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CHAPTER-2 REVIEW OF LITERATURE

2.1 HUMAN RESOURCE MANAGEMENT

Human resource management is the key functional area in an organization. Edwin Philipo (2006) defines human resource management as planning, organizing, directing, controlling of procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organizational and social objectives are achieved. (http://www.scribd.com/doc/24594577/Chapter-1-Introduction-to-Human-ResourceManagement-Definition-Concept-For). This is an important function in the organization as like all other functional departments in the organization. The major functions of the human resource management in an organization have been detailed here.

(http://www.bized.co.uk/educators/16-19/business/hrm/lesson/hrm1map_small.gif)

 The Role and Importance of Human Resource Management in an Organization Baker (2006) says the organizations in the 21st century are focusing on the people centered management than any other dimensions of managements. The slogan our people are most important asset has meaning and popularity in this kind of organization. According to Forgas (2004) the human recourse management in the new era is focused on the five layers of the employee management they are: recruitment and selection, performance objectives, performance metrics, reward and recognition and short term training. (Sten, 2006). All the

functions of human resource management are equally important, but these five are considered as the major functions and the key functions of the department. Managing people effectively is a difficult task in the organization, but if the company could be able to management them effectively, that will be the success of the organization.

2.2 HUMAN RESOURCE MANAGEMENT IN INSURANCE INDUSTRY

In the United Kingdom, insurance and tourism industry is one of the growing industries. The most interesting think in this industry is that the majority of the employees are from different part of the world, thus the industry is a place of multicultural union of employees. The 2003 Labor Market Review (hospitality) specially made by the insurance training foundation, indicates that the human recourses in the industry is increasing 185000 year on year to the total to 1.67 million. This is reported by the British Insurance Association (BHA). The industry is facing important changes and which have long term implications in the industry. (Boella & Goss-Turner, 2005). According to Hayes and Ninemeier (2008) insurance industry is a people business . Here the people are satisfying the people, so this industry is a people oriented industry. The non- profit and profit insurance industry shares the common goal that is to provide the service quality. The trend in the industry is that more people intensive.

2.3 PERFORMANCE APPRAISAL: AN INTRODUCTION

Performance appraisal is defined as a tool that affords management with precious information concerning the excellence and quality of the human resources the organizations possess which may dole out as a basis for important human resource decisions that may result in motivation and / or the motivation of the human resources in an organization... (Ozgen, Baser, & Mimaroglu). Krattenmaker (2009) projects that the performance appraisal as the significant part of the performance management in an organization. Dessler defines performance appraisal as the method or a procedure which sets the work standards and evaluating the employees performance with reference to the pre set standards and the process of providing accurate feedback to the human recourses with the aim to motivate, develop and make them the real worth of the organization. In an organizational atmosphere performance appraisal is one of the most important terms. In common words performance appraisal is the process which evaluates the performance of the employees in the organization to develop their performance in the organization. Apart from simply evaluating the performance of the employees in the organization performed appraisal is the technique which stands to manage the performance of the employees in the organization and to make them able to keep an excellent performance in the future as well. So the term performance appraisal has two indications one is to evaluate and the other is to manage. It is showing in figure.1

Figure-1- Indications of performance appraisal system. Performance appraisal

Evaluation

Better management

Source: compiled by the author (2010)

 The evaluation of the Past Performance The evaluation of the past performance has a major role in the organization. Performance evolution of an employee is way to identify the past performance of the employee and identify the other factors which helps the employee to improve the performance of the employee in the future. The evaluative nature of the performance of the employee will help the employee and the management to understand the present situation of the employee in the organization and his career (Garther. & Jennifer. 2008). so this evaluation has two functions in the employee management, they are the identification of his past performance and the basis for the future performance.  Managing the Future Performance As we discussed the performance appraisal is a multi tier process which has two tiers. The better evaluation is the first step to the better management in the future. So the performance appraisal is a way to the future performance management of the employees . (Fletcher,. 2004) So effective and good performance in the future need a good and current performance management. 2.4 PERFORMANCE APPRAISAL IN INSURANCE INDUSTRY Like all the other industries performance appraisal is relevant in insurance industry as well. In insurance industry performance appraisal can be done on the basis of both quantity and quality of work. (Hayes & Ninemeier, 2009). Guests are expecting the quality of the products and the quality of the service, which delivers the products. (Kandumpully, Mok, & Sparks, 2000). Performance appraisal is defined is as a tool that affords management with precious information concerning the excellence and quality of the human resources the organizations possess which may dole out as a basis for important human resource decisions that may result in motivation and / or the motivation of the human resources in an organization.. (Ozgen, Baser, & Mimaroglu). Krattenmaker (2009) projects the performance appraisal as the significant part of the performance management in an organization. Dessler defines performance appraisal as the method to or a procedure which sets the work standards and evaluating the

