HRM-NOTES

Module-1

Human Resource Management

Human Resource Management

HRM is a broad sense may be defined as management function that Helps Manages, Recruit and Select Train and Develop Members/Employees for an organization. It is obviously concerned with the people’s dimensions in organization.

Nature of HRM

Ø  Pervasive force: HRM is pervasive in nature. It is present in all enterprises. It permeates all levels of management in an organization.

Ø  Action oriented: HRM focus attention on action, rather than on record keeping, written procedures or rules.

Ø  Individually oriented: It tries to help employees develop their potential fully. It encourages them to give their best to the organization.

Ø  People oriented: HRM is all about people at work, both as individual and groups. Its tries to put people on assigned jobs in order to produce excellent result.

Ø  Future oriented: Effective HRM prepares people for current as well as future challenges, especially working in an environment characterized by dramatic change.

Ø  Development oriented: HRM intends to develop the full potential of employees. The reward structure is tuned to the needs of employees

Ø  Integrating mechanism: HRM tries to build and maintain cordial relations between people working at various levels in the organization.

Ø  Comprehensive function: HRM is to some extent, concerned with any organizational decision which has an impact on the workforce

Ø  Inter disciplinary function: HRM is a multi-disciplinary activity, utilizing knowledge and inputs drawn from psychology, anthropology, economic etc.

Ø  Continuous function: HRM is not a one short deal. It requires a constant alertness and awareness of human relations and their importance in every day operations.

Scope of HRM

Ø  Personnel aspect: This is concerned with manpower planning, recruitment, selection, placement, transfer, promotion, training and development, etc.

Ø  Welfare aspect: It deals with working conditions and amenities such as canteens, rest and lunch rooms, housing, transport, medical assistance, education etc.

Ø  Industrial aspect: This covers union-management relations, joint consultation, collective bargaining, grievance and disciplinary procedures, settlement of disputes, etc.

Objectives of HRM

Ø  To help the organization to reach its goals

Ø  To employ the skills and abilities of the workforce efficiently

Ø  To provide the organization with well trained and well motivated employees

Ø  To increase to the fullest the employees job satisfaction and self actualization

Ø  To  develop and maintain a quality of work life

Ø  To communicate hr policies to all employees

Ø  To be ethically and socially responsive to the needs of the society

Evolution of HRM

Period	Development Status	Outlook	Emphasis	Status
1920s-1930s	Beginning	Pragmatism of capitalists	Statutory welfare, Paternalism	Clerical
1940s-1960s	Struggling for recognition	Technical, legalistic	Introduction of Techniques	Administrative
1970s-1980s	Achieving Sophistication	Professional, Legalistic, Impersonal	Regulatory, conforming, imposition of standards on other functions	Managerial
1990s	Promising	Philosophical	Human values, productivity through people	Executive

HRM VS PM ( personnel management)

HRM views people as an important source or asset to be used for the benefit of organization, employees and the society. It is emerging as a distinct philosophy of management aiming at policies that promote mutuality mutual goals, mutual respect, mutual reward, and mutual responsibilities

PM has a limited scope. It viewed labor as a tool, the behavior of which could be manipulated for the benefit of the organization and replaced when it was worned out. The personnel department itself was not treated with respect .it was not filled with productive employees

Difference between HRM and PM

Dimension	Personal management	Human resource management
1.Concentrate	PM largely about mediating between the management and employees	planning, monitoring and control aspects of resources
2.Communication	Indirect	Direct
3.Treated	As a commodity or tools or equipment which can be purchased & used.	As a resources
4.View	Employee in PM is economic man as his services are exchanged for wages.	Employee in HRM not only as economic man but also social & psychological man so imply complete man
5.Benefit	Employees are used mostly for organizational benefit.	Employees are used for the multiple mutual benefits of the organization, employees & their family member.
6.Pay	Job evaluation (fixed grade)	Performance related
7.Key manager	Personnel	General/business/line manger
8.Speed of decision	Slow	Fast
9.Function	Auxiliary	Strategic management
10.Cost	Employees are cost centered & therefore mgmt controls the cost of labor.	It is profit centre & therefore invest capital for HRD & future utility
11.Job design	Division of labor	Team work

Features of HRM

Ø  HRM is concerned with employees both as individual & as a group in attaining goals.

Ø  It is concerned with emotional behavior & social aspects of personnel.

Ø  It is concerned with the development of HR & their knowledge, skills & potentialities.

Ø  HRM covers all levels (top, middle, & low) & category (skilled, unskilled, technical, and professional) of employees. It covers both organized and unorganized employees.

FUNCTIONS OF HRM/PM

1. Managerial Functions:

The basic managerial functions are as follows:

      Planning: Planning is a pre-determined course of action “planning is the foundation of most successful actions of any enterprise”. Planning is the determination of the plans, strategies, Programmes, policies, procedures and standards to accomplish the desired organization objectives.

      Organizing: This function is primarily concerned with proper grouping of personnel activities, assigning of different groups of activities to different individuals and delegation of authority.

      Directing: This involves supervising and guiding the personnel. To execute plans, direction is essential for without direction there is no destination.

      Controlling: It is the art of checking, regulating and whether everything occurs in conformity with that has been adopted. It is greatly concerned with actions and remedial actions.

2. Operative Functions.

      Procurement Functions:  It is concerned with the obtaining of a proper kind and number of personnel necessary to accomplish Organizations goals i.e. recruitment, selection and placement, induction and orientation, human resource planning, job analysis, etc.

      Development: is concerned with the personnel development of employees by increasing this skill through training so that job performance is properly achieved and designing and conducting training Programmes. Ex: training, executive development, career planning and development, human resource development, etc.

      Motivation & Compensation: It is the process which  inspires people to give their best to the organization through the use of  intrinsic (like achievements, recognition, responsibility)  and extrinsic (like  job design, work scheduling, appraisal based incentives)rewards.

      Maintenance: Maintenance function deals with sustaining and improving the conditions that have been established and employee’s health and safety measures and employee service Programmes. .(health and safety, employee welfare, social security measures)

      Integration Functions: It is concerned with the attempt to effect an effective reconciliation of the individual, societal and organization interests. (Grievance redressal , Discipline, Teams and teamwork, Collective bargaining, Employee participation and empowerment, Trade unions and employees association, Industrial relation)

      Emerging issues: Effective management of human resources depends on refining HRM practices to changing conditions. Some important issues are:

ü  Personnel records

ü  Human resource audit

ü  Human resource research

ü  Human resource accounting

ü  Human resource information system

ü  Stress and counseling

ü  International HRM

Personnel policies, procedures, and programmes

Ø  Personnel policies: personnel policies  guide actions .they offer the general standards or parameters based on which decisions are reached .they serve as a  road map for managers  on a number of issues such as recruitment ,selection , promotion  and compensation .

Ø  Personnel procedures : a procedure is a well thought  out course of action .it prescribes the specific manner in which  a piece of work is to be done .it is  also called as ‘action guidelines “

Ø  Personnel programmes: are complex sets of goals, policies, procedures, rules, steps to be taken resources to be employed and other elements necessary to carry out a given course of action. As a single purpose ‘metaplan’, they show the major steps needed to achieve an objective, which will be responsible for each and the appropriate time for carrying it out. A programme thus is a comprehensive plan covering a large territory.

Types of personnel policies

Ø  Originated policies: these are established by top mgt  deliberately  so as to guide executive  thinking at various levels

Ø  Appealed policies: these are formulated to meet the requirement of certain peculiar situations which have not been covered by the earlier policies .such request usually came from subordinates who fail to handle the cases based on guidance offered by the existing policies.

Ø  Imposed policies : these are formed under pressure from external agencies such as government trade associations

Ø  General policies: they reflect the basic philosophy and priorities of the top management in formulating the broad plan for mapping out the organization growth chart.

Ø  Specific policies: these policies cover specific issues such as hiring ,rewarding and bargaining

Ø  Written policies: implied policies are inferred from the behavior of members ( dress code ,gentle tone  while talking to customers ,not getting angry while at work )

Advantages of personnel policy

Ø  Delegation: They help managers operating at different levels to act with confidence without the need for consulting superiors every time.

Ø  Uniformity: They increase the chances of different people at different levels of the organization making similar choices, when independently facing similar situations.

Ø  Better control: As personnel policies specify the relationship shared between the organization, management and its employees, thy allow members to work achievements of the objective of the organization without conflict.

Ø  Standards of efficiency: Policies can also serve as standards in execution of work. They establish management to see if they have been translated into action by various groups in the organization or not.

Ø   Confidence: Policies make the employees aware of where they stand in the organization and create confidence in them while confronting routine and recurring problems.

Ø  Speedy decision: Policies can speed up decision-making by providing a blanket framework within which personnel decisions can be made.

Ø  Coordinating devices: Personnel policies help in achieving coordination. They ensure a steady course of action and prevent unwarranted deviations from planned operations.

Characteristics of sound policy

Ø  Related to objectives: Policies must be capable of relating objectives to functions, physical factors and company personnel.

Ø  Easy to understand: Policies should be stated in definite, positive, clear and understandable language.

Ø  Precise: Policies should be sufficiently comprehensive and prescribe limits and yardsticks for future action.

Ø  Stable as well as flexible: Policies should be stable to assure people that there will not be drastic changes. They should be flexible to keep the organization in tune with the times.

Ø  Based on facts: Policies should be built on basis of facts and sound judgment and not on personnel feelings

Ø  Appropriate number: There should be as many policies as necessary to cover conditions that can be anticipated, but not so many that they become confusing.

Ø  Just fair and equitable: Personnel policies should be just fair and equitable to internal as well as external groups.

Ø  Reasonable: Policies must be reasonable and capable of being accomplished. To gain acceptance and commitment from employees.

Ø  Review: Periodic review of personnel policies is essential to keep in tune with changing times and to avoid organizational complacency or managerial stagnation.

Obstacles in personnel policies

Ø  Many times managers are reluctant to follow policy guidelines

Ø  Often conflicts erupt between implied and expressed policy statements especially on employment matters.

Ø  Personnel policies demand constant revision ,modification and restructuring

Ø  Personnel policies are not easy to communicate.

Ø  Since policies grant freedom to managers as to what is to be done in a particular situation there is always the danger of some managers strictly stick on to the policy.

Organizing the HRM

Ø  When people gather together and formally agree to combine their efforts for a common purpose, on organization begins to take shape.

Ø  The process of creating an organization structure is known as organizing.

Line relationship:

Ø  The relationship existing between two managers due to delegation of authority and responsibility and giving or receiving instructions or orders is called line relationship.

Ø  Thus line relationship generally exists between a superior and subordinate.

Ø  The line managers are completely responsible and accountable for the results achieved by the employees of the respective departments and sections.

Ø  This means that though  authority is delegated, responsibilities for action taken by subordinates still rests with the superior

Staff relationship

Ø  The staff concept is probably as old as the organization itself .it is virtually impossible for line executives to perform all their functions and concentrate on their organizational activities.

Ø  This naturally compels them to secure advice and help from specialists .staff relationship make this possible.

Ø  The relationship between a line manager and the staff authority is advisory  which means that  the staff ,a supporting unit ,recommends actions or alternative actions to the line manager

Ø  a staff manager helps serve ,investigate ,plan ,solve special problems ,support line effort ,provide ideas  and have special expertise.

