understand the technical and economic reasons for change.
2. Psychological Dimension: Based on the fact that change is logical on terms of the human values and
feelings in the situation.
3. Sociological Dimension: Based on change logical from the point of view of social values. Is the change
consistent with norms of the group? Does it maintain group teamwork? These questions need to be
resolved keeping in mind society norms.

Change Process
Managing change means managing the conversation between the people leading the change effort and those who
are expected to implement the new strategies.
The critical factors of a change process are :
• Skill to identify and analyze the objectives of change (knowledge of understanding what the problem is &
finding solutions to it.)
• Skill to devise successful methods to accomplish the objectives and solve the problems.
• Skill to enlist the support of people involved and affected by change.

A Model Of Adaptive Orientation

Low

Anticipative Reactive
Management Management
Environmental Stability
Satisficing Conservative
Management Management
High
High Low

Adaptive
Orientation
Strategies For Dealing With Change
In some cases where change is forced the new behaviour engaged in creates the kind of knowledge that develops
commitment to the change and therefore, begins to approximate a participative change as it reinforces the
individual and group behaviour. The hope is that “if people will only have a chance to see how the new system
works they will support it.” Planned change according to Benne and Chin, can be divided into three basic types
of strategies.

Empirical – Rational Strategies :

The fundamental assumption underlying empirical-rational strategies is that human beings are rational and will
follow their self-interest once this is revealed to them. This strategy is basically straightforward and
uncomplicated. Since the person is rational and motivated by his self-interest, he will obviously adopt the
proposed change if the logic can be effectively communicated.

Normative Re-educative Strategies :

The normative re-educative strategies believe that human beings are guided in their actions by sociocultural
norms and their commitment to these norms. Consequently, change is not exclusively at the cognitive or
intellectual level but is often at a more personal level : habits, attitudes, and values.

Power-Coercive Strategies :
Power-coercive strategies are based on the assumption of compliance of those with less power to the will of
those with more power.

Resistance to Change
Managers in every company must be alert to problems and opportunities, because the perceived need for change
is what sets the stage for subsequent actions that create a new product or technology. Big problems are easy to
spot. Sensitive monitoring systems are needed to detect gradual changes that can fool managers into thinking
their company is doing fine. An organization may be in greater danger when the environment changes slowly,
because managers may fail to trigger an organizational response. Failing to use planned change to meet small
needs can place the organization in hot water, as illustrated in the following passage :

When frogs are placed in a boiling pail of water, they jump out – they don’t want to boil to
death. However, when frogs are placed in a cold pail of water, and the pail is placed on a
stove with the heat turned very low, over time the frogs will boil to death.

Psychologists have studied the phenomenon of resistance to change during the past few decades. Several
explanations have been given for resistance to change. Some of these are as follows:
1. The change itself produces disequilibrium
2. There exists a deep seated human characteristic to go against change
3. The basic anxieties aroused by the working conditions
4. Insecurity created by the ambiguity related to change

Resistance has a protective function for the individual. All behaviour which opposes change is not necessarily
resistance. Some opposition to change may be perfectly logical.

Tactics for Overcoming Resistance to Change

Approach
When to Use
Communication, education • Change is technical.
• Users need accurate information and analysis to
understand change.
Participation • Users need to feel involved.
• Design requires information from others.
• Users have power to resist.
Negotiation • Group has power over implementation.
• Group will lose out in the change.
Coercion • A crisis exists.

Top management support
• Initiators clearly have power.
• Other implementation techniques have failed.
• Change involves multiple departments or reallocation of
resources.
• Users doubt legitimacy of change.

Techniques for initiating Change

Strategies for overcoming resistance to change typically involve two approaches: the analysis of resistance
through the force field technique and the use of selective implementation tactics to overcome resistance.
Organisations may be in a state of equilibrium, with forces pushing for change on one hand and forces resisting
change by attempting to maintain the status quo on the other. Kurt Lewin expressed this phenomenon in his
field force theory, which suggests that an equilibrium is maintained by driving forces and restraining forces.
When a change is introduced, some forces drive it and other forces resist it. To implement a change,
management should analyze the change forces. By selectively removing forces that restrain change, the driving
forces will be strong enough to enable implementation.

Another approach, and one that is usually more effective, is to reduce or eliminate the restraining forces and
then move to a new level of equilibrium. In organizations, therefore, a change in policy is less resisted when
those affected by it participate in the change. The change process involves three steps :
1. unfreezing
2. moving or changing
3. refreezing

The first stage, unfreezing, creates motivation for change. If people feel uncomfortable with the present
situation, they may see the need for change. However, in some cases an ethical question may arise regarding
the legitimacy of deliberately creating discomfort that may initiate change. The second stage is the change
itself. This change may occur through assimilation of new information exposure to new concepts, or
development of a different perspective. The third stage, refreezing, stabilizes the change. Change, to be
effective, has to be congruent with a person’s self-concept and values. If the change is incongruent with the
attitudes and behaviors of others in the organization, chances are that the person will revert back to the old
behaviour. Thus, reinforcement of the new behaviour is essential.
Job Description
“Job description” is an important document, which is basically descriptive in nature and contains a statement of
job analysis. It provides both organisational information (location is structure, authority, etc.) and functional
information (What the work is). It defines the scope of job activities, major responsibilities, and positioning of
the job in the organisation.

Job Description describe ‘jobs,’ not ‘job holders.’ It is a vehicle for oganisational change and improvement.

Uses of Job Description

According to Zerga, who analysed 401 articles on job description about 30 years ago, a job description helps us
in :
• Job grading and classification
• Transfers and promotions
• Adjustments of grievances
• Defining and outlining promotional steps
• Establishing a common understanding of a job between employers and employees
• Investigating accidents
• Indicating faulty work procedures or duplication of papers
• Maintaining, operating and adjusting machinery
• Time and motion studies
• Defining the limits of authority
• Indicating case of personal merit
• Facilitating job placement
• Studies of health and fatigue
• Scientific guidance
• Determining jobs suitable for occupational therapy
• Providing hiring specifications
• Providing performance indicators

Components of Job Description :

• Job identification, or Organisational position
• Job duties and responsibilities
• Relation to other jobs
• Supervision
• Machine, tools and equipment
• Working conditions
• Hazards

Guidelines for Writing a job Description

• A paragraph is allocated to each major task or responsibility.
• Paragraphs are numbered and arranged in a logical order, task sequence or importance.
• Sentences have to begin with an active verb, e.g. “types letters,” “interviews the candidates,” “collects,
sorts out, routes and distributes mail.”
• Accuracy and simplicity are emphasised rather than an elegant style.
• Brevity is usually considered to be important but is largely conditioned depending on the type of job being
analysed and the need for accuracy.
• Examples of work performed are often quoted and are useful in making the job description explicit.
• Job descriptions, particularly when they are used as bases for training, often incorporate details of the faults
which may be encountered in operator tasks and safety check-points.
• Statements of opinion, such as “dangerous situations are encountered,” should be avoided.
• When job descriptions are written for supervisory jobs, the main factors (such as manning, cost control, etc.)
are identified and listed. Each factor is then broken down into a series of elements with a note on the
supervisor’s responsibility.