employees performance with reference to the pre set standards and the process of providing accurate feedback to the human recourses with the aim to motivate, develop and make them the real worth of the organization. Performance appraisal is mis interpreted in the insurance industry in many ways; unfortunately performance appraisal systems confuse performance with personality traits (for example, honesty, hard working, patience etc.) this is more visible in the insurance industry. There is a strong argument in the human resources management in the industry that there is a real relationship between the personality traits and performance appraisal, but this argument is proved as a wrong one. However personality traits should be a function in the recruitment and the selection process and not in the performance appraisal. (Andrews, 2009) 2.5 PERFORMANCE APPRAISAL PROCESS IN INSURANCE INDUSTRY Performance appraisal process in the insurance industry have five components, the diagram detailed here describes the process involved in the performance appraisal process with special reference to the insurance industry. Performance appraisal process is showing in figure-2 Figure 2- The process of performance appraisal system in insurance industry.

 Plan The initial tier in the process is planning. The organization has to plan the performance desired or target level of performance for each job profile. This is the deadline for the

employees which they want to meet and this will be considered as the minimum level that they need to meet in the performance basis.  Develop In the second tier develop means the development of the performance appraisal systems in the organization. The performance appraisal systems in the organization will be developed on the basis of the targeted level of performance, the nature of the industry and the level of the employee . (Gillen. 2007)  Perform The third level is for the performance appraisal process, means the performance

evaluation of the employees in the organization. This means the evaluation is going on with the developed performance tools against the desired targets . (Gillen. 2007)  Assess Assess is the fourth stage which is the valuation of the results of the performance appraisal in the organization. So this is the weigh up of the appraisal done in the organization.  Review Review is the feedback system in the performance appraisal process. According to this, the employees will get the result about their performance in the organization. And this has a significant importance in the performance appraisal process and will help the future management of the performance in the organization. 2.6 PERFORMANCE APPRAISAL METHODS IN INSURANCE INDUSTRY In the insurance industry there are eleven major performance appraisal methods which are widely accepted. The various methods of performance appraisal systems are detailed below;  Critical Incident Method This method is a most common and easy to apply in the insurance industry. As per this method of appraisal the manger write down the positive and negative performance actions of

the member of staff. So this is simple but this method has some demerits in nature . (Gillen. 2007)  Weighted Check List Method This method is also a simple in nature but less expensive and easy to apply. According to weighted check list method the job profile has certain components which the employee needs to meet. So this method checks the level of the employee meet or the expected targets the job demands. (Gillen. 2007)  Graphic Rating Scales There is no desired standard in this method of performance appraisal. The line manger of other managers simple evaluating or checking the performance of the employees. The major advantage of this method is that this will be applicable in all circumstances in the organization . (Gillen.2007)  360 Degree Performance Appraisal Method 360 degree performance appraisal is good in nature because in this method of performance appraisal the employee get feedback from the fellow employees work with him in the organization. The information will be anonymous and confidential in nature. This will help the employee to get multiple appraisal or evaluation in a single time.  Management by Objectives This method is widely accepted and common in use. This method is also known as MOB method of evaluation. For this the superiors set the targets for the employees based on his level and he will be assessed on the basis of this. The major advantage of this method is that the employees will get target on the basis of their abilities and this targets will be based on their professional experience, department of work and educational qualifications. (Derek. Laura & Stephen.2002)  Behavioural Observation Scales

As per this method the employees will be evaluated on the basis of the critical roles they performed in the organization. At the mean time they will be evaluated on the basis of the critical situations they handled and the nature they handled these situations. 2.7 ELEMENTS OF A GOOD PERFORMANCE APPRAISAL SYSTEM A good performance appraisal system has five major elements. The meeting of these five major elements decides the success and effectiveness of the performance appraisal in its evaluative and management nature.  Measurement Performance appraisal is a measurement of the performance level of the employee in the organization. This measurement will be on the basis of the expected performance of the employee in the organization and this would meet the agreed level or target level of the organizational standards. The performance can exceed the expected level. So the company has a standard target to measure. (Fletcher, 2004)