Role of personnel manager/HR manager

Administrative roles:

      Policy maker: HR manager helps management in formation of policies governing talent acquisition and retention, wage and salary administration, working conditions, etc.

      Administrative expert: The administrative role of an HR manager is heavily oriented to processing and record keeping. Maintaining employee files, HR-related database, transport and medical facilities, etc are examples of administrative nature of HR management.

      Advisor: It is said that PM is not a line responsibility but a staff function. The personnel manager performs his functions by advising, suggesting, counseling and helping the line managers in discharging their responsibilities.

      Housekeeper: The administrative role of an HR manager in managing the show includes recruiting, reference –checking, time keeping, maintenance of records, etc. 

      Counselor: The personnel manager discuses various problems of the relating to work career, colleagues, health, family etc

      Welfare officer: As a welfare officer he provides and maintains canteens, hospitals, educational institutes, clubs, libraries, etc.

      Legal consultant: HR manager plays a role of grievance handling, settling of disputes, handling disciplinary cases, doing collective bargaining, etc.

Operational roles:

      Recruiter: HR manager have to use their experience to good effect while laying down career paths to new recruits without increasing the financial burden to company.

      Trainer and developer, motivator: HR managers have to find all skills from time to time, offer training opportunities, and bring out the latent potential of people through rewards.

      Coordinator/ linking pin: HR manager acts as a linking pin between various departments of an organization.

      Mediator: HR manager acts as a Mediator in case of friction between two employees, groups of employees, superiors and subordinates.

Strategic roles

      Change agent: HR as it is popularly called now aims at building the organizations capacity to embrace and capitalize on change.

      Strategic partner: HR executives would be able to smoothly move into top management positions, using their soft skills to good advantage.

Qualities and qualification of PM /HR manager

Qualities

Ø  Personnel attributes:

The HR manager should posses Personnel attributes like:

      Intelligence: This includes skills to communicate, articulate, moderate, understand, command over language, ability to draft agreements, policies, etc.

      Education skills: The HR manager should posses teaching skills as he has to learn and teach employees about the organizational growth, need foe and mode of development of individuals, etc. 

      Discriminating skill: The HR manager should have the ability and discretion to discriminate between rights and wrong, merit and demerit.

      Executing skill: The HR manager is expected to execute the management’s decision regarding personnel issues with speed, accuracy and objectivity.

Ø  Experience and training: Experience in an enterprise in some other executive capacity can also help towards an appreciation of the general management problems and a practical approach in tackling personnel concerns issues.

Ø  Professional attributes: It is relevant, particularly in the Indian context. The HR manager’s job, as in the case of others managers is getting professionalized.

Qualification:

The job of HR manager is fairly complex. Meeting the ever-increasing needs, aspirations and expectations of employees is not easy.

Ø  Business mastery: It is well known fact and has been proved in various surveys that HR professionals don’t care to understand the business of the company and the industries that they are working in.

Ø  Change mastery: HR mangers need is to be able to influence others and guide changes in organizations. Given the multifarious HR-related changes influencing present-day organizations.

HR as Strategic Partner

Ø  HR manager must meet up with the needs of the changing organization.

Ø  HR’s role is not just to adapt its activities like compensating employees. But deliver strategic services cost effectively by building a competent, consumer-oriented work force.

Ø  It assume important role in strategy formulation as well strategy implementation.

Ø  Identify external opportunities & competitive advantage.

Factors influencing HRM

In a dynamic Global environment, factors influencing HRM strategy are listed below:

1. Level of technology and quality issues;

2. Organizational life cycle & age/ history of the subsidiary;

3. Culture parochialism (narrow mindedness) of the organization & nation;

4. Costs of localized vs. common approach;

5. Corporate International Strategy;

6. Level of Development in Foreign Locations;

7. Diversity of product or service;

8. Organizational life cycle & experience;

9. Local political & legal constraints on staffing & tax provisions;

10. Judgments on quality of local personnel.

Challenges and Opportunities in HRM

Ø  Demographic changes--particularly the aging of the workforce--present significant challenges as organizations prepare for the next wave of retirement. These circumstances provide opportunities for HR professionals to demonstrate leadership by implementing creative staffing policies such as phased retirement, job-sharing and retiree "recycling."

Ø  HR professionals are acutely aware of the changes taking place within the profession itself. In its strategic leadership role, HR must deal with more complexity in its areas of responsibility and must find ways to measure the value of human capital and demonstrate its return on investment.

Ø  To drive organizational success, HR professionals must understand the implications of these trends not only for HR, but also for their organization as a whole. HR leaders will find opportunities in these developments and must put programs and practices in place today to meet the challenges of tomorrow.

HRM’s evolving role in the 21st century

1. HR as a strategic partner: Executives with people management skills would be able to steal the show, since they help integrate corporate goals with employee expectations in a successful way.HR executives would be able to smoothly move into top management positions, using their soft skills to good advantage.

2. Talent Hunting, developing, retaining star employees: he 21st century Corporation would be looking for people with cross functional expertise with strong academic background and team management skills. Corporates pay attention to talent acquisition, development and retention through novel developmental efforts, compensation packages and incentives apart from flexible work schedules.

3. Lean and Mean Organizations: Organizations will be forced to eliminate low-end jobs, say goodbye to older employees with limited skill sets, outsource work to specialized institutions in an attempt to save costs and remain highly competitive. As a result obtaining employee loyalty and commitment would be quite challenging in such a scenario.

4. Labor relations: LPG Reforms means the end of the road for trade unions. They will lose their count slowly but steadily. Governmental influence in labour- management relations would have only historical significance as employment-related issues begin to be dictated by market forces.

5. Health care benefits: To attract talented workforce healthier work environments would be an absolute necessity. Employers would be obliged to give their employees safe, healthy and secure work environments. Wellness programs to solve potential health problems, Office décor, and furniture design and space utilization with a view to improve the comfort levels of employees are the top priorities of HR in the current scenario.

                                                           

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Module-2

Job Design and Analysis

Job design

Job design involves conscious efforts to organize tasks, duties and responsibilities into a unit of work to achieve certain objectivity .job design follow job analysis.

The job design involves three steps:

Ø  The specification of individual tasks.

Ø  The specification of the method of performing each task and

Ø  The combination of tasks into specific job to be assigned to individuals.

Factors affecting job design

1.      Proper scope of job: the scope of the job should be proper. If the scope is narrow(less), then the job will not be challenging. It will not give an opportunity for development. The manager will not get satisfaction after completing an easy.

2.      Managerial skills: the skills of the manager should be considered before designing his job. All managers do not have equal skills. So, the service of the manager must be fully utilized. If not, the manager will have a lot of free time.

3.      Organization’s requirements: jobs must be designed according to the requirements of the organization. We cannot use the same job design for all organizations.

4.      Technology: the level of technology used by the organization also affects the job design. An organization having a high level of technology will have different job designs compared to an organization having a low level of technology.

5.      Individuals like and dislikes: people have different like and dislikes. Some people like to work while some people prefer to work in groups. Some people want to do only planning and decision making while other people like to implement these plans and decision.

6.      Organizational structure: it also affects the job design. Individual jobs must fit into the organization’s structure.

Five job design approaches

1. Job rotation: job rotation is a job design method which is able to enhance motivation, develop workers' outlook, increase productivity, improve the organization's performance on various levels by its multi-skilled workers, and provides new opportunities to improve the attitude, thought, capabilities and skills of workers. Job rotation is also process by which employees laterally mobilize and serve their tasks in different organizational levels; when an individual experiences different posts and responsibilities in an organization, ability increases to evaluate his capabilities in the organization.

2. Job engineering: job engineering focuses on the tasks to be performed, methods to be used, workflows among employees, layout of the workforce, performance standards and interdependencies among people and machines. Experts often examine these job design factors by means of time and motion studies, determining the time required to do each task and the movements needed to perform it efficiently.

3. Job enlargement: it refers to the expansion of the number of different tasks performed by an employee in a single job. job enlargement as the process of allowing individual workers to determine their own pace (within limits), to serve as their own inspectors by giving them responsibility for quality control, to repair their own mistakes, to be responsible for their own machine set-up and repair, and to attain choice of method. 

4. Job enrichment:  it involves adding more motivators to a job to make it more rewarding .job becomes enriched when it gives job holder more decision making, planning and controlling powers. Job enrichment has the same motivational advantages of job enlargement; however it has the added benefit of granting workers autonomy. 

 5. Socio technical system: it focuses on organization as being made up of people with various competencies who use various tools, machines and techniques to create goods or services valued by customers and other stakeholders. Thus social and technical systems need to be designed with respect to one another and to the demands of customers’ suppliers and other stakeholders in the external environment.

JOB analysis

Ø  Job analysis is formal and detailed examination of jobs .it is a systematic investigation of the tasks duties and responsibilities necessary to do a job.

Ø  A tasks is an identifiable work activity carried out for a specific purposes  for example typing a letter

Ø  A duty is a larger work segment consisting of several tasks that are performed by an individual for example pickup, sort, and deliver incoming mail.

Ø  Job responsibilities are obligation to perform certain tasks and duties.

Process of job analysis

Ø  Organization analysis: this is required to find the linkages between jobs and organizational objectives, interrelationships between jobs and contribution of various jobs to the efficiency and effectiveness of the organization.

Ø  Selection of representative positions to be analyzed: it is not possible to analyze all the jobs. A representative sample of jobs to be analyzed is decided keeping the cost and time constraints in mind.

Ø  Collection of job analysis data: this step involves the collection of data on the characteristics of the job, the required behavior and personal qualifications need to carry out the job effectively.

Ø  Preparation of job description: this step involves the describing the contents of the job in terms  of functions, duties, operations, etc. the job holder is required  to discharge the duties and responsibilities and perform the operations listed in job description.

Ø  Preparation of job specification: this step involves conversion of the job description statements into a job specification. Job specification of personal attributes in terms of traits, skills, training, and experience needed to carry out the job.

Methods of collecting job analysis data

Ø  Job performance: in this, the job analyst actually performs the job in question. The analyst thus receives firsthand experience of contextual factors on the job including physical hazards, social demands, emotional pressures and mental requirements.

Ø  Personal observation: The analyst observes the workers doing the jobs. The tasks performed, the pace at which activities are done, the working conditions, etc., are observed during a complete work cycle.

Ø  Critical incident: Critical incident technique (CIT) is a qualitative approach to job analysis used to obtain specific, behaviorally focused descriptions of work or other activities. Here the job holders are asked to describe several incidents based on their past experience.

Ø  Interview: this method consists of asking questions to both incumbents and supervisors in either individual or a group setting. The use of this method is that job holders are most familiar with the job and can supplement the information obtained through observation.

Ø  Panel of expert: this method utilizes senior job incumbents and superiors with extensive knowledge of the job. To get the job analysis information, the analyst conducts an interview with the group.

Ø  Diary method: several job incumbents are asked to keep diaries or logs of their daily activities- according to this method and record the amount of time spent on each activity.

Ø  Questionnaire method: it is widely used method. Here the job holders are given a properly designed Questionnaire aimed at eliciting relevant job-related information.