The British Institute of Management Publication adds four more guidelines.

• Give a clear, concise and readily understandable picture of the whole job.
• Describe in sufficient detail each of the main duties and responsibilities
• Indicate the extent of direction received and supervision given.
• Ensure that a new employee understands the job if he reads the job description.

Recruitment
“Recruitment is a process of searching for prospecting employees and stimulating them to apply
for jobs in the organisation.”

Steps on Recruitment process

Personnel recruitment process involves three elements viz.
• A recruitment policy
• The development of sources of recruitment
• Different methods / techniques used for utilising these sources

Recruitment Policy
A good recruitment policy must contain these elements:
(a) Organisation’s objectives
(b) Identification of the recruitment
(c) Preferred sources of recruitment.
(d) Criteria of selection and preferences.
(e) The cost of recruitment and financial implications of the same.

Prerequisites of a good recruitment policy

The recruitment policy of an organisation must satisfy the following conditions:
• It should be in conformity with its general personnel policies;
• It should be flexible enough to meet the changing needs of an organisation.
• It should be so designed as to ensure employment opportunities for its employees on a long-
term basis so that the goals of the organisation should be achievable; and it should develop
the potentialities of employees.
• It should match the qualities of employees with the requirements of the work for which they
are employed; and
• It should highlight the necessity of establishing job analysis.

Sources of recruitment:
Internal sources
External sources

Methods or Techniques of Recruitment

Direct Methods
Indirect Methods

Factors Affecting Recruitment

• All organisations whether large or small, do engage in recruiting activity, though not to the
same extent. This differs with:
• The size of the organization.
• The employment conditions in the community where the organisation is located.
• The effects of past recruiting efforts which show the organisation’s ability to locate and keep
good performing people
• Working conditions and salary benefit packages offered by the organisation – which may
influence turnover and necessitate future recruiting.
• The rate of growth of organization.
• The level of seasonality of operations and future expansion and production programmes.
• Cultural, economic and legal factors etc.

Steps on Recruitment process

Personnel recruitment process involves three elements viz.
• A recruitment policy
• The development of sources of recruitment
• Different methods / techniques used for utilising these sources

Prerequisites of a good recruitment policy

The recruitment policy of an organisation must satisfy the following conditions.
It Should:
• Be in conformity with its general personnel policies
• Be flexible enough to meet the changing needs of an organisation.
• Be so designed as to ensure employment opportunities for its employees on a long-term basis so that the
goals of the organisation should be achievable; and it should develop the potentialities of employees.
• Match the qualities of employees with the requirements of the work for which they are employed; and
• Highlight the necessity of establishing job analysis.
Selection
Selection procedure is concerned with securing relevant information about an applicant. The information is
secured in a number of steps or stages. The objective of selection process is to determine whether an applicant
meets the qualifications for a specific job and to choose the applicant who is most likely to perform well in the
job. The formal definition of selection is:
“ It is the process of differentiating between applicants in order to identify (and hire) those with the greater
likelihood of success in a job.”

Role of selection:
The role of selection in an organisation’s effectiveness is crucial for at least, two reasons:
1. Work performance depends on individuals
2. Cost incurred in recruiting and hiring personnel.

Selection process involves the following steps:

1. Environmental factors affecting selection
2. Preliminary interview
3. Selection tests
4. Choosing tests
5. Employment interview
6. Reference and background checks
7. Selection decision
8. Physical examination
9. Job offer
10. Contracts of employment and
11. Evaluation of selection program

Barriers to effective selection:

• Perception
• Fairness
• Validity
• Reliability
• Pressure

Four approaches to selection

• Ethnocentric selection
• Polycentric selection
• Regiocentric staffing
• Geocentric staffing

Job - Satisfaction

What Is Job - Satisfaction?

There are three important dimensions to Job - Satisfaction:
1. Job satisfaction refers to one’s feelings towards one’s job.
2. Job satisfaction is often determined by how well outcomes meet or exceed expectations.
3. The term Job - satisfaction and job attitude is often used interchangeably.

Some definitions of Job - satisfaction:

“Job - satisfaction is the amount of pleasurable or contentment associated with a job. If you like your job
intensely you will experience high job satisfaction. If you dislike your job intensely, you will experience job
dissatisfaction.”

“ …. Job – satisfaction will be defined as the amount of overall positive affect (or feelings) that individuals have
towards their jobs.”

Consequences Of Job - Satisfaction:

• High Job – satisfaction may lead to:
• Improved productivity
• Decreased employee turnover
• Improved attendance
• Reduced accidents
• Less job stress
• Lower unionisation

Sources Of Job – Satisfaction

Several job elements contribute to Job – satisfaction they are:
• Wages
• Nature of work
• Promotion
• Supervision
• Work group
• Working conditions

Benefits of Job – Satisfaction Study

1. They give management an indication of general levels of satisfaction in a company
2. Improved communication
3. Improved attitude
4. It can help to discover the cause of indirect productivity problems, such as absenteeism, turnover etc.
5. They help management asses training needs
6. It is an indicator of the effectiveness of organisational reward systems.
7. It evaluates the impact of organisational change on employee attitudes.
8. They are useful to the unions

Ways of Measuring Job – Satisfaction

• Rating Scales
• Critical Incidents
• Interviews
• Action Tendencies
• Use Of Existing Information

Training needs
The Determination of Training Needs with an Enterprise
There is a great difference between the way in which training needs would be determined in a perfect world and
an ideal company, and the way in which it is often done in the normal working circumstances.

Let us consider an example - on one hand, there is a progressive company with highly organized central
personnel and training departments, and a plan for integrated manpower development. At the other extreme,
there is a company where the personnel and training responsibilities are not very clearly defined, and where the
function, if it can be identified at all, is one of a number of general responsibilities carried out by an official
whose main responsibility is something quite different.

In the first type of company, the determination of training needs is something, which is constantly being carried
out and reviewed as circumstances, policies, markets, and company objectives change. In the second type of
company, the training is much less likely to be planned ‘globally’ for the company as a whole. The initiative is
often left to one particular department manager who happens to realize the potential benefits of training and is
keen to do something about it. He may nominate one member of his staff as training officer and activities may
be launched which are related only to the specific needs of that particular department at that particular time.
They may even conflict with the needs of the organisation as a whole.

At the one extreme, training needs are carefully analyzed and reviewed and, the other displays a piecemeal
haphazard approach, unplanned, unsystematic, and often unrelated to the needs of the company. In between
these two extremes there are all the permutations and combinations.

The approach of each company will vary from that of other companies and so it should, but fundamentally there
are a number of common basic steps:
• Take an inventory: The present manpower should be taken stock of both quantitatively and qualitatively.
Information related to manpower will be available in the personnel department, i.e., information about
qualifications and previous experience and training already given by the company. Information about how
effective the people are in their present job and about their promotion ability should also be included.

• Forecasts of future requirements: Normal ‘wastage’ through retirement, transfers, resignations, etc. and
the possible effects of changes in the company’s policies and objectives, e.g. expansion, re-organisation,
contraction, etc. should be considered here.