 Feed Back Feedback is the result which the evaluator has to pass to the employees through the proper channel in the organization. All the functions in the organization need a feed back and the employee has a right to know about the performance of the employee in the organization. (Gillen.2007) Feedback is a source for the employee to get an idea about his performance and an indication which tells him about the areas needed more care for his development in the professional life.  Positive Reinforcement The traditional or the past organizational culture the performance appraisal has a role of criticism alone. But in the modern human resource management always needs a positive

approach after the performance appraisal model. The positive strengthen of the organization to employee will be worth for the future management of the performance. So the positive boost is always recommended.  Exchange of Views Performance appraisal is a process which always includes two persons, the employee and the person who evaluates the performance. So the employee will have many ideas, which might be innovative, to improve the performance in the future. This will be help to the other employees as well. The manager also must have some ideas which can contribute more to the employee s performance. (Armstrong and baron.2005) So apart from pushing some ideas appraisal is a process of exchanging the individual views.  Agreement Agreement stands for the conformity of the need and importance of the performance appraisal in the organization with the employees. Employees might have a resistance to the performance appraisal in the organization. So the higher authority involved in the process that make sure of the agreement process.

2.8 OBJECTIVE OF PERFORMANCE APPRAISL IN INSURANCE INDUSTRY

Insurance industry always gives priority to the service quality. The improvement in service quality happens through performance appraisal and employee motivation. The major objectives of performance appraisal are detailed here. The success of the performance is when the employee s performance meets the expectations of the organization, and the ultimate aim is to bring employee performance to the desired level of the organization.

Before going deep to the performance appraisal in the insurance industry, the important question to be answered what is the purpose of the performance appraisal in the insurance industry? There are a number of writers had thought about this and the reasons are detailed here. (Nickson, 2007)

2.8.1 Review of the performance of the employees

The ultimate aim of the performance appraisal in the organization is to review the performance of the employees against the organizational and the international standard. Among this objective the performance appraisal team has to review the past, present and to share the expected future performance of the employee. Performance appraisal needs to identify and analyze the strengths and weakness of the employees in the organization. (Goal, 2008). The review of the performance will provide feedback to the employees about their performance and the expectations about them in an organization.

(http://www.esd.qmul.ac.uk/qmpas/training_pack/Purpose.pdf).

2.8.2 Identify the training and development needs to the employees

Hiam (2003) defines training as an organized activity which needs professional manner for the development of the employees in the organization. The performance appraisal is the method which tells the human resource department to identify the areas where the training and development needed for an employee. Performance appraisal is the factor which designs the training and development methods of the organization. (Willaim, 2004)

2.8.3 Plan the career development of the employees

The post modern organizations provide opportunities from career development to employees. Career management is a major function of the performance appraisal in an organization. Career management is a major challenge in the organizations. Organizations plans to retain the best available employees with them and to identify the best are the result of efficient and good performance appraisal. People are not working for money and they are professionally motivated for achieving good positions in the professional life. (Blek, 2007)

2.8.4 Human resource planning

Human resource planning is a major objective of performance appraisal. Environmental scanning in the current human resources is one among the initial step in the human resource planning process. Performance appraisal is a better method for the current employee scanning. So the performance appraisal is a better base for human resource planning. Environmental scanning is considered as the engineering work for the human resource planning. Performance appraisal is the engineering work for the human resource planning. (Bandt & Haines, 2002).

2.9 THE CONCEPT OF PERFORMANCE APPRAISAL IN HUMAN RESOURCE MANAGEMENT Managing human resources in an organization is one of the major tasks of the department. According to Cohan (2003) performance appraisal is designed to satisfy three important needs in an organization. These three needs are detailed here: firstly performance appraisal is a system which judges the increase in salary, transfers, and promotions and rarely use for terminations and the promotions. Secondly performance appraisal system is designed to tell to the subordinate about his/her performance, his duties, and the things they need to correct for the successful performance in his/her office. Thirdly performance appraisal has been designed to coach and counsel the employees by the superiors. (Cohan, 2003). Performance appraisal has to satisfy these needs in an organization. Every organization has to plan their performance appraisal systems to satisfy their specific objectives.