Benefits of Job Analysis

A thorough and competently conducted job analysis has a number of benefits for the human resource cycle and the organization as a whole:

Ø  HR Planning -Provides essential information for management before making organizational decisions -Show actual number and nature of jobs within the company -Create precise job descriptions -Bring the specifics of a position in focus -Determine relative worth of each position and its appropriate class -Maintain the competitiveness of the company in the market

Ø  Setting & Monitoring Performance Standards -Establish a job’s specific activities and performance standards -Carry out objective performance appraisals -Combine responsibilities into logical job groups -Identify major job responsibilities for inclusion in a performance management system

Ø  Compensations & Benefits -Evaluate and establish appropriate levels of compensation based on job value -Develop compensation programmes based on different skill levels -Create an obvious effect in motivating employees

Ø  Recruitment & Selection -Establish relevant standards and requirements for personnel selection purposes -Locate suitable pool of candidates for recruit and hire -Develop unbiased interview questions -Get rid of unnecessary tasks and positions -Know what should be done for the job

Ø  Training -Expose skills that require by various jobs -Define contents of training programmes -Identify health and safety hazards and working conditions that require special training

Job description

A job description is a written statement of what  the job holder does ,how it is to be done ,under what condition it is done and why it is done .it describes what the job is all about ,throwing light on job content ,environment and conditions of employment ,it is descriptive in nature and defines the purpose and scope of a job

Example of Job Description:

Title	Compensation manager
Code	Hr/ 2310
Department	Human resource department
Summary	Responsible for the design and administration  of employees compensation programmes
Duties	•      Conduct  job analysis •      Prepare job description for current  and projected position •      Evaluate job description and act as a chairman  of job evaluation committee •      Develop and oversee bonus and other employee benefit plans •      Develop an integrated hr information system
Working conditions	Normal eight hours per day .five days a week
Report to	Director , human resource department

Job specification

Job specifications specify the minimum acceptable qualifications required by the individual to perform the task efficiently. Based on the information obtained from the job analysis procedures, job specification identifies the qualifications, appropriate skills, knowledge, and abilities and experienced required to perform the job.

Job specification is an important tool in the selection process as it keeps the attention of the selector on the necessary qualifications required for that job.

Education	MBA with specialization in HRM /MA in social work PG diploma in HRM /MA in industrial psychology A degree of diploma in labor laws id desirable
Experience	At least 3 years experience in a similar position  in a large
Skill ,knowledge, abilities	•      Knowledge of compensation practices •      Skills in writing  job description , in conducting  job analysis •      Interviews •      Ability to conduct meeting  to plan and prioritize work
Work orientation factors	The position may require up to 15 percent travel
Age	Preferably below 30 years

Differentiate between Job Description and Job Specification

Job Description	Job Specification
Job Description is a functional description of what the job entails. And define the purpose and scope of a job.	Job specification is a statement of the minimum acceptable human qualities required for the proper performance of a job.
It is a written record it contains title, location, duties, responsibilities, working conditions, hazards and relationship with other jobs.	It includes physical, mental, social, psychological and behavioral characteristics  of a person

HR Planning

Human Resource (HR) Planning: The process of analyzing and identifying the need for and availability of human resources so that the organization can meet its objectives.

HR Planning Responsibilities

      Top HR executive and subordinates gather information from other managers to use in the development of HR projections for top management to use in strategic planning and setting organizational goals.

Small Business and HR Planning Issues:

      Attracting and retaining qualified outsiders

       Management succession between generations of owners

      Evolution of HR activities as business grows

      Family relationships and HR policies

Objectives of HRP

Ø  Forecast personnel requirement: HRP is essential to determine the future manpower needs in an organization. In the absence of such a plan, it would be difficult to have the services of right kind of people at the right time.

Ø  Cope with changes: HRP is required to cope with changes in market conditions, technology, products and government regulations in an effective way. These changes may often require the services of people with the requisite technical knowledge and training.

Ø  Use existing man power productively: By keeping an inventory of existing personnel in an enterprise by skill, level, training, educational qualifications, work experiences; it will be possible to utilize the existing resources more usefully in relation to job requirements.

Ø  Promote employees in a systematic manner: HRP provides useful information on the basis of which mgt decides on the promotion of eligible personnel in the organization.

Linkage of Organizational and HR Strategies

Benefits of HRP

Human Resources Planning (HRP) anticipates not only the required kind and number of employees but also determine the action plan for all the functions of personnel management. The major benefits of Human resource planning are:

      It checks the corporate plan of the organization.

       It offsets uncertainly and change .But the HRP offsets uncertainties and changes to the maximum extent possible and enables the organization to have right men at right time and in right place.

       It provides scope for advancement and development of employees through training, development etc.

      It helps to anticipate the cost of salary enhancement, better benefits etc.

      It helps to anticipate the cost of salary, benefits and all the cost of human resources facilitating the formulation of budgets in an organization.

       To foresee the need for redundancy and plan to check it or to provide alternative employment in consultation with trade unions, other organizations and government through remodeling organizational, industrial and economic plans.

       To foresee the changes in values, aptitude and attitude of human resources and to change the techniques of interpersonal, management etc.

       To plan for physical facilities, working conditions and the volume of fringe benefits like canteen, schools, hospitals, conveyance, and child care centers. Quarters, company stores etc.

       It gives an idea of type of tests to be used and interview techniques in selection based on the level of skills, qualifications, intelligence, values etc., of future human resources.

      It causes the development of various sources of human resources to meet the organizational needs.

       It helps to take steps to improve human resource contributions in the form of increased productivity, sales turnover etc.

       It facilities the control of all the functions, operations, contribution and cost of human resources.

Process of HRP (for large organization)

1.      Forecasting the demand for human resources

a)      External challenges: these challenges arise from 3 important sources:

v  Economic developments: Liberalization, opening up of baking sectors, capital market reforms, the online trading systems have created huge demand for finance professionals.

v  Political, legal, socio and technical changes: the demand for certain categories of employees and skills is also influenced by changes in political, legal and social structure in an economy.

v  Competition: Competition is beneficial to customer but suicidal for companies operating on thin margins. Such companies have to necessarily go ‘lean’ by reducing their workforce.

b)     Organizational decisions: the organization’s strategic plan, sales and production forecasts and new ventures must all be taken into account in employment planning.

c) Workforce factors: demand is modified by retirements, terminations, resignations, deaths and leaves of absence.

d) Forecasting techniques: these techniques commonly employed by modern organizations are given below:

v  Trend analysis: HR needs can be estimated by examining past trends. Past rates can project into the future.

v  Workforce analysis: the average loss of manpower due to leave, retirement, death, transfer, etc., during the last 5 yrs may be taken into account.

v  Workload analysis: the need for manpower is also determined on the basis of work-load analysis, wherein the company tries to calculate the number of persons required for various jobs.

v  Job analysis: it helps in finding out the abilities or skills required to do jobs efficiently.

2.      Preparing man power inventory (supply forecasting):

The basic purpose of preparing manpower inventory is to find out the size and quality of personnel available within the organization to man various positions.

a)      Internal labor supplier: a profile of employees in terms of age, sex, education, job level, training, experience, past performance and future potential should be kept ready for use whenever required.

b)       External labor supply: an organization is able to anticipate its outside recruitment needs and look into the possible sources of supply keeping the market trends in mind.

3.      Determining manpower gaps:

The exiting number of personnel and their skills are compared with the forecasted man power needs to determine the quantitative and qualitative gaps in the work force.

4. Formulating HR plans:

v  Recruitment plan: it will indicate the number and type of people required and when they are need.

v  Redeployment plan (relocation): it will indicate the programmes for transferring or retraining existing employees for new jobs.

v  Redundancy plan: it will indicate who is redundant, when and where; the plans for retraining, where this possible, etc.

v  Training plan: it will indicate the number of trainees or apprentices required and the programme for recruiting or training them.

v   Productivity plan: it will indicate reasons for employee productivity or reducing employee costs through mechanization, ob redesign, etc.

v  Retention plan: it will indicate reasons for employee turnover and show strategies to avoid wastage through compensation policies.

v  Control points: the entire manpower plan is subjected to close monitoring from time to time.

Limitations /problems in HRP

Ø  Accuracy: projecting manpower needs over a period of times is a risky one. It’s not track the current and future trends correctly and convert the same into meaningful action guidelines.

Ø  Supports: Support from mgt is equally missing on more than one occasion. They are unwilling to commit funds for building an appropriate human resource information system.

Ø  Numbers game: HRP, in final analysis, may suffer due to excessive focus on the quantitative aspects. The quality side of the coin may be discounted thoroughly.

Ø  Resistance: Mgt simply is trying to turn HRP into a kind of scientific exercise to get more from employees without offering any commensurate benefits.

Ø  Preparation: It demands elaborate preparation, careful monitoring of internal as well as external factors, strong support from mgt and workers, and sincere implementation.

Factors affecting HRP

HRP is influenced by several considerations. The more important of them are:-

Ø  Type and strategy of Organization: - The type of organization is an important consideration because it determines the production process involved, number and type of staff needed, and the supervisory and managerial personnel required. Manufacturing organizations are more complex in this respect than those that render services.

Ø  Organizational Growth Cycles and Planning: - The stage of an organization’s growth can have considerable influence on HRP. Need for planning is felt when the organization enters the growth stage. Internal development of people also begins to receive attention in order to keep up with the growth.

Ø  Environmental Uncertainties: - HR managers rarely have the privilege of operating in a stable and predictable environment. Political, social and economic changes affect all organizations. Personnel planners deal with uncertainties by carefully formulating recruitment, selection, and training and development policies and programmes.

Ø  Time Horizons: - Yet another major factor affecting personnel planning is the time horizon. On one hand, there are short-term plans spanning six months to one year. On the other hand, there are long-term plans which spread over three to twenty years. In general, the greater the uncertainty, the shorter the plan’s time horizon and vice versa.

Ø  Type and quality of Information:- The information used to forecast personnel needs originates from a multiple of sources. A major issue in personnel planning is the type of information which should be used in making forecasts.

Ø  Nature of jobs being filled:- Personnel planners must consider the nature of jobs being filled in the organization. Job vacancies arise because of separations, promotions and expansion strategies.

Ø  Off-loading the work:- Several organizations off-load part of their work  to outside parties either in the form of sub-contracting or ancillarisation. Off-loading is a regular feature both in the public sector as well as in the private sector. Most organizations have surplus labor and they do not want to worsen the problem by hiring more people. Hence, the need for off-loading.

Importance of HRP

Ø  Reservoir of talent: the organization can have a Reservoir of talent at a point of time. People with requisite skills are readily available to carry out the assigned tasks.

Ø  Prepare people for future:  People can be trained, motivated and developed in advance and this helps in meeting future needs for high-quality employees quite easily.

Ø  Expand or contract: if the organization wants to expand its scale of operations, it can go ahead easily. Advance planning ensures a continuous supply of people with requisite skills who can handle challenging jobs easily.

Ø  Cut cost: planning facilities the preparation of an appropriate HR budget for each department or division. This helps in controlling manpower costs by shortages/excesses in manpower supply.

Ø  Succession planning: HRP, as pointed out previously, prepares people for future challenges. The ‘stars’ can be picked up and kept ready for further promotions whenever they arise.

Recruitment

Recruitment is the process of locating and encouraging potential applicants to apply for existing or anticipated job openings. It is actually a linking function, together those with jobs to fill and those seeking jobs.

Ex: Recruitment ad of a foreign bank may invite applications from chartered accountants who have cleared the CA examination in the first attempt only.