• To decide where one is going to find the people: Some of the people can be found within the organisation
unless there is a well-planned scheme for ‘spotting’ talent. It is in this third step that the results of steps
one and two are combined. Step two forecasts all future requirements but in particular it highlights key
jobs, which will need to be filled during the review period. Step one has mentioned what type of people
organisation has and what their potential is. The two can be then matched by allocating people to ‘target’
jobs. If it is unlikely to fill all vacancies from within the organisation then sources outside the company can
be tapped.

• Decide what one is going to do to develop the manpower: Both those who are there and those who are
going to be recruited in order to help them to be fully effective in their present posts and to prepare them
for their ‘target’ jobs’. In practice it is a good idea to prepare people wherever possible for two target
jobs. This is because some personnel development programs are quite lengthy and in the meantime
company objectives – and therefore organisations may change. The ‘two-target-job’ approach ensures
greater flexibility.

This, in a nutshell, is the raison d’etre of the training officer’s job. The training needs, both short term and
long term, will be spotlighted by the development program. The training officer’s task will be to advise on what
is to be done within the company to meet these training needs and also what use, if any, is to be made of
‘external’ facilities offered by training institutions, consultants, technical and commercial colleges, universities,
etc. In order to do this, the training officer needs to keep himself well informed about the work of these
organisations and its quality.

The Training and Consultancy Cycle

There is a marked difference between the knowledge of a management technique and the ability to use it
properly in a practical management situation. This ability can be defined as a management skill. Knowledge of
the technique can be acquired through theoretical study and through simulation exercises in the classroom or
laboratory. But the essential skills in practical use and application of the technique cannot be acquired in the
same way as the theory. Acquisition of these skills involves identification of practical situations to which the
technique can be applied; the adaptation of the technique to the requirements of these situations; co-ordination
of the efforts of those people concerned with introduction of the technique, and the overcoming of diverse
obstacles. Such skills are only developed and refined through practice and first-hand experience. The
aptitudes and efforts of the individuals concerned as well as opportunities provided by the environment greatly
influence the process of acquiring management skills.

The first activity in which the managers, or young people trained for future jobs participate, are training
courses.

The next activity in the development cycle is guided practical application of the new techniques and concepts.
In some cases, this is done during the training program concerned, which consists thus of two major phases: the
first, phase of classroom or laboratory training is followed by a phase during which the participants work as
individuals or in groups on practical projects. In other cases, the formal training program does not include this
second phase. But it is almost invariably followed by a follow-up period, which is very similar in objectives and
scope. Before the end of the course, each participant is assisted in selecting a practical problem-solving task in
which he will apply, in the conditions of his own enterprise, what he has learned in the course.

The professional training staff keeps in touch with the participants and work with them in their enterprise
enough to ensure that each participant does, in fact, produce practical results. It is considered that this
approach is the only way to ensure that participants receive adequate training in, and exposure to, practical
management skills. Further, top management is unlikely to accept any alternative approach to training which
excludes the practical application of new techniques.
At the end of this practical in-plant application phase (whether part of a general course or follow-up phase after
the completion of a course) participants return to the training center for a few more days, so that each can
present to the group the description of the problem he tackled, the methods used to solve it and the obtained or
expected results. Through such “evaluation seminars” everyone has a further opportunity to learn about
additional practical applications.

The Determination of Training Needs with an Enterprise

There is a great difference between the way in which training needs would be determined in a perfect world and
an ideal company, and the way in which it is often done in the normal working circumstances.
Let us consider an example - on one hand, there is a progressive company with highly organized central
personnel and training departments, and a plan for integrated manpower development. At the other extreme,
there is a company where the personnel and training responsibilities are not very clearly defined, and where the
function, if it can be identified at all, is one of a number of general responsibilities carried out by an official
whose main responsibility is something quite different.
In the first type of company, the determination of training needs is something, which is constantly being carried
out and reviewed as circumstances, policies, markets, and company objectives change. In the second type of
company, the training is much less likely to be planned ‘globally’ for the company as a whole. The initiative is
often left to one particular department manager who happens to realize the potential benefits of training and is
keen to do something about it. He may nominate one member of his staff as training officer and activities may
be launched which are related only to the specific needs of that particular department at that particular time.
They may even conflict with the needs of the organisation as a whole.

At the one extreme, training needs are carefully analyzed and reviewed and, the other displays a piecemeal
haphazard approach, unplanned, unsystematic, and often unrelated to the needs of the company. In between
these two extremes there are all the permutations and combinations.

The approach of each company will vary from that of other companies and so it should, but fundamentally there
are a number of common basic steps:
• Take an inventory: The present manpower should be taken stock of both quantitatively and qualitatively.
Information related to manpower will be available in the personnel department, i.e., information about
qualifications and previous experience and training already given by the company. Information about how
effective the people are in their present job and about their promotion ability should also be included.
• Forecasts of future requirements: Normal ‘wastage’ through retirement, transfers, resignations, etc. and
the possible effects of changes in the company’s policies and objectives, e.g. expansion, re-organisation,
contraction, etc. should be considered here.
• To decide where one is going to find the people: Some of the people can be found within the organisation
unless there is a well-planned scheme for ‘spotting’ talent. It is in this third step that the results of steps
one and two are combined. Step two forecasts all future requirements but in particular it highlights key
jobs, which will need to be filled during the review period. Step one has mentioned what type of people
organisation has and what their potential is. The two can be then matched by allocating people to ‘target’
jobs. If it is unlikely to fill all vacancies from within the organisation then sources outside the company can
be tapped.
• Decide what one is going to do to develop the manpower: Both those who are there and those who are
going to be recruited in order to help them to be fully effective in their present posts and to prepare them
for their ‘target’ jobs’. In practice it is a good idea to prepare people wherever possible for two target
jobs. This is because some personnel development programs are quite lengthy and in the meantime
company objectives – and therefore organisations may change. The ‘two-target-job’ approach ensures
greater flexibility.

This, in a nutshell, is the raison d’etre of the training officer’s job. The training needs, both short term and
long term, will be spotlighted by the development program. The training officer’s task will be to advise on what
is to be done within the company to meet these training needs and also what use, if any, is to be made of
‘external’ facilities offered by training institutions, consultants, technical and commercial colleges, universities,
etc. In order to do this, the training officer needs to keep himself well informed about the work of these
organisations and its quality.
The Training and Consultancy Cycle
There is a marked difference between the knowledge of a management technique and the ability to use it
properly in a practical management situation. This ability can be defined as a management skill. Knowledge of
the technique can be acquired through theoretical study and through simulation exercises in the classroom or
laboratory. But the essential skills in practical use and application of the technique cannot be acquired in the
same way as the theory. Acquisition of these skills involves identification of practical situations to which the
technique can be applied; the adaptation of the technique to the requirements of these situations; co-ordination
of the efforts of those people concerned with introduction of the technique, and the overcoming of diverse
obstacles. Such skills are only developed and refined through practice and first-hand experience. The
aptitudes and efforts of the individuals concerned as well as opportunities provided by the environment greatly
influence the process of acquiring management skills.

The first activity in which the managers, or young people trained for future jobs participate, are training
courses.