2.10 PERFORMANCE APPRAISAL AND EMPLOYEE WORK CULTURE

Performance appraisal, performance review, performance evaluation, personnel rating, merit rating, employee appraisal, or employee evaluation, call it what you will, the evaluation of a job and the result that follows can alter an employee in many different levels. An employee s wages, training, position, and status all depend on how well or poorly he or she scores on a job evaluation. Performance appraisals reflect the actual goals accomplished and the level of contribution put forth by an individual rather than the employee s effectiveness. The appraisal looks at the aspects of an employee that can be controlled by the individual. A performance appraisal, while it might be modified for each particular job, does not hold any bias to the ranking of an employee. All employees are looked upon in the same manner, those holding similar positions are judged on similar scales. There are many types of evaluations that take place in the business world ranging from self to peer reviews as well as supervisor evaluations. There are also two main different types of performance appraisals: absolute and comparative. Supervisors take into account self reviews, peer reviews, and the outcome of a scaled job evaluation before making any type of managerial decision. Absolute and comparative performance appraisals as well as self and peer ratings all influence the supervisors performance judgments of an individual employee. Choosing what kind of performance appraisal and to what extent ratings have an individual s final review are the kinds of questions companies need to answer. When it comes to the actual performance appraisal, one of two types of judgment tasks will be involved, either absolute or comparative. Wagner and Baker (2006) took it upon themselves to answer the primary question of which of the types of judgment more accurately rated individuals in four main components: differential elevation, differential accuracy, elevation, and stereotype accuracy. The four distinct forms of accuracy were developed by Hiam (2003). Differential elevation is the correspondence between the differences of the average ratings across traits of two targets with the corresponding difference in criterion. Differential accuracy is the correspondence between

the rating of the perceiver and the criterion with means of target and trait removed. Elevation is the correspondence between the average rating of the perceiver and the average score on the criterion measure. Stereotype accuracy is the correspondence between the differences between the average ratings across targets of two traits with the corresponding difference in criterion. Within absolute and comparative appraisals, there are two ways in which to perform the appraisal. The reviewer may use either global items, the overall dimension of performance, specific items, critical incidents of behaviour, or a mixture of the two. Wagner and Gary (2006) make mention to the fact in their paper that research Comparing the quality of ratings from global and specific items has yielded mixed findings, making it difficult for companies to rely on only one of the two traits within an appraisal. It has been found that while raters who use scales describing specific behaviours committed fewer errors, those who use global traits were rated more accurately. 2.11 THE EMPLOYEE MOTIVATION IN THE INSURANCE INDUSTRY

According to Gareth R. Jones and Jennifer M. George's, "Contemporary Management," motivation is defined as "psychological forces that determine the direction of a person's behaviour in an organization, a person's level of effort and a person's level of persistence. (Jones & George's, 2008). So the employee motivation is a psychological factor which boosts the performance of the employees. Some would say it is getting people involved. Others may say motivation is letting people know that the jobs they do are important and valued. Still others may define motivation as worker initiative. However it is defined, motivation is probably one of the most important human resources management responsibilities (Kruzela, 2006). Considerable research has been conducted regarding the definition of motivation. According to Holmes (2006) motivation is both one of the simplest and most complex of management jobs. It is simple because people are basically motivated or driven to behave in a way that they feel leads to rewards. So motivating someone should be easy: just find out what he or she wants and hold it out as a possible reward . Withiam (2006) said Motivation is a state or force within an individual that makes the employee act in a way designed to achieve some