Objectives of Recruitment:

• Support the organization ability to acquire, retain and develop the best talent and skills.

• Determine present and future manpower requirements of the organization in coordination with planning and job analysis activities.

• Obtain the number and quality of employees that can be selected in order to help the organization to achieve its goals and objectives.

• Create a pool of candidates so that the management can select the right candidate for the right job from this pool

• Attract and encourage more and more candidates to apply in the organization.

• Increase the pool of candidates at minimum cost.

• Acts as a link between the employers and the job seekers

• Infuse fresh blood at all levels of the organization

• Meet the organization's legal and social obligations regarding the composition of its workforce.

• Increase the effectiveness of various recruiting techniques

Sources of recruitment

                                                            SOURCES OF RECRUITMENT

           

1.      Internal source:

Ø   Persons who are already working in an organization constitute the internal source.

Ø   Whenever any vacancies arise someone from within the organization is upgraded, transferred, promoted or even demoted.

2.      External sources:

Ø  External sources lie outside an organization

Ø  Here the organization can have the service of employees working in other aspirant registered with employment exchanges.

Ø  Students from reputed educational institution candidates, referred by unions, friends relatives and existing employees, candidates responding to advertisement.

Merits and demerits of internal sources of recruitment:

ADVANTAGES	DISADVANTAGES
1.      Familiarity of Candidate	1.      Lack of New Ideas
2.      Available information & observation	2.      Expensive Training Programs
3.      Selection & Socialization – less expensive	3.      Political & Personal Bias
4.      Enhances Employee Morale	4.      Ripple Effect
5.      Retention of Employees	5.      Some Unhappy Employees

Merits and demerits of external sources of recruitment:

ADVANTAGES	DISADVANTAGES
1.      New Ideas	1.      Lack of Reliability
2.      Valuable Information – Competitors Moves & Strategies	2.      Committing Mistakes
3.      The organization has the freedom to select candidates from large pool.	3.      Expensive Process
4.      Diverse Skills & Vast Experience	4.      Orientation Process – Time Consuming
5.      Long term benefits	5.      De-motivates Internal Employees

Factors affecting Recruitment Policy

RECRUITMENT POLICY The recruitment policy of an organization specifies the objectives of recruitment and provides a framework for implementation of recruitment programme. It may involve organizational system to be developed for implementing recruitment programmes and procedures by filling up vacancies with best qualified people.

Internal Factors affecting Recruitment Policy

The internal factors or forces which affecting recruitment and can be controlled by the organization are

• HUMAN RESOURCE PLANNING

Effective human resource planning helps in determining the gaps present in the existing manpower of the organization. It also helps in determining the number of employees to be recruited and what qualification they must possess.

•SIZE OF THE FIRM

The size of the firm is an important factor in recruitment process. If the organization is planning to increase its operations and expand its business, it will think of hiring more personnel, which will handle its operations.

• COST

Recruitment incur cost to the employer, therefore, organizations try to employ that source of recruitment which will bear a lower cost of recruitment to the organization for each candidate.

•GROWTH AND EXPANSION

Organization will employ or think of employing more personnel if it is expanding its operations.

External Factors affecting Recruitment Policy

The external factors which affecting recruitment is the forces which cannot be controlled by the organization. The major external forces are:

• SUPPLY AND DEMAND

The availability of manpower both within and outside the organization is an important determinant in the recruitment process. If the company has a demand for more professionals and there is limited supply in the market for the professionals demanded by the company, then the company will have to depend upon internal sources by providing them special training and development programs.

•LABOUR MARKET

Employment conditions in the community where the organization is located will influence the recruiting efforts of the organization. If there is surplus of manpower at the time of recruitment, even informal attempts at the time of recruiting like notice boards display of the requisition or announcement in the meeting etc will attract more than enough applicants.

• IMAGE / GOODWILL

Image of the employer can work as a potential constraint for recruitment. An organization with positive image and goodwill as an employer finds it easier to attract and retain employees than an organization with negative image. Image of a company is based on what organization does and affected by industry. For example finance was taken up by fresher MBA’s when many finance companies were coming up.

 • POLITICAL-SOCIAL- LEGAL ENVIRONMENT

Various government regulations prohibiting discrimination in hiring and employment have direct impact on recruitment practices. For example, Government of India has introduced legislation for reservation in employment for scheduled castes, scheduled tribes, physically handicapped etc. Also, trade unions play important role in recruitment. This restricts management freedom to select those individuals who it believes would be the best performers. If the candidate can’t meet criteria stipulated by the union but union regulations can restrict recruitment sources.

• UNEMPLOYMENT RATE

One of the factors that influence the availability of applicants is the growth of the economy (whether economy is growing or not and its rate). When the company is not creating new jobs, there is often oversupply of qualified labor which in turn leads to unemployment. • COMPETITORS The recruitment policies of the competitors also effect the recruitment function of the organizations. To face the competition, many a times the organizations have to change their recruitment policies according to the policies being followed by the competitors.

Recruitment Techniques

• Advertising

 A classic employment recruitment technique is the "help wanted" advertisement in your local newspaper. While you can still utilize this form of recruitment, an online ad can be more cost-effective and reach a broader audience. Ads placed on job websites or on your business website can draw potential employees from a wider geographic area. For targeted recruitment, you can place ads on industry specific job boards.

• Career Fairs

 For entry-level jobs, career fairs can help you recruit recent graduates and individuals who want to change careers. Some colleges and universities sponsor on-campus career fairs that can help you recruit well-educated employees for your business. Job fairs also provide an easy way to collect resumes to help fill future vacancies.

• Database

Maintain a database or filing system for potential employees based on resumes collected at career fairs, from your website or from manual submissions. When looking to fill a vacancy, review your file of resumes for potential applicants and send queries to possible candidates. This recruitment method can help fill vacancies faster at a lower overall cost than starting a fresh recruiting effort.

• Employment Agencies

If you are searching for employees with specific skills, you may want to work with a recruiting agency that screens and potentially tests applicants based on the skills you require. While the initial cost of utilizing an employment agency may be high, the long-term reward of a well-placed, highly capable employee can be greater than the initial recruitment cost.

• Internal Recruiting

Internal recruiting is an effective method of filling vacancies. Existing employees have an established track record that can be matched to a current vacancy. Even if the employee needs some additional training to fulfill all the position requirements, companies gain valuable employee relation benefits by hiring from within. Promoted employees may demand lower compensation than those hired from external sources; in addition, you decrease turnover by providing advancement opportunities.

• Employee Referrals

Your existing employees can be a great source of providing recruitment referrals. They may know of a good match for a vacancy that would not respond to more traditional recruitment methods. Many potential employees are working for other companies and are not actively looking for employment, but may be enticed to change employment for the right opportunity. You should encourage employee referrals by providing bonuses for all new hires employed based on a referral.

Recruiting Subsystem

• Applicant tracking (Releasing Recruitment Advertisements, Recruitment and selection tests and hiring)

• Internal search (looking for internal candidates)

Constraints and challenges

Ø  Poor image: of the company – declining industry-earning a bad name, poor quality products-nepotism

Ø  Unattractive job: job without challenges, devoid of career growth

Ø  Conservative internal policies: A policy if internal promotions based on seniority, experience, job knowledge may result in loss of effective hands from outside.

Ø  Limited budgetary support: Recruitment efforts costs money.

Ø  Restrictive Policies of Government: governmental policies on recruitment/promotion based on seniority, reservation, ex-service men, disabled persons etc..

Methods of recruitment

1. Internal method:

      Promotion and transfer:

Ø   Promotion involves movement of employees from lower level position to high level position.

Ø  Transfer involves lateral movement within the same grade, from one job to another .it may lead to changes in duties and responsibilities, working conditions etc.

      Job posting:

Ø  Job posting is another way of hiring people from within .in this method, the organization publicizes openings on bulletin boards, electronic media and similar outlet.

      Employee referrals

Ø  Employee referral means using personal contacts to locate job opportunities.

Ø  It is a recommendation from current employees regarding a job applicant.

2. External method:

      Direct methods

v  Campus interview:

 It is a method of recruiting by visiting and participating in college’s campuses and their placement centers.

      Indirect methods:

v  Advertisement:

These includes advertising in   newspaper, trade professionals and journals

Ø  News papers ads

Ø  Television and radio ads

      Third party methods:

v  Private employment search firms:

Ø   A search firm is a private employment agency that maintains computerized lists of qualified applicants and supplies these to employers willing to hire people from the list for a fee.

Ø  Employment exchange: As a statutory requirement, companies are also expected to notify their vacancies through the respective employment exchanges, created all over India for helping unemployed youth, displaced persons ex military personnel, physically handicapped etc.

Ø  Gate hiring and contracts: gate hiring (where job seekers, generally employees presents themselves at the factory gate and offer their service on a daily basis, hiring through contractors, recruiting through word of mouth publicity.

v  Unsolicited applicants /walk-ins:

 Company generally receives unsolicited applicants from job seekers at various points of time.

v  Internet recruiting:

The website offers a fast, convenient and cost effective means for job applicants to submit their resume through the internet.

      Alternatives to recruitment:

v  Over time:

 Short term fluctuations in work volume could best be solved through over time.

v  Sub contracting:

To meet a sudden increase in demand for its products and services the firm may sometimes go for sub contracting instead of expanding capacity immediately.

v  Temporary employees:

         Employees hired for a limited time to perform a specific job are called temporary employees

v  Employee leasing:

             Hiring permanent employee of another company who possess certain specialized skills on lease basis to meet short term requirements.

v  Outsourcing:

     Any activity in which a firm lacks internal expertise and requires on impartial opinion can be out sourced. Outsourcing is contracting with another company or person to do a particular function.

Recruitment process

The following figure outlines the important steps involved in the recruitment process. These steps are briefly described below.

1.      Form Selection Committee: Selection committees generally consist of a minimum of two members but not more than four persons, including the chairperson. Members of a selection committee should be chosen on the basis of their objectivity, professionalism and ability to exercise good judgment in selecting the most suitable person for the job vacancy.

2.      Review Position Description: Before advertising the job vacancy, members of the selection panel should review the position description for the job. If there is not a position description available, one must be prepared before the selection process can continue.

The purpose of reviewing the position description is so that members of selection committee can:

·         Familiarize themselves with the objectives and duties of the job

·         Review the condition of employment (pay, hours of work, leave, superannuation, etc)

3.      Advertise: A job vacancy may be advertised in a variety of ways including:

·         Employment section of newspapers

·         Notifying a recruitment agency

·         Employment websites such as Seek

·         Your organization’s own newsletters

·         Your organization’s own website

4.      Receive Applications: Applications for employment must be treated with considerable diligence and respect. Failure to appropriately handle applications for a job can severely jeopardize someone's employment potential, and thereby cause annoyance, distress, financial hardship and career prospects. Employment applications should be acknowledged as soon as possible, and filed in appropriate place to ensure none are missed.

5.      Arrange Interviews: Each candidate should be personally notified by telephone. It is unadvisable to notify by email, as an email sent is not necessarily an email received. Notification by letter is better that email but not as good as telephoning.

 

6.      Compile Interview Questions: Interview questions must relate to the key selection criteria. Questions must be open ended and well-worded so as to cause the "interviewee" to describe their relevant work history and/or portray their knowledge.