The next activity in the development cycle is guided practical application of the new techniques and concepts.
In some cases, this is done during the training program concerned, which consists thus of two major phases: the
first, phase of classroom or laboratory training is followed by a phase during which the participants work as
individuals or in groups on practical projects. In other cases, the formal training program does not include this
second phase. But it is almost invariably followed by a follow-up period, which is very similar in objectives and
scope. Before the end of the course, each participant is assisted in selecting a practical problem-solving task in
which he will apply, in the conditions of his own enterprise, what he has learned in the course. The professional
training staff keeps in touch with the participants and work with them in their enterprise enough to ensure that
each participant does, in fact, produce practical results. It is considered that this approach is the only way to
ensure that participants receive adequate training in, and exposure to, practical management skills. Further,
top management is unlikely to accept any alternative approach to training which excludes the practical
application of new techniques.

At the end of this practical in-plant application phase (whether part of a general course or follow-up phase after
the completion of a course) participants return to the training center for a few more days, so that each can
present to the group the description of the problem he tackled, the methods used to solve it and the obtained or
expected results. Through such “evaluation seminars” everyone has a further opportunity to learn about
additional practical applications.
Strategic Training System (Planned training)
Planned training, as defined by Kenney and Reid (1994), is a ‘deliberate intervention aimed at achieving the
learning necessary for improved job performance’ the process of planned training consists of the following steps
(as shown in the figure below):
• Identify and define training needs – This involves analysis of corporate, team, occupational and individual
needs to acquire new skills or knowledge or to improve existing competencies. The analysis covers problems
to be solved as well as future demands. Decisions are made at this stage on the extent to which training is
the best and the most cost-effective way to solve the problem.
• Define the learning required – It is necessary to specify as clearly as possible what skills and knowledge
have to be learnt, what competences need to be developed and what attitudes need to be changed.
• Define the objectives of training – Learning objectives are set, which define not only what has to be learnt
but also what learners must be able to do after their training program.
• Plan training programs – These must be developed to meet the needs and objectives by using the right
combination of training techniques and locations.
• Decide who provides the training – The extent to which training is provided from within or outside the
organisation needs to be decided. At the same time, the division of responsibility between the training
department, managers or team leaders and individuals has to be determined.
• Implement the training – Ensure that the most appropriate methods are used to enable trainees to acquire
the skills, knowledge, level of competence and attitudes they need.
• Evaluate training – The effectiveness of training is monitored during programs and, subsequently, the impact
of training is assessed to determine the extent to which learning objectives have been achieved.
• Amend and extend training as necessary – Decide, on the basis of evaluation, the extent to which the
planned training program needs to be improved and how any residual learning requirements should be
satisfied.

Identification of training needs

Training must have a purpose and that purpose can be defined only if the learning needs of the organisation and
the groups and individuals within it have been systematically identified and analyzed.

Training needs analysis – Aims

Training needs analysis is partly concerned with defining the gap between what is happening and what should
happen. This is what has to be filled by training i.e. the difference between what people know and can do and
what they should know and be able to do.

What is Training gap What should be

Corporate or Corporate or
functional results functional standards

Knowledge and skill Knowledge and

possessed The Training Gap
skill required

Actual performance Targets or standards

of individuals of performance

Training needs analysis – Areas

Training needs should be analyzed, first, for the organisation as a whole – corporate needs; second, for
departments, teams, functions or occupations within the organisation – group needs. And third, for individual
employees – individual needs. These three areas are interconnected, as shown in the above figure. The analysis
of corporate needs will lead to the identification of training needs in different departments or occupations,
while these in turn will indicate the training required for individual employees. The process also operates in
reverse. As the needs of individual employees are analyzed separately, common needs emerge which can be
dealt with on a group basis. The sum of group and individual needs will help to define corporate needs, although
there may be some super ordinate training requirements which can be related only to the company as a whole to
meet its business development needs – the whole training plan may be greater than the sum of its parts.

Training needs analysis – Areas and Methods

Corporate Group Individual

Performanc
Analysis of Analysis of Job and
Training e &
strategic human role
surveys developme
plans resource analysis
nt reviews
plans

Methods of analyzing training needs

The four methods of training needs analysis are:
• Analysis of business and human resource plans
• Job analysis
• Analysis of performance reviews
• Training surveys

Business and human resource plans

The training strategy of an organisation should largely be determined by its business and HR strategies and plans
from which flow human resource plans. The plans should indicate in fairly general terms the types of skills and
competences that may be required in the future and the number of people with those skills and competencies
who will be needed. These broad indicators have to be translated into more specific plans which cover, for
example, the outputs from training programs of people with particular skills or a combination of skills (multi-
skilling).

HRD – An Overview
Introduction
In recent times, particularly with liberalization of the Indian economy and its gradual and halting integration
with the world economy, the Human Resources (HR) function in India has finally acquired the importance that it
has in the developed world. Perhaps, due to the abundant manpower available and relatively low cost, this did
not merit undue consideration earlier. But now it is realized that with equal opportunities to acquire technology,
finance, systems, the cutting edge of an organisation will be its Human Resources. That is, the difference
between one company and another in the market place, other things being equal, will be the quality, skill,
attitudes and commitment of the Human Resources, which will either see the company achieve good results –
profits – or, decline – losses.
Human Resource Development is incorporated in organisations to cope with the corporate cultural change. It is
important to make the implicit explicit: to continually examine the culture through a variety of feedback
mechanisms, mapping out the culture, assessing where the organisation is, where it wants to go and thus
carefully identifying strategies for change.

Thus, HRD is a continuous process, which matches organisational needs for human resources and the individual
needs for a career development. It enables the individual to gain their best human potential by attaining a total
all round development. It promotes dignity of employment of every employee of an organisation, and provides
opportunities for teamwork, personal development and career development. Hence a well-planned HRD system
must be a part of human resource management of every organisation.

Evolution of The HRD Function

HR management tries to focus on “people” in the workplace, the need to understand their contribution to the
organization’s purpose. Consequently, there is now an emphasis on trying to build on HR systems and processes.
The evolution of the HRD function went through the following phases:

The Initial Phase: This was characterized by a labor welfare approach. The feature of this approach was that
the function was basically concerned with maintaining records of employees – such as attendance records, leave
of different sorts – Casual Leave / Earned Leave / Sick Leave / Extraordinary Leave / Study Leave / Restricted
Holiday and so on and this data was fed to calculate the wages. Besides the basic wage, other wage components
like PF were also recorded. Records were also maintained of PF loans and other retirement benefits, and
implementation of safety measures as per the Factories Act. In addition there was some amount of monitoring
and providing information to the employee, the accounts department and for the concerned department head.

With the advent of trade unions, dealing with the union was an add-on function. This involved receiving the
charter of demands from union leaders and interpreting it.

Fire Fighting: In this phase, the function was frequently, “dousing fires” i.e. resolving conflicts and keeping the
wheels of production moving (union demands, dissatisfaction etc.) Management was preoccupied with keeping
the engines of production moving at all times, and so work stoppages and discord was an aberration to be
speedily got over with, so that the ‘fundamental’ business of production was not held up. The major policy
decisions and negotiating was done by the Top Management, the Personnel Management and Industrial Relations
(PMIR) function played a supportive/informative role and was more preoccupied with backroom discussions and
negotiations.