goal. Taking this broad definition and putting it into the context of supervision in the insurance operation, we might say that motivation is what the supervisor does to encourage and influence other people to take necessary action . This is different, however, from the supervisor who establishes a goal dealing with what I will do to motivate my employees (Silverman, 2001, p.210). Motivation is, in fact, an internally generated force or drive within the individual which provides an incentive for the employee to act. Ray and Wieland stated that motivation is the force within a person that makes him/her act in a certain way to achieve some goal. As taken from Patel (2003) motivation is an important concept in modern psychology. It is not possible to understand, explain or predict human behaviour without some knowledge of motivation According to North (2004) motivation is in the individual and helps to explain behaviour. Motivation is an intricate inside process with three components: what drives the individual to behave in certain ways, what steers the behaviour, and what maintains the behaviour. To satisfy the employees need is very difficult because each employee has different characteristics that affect behaviour. On the other hand, Limited information and literature is available on motivating public sector employees, especially in public sector health care industry. The ability to motivate employees is a fundamental requirement of effective management in the workplace. Motivation concerns those psychological processes that cause the arousal, direction and persistence of behaviour (Kets 2005). Motivated employees help organisations survive and succeed in the competitive environment. Rainey states that work motivation refers to how much a person tries to work hard and well to the arousal, direction, and persistence of effort in work settings . Review of the literature shows that identifying employee motivation is considered essential to understanding why an individual chooses one job over another and why some employees work hard and some do not. Robertson, Smith and Cooper state that consideration of questions such as; why do people go to work, why do people work hard? clearly shows that effort and performance at work are determined by ability, temperament and motivation. Despite the often complex interactions between these factors it is possible to develop theories and practical guidelines that focus specifically on motivation without losing sight of the influence of other factors. Behn argued that one of big questions that

scholars of public management should be attempting to answer is: how public managers can motivate public employees to achieve goals. Baldwin asked whether there would be a difference in the motivation level of public and private sector employees as a result of differing instrumental incentives (e.g., lower pay in the public sector), he found no difference. Jurkiewicz, Massey and Brown found that public and private sector employees want different things from their jobs. Frederickson and Hart contended that itis assumed that a significant reason why people enter the public service is some feeling of patriotism. Baldwin stated that public employees place greater importance on job security than do private employees. Crewson debated that non-pecuniary inducements especially the

opportunity to serve society and the public interest matter more to public than private employees and high pay matters less to public than private employees. The factors that organizations have to be concerned with are self-concept, attitudes, values, interests, feelings, personality, and life experiences. They have to encourage employees through a positive organizational climate that is motivating.

2.11.1 The importance of motivation to employees Why do insurance organizations try to motivate employees? Miller (2006) stated that all managers realize that motivation is important and if employees are enthusiastic about task accomplishments, try to do their jobs the best, the organization will benefit. Rutherford also noted that organizational goals cannot be effectively attained unless employees work together, so it is obvious that the need for teamwork in the insurance organization is essential. One thing that managers should realize is their job is not just to motivate an employee . All employees come to a work situation motivated to attain personal goals which they have established. One goal for the service manager is to develop motivated employees and increase their morale about their work. Employee morale towards work, such as supervisors and peers, organization, work environment, can be defined as the feelings an employee has about all aspects of the job. There are many benefits to be gained from building good morale. Besides, there are proven relationships between morale levels,

turnover, and absenteeism. However, research indicates that high employee morale levels do not always yield high productivity levels.

The importance of employee motivation in organizational success is  To Deliver Better Performance The ultimate aim to motivate the employees in the organization is to deliver the excellent performance from the employees. The motives are the factors which facilities the employee performance, which lead the organization into success.  Puts Human Resource into Action Correct motivation is the factor that forces the human resources into action in an organization. The reward an employee get from the organization is the factor which give a normal performance and the motivation is the factor which forces an employee to provide a advanced performance and this is the difference .(Wong.2000)  Build a Friendly Relationship In insurance the service quality is important. Even a single employee who is not motivated or properly motivated can darken the desired service quality of the hotel. Only the staff that motivated properly can make an excellent relationship with the customers. The relationship with all the employees from the bottom level to the higher ordered is mandatory in the success in this industry and motivation alone can make it a reality in the business atmosphere. So motivation is essential in building friendly relationships.  To Achieve Organizational Success Every organization has its own organisational goals. In the insurance industry the common goal of all players is to attain the service quality. So the achievement of these goals depends on the level of motivation, the employees have in the company. 2.11.2 Motivational theories

Human beings are motivated by many needs. These depend on many factors and vary by the person and individual situation. Basic needs are food, clothing, medicine and shelters, but workplace needs extend to acceptance and self-esteem. The researcher has indicated each individual will experience these factors in different degrees. Thus, to better understand how to motivate employees, managers should understand the basic theories of motivation (Bush 2003). The researcher mainly indicates two theories, these are maslow s hierarchy and Alderefer theory of needs.

 Maslow s Hierarchy of Needs According to Maslow, five basic constructs form the human hierarchy of need. There are physiological needs, security needs, belongingness needs, esteem needs, and selfactualization needs. Maslow s conceptualization of needs is represented by a triangle with five levels which he called the Hierarchy of Needs. Maslow stated that lower level needs must be satisfied before the next higher level. When people satisfy the first level, they will go the next level and the next.