7.      Conduct Interviews

Interview duration:

20 mins	not a serious duration for a career job
30 mins	barely enough time, risk of not keeping to schedule, rushed, insufficient time for note taking, decision making, too hard for interviewers.
40 mins	Allows for 30 minutes of questions and 10 minutes change round time in which interviewers can write notes, discuss candidates and refresh them.
over 40 mins	Durations between 40 mins and one hour are appropriate for middle management positions.

8.      Select Successful Candidate: ‘Selection on merit' is a process of determining which job seeker has the skills, abilities and knowledge deemed to be most suitable for the job. In a merit based system, applicants effectively compete for a job. The written application, the selection interview and any testing of applicants is all part of the competition process.

9.      Check Referees It is essential to follow through with checking the applicant's referees. Although referees may not make negative comments about the applicant, much can be gleaned from what they say (or do not say). 

10.   Formally Notify: You will need to formally notify the successful and unsuccessful candidates as soon as possible. The successful candidate may already have undertaken other interviews and may receive other job offers.

New approaches to Recruitment

 Walk-in: A walk-in interview is a job screening that happens without an appointment or scheduled meeting. They are common at career fairs and informal meet-and-greet sessions, and they conduct various tests and interviews. Employers may offer candidates a job at the end, but more often than not, the meetings are used as a way to quickly narrow down the applicant pool. Top candidates are often invited for a more formal interview at a later date.

 Consult-in: The busy and dynamic companies request the potential job seekers to approach them personally and consult them regarding the jobs. The companies select the suitable candidates form among such candidates through the selection process.

 Head-Hunting: The companies request the professional Organizations to search for the best candidates particularly for the senior executive positions. The professional Organizations search for the most suitable candidates and advise the company regarding the filling up of the positions. Head hunters are also called as search consultants.

 Body shopping: Professional Organizations and hi-tech training institutes develop a pool of human resources for the possible employment. The prospective employers contact these organizations to recruit the candidates. Otherwise, the organizations themselves approach the prospective employees to place their human resources. These professional and training institutions are called body shoppers and these activities are known as body shopping. The body shopping is used mostly for computer professionals.

 Business alliances: Business alliances like acquisitions, mergers, and take-overs help in getting resources. In addition, the companies do also have alliances in sharing their human resources on ad-hoc basis. It does mean that, the company with surplus human resources offers the services of their employees to other needy organizations.

 E-recruitment: The technological revolution in telecommunication helped the Organizations to use the internet as a source of recruitment. Organizations advertise the job vacancies through the World Wide Web (www) internet. The job seekers send their applications through email or internet. Alternatively, job seekers place their CVs in the world wide web/internet, which can be drawn by the prospective employers depending upon their requirements.

Dept of MBA.SJBIT Page 45

Cost benefit analysis of recruitment sources

When large companies hire thousands of employees per year, these costs can take a significant portion of the HR budget and the total operating expenses. Successful start-ups and dot-coms are also feeling the squeeze. Agency fees of 20 to 30 percent of the new hire's base salary have a heavy financial impact when you're adding more than 100 new hires per year.

Whether you are using the new electronic methods or the traditional hiring tactics, having a standard and effective way of measuring your cost per hire is essential to evaluating your recruiting effectiveness and efficiency. The Saratoga Institute includes six basic elements to calculate cost per hire:

1. Advertising

2. Agency and search firm fees

3. Referral bonuses paid to employees

4. Travel costs incurred by both recruiters and applicants

5. Relocation costs

6. Company recruiter costs (including salary and benefits prorated if the recruiter performs duties other than staffing

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Module-3

Selection, placement, induction and performance management

Selection

Ø  Selection is the process of choosing the best candidate from the numbers of candidate. It is process of collecting the all necessary information and matching the desired skill with the available skill.

Ø  It is process which help to distinguish best candidate from the normal one. It’s come after recruitment.

Selection process/ procedure/ factors affecting selection

Selection is a long process, commencing from the preliminary interview of the applicants and ending with the contract of employment.

1.      Reception: A company is known by the people it employs. In order to attract people with talent, skills and experience, a company has to create a favorable impression on the applicant’s right from stage of reception.

2.      Screening interview: A preliminary interview is generally planed by large organizations to cut the costs of selection by allowing only eligible candidates to go through the further stages in selection.

3.      Application blank: app blank or form is one of the most common methods used to collect information on various aspects of the applicant’s academic, social, demographic, work-related background and references.

4.      Selection test: important decision in the selection process involves applicant testing and the kinds of tests to use. a test is standardized, objective measure of a person’s behavior, performance or attitude.

5.      Selection interview: interview is the oral examination of candidates for employment. In this step, the interviewer tries to obtain and synthesize information about the abilities of the interviewee and the requirements of the job.

6.      Medical examination: Whether the applicant is medically suitable for the specific job or not. Whether the applicant has health problems or psychological attitudes likely to interfere with work efficiency or future attendance

7.      Reference check: Once the interview and the medical examination of the candidate are over, the personal department will engage in checking reference. Candidates are required to give the names of two or three reference in their application forms.

8.      Hiring decision: the line manager concerned has to ma e the final decision- whether to select or reject a candidate after soliciting the required information through different techniques discussed earlier.

Selection tests:

1. Aptitude test: An aptitude test is a measure of a specific skill or ability

2. Achievement Tests: Achievement tests measure learning of general or specific academic skills.  It measures of what a person knows or can do it right now.

3. Interest test: Are used to measure an individual’s activity preference .these tests are particularly useful for students considering many careers or employees deciding upon career changes.

4. Graphology test: is test that seeks to predict success or failure through  one’s handwriting .for example they ask applicant to complete application form  and write about why they want job .

5. Intelligence test: these are mental ability test .they measure the present learning ability and also the ability to understand instruction and make judgments.

6. Personality test: are used to measure basic aspects of an applicant’s personality such as motivation, emotional balance, self confidence, interpersonal behavior .introversion etc.

7. Simulation tests: simulation exercise is a test which duplicates many of the activities and problems an employee’s face while at work. such exercise are commonly used for hiring managers at various levels in an organization .

8. Assessment test: an assessment centre is an extended work sample .it uses procedures that incorporate group and individual exercise .these exercise are designed to stimulate the type of work which the candidate will be expected to do.

9. Polygraph tests: the polygraph (the lie detector consists of a rubber tube around the chest, a cuff round the arm and sensors attached to the fingers that record the physiological changes in the examinee as the examiner puts question that call for an answer of yes or no) records physical changes in the body as the test subject answers a series of questions.

10. Integrity tests: these are designed to measure employee’s honesty to predict those who are more likely to steal from an employer or otherwise act in a manner unacceptable to the organization. Here they are supposed to answer only yes or no.

Types of interviews

1. Informal: Interviewer knows which questions they want to ask. They might change their mind about questions and carry on a conversation with the candidate. This can be difficult, because you may spend the whole time talking about sports or music. After this interview, you wonder what happened.

 2. Structured: In a structured interview, a list of questions has been prepared based on the job requirements. The same questions are asked of every candidate. The same questions are asked in the same order. Notes are taken

3. Unstructured: This interview can be very stressful if you are not prepared. The interviewer may ask an any type question or two and then wait. You should be prepared with questions of your own and show initiative is asking them.

4. Sequential: You will interview with several people, but with only one at a time. These individuals might be people you will be interacting with during the course of your work. Since they each need to interview you, treat each one as a separate interview. You may have to answer the same questions over and over.

5. Panel: This is also called a group interview. The panel or group is made up of people you would be working with. It can be as few as two people or up to as many as nine people. They have a list of prepared questions and will usually take turns asking the questions.

6. Telephone

•         To reduce the costs of interviewing many companies now do a pre-screening by e-mail or over the telephone.

Your task: Be prepared. Have all information next to you.

•         Eliminate background noises.

•         Be professional.

•         Stand while you talk. Your voice will sound stronger and more confident.

7. Behavioral: You will be asked about real-life situations. They are looking at how you respond in given situations.

8. Face-to-face interviews: This may be one-to-one between you and the interviewer, or you may sometimes find that there are two interviewers, such as a functional specialist and a member of the resourcing or HR team.

9. Competency/criteria based interviews: These are structured to reflect the competencies or qualities that an employer is seeking for a particular job, which will usually have been detailed in the job specification or advert. The interviewer is looking for evidence of your skills and may ask such things as: ‘Give an example of a time you worked as part of a team to achieve a common goal.’

10. The non directive interview: the recruiter asks questions as they come to mind .there is no specific format to be followed .the question can take any direction.

11. The situational interviews: one variation of the structured interview is known as the situational interview, in this approach the applicant is confronted with a imaginary incident and asked how he or she would respond to it.

12. Stress interview: the interviewer attempts to find how applicant would responds to aggressive, embarrassing, rude and insulting questions.

Placement

Placement is the process of assigning a specific job to each of the selected candidates. It involves assigning a specific rank and responsibility to an individual. It implies matching the requirements of a job with the qualifications of the candidate.

Benefits of proper placement:

The employee is able to

Ø  Show good results on a job

Ø  Get along with people easily

Ø  Keep is spirits high report for duty regularly

Ø  Avoid mistakes and accidents

If neglected, it may create employee adjustment problem leading to absenteeism, turnover , accidents , poor performance etc.

Induction/Orientation

It is the process of receiving and welcoming an employee when he joins a company and giving him the information about the company.

An applicant after being hired, he/she must be inducted and placed a chosen job.

Induction or orientation conveys 3 types of information

1. A review of the organization’s history, founding fathers, objectives, products, services as well as how the employee’s job contributes to the organization needs.

2. General information about the daily work routine.

3. A detailed presentation, perhaps in a Boucher of the organization policies, work rules and employee benefits.

Purpose / need of Induction (Objectives)

1. Many organizations are known to spend a few weeks / months on orientation Programmes.

2. The ides is the make the new employees feel at ‘home’ in the new environment.

3. New employee will be anxious about their jobs, colleagues, superiors and company rules to remove, this fear / anxiety, orientation programmes are required.

4. The adjustment of the employee to the company depends on the expectations from the jobs / holders.

5. It expectations are high, adjustment is difficult. It expectations are moderate, adjustment is comfortable.

Induction Programme Steps

Ø  Well come to the organization

Ø  Explain about the company

Ø  Show the location where the new recruit will work

Ø  Give the companies manual to the new recruit

Ø  Provide details about various work group

Ø  Give details about benefits holiday attendance etc

Ø  Explain about future training opportunity

Ø  Clarify doubts

Ø  Take the employees on guided tour of building etc

a) Content

b) Socialization: NEW RECRUT begins to understand and accept the values norms held by others in the organization.

c) Follow up

Topics covered in the Induction Programmes:

1. Organizational Issues: History, organization details, names and titles of top management, employees Title and department layout of the company, probationary period, products/services, overview of production company policies and rules, discipline, employee, handbook, safety procedure.

2. Employee Benefits: Pay scale, leave, training and education benefits, Insurance benefits, retirement programs, other benefits.

3. Introduction: To superior, co-workers, subordinates, training and others.

4. Job Details: Job location, job tasks, job objectives, relationship to other jobs.

Performance management

Performance management and Performance appraisal

• A system that involves employee evaluations once a year with an ongoing effort to provide feedback and coaching so that performance can be improved is performance management system. (PMS)

• PA-Performance appraisal is the systematic description of an employee’s strengths and weaknesses.