Such an approach is also referred to as the maintenance role and the obverse is the development role. If the HR
position is in the lower rung of the management hierarchy, for example, in the production department or in a
labour welfare-oriented department, the HR person would be playing more of the reactive role – if there is a
problem, he reacts and the problem is sought to be solved. Production should receive the first priority and all
industrial disputes should be settled. With the emphasis on the current issues, aspects like long-term strategy,
planning, etc. are given low priority. The PMIR function was in the unenviable position of having to douse fires
all the time. The major decisions were taken at the factory manager or the managing director level. When the
fire or strife erupted the function got some attention, but when the fire was put out, it got no time anymore.

Third Phase: This stage in the evolution of the function came about due to the influence of a variety of factors:
the increasing cost of human resources due to the increased number of benefits, increased cost of living, higher
expectations and higher costs of scarce skilled manpower. The increased HR cost became more pronounced in
the service industry than in the manufacturing industry as the Human Resource was the main input in the service
sector. The other major influence was that of the behavioral scientists and their contribution to understanding
the nature of human behavior at work focusing on issues like leadership, work motivation, participation and
factors influencing work productivity. The third factor was the attempt to integrate the Trade Unions/Workers
with management’s vision of the enterprise, that survival and prosperity was common to both. In fact the market
was such that in many products there was more of rationing distribution, due to either capacity or input
constraints. Monopoly or dominant market share remained the major concern rather than production cost and
technological efficiencies.

Integrated HR Function
At the end of the Third Phase organizations soon began focusing on their human resources. Human Resource was
in abundant supply and not a very significant cost in the total operating cost, but working in industry itself was a
new experience for most people in the initial phase. The PMIR function was thus playing a reactive maintenance
role, because of a combination of market, cost, supply and finance factors. But with a few corporations
experimenting with innovative approaches to combat the negative fall-out of the traditional approaches to
labour, they focused on the positive and the significant contribution they could make to a congenial working
environment and consequently, smooth production, including changeover to new technology, flexible manning
and increased productivity.

The significant shift was that management now began to take the initiative and introducing HR systems and
procedures, rather than reacting to a particular problem or a demand. HR issues of major policy initiatives e.g.
new products, new plants, and so on, were discussed taking to account the HR implications, which hitherto was
not the case. Top managers reviewed and took stock of the situation. Finally, the HR position itself was
upgraded to come on par with the other functions in terms of status and salary.

A Broad perspective of Personnel, IR and HRD Functions

The Management process is made up of four steps embracing the ‘people’ dimension-‘getting them, preparing
them, activating them and keeping them.’ The Management of human resources is a very complicated and
challenging task for those who are entrusted with the successful running of an organization; and this implies
considerable knowledge of various aspects of “Personnel Management and Industrial Relations.”

The Personnel Function– The nervous system of the organisation structure

Personnel management may be conveniently described as the part of the management process, which is
primarily concerned with the human constituents of an organisation. Its object is the maintenance of human
relationships on a basis by which, consideration of well-being of the individual, enables all those engaged in the
undertaking to make their maximum personal contribution to the effective working of that undertaking.

The personnel function has two aspects: there is, in the first place, this responsibility attaching to all managers
and supervisors for the way in which they manage their people and weld this human material into the team that
carries out effectively the activities of the operating departments or sections. While this is primarily a matter of
the exercise of leadership, it is also linked up with the carrying out of the established personnel policy and the
smooth application of the procedures designed to secure the fulfillment of that policy. It necessarily entails on
the part of the managers and supervisors an understanding of the principles of personnel management as well as
close acquaintance with the personnel procedures and methods of the organisation itself.

A “Service’ facility
The second aspect is the specialized responsibility, which falls to the charge of the personnel specialist. His task
includes advising the company’s Managing Director or General Manager, and through him the Board of Directors,
on the formulation of personnel policy and planning and supervising the procedures by which that policy is to be
carried into effect. The Personnel Manager is an expert retained to deal with all policy, planning and methods
concerning the management of people, parallel, for instance, to the engineering expert who has to deal with
production policy, process layouts, engineering methods, tooling or the chemist who is responsible for
formulation of quality standards. The Personnel Officer’s responsibility entails mainly rendering a service to
other managers, as well as advising them in the discharge of their own human responsibilities. He serves the
other managers by many of the activities which are carried out within his own specialist department: the
procedures of selecting and engaging, the records and returns, the statistics and study of absenteeism, the
provision of canteen and medical services, and numerous other facilities. In the language of organisation theory,
he holds a “functional responsibility” for all personnel matters.

The nearest analogy is in the human body. Personnel management is not the brain, the controller, not only just a
limb, a member, nor yet the bloodstream, the energizing force. It is the nervous system. It is centered in the
controlling unit of the brain, for personnel policy is a Board responsibility and interpreted through the Managing
Director. It is a two-way channel of information reaching out to every part of the body i.e. organisation: it is a
live channel, not just a duct, and in some respects has automotive force. It is used in every action; if it
atrophies, partial paralysis results; if it gets out of balance, there ensues instability, chaotic action, dis-
equilibrium, which can be found in all stages of advancement, in close parallel with neurosis. But, above all
this, it is inherent in the whole body and intimately associated with its every movement. The nervous system
can never be thought of as an adjunct of the body – no more can personnel management be an extraneous or
superimposed element on the structure of organisation. The personnel function lies embedded in the structure,
is inherent in the dynamism of that structure, an integral part of the process of management itself.

Induction and Placement of Human Resources

Whenever new employees join an organisation there is always a period of learning and adaptation before they
become fully effective. Partly, this involves finding out about the practicalities of the job and facts about pay,
other employee benefits and the organisation’s rules and regulations. But there is also the need to understand
the less tangible but very powerful influence of ‘the way we do things around here’. Every organisation has its
own style or culture and new employees are unlikely to be fully effective or feel comfortable in their work until
they have absorbed this cultural influence and adjusted to it.

In a very general sense, induction is this process of initial learning and adjustment, whether or not the process is
planned or structured by the employer. In organisations that provide no form of induction, many new staff may
eventually settle in, relying on their own efforts to learn about the organisation and with informal help from
their colleagues. But there are two major risks involved in leaving induction to chance.

The process is likely to take far longer than if induction was planned, and this slow learning period carries
hidden costs.
Not all new entrants will learn and adapt.
Not all new entrants will learn and adapt successfully, and the organisation is them likely to experience the
significant disruption and costs of replacing early leavers.

The costs of early leaving

Many employees who leave soon after joining an organisation do so because they have not been helped either to
understand their role or to adapt to the organisational culture – both aspects being central to effective
induction.

An organisation that experiences a high incidence of employees leaving during their first few months may also
acquire a reputation as a poor employer. Early leavers are often disillusioned and tend to put all the blame on
the organisation – even if in some cases they may themselves have failed to put sufficient effort into making a
success of their new jobs. Most are likely to tell friends and family that the organisation as a bad employer, and
a reputation of this kind will spread and make it increasingly difficult to recruit good-quality staff. One aim of
an effective induction policy is to generate enthusiasm for working for the organisation, and this enhances its
employment reputation.