Exhibit 1 Maslow said higher-level needs like those for self-esteem or self-actualization would not become salient (even when unfulfilled) until lower needs were satisfied. Therefore, it may be rather inefficient to motivate a lone assembly-line worker by offering awards when his job is done as expected; Maslow said it is more important to be part of a social group that will motivate him (Deans, 2003).

 ERG Theory Alderfer said there are three groups of core needs: existence, relatedness, and growth. It was called ERG theory. The existence group is concerned about providing the basic material. The relatedness group is concerned about personal relationships. And the last group is growth needs. It is concerned about intrinsic desire for personal development. It is similar to Maslow s hierarchy of needs in many ways.

Exhibit 2 ERG theory Maslow s theory - Existence needs ----------- - Physiological needs - Security needs - Relatedness needs ----------- - Belongingness needs

- Esteem needs - Growth needs ----------- - Self-actualization Although there are similarities, there are two important differences. First, Alderfer s said sometimes multiple needs could also be operating as motivators. Second, differing from Maslow s to start at the lower level first, sometimes people need the higher level before the lower level. It depends on each situation and each situation is different.  Herzberg s Theory Herzberg s theory is based on two distinct sets of factors that influence behavior: 1. Basic factors influencing job dissatisfaction, which include pay, organization policies, working environment and the satisfaction with supervision. 2. Motivating factors influencing job satisfaction, which include recognition, promotion, achievement, and the intrinsic nature of the work. According to Herzberg, job satisfaction and dissatisfaction are seen as two distinct and independent continuums. At one end, it ranges from satisfaction to no satisfaction while at the other; it ranges from dissatisfaction to no dissatisfaction. Herzberg considered job factors such as pay, status, working environment, job security and interpersonal relations as extrinsic factors. These factors have a disrupting effect in that employees will become dissatisfied with their jobs when these needs are not adequately met. On the other hand, factors such as the work, recognition, feeling of achievement, opportunities for growth and advancement are known as intrinsic factors (Wong, Siu and Tsang). Balmer and Baum applied Herzberg s theories to the area of hotel guest satisfaction in Cyprus. They argued that Herzberg s theory is more applicable and relevant than Maslow s in view of changes in customer expectation and the concept of quality.

 Theory X and Theory Y Jerris reviewed McGregor s, theory which investigated managers and supervisors attitudes toward employees, and effects on workplace motivation. Theory X believes that employees naturally dislike work, responsibility and are lazy. Dealing with employees like these, managers must closely control and direct their activities by using

threats and punishment. Theory Y believes that employees naturally enjoy working and want to be productive. They don t need control, managers must trust them to get the job done, as motivation for these employees is the harder they work, the more pay or promotion. The Theory X and Theory Y are different from basic assumptions regarding human needs and behavior. Understanding people s needs and behavior then becomes an important skill all managers need to develop.  Level of employees motivation There are three levels of employees motivation according to research conducted by Mosley, Megginson, and Pietri in 2001. (1) The direction of an employees behavior. It relates to those behaviors which the individual chooses to perform. (2) The level of effort. It refers to how hard the individual is willing to work on the behavior. (3) The level of persistence. It refers to the individual s willingness to pursue the behavior despite obstacles or roadblocks. 2.11 PERFORMANCE APPRAISAL AND MOTIVATION Both the terms are important in the organizational atmosphere separately and together. In the above paragraph we saw the importance of performance appraisal and motivation. Here the relationship with the two and the role they have to play together in the organization.  Performance Appraisal Helps to Identify What Motives the Employee In the concept of employee motivation in the organization the most difficult thing for the experts is the difficulty in identifying the real thing which motivates the employee. The organization might have many things to motivate the employees, but in the narrow sense this will not motivate the employee. (Fletcher. 2004) The motives of employee are varying from one to another. Without proper assessment nobody can assume what motivates the employee. Money is a good motive, but there are many employees for whom money is not a motive.  Reveals the Employee Concepts of Motivation