• Thus performance appraisal is a part of Performance management system.

Performance appraisal

“It is the systematic evaluation of the individual with respect to his/her performance on the job and his/her potential for development”

Who will appraise?

Ø  Supervisors: supervisors include superiors of the employee, other superiors having knowledge about the work of the employee and departmental head or manager. The general practice is that immediate superiors appraise the performance, which in turn, reviewed by department head/manager.

Ø  Peers: peer appraisal may be reliable if the work group is stable over a reasonably long period of time and performs tasks that require interaction.

Ø  Subordinates: the concept of having superiors rated by subordinates is being used in most organizations today, especially in developed countries. Ex: in most US universities students evaluate a professor’s performance in the classroom. Such novel method provide the relationships b/w superiors and subordinates are cordial.

Ø  Self appraisal: employee development means self-development; employees who appraise their own performance may be highly motivated.

Ø  Consultants: sometimes, consultants may be engaged for appraisal when employees or employers do not trust the supervisory appraisal and management does not trust the self-appraisal or peer appraisal or subordinate appraisal.

Ø  Customers: internal and external customers also are used as sources of performance appraisal information, particularly for companies, such as Ford and Honda that are focused on total quality mgt.

When to appraise?

Ø  Informal appraisal are conducted whenever the supervisor or personnel manger feel it necessary

Ø  Systematic appraisal are conducted on a regular basis ,say for example every six months or annually

Ø  One study 244 firms found that appraisals were most often conducted  once a year

Ø  According to another Indian study eight organizations appraised their supervisory personnel at their anniversary date of joining

Features of performance appraisal

1. The appraisal is a systematic process involving three steps

Ø  Setting work standard

Ø  Assessing employees actual performance relative to these standards

Ø  Offering feedback to the employees so that he can eliminate deficiencies and improve performance in course of time

2. It tries to find out how well the employees is performing the job and tries to establish a plan for further improvements

3. The appraisal is carried out periodically according to definite plan .it is certainly not a one shot deal.

4. Performance appraisal is not a past oriented activity

5. Performance appraisal is not job evaluation

6. Performance appraisal is not limited to calling the foul it focuses on employee development.

7. Performance appraisal may be formal or informal

Objectives of performance appraisal

Ø  Compensation decisions: it can serve as a basis for pay raises. Managers need performance appraisal to identify employees who are performing at or above expected levels.

Ø  Promotions decisions: it can serve as a useful basis for job change or promotion. When merit is the basis for reward, the person doing the best job receives the promotion.

Ø  Training and development programmes.

Ø  Feedback: performance appraisal enables the employee to know how well he is doing on the job and it tells him what he can to improve his present performance.

Ø  Personal development: performance appraisal can help reveal the causes of good and poor employee performance.

Benefits/uses of performance appraisal

1. Employer perspective (administrative uses)

Ø  Despite imperfect measurement techniques.

Ø  Documentation of performance appraisal and feedback may be required for legal defense

Ø  Appraisal  offers a rational basis for constructing a bonus or merit system

Ø  Appraisal dimensions and standards can help to implement strategic goals and clarify performance expectations.

2. Employee perspective (developmental purposes)

Ø  Individual feedback helps people to rectify their mistakes and get ahead, focusing more on their unique strengths.

Ø  Assessments and reorganization of performance levels can motivate employees to improve their performance.

The performance appraisal process

Ø  Establish performance standards: Appraisal systems require performance standards, which serve as benchmarks against which performance is measured. To be useful, standards should relate to the desired results of each job.

Ø  Communicate the standards: Performance appraisal involves at least two parties; the appraiser who does the appraisal and the appraisee whose performance is being evaluated. Both are expected to do certain things. The appraiser should prepare job description clearly; analyze results objectively, etc. The appraisee should be very clear about what he is doing and why he is doing it.

Ø  Measure actual performance: after standards are set and accepted next step is to measure actual performance. This requires the use of dependable performance measures, the ratings used to evaluate performance. Performance measure to be helpful must be easy to use, reliable, and report on critical behaviors that determine performance.

Ø  Compare actual performance with standards and discuss the appraisal: actual performance may be better than expected and sometimes it may go off the track. Whatever be the consequences, there is a way to communicate and discuss the final outcome.

Ø  Taking corrective action, if necessary: Corrective action is of two types: one puts out the fires immediately, while the other destroys the root of the problem permanently.

Methods of performance appraisal

1 .Individual Evaluation Method

(a)Confidential report: It is mostly used in government organizations. It is a descriptive report prepared, generally at the end of every year, by the employee’s immediate superior. The report highlights the strengths and weaknesses of the subordinate.

(b)Essay evaluation: Under this method, the rate is asked to express the strong as well as weak points of the employee’s behavior. This technique is normally used with a combination of the graphic rating scale because the rater can elaborately present the scale by substantiating an explanation for his rating.

(c)Critical incident technique: Under this method, the manager prepares lists of statements of very effective and ineffective behavior of an employee. These critical incidents or events represent the outstanding or poor behavior of employees on the job. The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behavior.

(d)Checklists and weighted checklists: Another simple type of individual evaluation method is the checklist. A checklist represents, in its simplest form, a set of objectives or descriptive statements about the employee and his behavior. If the rater believes strongly that the employee possesses a particular listed trait, he checks the item; otherwise, he leaves the item blank.

(e)Graphic rating scale: Perhaps the most commonly used method of performance evaluation is the graphic rating scale. Of course, it is also one of the oldest methods of evaluation in use.

(f) Behaviorally anchored rating scales: Also known as the behavioral expectations scale, this method represents the latest innovation in performance appraisal.  It is a combination of the rating scale and critical incident techniques of employee performance evaluation.

(g)Forced choice method: This method was developed to eliminate bias and the preponderance of high ratings that might occur in some organizations. The primary purpose of the forced choice method is to correct the tendency of a rater to give consistently high or low ratings to all the employees.

(h)Management by Objectives (MBO): MBO represents a modern method of evaluating the performance of personnel. Thoughtful managers have become increasingly aware that the traditional performance evaluation systems are characterized by somewhat antagonistic judgments on the part of the rater.

2. Multiple person evaluation method:

Ø  Paired comparison method: - Paired comparison method helps make the ranting method more precise. For every trait (quality of work, quality etc), Pairs are made and every subordinate is compared with every other subordinate.

Ø  Forced distribution method: - Forced distribution method is similar to grading on a curve. With this method, manager place predetermined percentage or rates in to performance categories. For example you may decide to distribute employees as follows:

·         15% high performance

·         20% High average performance

·         30% average performance

·         20% low average performance

·         15% low performance

Ø  Ranking method: this is a relatively easy method of performance evaluation .under this method the ranking of an employees in a work group is done against that of another employees .the relative position of each employee is expressed in terms of his numerical rank

3.      Other methods

Ø  Group appraisal: in this method, an employee is appraised by a group of appraisers .this group consists of immediate supervisors  of the employee  other supervisors who have close contact with  the employees work managers head of the department and consultant.

Ø  Assessment centre :it is a system in where assessment of several individuals  is done by various experts using various techniques ex: role play  case studies  etc

Ø  Field review : in this method  a trained  ,skilled representatives of the hr dept goes into the field  and assists line supervisors with their rating of their respective subordinate

Ø  Human resource accounting: HRA is sophisticated way to measure the effectiveness of personnel management activities and the use of people in an organization. It is the process of accounting for people as an organizational resource

Problems and limitations with Performance Appraisal

a. Judgment Errors

     People commit mistakes while evaluating people and their performance. Biases and judgment errors of various kinds may spoil the show. Bias here refers to inaccurate diction of a measurement. These are:

Ø  Leniency or severity: A manager may be too lenient towards an employee rating or too severe (strict).

Ø   Central tendency: Average/middle range of rating may be employed for all employees

Ø  Halo error: One aspect of the individual influences the performance rating. E.g. an employee going very late & works even after working hours may be favored & promoted

Ø  Rater effect: Favoritism, stereotyping, biases, sex, age, race and friendship are the reasons.

Ø  Primacy & recency effects: early stages of career performance or recent performance are count.

Ø   Spillover effect: past performance rating influences current performance rating.

Ø  Status effect: depending on the hierarchy or the job title, performance is rated.

Ø  Perception effect: strong beliefs / prejudice e.g. regional favoritism.

Ø  Performance dimension effect: error in the measurement of performance.

b) Poor appraisal forms

The appraisal process might also be influenced by the following factors relating to the forms that are used by raters:

Ø  The rating scale may be quite vague and unclear

Ø  The rating form may ignore important aspects of job performance.

Ø  The rating form may contain additional, irrelevant performance dimensions.

Ø  The forms may be too long and complex

c) Lack of rater preparedness: The raters may not be adequately trained to carry out performance management activities.

d) Ineffective organizational policies and practices: If the sincere appraisal effort put in by a rater is not suitably rewarded, the motivation to do the job thoroughly finishes off. Sometimes, low ratings given by raters are viewed negatively by management – as a sign of failure on the part of rater or as an indication of employee discontent.  

360 degree feedback

360 Degree Feedback is a system or process in which employees receive confidential, anonymous feedback from the people who work around them. This typically includes the employee's manager, peers, and direct reports.

Multiple raters are involved in evaluating performance in this type of appraisal. The 360 degree technique is a systematic collection of performance data on use individual or group, derived from a number of stakeholders – the stakeholders being the immediate supervisors, team members, customers, peers and self. In fact, anyone who has useful information on how an employee does the job may be one of the appraisers.

Companies typically use a 360 feedback system in one of two ways:

1.360 Feedback as a Development Tool to help employees recognize strengths and weaknesses and become more effective.

2. 360 Feedback as a Performance Appraisal Tool to measure employee performance

The advantages of 360 degree techniques

1.      Evaluate methods applied to achieve targets

2.      Reveals strengths and weakness in management style

3.      Forces inflexible managers to initiate self change

4.      Creates an atmosphere of teamwork and improvements

5.      unearth truths about organizational culture and ambience

The disadvantages of 360 degree

1.      Ignores performance in terms of reaching goals.

2.      Colleague’s responses tend to be biased.

3.      Assesses reject the truth of negative feedback.

4.      The system can be used to humiliate people.

5.      Linking findings to rewards can prove to be unfair.

BARS (Behaviorally Anchored Rating Scales) Method

BARS refer to Behaviorally Anchored Rating Scales. It was developed by Smith and Kendall to provide a better method of rating employees. It differs from "standard" rating scales in one central respect, in that it focuses on behaviors that are determined to be important for completing a job task or doing the job properly, rather than looking at more general employee characteristics (e.g. personality, vague work habits).So, rather than having a rating item that says: Answers phone promptly and courteously, a BARS approach may break down that task into behaviors: For example:

 Answers phone within five rings.

 Greets caller with "Hello, This is the Dinkle Company, how may I help you?"

Notice how the BARS items are describe the important BEHAVIORS. Once those behaviors are identified for a particularly job, or employee, the items can be used to base a numerical or performance label on, let's say a five point, or seven point scale.