Elements of Induction
Induction is a planned and systematic process, structured and implemented by the organisation, to help new
employees settle into their new jobs quickly, happily and effectively. There is much more to it than the running
of formal induction courses, useful though these are. The longer-term process of tuning in to the style of the
organisation and understanding its aims and values cannot be achieved by simply attending a course. New
employees bring with them expectations about the job and the organisation, gained through the organisation’s
reputation and by contact during the recruitment and selection process – so parts of that process need to be
treated as pre-induction. How the new employee is received on the first day at work creates a strong first
impression and so requires particular attention. Also, the way supervisors and managers behave in their day-to-
day contacts with their staff has a major influence on how well and how quickly new employees settle in.

It is also important to recognise that existing employees who transfer or who are promoted within the
organisation require help in settling into their new jobs, as do those returning to work after lengthy career
breaks. Home-based employees and part-timers are often omitted from formal induction programmes, but their
needs for assistance in adjusting to new working circumstances can be considerable. So induction should not be
limited to new recruits to full-time jobs. It is necessary, too, for induction to reflect the specific characteristics
of different types of work and of different economic sectors. A thorough and well-planned approach to induction
carries dividends to the employer in helping to secure a competent, motivated workforce; and it benefits the
individual employee by contributing positively to career development.

An Induction Checklist
Topic
Reception
Initial reception
Initial documentation
Bank account details
Next of kin
Issue of :
ID/security pass
Car park permit
Staff handbook
Introduction to supervisor or manager

Topic
Site geography and facilities
General tour of the site
Cloakrooms and lavatories
Staff restaurant and vending machines
Car/motor cycle/bicycle parking
Notice boards
Employee’s work location
Fire exits
First aid room/first aid boxes
Time recording equipment
Issue of equipment
Protective clothing
Pager/mobile phone

Topic
Heath and safety
Fire and emergency drills
Security alerts
General safety rules
Specific hazards (e.g. toxic chemicals0
Smoking regulations
Accident procedures
Hygiene regulations
Introduction to workplace safety representative
Introduction to workplace first-aider
Occupation health service

Topic
Pay
Pay system
Basic pay
Bonus schemes
Grading/job evaluation
Allowances (shift, overtime, standby, etc.)
Deductions (savings schemes, etc.)
Explanation of payslip
Method of payment

Topic
Other conditions, benefits and employment policies
Attendance : hours of work, flexitime, meal/rest
Breaks
Leave : entitlement, notification
Sick pay : notification of absence, entitlements
Extra-statutory holidays
Pension scheme and life assurance
Company cars
Expenses : entitlements and claims procedure
Private medical/dental insurance
Staff purchase/discounts etc.
Maternity/paternity leave
Company loans (season tickets, mortgages, etc.)
Any flexibility in choice of benefits
Social sports, fitness facilities
Counselling and welfare scheme
Disciplinary rules and procedure
Grievance procedure
Equal opportunity policy
Alcohol/substance abuse policy
Disability policy and equipment
Anti-harassment/bullying policy and procedure
Customer care and contact policies and procedures
Code of conduct (organisational ethics, anti-corruption, etc.)

HR Challenges
As companies rush to become global, HR professionals are being asked to navigate through the white-water
rapids of a multicultural workplace, complex markets, and a new global competitors. Beneath the turbulent
water are the hidden challenges of lost talent, inequities, and the unknown. The signals, the warnings, are often
not seen or heard until it is too late, and the damage is done. Moreover, navigating one river successfully is no
guarantee of success on another just as one new global business experience rarely resembles another.

Technology and HR
It’s become a cliché to talk about the accelerating pace of change in the business environment . Every
commentator on any business trend pays homage to it. But undeniably, today’s organization seems to experience
change like never before. Over the past decade, HR professionals task was simple - attract, retain, and motivate
good people. Certainly nothing was said or expected about creating work environments that encourage
interconnecting people, knowledge, and markets. The winds of change are heralding the emergence of the new
economy, the information economy, and the digital economy. Seamlessly creating new work environments,
shaping new corporate cultures and dictating new business ethics. A new breed of professionals have raised the
challenge sweepstakes for the HR managers.

The technology of the business exerts a major influence on the internal environment how work is organized,
managed and carried out. The introduction of new technology may result in considerable changes to systems and
processes. Different skills are required, new methods of working are developed. The result may be an extension
of the skills base of the organization and its employees, including multi-skilling . But it could result in
downsizing. Technology can therefore present a considerable threat to employees.

The consequences of changing technology

• Smaller, more productive organizations
• Growing need for training on how to use technology
• Increasing need for people to cope with the expectation that they can perform
anytime or anywhere
• Increased productivity
• Flatter organizations
• Increased efficiency
• Reduced interpersonal contact

Threats of changing technology and the role of HR

Increased productivity
Technology offers the greatest opportunity for improved productivity and will continue to change abilities and
expectations for how and where work is done and who does work. Changing technology necessitates changes in
organizational structures, job design, hiring practices, compensation structures, training, and employee
relations. As technology changes faster, so too must ways of managing the people who work in technologically
dependent work. That responsiveness will require increasingly flexible HR efforts and increasingly rapid HR
decision making.

Changes in the way work is done

The ability to share information is escalating exponentially with personal computers in virtually every office and
in many residences and connected to a network. The ability to perform work anywhere and at any time - the
“virtual office” calls for new performance measurement systems and different managerial skills.

Increased need for Training

To keep pace with changing technology, organizations must increasingly devote resources to training employees
on how to use it. Organisations meet this demand by providing continuous retraining to help employees keep
pace with changing technology. The human element is key to taking full advantage of technological change, and
managing that human element is essential if any benefits of technological change are to be realized. HR can
take the leadership role by directing the formulation of systematic action plans or strategies developed to
enable people to deal with technological change.

Attraction and Retention of talent

Better talent is worth fighting for. At senior levels of an organization, the ability to adapt, to make decisions
quickly in situations of high uncertainty, and to steer through wrenching change is critical. But at a time when
the need for superior talent is increasing, big US companies are finding it difficult to attract and retain good
people. Executives and experts point to a severe and worsening shortage of the people needed to run divisions
and manage critical functions, let alone lead companies. Everyone knows organizations where key jobs go
begging, business objectives languish, and compensation packages skyrocket.

THE RETENTION MEASURES

 Increasing the organization’s level of professionalism
 Moving from family to professional management
 Making performance appraisals objective
 Involving employees in the decision making process
 Ensuring a match between authority and accountability
 Measuring employee satisfaction
 Achieving a match between individual and organizational goals
 Designing a competitive compensation package
 Increasing organizational transparency
 Promoting employees from within
 Helping employees acquire new skills
 Offering stock options
 Focusing on welfare measures proposition

Increasing the organization’s level of professionalism

Employees leave companies where intra-organizational interactions are unstructured, and decisions, ad-hoc and
driven more by personal prejudice rather than professional consideration. By adopting systems that introduce an
element of objectivity into its internal operations, a company can create a better workplace.

Moving from family to professional management

In most family managed organizations, professional managers leave because they cannot see themselves holding
key positions, or functioning with the level of independence that their designations merit. By inducting
professionals into senior management positions, a company can lower its attrition rate.

Making performance appraisals objective

Employees like to know how, when and by whom their performance is going to be measured. An appraisal process
that lists objective and measurable criteria for performance appraisal removes the uncertainty in the minds of
employees that their superiors can rate their performance any which way they please.