Performance appraisal is the process which helps the employee to share the motivational concepts and what in the organization can motivate them. So this will lead to the application of correct motivation in the organization. (Kreithner& Kinicki,2009)  Motivation is the Key to Performance Improvements The motivation in the organization forces the employee to get the targeted performance level assigned to the employee. So this will be a good way to achieve a good performance appraisal system. As performance appraisal improves motivation in the employee, good motivation makes the appraisal more effective and valuable. 2.13 THE EMPLOYEE RETENTION IN INSURANCE INDUSTRY As like the application of more motivational techniques in the organization the employees need some applications to retain them with the organization. Motivation and effective performance appraisal are always good facilitators of employee motivation but the organization needs to retain the employees in the company. The main Factors facilitating the employee retention are written as follows;  Motivation Effective motivation is the best factor which facilitates the employee retention. The employees pay importance to satisfaction than money.  Career Management Options Employees in the contemporary business are more careers focused. They always want to look on the future expected career opportunities from the organization. So the talented employees must be retained in the company.  Good Work Culture The company must have a good work culture which provide job satisfaction, provides motivation and career growth. The good work relationships are the other secret of the retention . (Allen. 2003)  Competitive Compensation

Money matters in the business are always important. The competitive pay offer to the employees will always retain them in the organization. For employee retention the employees should be satisfied in their pay and perks.

 Good Communication The excellent communication with the employees will be a best way to retain them in the current office. This means that the employees must have the freedom to communicate with their superiors in the organization. (Mathis.& Jackson, 2005.)  Role in Decision Making The employees or the representatives of them must have a chance to be apart in the decision making team of the organization. The employers must have the obligation to make sure their participation in the decisions which directly or indirectly affects them . (Gillen.2007) 2.13.1 Importance of Employee Retention  Talent Retention The major reason of employee retention is the aim to retain the good talents in the organization. Employee retention keeps the good talents in the organization.  Cost Competitive The employee retention policies will save the employer from the charges from new recruitment and selection process and development expenses and induction expenses . (Gillen.2007) 2.14 RECENT TRENDS OF HUMAN RESOURCE MANAGEMENT IN HOTEL INDUSTRY In this section we attempt to provide more meaningful insights on the various factors which affect the different activities of the organisational activities and the motivation factors. Those

factors can classified as under organizational activities and the employee motivation can be grouped under two heads a) Growth of the organisation and b) Change factors. The Change factor in an enterprise can be further classified in to work plan, culture and technology. 2.14.1 Growth of the organisation: The growth of the organisation indicates the organic expansion of the firm in various activities. Growth is a mere indication of taking the control of the market place, customers, competitors and employees. This will guide the firm to generate profitability of the firma and thereby providing more opportunities for its employees. The growth of the employees can be measured through the growth of the entire organisation, therefore employees must have some wisdom of satisfaction to the firms which they are associated with and should perform for the growth of the organisation. It should be remembered that growth is a step by step process and it cannot happen overnight, it involves grouping of all the efforts of the organisation to perform their assigned tasks. The top management has to apply its all the factors of production like men, materials, machine and money to achieve the common goals of the organisation. 2.14.2 Organizational change: It is an approach of modifying the existing activities of the business in order to increase the productivity, reduce the costs and enhance the profitability. Generally change increases the motivation of the employees, and this depends upon the type of change implemented by the top management. In certain circumstances organisations adopt new method of advancement in beating the competition, improve the performance of the business, satisfy the customers and to reduce the costs. This would help to increase the motivational level of the employees. Change in the organisational context can be further classified in to the following types 2.14.3 Work plan: This kind of advancement takes place when organisations want to improve their efficiency and to have organic growth in their business. Any organisation to strive in the tough market place must adopt various strategies to improve their efficiency by implementing new types of work plans, design new work environment, and encourage employees to have a new setup of floor activities. This can be done only when the organisations have a cordial