Challenges of performance management

Ø  Create a culture of excellence that motivates employees at all levels

Ø  Match organizational objectives with individual s aspirations

Ø  Equip people with requisite skills to discharge inefficiency

Ø  Clear growth paths for talented employees

Ø  Provide new challenges to refresh flattening corners

Ø  Empower employees to take decisions without fear of failing 

Ø  Encourage teamwork and team spirit and open communication

Characteristics of an ideal Performance Appraisal system or an Effective Appraisal System

1. Strategic congruence: an ideal PA should be congruent with the unit and organization’s strategy. Individual goals must be aligned with unit and organizational goals.

2. Thoroughness: system should be thorough regarding 4 dimensions. First all employees should be evaluated (including managers). Second, all major job responsibilities (including behaviors, results). Third, evaluation should include performance spanning the entire review period (not just few months or weeks). Finally, feedback should be given on positive performance aspects as well as those that are in need of improvement.

3. Practicality: It should be easy-to-use system for taking decisions and benefits should overweigh costs.

4. Meaningfulness: the standards and evaluations must be relevant and important, assessment must be for those functions which are under employees control, evaluation should be regular, and result should be useful for administrative decisions

5. Specificity: it should be specific and provide detailed and concrete guidance to employees about what is expected from them and how they have to meet these expectations.

6. Identification of effective and ineffective performance: system should distinguish between effective and ineffective behaviors and results

7. Reliability: A good system should be free of error.

8. Validity: The system should include relevant (include all performance facets) ,not deficient( do not leave any important aspects out), and are not contaminated( do not include factors outside of the control of the employee)

9. Acceptability and fairness: A good system is acceptable and is perceived as fair by all participants. Perceptions of fairness are subjective, ex: perceptions are individualistic (United States) and collectivistic (Korea) cultures.

10. Inclusiveness: Good systems include input from multiple sources and concerns of all the people who will be affected by the outcome.

11. Openness: Good systems have no secrets, feedback should be given frequently, and it is two way communication process where information is exchanged and hence it should be clear, open and honest.

12. Correctability: It is difficult to have a system to be completely objective, but it should have a mechanism to correct the errors.

13. Standardization: Performance is evaluated consistently across people & time, to achieve this, ongoing training of individuals of appraisers is a must and hence appraisal is standardized. 14. Ethicality: Managers suppresses his personal interest in providing evaluations, and evaluates for performance dimensions with sufficient information, and the privacy of employee is respected.

Potential Appraisal

In most Indian organizations, people earn promotions on the basis of their past performance. The past performance is considered a good indicator of future job success.

Potential appraisals are required to:

Ø  inform employees about their future prospects;

Ø  help the organization chalk out of a suitable succession plan;

Ø  update training efforts from time to time;

Ø  Advise employees about what they must do to improve their career prospects.

Steps to be followed while Introducing a Good Potential Appraisal System

Ø  Role Descriptions: Organizational and functions must be defined clearly. To this end, job descriptions must be prepared for each job.

Ø  Qualities needed to perform the roles: based on job descriptions, the roles to be played by people must be prepared.

Ø  Rating mechanisms:

Besides listing the functions and qualities, the potential appraisal system must list mechanisms of judging the qualities of employees such as

 i. Rating by others: the potential of a candidate could be rated by the immediate supervisor who is acquainted with the candidate’s work in the past.

ii. Tests: managerial and behavioral dimensions can be measured through a battery of psychological tests.

iii. Games: simulation games and exercise could be used to uncover the potential of a candidate.

iv. Records: performance records and rating of a candidate on his previous jobs could be examined carefully on various dimensions such as initiative, creativity, risk taking ability, etc., which might play a key role in discharging his duties in a new job.

Ø  Organizing the system:

After covering the above preliminaries, he must set up a system that will allow the introduction of the scheme smoothly giving answers to some puzzling questions:

I.  How much weightage to merit in place of seniority in promotions?

ii. How much weightage to each of the performance dimensions – technical, managerial, behavioral qualities?

iii. What are the mechanisms of assessing the individual on different indicators of his potential and with what reliability?

Ø   Feedback:

The system must provide an opportunity for every employee to know the results of his assessment. “He should be helped to understand the qualities actually required for performing the role for which he thinks he has the potential, the mechanisms used by the organizations to appraise his potential and the results of such an appraisal”.

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Module-4

Human Resource Development

Human Resource Development (HRD)

HRD is a positive concept in human resource management .it is based on the belief that an investment in human beings is necessary and will invariably bring in substantial benefits to the organization in the long run.

It aims at overall development of human resources in order to contribute to the well being of the employees, organization and the society at large.

 ACCORDING TO PROF T .V ROA HRD is a process by which employees of an organization are helped in a continuous and planned way to

1) Acquire or sharpen capabilities required to perform various associated with their present or expected future roles.

2) Develop their general capabilities as individuals and discover and exploit their own inner potential for their own or organizational developmental purposes.

3) Develop an organizational culture in which superior –subordinate relationship, team work collaboration among sub units are strong and contribute to the professional well being, motivation and pride of employees

Features Of HRD

Ø  HRD is a system: it is a system having several interdependent parts or subsystems such as procurement, appraisal, development, etc. change in any one subsystem leads to changes in other parts.

Ø  HRD is a planned process: it is a planned and systematic way of developing people. Further, it is undertaken on a continuous basis. Learning, as we all know, is a lifelong process and goes on and on.

Ø  HRD involves development of competencies: it tries to develop competencies at four levels. At individual levels, employees are made to realize the importance of playing their roles. At the interpersonal level, more tress is laid on developing relationships. At group level, task forces, cross-functional teams are created to cement inter relations. At the organizational level, the organization is made to nurture a development climate.

Ø  HRD is an inter-disciplinary concept: HRD is an amalgamation of various ides, concepts and practices drawn from a number of soft sciences such as sociology, anthropology, psychology, economics, etc…

Ø  HRD improves quality of life: HRD enables the employee to discover and utilize his/her capabilities in service of organizational goals. The whole effort of HRD is focused on improving the quality of life of employees working at various levels in an organization.

Objectives of HRD

Ø  The capabilities of each employees as an individuals

Ø  The capabilities of each employees as an individuals in relation to his or her present roles

Ø  The capabilities of each employee in relation to his or her expected future roles.

Ø  The dyadic relationship between each employees  and his or her employer

Ø  The team spirit and functioning in every organizational unit.

Ø  Collaboration among different unit of the organization.

Ø  The organization's overall health and self renewing   capabilities which in turn increasing the enabling capabilities of individuals, dyads, teams, and the entire organization.

Benefits of HRD

Ø  HRD improves the capabilities of people .they become innovative and enterprising ever eager to take  risk and get  ahead

Ø  HRD improves team work

Ø  HRD leads to greater organizational effectiveness.

Ø  Performance related rewards help employees realize the importance of utilizing their skills fully in the service of organizational goal

Difference between HRD and personnel function

Points of distinction	personnel function	HRD HRDHHRD
orientation	Maintenance oriented	Development oriented
structure	An independent  function with independent sub function	Consists of inter-dependent parts
Philosophy	Reactive function responding events as and when they take place	Proactive function , trying to anticipate and get ready with appropriate response
Responsibility	Exclusive responsibility of personnel department	Responsibilities of al managers in the organization
motivators	Emphasis is put on monetary rewards	Emphasis is on higher order needs
outcomes	Improved performance is the result of improved satisfaction and morale	Better use of human resources leads to improved satisfaction and morale
aims	Tries to improve the efficiency  of people and administration	It tries to develop the organization as a whole and its culture

HRD Mechanisms or sub systems

1.      Performance appraisal: performance appraisals have become increasingly important tools organizations to use in managing and improving the performance of employees, in making timely and accurate staffing decisions and in improving the overall quality of the firms’ products and services.

2.      Potential appraisal:  the term ‘potential’ refers to abilities possessed by an employee but not put to use currently or the abilities to assume challenging responsibilities in future assignments.

3.      Career planning: a career is a sequence of positions held by a person in the course of a life time. Career planning is a process of integrating the employees’ needs and aspirations with organizational needs.

4.      Training and employee development: training is a learning experience designed to achieve a relatively permanent change in an individual that will improve the ability to perform on the job. Employee development, on the hand, future-oriented training process, focusing on the personal growth of the employee.

5.      Organization development: OD may be defined as a change effort that is planned, focused on an entire organization or a large sub-system, managed from the top, aimed at enhancing organizational health and effectiveness and based on planned interventions made with the help of a change agent or third party who is well-versed in the behavioral sciences.

6.      Rewards: rewards could be linked to performance as well to motivate high achieves to do well. If rewards are allocated completely on non-performance factors such as seniority, job title, etc., then employees are likely to reduce their efforts.

7.      Employee welfare and quality of work life: employee welfare means the efforts to make life worth living for workmen. It includes various services, facilities and benefits offered to employees by the employees, unions and government. QWL means having good working conditions, good wages and benefits, good leadership and interesting, challenging jobs.

8.      Human resource information system: HRIS is a method by which an organization collects, maintains and reports information on people and jobs.

Training

Ø  Training refers to the Imparting of specific skills, abilities and knowledge to an employee, Training is transfer of knowledge from a trainer to a trainee.

Ø  “Training is an attempt to improve current or future employee performance by increasing an employee’s ability to perform through learning, by changing the employee’s attitude or increasing his skills and knowledge”

Ø  Training is acquiring new skills through classroom learning

Ø   It has a short term and narrow focus of skills acquisition

Ø  Training is led by an instructor

Ex: Learning to fire a rifle, Computer training etc...

Development

Ø  Development includes learning, experiencing and practicing the knowledge, skills and attitude which improves the overall personality of an individual

Ø  It has a long-term and broader perspective of integrated development of individuals.

Ø   The developmental interventions include counseling, mentoring, feedback, spiritual activities, community service etc...

Ø  Development is exploring the potential through awareness, practice and modification

Difference between training and development

Training	Development
1.      It focuses on technical, mechanical oriented operations.	1.      Its focuses on theoretical skills and conceptual ideas
2.      It is concerned with specific job skills and behavior	2.      It is concerned with related enhancement of general knowledge and understanding non-technical organization function
3.      It is mostly for non- managers.	3.      It is for managers and executives
4.      It focuses on current jobs.	4.      It prepares for future jobs.
5.      It focuses on short-term gains.	5.      It focuses on long-term accruals.
6.      It is one-shot deal.	6.      It is a continuous on-going process
7.      It may results in enhancement of  a particular job sills	7.      It may result in personal growth and development of overall personality
8.      Evaluation for training is considered to be essential.	8.      No evaluation for development is possible.
9.       It can be classified into two types: On-the job training and off-the job training	9.       No such classification is possible.

OBJECTIVIES OF TRAINING

Ø  To train the employees in the companies culture and ethics.

Ø  To prepare the employees both newly recruited and already employed to meet the present as well as the future requirement of the job and the organization.

Ø  To train the employees in order to improve the work methods and skills so as to increase the quality and quantity of the output.

Ø  To prepare employees for high level responsibilities.

Ø  To reduce wastage and accidents.

Ø  To develop interpersonal relationship.

Ø  To improve individual and group morale with attitude cordial relationship.

Need for Training:

Ø  The need for training and development is determined by the employee’s performance deficiency.

Ø  In simple terms, Training and development need = Standard Performance- Actual Performance

BENEFITS OF TRAINING

Ø  Leads to improve the profitability.

Ø  Improves the job knowledge and skills at all levels of the organization.

Ø  Helps people identify organizational goals and understanding organization policies.