Involving employees in the decision making process

People like to work in organizations where their opinions count. The higher an employee’s involvement in
decision-making, the higher the organization’s retention level. A participative decision-making process is good;
total empowerment, better.

Ensuring a match between authority and accountability

Most companies fall into the trap of holding an employee accountable for a specific activity without empowering
him/her with the authority to perform it well. Often, the situation is exacerbated by the fact that they vest
another employee with the same authority, but do not hold him accountable.

Measuring employee satisfaction

Obsessed with catering to the demands of their external customers, companies ignore their internal customers.
Periodic employee satisfaction surveys can highlight the potential flashpoints, and enable the company to take
corrective action.

Achieving a match between individual and organizational goals

Many companies fall into the trap of expecting their employees to subsume their individual objectives before the
organizations one, which forces the employee to leave. The best companies achieve a balance between the two.
Designing a competitive compensation package
Money isn’t a motivator, but it is an effective de-motivator. While organizations that pay best-in-industry salaries
may find themselves unable to use that fact to motivate their employees, those that could not find their best
employees leaving.

Increasing organizational transparency

People do not like to work in black box like organizations, where information is rationed out on a need-to-know
basis. They prefer a transparent organization that is willing to share every aspect of its functioning with its
employees.

Promoting employees from within

A company that constantly fills vacancies by hiring from outside is certain to face retention problems. Employees
who realize that they are unlikely to be promoted to fill the vacancies will leave the organization. Growing your
own is a sound retention strategy.

Helping employees acquire new skills

As the job-profiles and desired skills-sets for a particular job change, companies may feel the need to hire
employees with new skills, or retrain their existing employees. Companies that choose to do the latter will find
it easier to retain their people since the training signals that the organization values their contribution, and is
willing to invest in upgrading their skills.

Offering stock options

ESOPS are a sign that the organization recognizes the role of the individual in its performance, and is willing to
share the benefits with her.

Focusing on welfare measures proposition

Employees are not just warm bodies; they are individuals with families and lives of their own outside the
workplace. Organizations that recognize this, and help employees achieve a better balance between life work
are likely to face fewer problems than those that do not.

ATTRACTING TALENT FROM CAMPUS

Never before has it been more important for companies to recruit the best and brightest from the campuses of
India’s business and engineering schools. The days are over when companies used to recruit raw talent, train and
polish them all the facts they needed. This is the day of attracting readymade knowledge worker. As campuses
are being the natural filter of intelligence and managerial prowess, the entry barrier to the business &
engineering schools for students ensure the major source of top talent from their campuses.

We know that Campuses are the major sources of talent. But it is not that easy to select the talent from that
pool as there are more than 200 companies try scouting for management trainees from the campuses. Hence it is
essential for the companies to prepare themselves adequately before entering any campuses. Here are some
insights for the organizations intend to hire talent from campuses.

Shortlist campuses
Gather the curricula and specialization of the business and engineering schools, mode of selection of students;
also find out the faculty at the schools and the mix of teaching staff and visiting faculty. Concentrate on the
schools whose curricula and specialization matches the needs of your organization.

Choose recruiting team carefully

It is essential for the organization to develop a recruiting team from within. Most companies usually send a team
of one senior HR Manager, one or more middle managers and senior executives. But according to research, the
team should comprise of a Line Manager rather than a General Manager and have thorough knowledge of the
company and the job. It is also advisable to have a team within the age group of 30-45 Years.
Composition of the team also reflects the seriousness of the Campus Recruitment. When you are competing with
bigger companies to hire on campuses, if possible ask your CEO or MD to address a pre-placement talk to the
students and also include the alumni in the talk. This would help in getting the favourable response.

Pay smartly not highly

In the present era wherein the compensation of a fresh recruitee from campus is touching new high every year, it
is not possible for every company to match that salary. In the last five years the highest annual salary has risen
to almost 500%. As for startup and other companies it is not possible to match the figure, they should add ESOP,
foreign placement, entrepreneurial options in their compensation package.

Present a clear image

You cannot meet the requirements of all the people all the time. Instead of being something to everybody, offer
something unique or special. It is better to have a focused USP - A Learning Environment OR Chance to Work
Abroad. These will immediately attract some of the students.

Showcase corporate culture

Business School Graduates are more interested in Culture than Cash. Their highest priorities are
Level of responsibility
Degree of autonomy
Extent of elbow room
Potential and scope for learning

Don’t oversell yourself

The first flush of wide eyed MBAs eager for the best paying and most glamorous jobs has been replaced by hard
nosed job seekers who can see through inflated claims. You must make a bang at the PPT where your opening
pitch to students will determine your place in the order in which companies will get the chance to hire MBAs
from the campus.

Present all the facts to the students. Not just Living room include even your kitchen- and nothing but facts.
Don’t promise what you cannot deliver. Campuses have long memories. You can lie and hire good people once.
But you won’t be taken seriously for many years to come.

Get in early
Instead of waiting for the annual battle for the best brains, try identifying your target students as early as
possible and forge a bond between them and your company.
Proctor & Gamble uses a rigorous selection process to pick summer trainees from B-School campuses every year
ahead of placement time and putting them to work on live projects. It assesses early and makes job offers on
the spot. Flattered MBAs often remember and accept the offers when placements are conducted.

Building special relationships with particular B-Schools or Engineering-Schools could also get head-start in the
hiring race. Offering scholarships to students, endowing chairs, or sending your managers to teach on campuses
will help build bridges with students earlier than your rivals.

Not everyone fits the bill

The competition to hire on campus may camouflage the fact that you could still end up recruiting an unsuitable
MBA. Screen the applicants as carefully as those apply to ads. Identify the candidates’ orientation towards work
by asking questions like “Just why do you want to work for us”. The group discussions and interviews that follow
must validate the initial impression.

Remember that toppers are often too narrowly specialized to be good general managers or too theoretical to
enjoy managing. Besides toppers are hot property, making competition tougher. Target all-rounders instead.

Sometimes, ensuring that your selected candidate actually joins you can be tough since you could be competing
with academic opportunities abroad. To avoid losing them, stay in touch with recruit elects, invite them for
visits, tracking changes in their career plans and offering counseling.

“Today’s mba or engineer is looking for excitement and challenge as much as compensation and learning.
Offering him those qualities could well become your strongest point in campus hiring war”

The best practices can be summed up as:

Build possibility of Stock Ownership into compensation package.
 Highlight your corporate culture as a good reason to work for your company
Focus on career growth opportunities that your company offers to recruits.
Include young line managers and B-School alumni in the recruiting team.
Build relationships with institutes and students to grab them before rivals.

Job Evaluation
Job evaluation means to produce a fairly defensible rating of various jobs on which a rational and acceptable pay
structure can be built. To do this job evaluation heavily depends upon the description and sometimes job
specification also provided by job analysis. Though job evaluation attempts to assess jobs and not people, the
methods used for it are highly similar to those used to assess people.

Some of the features of job evaluation are :

• The standards of job evaluation are relative and not absolute.
• Job evaluations are generally carried out by groups and not by individuals.
• Job evaluation does not determine pay scales but merely guides on the ways in which they may be devised.