relationship with all of its employees by bringing in the new kind of job enrichment and enlargement programs. 2.14.4 Culture: Culture is seen as the important personality of any organization, it comprises the different principles, standards, and postulations like monetary value, time, different amenities, work place environment and people so that various employees of the organization creates an important part in the business so that all the members of the organisation understand the basic society of the firm in which they perform their activities after which they have to adjust to the environment of the business. In the recent years many organisations have treated human resource development as asset rather than a mere cost centre activity, this is an evident fact that the perception of the organisation is changed and they are placing human resource management at the heart of framing any organisational strategy. Now, managers are left to manage their own people without many interventions from the top officials, due to this many employees have the urge to perform better for their own benefit and for the success of the organisation. 2.14.5 Technology: Technology have now become one of the important tool in all organisational activities, it was once considered as high cost low value services to low cost high value tool in achieving the goals of the organisation. Every day we could witness new type of technologies are introduces for organisational effectiveness and to help in devising appropriate strategies for managing many activities of the business. At the beginning employees felt that the advent of technology would cost their jobs however, these perceptions have changes and now technology assists employees in performing their work better, improve productivity and reduce the costs. There have been tremendous revolutions in the application of technology in various industries, many new type of technology activities are being introduced day to day to perform better in the organisation. New type of technologies are developed to assist management in taking timely decisions and to help employees achieve greater productivity at a reduced time. 2.14.6 Changing Expectations & Attitudes of the employees

In the current innovative position of the human resources department it needs to first identify how the executives would believe and act so as to identify the various strategic measurement of the entire organisation in the services industry. It focuses on the performances and does not involve in changing the various human resources accountability, different cultural practices, and the operation of each departments, it also attempts to identify the new competencies which are essential for the human resource professionals. Dave identifies that there are five necessary qualities that is required by an budding human resources executives who needs to exemplify they are : Understanding the operations of the business, keeping in track of all human resources practices applied inside the firm, managing the change procedures inside the organisation, creating dynamic work cultures and to provide a good environment in the work areas which attempts to build and increase the individual capabilities and to increase the commitment towards the organisation and the department and lastly they required to show their personal credibility in handling various situation.

2.14.7 Strategic Human resources management The next step which needs to be identified is the role human resource management in the strategic decision making of the entire organisation. It is identified that the strategic human resource management is an important tool employed by the top management to take calculated decisions in managing the people, this has recently caught the attention of the practitioners especially in the services industry as they involve with people more than with the products. Human resources professionals are now treated as partners by the top management especially during the planning and implementation of key business strategies. To be considered as the key partner in the organisational decision making the human resource professionals must need to understand the operation of the business, develop his skills in the functional areas of the business, understand about the organisations work environment and to achieve great heights in the application of latest technologies. Human resource management are changing dynamically with the changes in the global environment of the

business, therefore these executives must be receptive to changes and must always possess creative skills in making the change practices inside the organisation. In order to play a pivot role in the strategic decision making of the enterprise, human resource management must attempt to practice the various key skills which are required for the business. They try to connect the top executives in identifying the clear mission, vision of the company and the reasons for its existence, current strategies applied by the management in the market place and the working environment inside the area. They must identify and advise the management to describe the perfect relationship with the various organisational activities. They must also know who frames the various organisational policies, and how it is been implemented inside the work environment. The changing faces of human resources necessitates the top management to modify the way which they anticipate from the traditional human resource department and now various department look forward for the human resources department as their primary point in devising any strategy in their departments. Human resources department must attempt to display their key skills which they gained through their functional experience and must critically evaluate all the strategic decisions taken by the management and must provide adequate suggestions to the top management.

2.14.8 Human resource reengineering Reengineering the various business processes must start with a gesture of complete reformation of the various process inside the organisation, companies are now retaining their core activities and started outsourcing the other divisions therefore outsourcing has now turn out to be an immediate solutions for many enterprise so as to re-engineer the entire departments which results in the reduced costs and increase the profitability of the entire organisation. The various activities of the human resource department like recruitment, selection, identifying the future training needs and the development of its key employees, and the current appraisal systems needs to be repositioned based on the various objectives and

the chosen business strategies of the enterprise. The peril of economizing the functions of human resources have made a significant contribution to the immediate solutions, which has been taken without keeping the employees as the central focus, and as a result the enterprise will finally ends up in de-motivating the employees and firing them from the current work force. The recent crisis has provided an opportunity to develop various means in order to identify and implement the key factors inside the organisation. Downsizing tin current economic scenario has lead to decreased employee morale and motivation level. Identifying, developing, determining and gratifying the different talents has now turn out to be part of the executives work with specific strategies stated by the human resource department. 2.14.9 Delivering quantifiable value Different logical approaches and fully integrated approaches are now a part of the activities of the new human resources department. Tony Miller have argued the need to redesign the various functions of the human resources department for different strategic advantage and to create large organisational value. In order to be flourishing in the future, the most significant transformation required in the human resources function is to attain the shift from its current place as a progression work activity to developing in to a powerful strategic player.