Methods of Job Evaluation :

The methods of job evaluation can be categorised into two categories :
• Non-analytical or non-quantitative methods
∗ Job Ranking Method
While using this method, we don’t break jobs into small components. We put them in order of merit
according to their worth them as a whole. The jobs are ranked by a panel of experts simply from
highest to lowest. Generally for each department separate rank orders are developed based on job
description of the jobs within that department. There are two ways in which ranking order can be
given by the panel-one by simply allotting continuous ranks, the other is by using paired comparison
method. While using this method two jobs are compared at a time and score is allotted on the basis
of whether the first job is estimated to be less important, more important or of the same
importance than the job is being compared with. Each judge from the panel does the comparing and
ranking individually and later on scores are totally up to enable a composite rank order to be drawn
up. This method reduce the subjectively element. Once the rank orders for the departments are
prepared they are combined with the rank orders prepared by other department and a final rank
order for the entire organisation covering all the jobs is prepared.

∗ Job Classification Method

In this method, major classes or grades are first established and then various jobs are assigned by
rankers to those grades. The raters read the jobs description and depending upon their personal
interpretation of the relative difficulty of tasks, responsibilities involved, knowledge and experience
required decide in which of the classes each job should be placed.

• Analytical or quantitative methods

Two of most known methods are factor comparison method and point system method.
* Factor comparison method.
This method was initally developed by Benge, Burke and Flay. The jobs are examined componentwise
and not as whole entities. The major steps consist of :

Determining the key jobs i.e. those jobs in which there is no disagreement between the management
and the union on the amount of salary paid and the jobs which have been described accurately.

Second step will be to determine the common factors among all the jobs
Then these jobs are rank ordered on each of these common factors.

Ranking should be done by a panel of atleast ten raters and these rankings should be done atleast
three times with an interval of about a week between every two rankings.

The next step will be to assign money value to the factors into which key jobs are divided. This is
done by dividing the present salary into the amount being paid for each of the factors. This assigning
is done independent of ranks given before.
 Then both rank orders are compared for all the factors on each job. The jobs whose rankings show lot
of disagreement are removed from the list.

Now all other jobs in the organisation are compared with the key job factor by factor and wages are
determined for them.
• Point System
Point system is like job classification approach to some extent. Just like in job classification method
different grades are developed for different types of jobs, point systems are also developed separately for
different categories of jobs. It is similar to factor comparison method also as jobs are evaluated factorwise.
The number of factors and types of factors differ from organisation to organisation and also within the
organisation sometimes.

Evaluation Training
Definition
“Evaluation of training means any attempt to obtain information (feedback) on the effects of a training
programme, and to assess the value of the training in the light of that information.”

Why Evaluate ?
Evaluation has two purposes. First, it can be used for assessing training effectiveness. Secondly, it can itself be
used as a training aid.

Objectives
Objectives of training evaluation is to determine the ability of the participant in the training programme to
perform jobs for which they were trained, the specific nature of training deficiencies whether the trainees
required any additional on the job training and the extent of training not needed for the participants to meet
job re- quirements. There are various approaches to training evaluation. To get a valid measure of training
effectiveness, the personnel manager should accurately assess trainee’s job performance two to four months
after completion of training.

Types of training evaluation

It is helpful to distinguish between four types of training evaluation. These are context, input, process and
outcome evaluation. They are of differing importance, depending upon whether we are talking about the
training of managers or of operatives.

Context evaluation
Obtaining and using information about the current operational context – that is, about individual difficulties,
organisational deficiencies and so on. In practice, this mainly the assessment of training needs as a basis for
decision.

Input evaluation
Determining and using facts and opinions about the available human and material training resources in order to
choose between alternative training methods.

Process evaluation
Monitoring the training as it is in progress. This involves continuous examination of administrative arrangements
and feedback from trainees.

Why Training Fails ?

The following factors have been regarded as the main reasons for failure of training programmes. :
• The benefits of training are not clear to the top management.
• The top management rarely plans and budgets systematically for training.
• The middle management, without proper incentives from top management, does not account for training in
production scheduling.
• Without proper scheduling from above, first line supervisors have difficulty production norms if employees
are attending training programmes.
• Behavioural objectives are often in precise.
• Training external to the employing unit sometimes teaches techniques on methods contrary to practices of
the participants organisation.
• Timely information about external programmes may be difficult to obtain.
• Trainers provide limited counselling and consulting services to the rest of the organisation.
Role of Human Resource Management

The Role of HRD in Business

A business enterprise is created and managed by people. It is not managed by “forces.” Economic forces set
limits to what management can do. They create opportunities for management’s action. But they, by
themselves, do not determine what a business is or what it does. Management not only finds these ‘forces”;
management creates them by its own action. Secondly a business cannot be defined or explained in terms of
profit. The basic factor in an economy’s development must be the rate of “brain formation,” the rate at which a
country produces people with imagination and vision, education, theoretical and analytical skill.

At least as important but unexplored is the increase in productivity achieved by replacing manual labour,
whether skilled or unskilled, by educated, analytical, theoretical personnel – the replacement of ‘labour’ by
managers, technicians and professionals, the substitution of “planning” for “working.” Obviously this
substitution must take place before capital equipment is installed to replace man’s animal energy; for someone
must plan and design the equipment – a conceptual, theoretical and analytical task.

The planning, design and installation of capital equipment is also only a part of the increase in productivity
through the substitution of “brain” for “brawn.” At least as important is the contribution made through the
direct change of the character of work from one requiring the theoretical analysis and conceptual planning of
men of vision and education without any investment in capital equipment whatsoever.

Productivity is vitally affected by the business structure and by the balance between the various activities within
the business. If, for lack of clear business objectives, managers waste their time trying to find out what they are
supposed to do rather than doing it, the company’s scarcest resource is being wasted. If top management is
interested only in engineering (perhaps because that’s where all the top men came from) while the company
needs major attention to marketing, it lacks productivity; and the end result is likely to be more serious than a
drop in output per man-hour.

Business is crucial to growth and development. A businessman is a person who perceives new economic
opportunities and creates a new venture or directs an existing one to seize these opportunities. Today, due to
the downtrend of business New HRD techniques need to be evolved so as to encourage development activity in
the workmen and managers.

The need for human resource planning

According to Prof. D. Quinn Mills of Harvard Business School, more and more managers are finding that
systematic human resource planning can give their businesses a competitive edge. It has become a standard
operating procedure in many of the top businesses. Innovative efforts to manage morale and improve individual
and organisational performance complement traditional practices such as staffing forecasts and succession
planning at their businesses. Links between human resource activity and strategic planning process are being
rapidly forged.

A survey of randomly selected 291 companies, each with a sale of $ 50 million or more, had found that among
the respondents about 40 per cent included a human resource component in their long term business plan, about
50 per cent drew formal management succession plan and prepared training and development plans for their
employees. Only 15 percent respondents reported that they do not do any people planning. In addition, 27 per
cent of the survey respondents, who practice human resource planning, are certain that it improves profitability.
And 39 per cent, or more than half of the human resource planners, insist that they can measure the difference
on the IR balance sheet.

It may be recommended that human resource planning, with an intention to introduce a competitive edge for
the business in the market place, may be introduced in them.