Ø  Improves relationship between boss and subordinate.

Ø  Guide lines to work and organizational development.

Methods & Techniques of training:

Training methods are broadly classified into

1.      On-the job training [in workplace]

      Orientation / induction: It is a planned introduction of employee’s to their jobs, their co-workers & the organization.

      Job instruction : A junior employee works according to instructions given to him (artificial tutor)

      Apprentice: This method provides sufficient knowledge and skills and practical knowledge. Usually of the period one year.

      Internships and assistantships: An employee is trained under a senior employee for a long period of time. This trains, provide actual work experience as well as knowledge. Ex: House surgeons, Lawyers.

      Job Rotation: This method involves training in a systematic manner from one type of job to another. The overall knowledge of the organization is well understood by a trainee. Trainee faces practical problems and learns a lot.

      Coaching: This method involves coaching by a superior and guiding a trainee provided that the superior is having the sufficient knowledge.

      Mentoring: Mentoring is a relationship in which a senior manager in an organization assumes the responsibility for grooming a junior person. A mentor is a teacher, developer of skills and intellect, host, guide, and most importantly, supporter and facilitator in the realization of the vision of the young person.

2. Off-the job training [away from the workplace].

      Vestibule (duplicate models): It utilizes equipments which closely resemble the actual ones used on the job. But training takes place, away from the work environment. The trainee is free from the tension of providing goods.

      Lecture: Lecture is a verbal presence of information by an instructor to a large audience. This method can be used for very large groups and hence the costs per trainee are less. Continuous lecturing will be boring, hence jokes and other attention gestures are used.

      Special study / case study: It is a written description of an actual situation in business which provides in the reader, the need to decide what is going on, what the situation really is or what the problems are and what can be done.

      Films (audio visual): An excellent type of training methods to provide both the audio and visual effects in understanding the subject.

      Conference or discussion: Organizing for conferences where specialized persons are making their presentations is another method of training. Discussion also enhances the knowledge between fellow trainees

      Role playing: It generally focuses on emotions (mainly human relations) issues rather than the actual ones. The essence of role playing is to create a realistic situation, as in case study, and then have the trainees assume the parts of specific personalities in the situation.

      Simulation: A simulator is any kind of equipment or technique that duplicate as nearly as possible the actual conditions encountered on the job. Simulation is an attempt to create a realistic decision making environment for the trainee.

      Laboratory: This is another method of training where a trainee conducts experiments to gain knowledge. This method is useful for science and engineering industries.

Ex: Pharmacy, Biotech Industries.

Areas of training

Ø  Knowledge: Here the trainee learns about a set of rules and regulations about the job, the staff and the products or services offered by the company. The aim is to make the new employee fully aware of what goes on inside and outside the company.  

Ø  Technical skills: the employee is taught a specific skill so that he can acquire that skill and contribute meaningfully.

Ø  Social skills: the employee is made to learn about himself and others, and to develop a right mental attitude towards the job, colleagues and the company. The principal focus is on teaching the employee how to be a team member and get ahead.

Ø  Techniques: this involves the application of knowledge and skill to various on the job situations.

Types of training/ approaches to training

Ø  Skills training: this type of training is most common in organizations. The process here is fairly simple. The need for training in basic skills such as reading, writing, speaking, listening, problem solving, and leading others is identified through assessments.

Ø  Refresher training: rapid changes in technology mat force companies to go in for this kind of training. It is conducted at regular intervals by taking the help of outside consultant who specialize in a particular descriptive.

Ø  Cross functional training: it involves training employees to perform operations in areas other than their assigned job. There are many approaches to cross functional training.

Ø  Team training: it generally covers 2 areas: content tasks and groups processes. Content tasks specify the team’s goals such as cost control and problem solving. Group processes reflects the way members function as a team.

Ø  Creativity training: companies like Titan industries, Wipro encourages their employees to thin unconventionally, break rules, tae risks, go out of the box and devise unexpected solutions. In this training, trainers often focus on three things:

1.      Breaking away

2.      Generate new ideas

3.      Delaying judgments

Ø  Diversity training: it considers all of the diverse dimensions in the workplace – race, gender, age, disabilities, lifestyles, culture, education, ideas, and backgrounds – while designing training programme. It aims to create better cross-cultural sensitivity and fruitful working relationships among a firm’s employees.

Ø  Literacy training: functional literacy programmes focus on the basic skills required to perform a job adequately and capitalize on most workers’ motivation to get help in particular area.

Ø  Orientation training: in this, new hires get a first hand view of what the company stands for, how the work is carried out and how to get along with colleagues.

Training needs assessment

Ø  Organization analysis: it involves a study of the entire organization by the following:

      Analysis of objectives: this is a study of short-term and long-term objectives and strategies followed at various levels to meet these objectives.

      Resources utilization analysis: this is done to find out comparative labor costs, whether a unit is undermanned or over-manned.

      Environmental scanning: here the economic, political, socio-cultural and technological environment of the organization is examined.

      Organizational climate analysis: this can be used to find out whether training efforts have improved the overall climate within the company or not

Ø  Task or role analysis: this is a detailed examination of a job, its components, its various operations and conditions under which it has to be performed. The focus here is on the roles played by an individual and the training needed to perform such roles.

Ø  Person analysis: the focus is on the individual in a given job. There are 3 issues to be resolved through manpower analysis. First, we try to find out whether performance is satisfactory and training is required. 2^nd, whether the employees is capable of being trained and the specific areas in which training is needed. Finally, we need to state whether poor performers on the job need to be replaced by those who can do the job.

Training Vs Education Nature

Training Vs Education Nature	Training	Education
Scope	Is narrower in scope and more specific	Is wider in scope and more general in purpose
Process	Is the act of increasing the knowledge & skills of an employee while doing a job	Is the process of increasing the general knowledge & understanding of employees
Purpose	Is Job oriented (skill learning)	Is theory oriented(Conceptual learning)
content	Is practice based and company/Machine specific	Content is generally aimed at improving the talents of a person
Place of Delivery	Vocational based training Institutes	Schools, colleges

Training Evaluation

 Training evaluation refers to the process of collecting the outcomes needed to determine if training is effective.

 Training effectiveness refers to the benefits that the company and the trainees receive from training.

 Training outcomes or criteria refer to measures that the trainer and the company use to evaluate training programs.

Reasons for Evaluating Training:

 Companies are investing millions of dollars in training programs to help gain a competitive advantage.

 Training investment is increasing because learning creates knowledge which differentiates between those companies and employees who are successful and those who are not. Because companies have made large dollar investments in training and education and view training as a strategy to be successful, they expect the outcomes or benefits related to training to be measurable.

Training evaluation involves:

 Formative evaluation – evaluation conducted to improve the training process.

 Summative evaluation – evaluation conducted to determine the extent to which trainees have changed as a result of participating in the training program.

Employee mobility

Internal Mobility

“Internal mobility” (mobility or talent mobility) is a dynamic internal process for moving talent from role to role – at the leadership, professional and operational levels. To achieve internal mobility, companies must adopt the principles of succession management at all ranks; provide transparent discussion of skills and potential, as well as organizational needs; and, focus on development across critical talent pools, based on business needs.

Types of internal mobility

—  Promotion

—  Transfer

—  Demotion

—  Career planning

1.      Promotion:

Promotion is advancement of employees to a better job – better in terms of greater responsibility, more prestige or status greater skill and especially increased rate of pay or salary.

Purposes of promotion

Ø  To utilize the employees skill ,knowledge at the appropriate level in the organizational hierarchy resulting in organizational effectiveness and employee satisfaction

Ø  To develop competitive spirit and inculcate the zeal in the employees.

Ø  To develop competent internal source of employees

Ø  To promote employees self development

Ø  To build loyalty and to boost morale

Ø  To reward committed and loyal employees

Ø  To promote interest in training , development  programmes and in team development

Bases of promotion

Ø  Merit as a basis of promotion: Merit is taken into denote an individual employees skill knowledge, ability, efficiency and aptitude as measured from educational, training and past employment record.

Ø  Seniority as basis of promotion: Seniority refers to relative length of service in the same job and in the same position .The logic behind considering the seniority as  basis of promotion is that there is positive correlation between the length of service in the same job and the amount of knowledge and the level of skill acquired by an employee in organization

Ø  Seniority cum merit: Combination of both seniority and merit can be considered as the basis for promotion satisfying the management for organizational effectiveness and the employees and trade unions  for respecting the length of service

Benefits of promotion

Ø  Better utilization of skill and knowledge

Ø  It creates and increase the interest of other employees in the company

Ø  It increases interest in acquiring higher qualification

Ø  It improves employee morale and job satisfaction

Ø  It improves organizational health

Problems with promotion

Ø  Promotion disappoints some employees

Ø  Some employees refuse promotion

Ø  Inequality in promotion decision

Types of Promotion

1. Horizontal promotion:

This type of promotion involves an increase in responsibility & pay and a change in designation, but with the same job classification. E.g. Lower division clerk is promoted to the position of upper division clerk. Here the job type of clerk remains the same.

2. Vertical promotion:

This type of promotion results in greater responsibility, prestige & pay together with a change in the nature of the job. E.g. an officer promoted as a manager. The job type is different, in this type of promotion.

3. Dry promotion: It merely increases pay & a change in designation. But the responsibilities do not change or increase. E.g. engineers to senior managers

Promotion policy

Seniority and merit, thus, suffer from certain limitations. To be fair, therefore, affirm should institute a promotion policy that gives due weightage to both seniority and merit. To strike a proper balance b/w the two, affirm could observe the following points:

       Establish a fair and equitable basis for promotion i.e., merit or seniority or both.

      A promotion policy establishes thus, should provide equal opportunities for promotion in all categories of jobs, departments and regions of an organization.

      Appropriate authority should be entrusted with the responsibility of taking a final decision on promotion.

      Detailed records of service, performance, etc… should be maintained for all employees, to avoid charges of favoritism, nepotism, etc…

      It should be consistent in the sense that it is applied uniformly to all employees, inspective of their background.

      A provision for appeal against arbitrary actions of mgt and its review should be there.

      Promotions initially may be for a trial period so as to minimize the mistakes of promotion.

2. Transfer:

A transfer involves a change in the job, place of the job of an employee without a change in responsibilities or salary. Transfer is a regular procedure in banks and other government establishments. E.g. once in 3 years, a bank employee is transferred. Transfers are frequent but promotions are not frequent

Reasons of transfer

Ø  To meet the organizational requirement

Ø  To satisfy the employees needs

Ø  To utilize employees skills

Ø  To  correct interpersonal conflict

Ø  To punish the employees who violate the disciplinary rules

Ø  To minimize fraud bribe

Types of transfers

1) Production transfers:

A shortage or surplus of the labor force is common in different departments in a plant or several plants in organization. The surplus labor is shifted to the labor shortage department. E.g.  New projects, new products, new models.

2) Replacement transfers:

In this type, a junior employee may be replaced by a senior employee to avoid laying off the senior employee.

3) Versatility transfers:

They are carried out to make employees versatile & competent in more than one skill. E.g. Bank employees are transferred from one section to another over a period of time so that they may acquire the necessary skills to attend to the various activities of the bank. Versatile operations are useful at the time of rush hours E.g. from credit card section to Loan Section.

4) Shift transfers:

Industrial establishments operate for more than one shift. Transfers between shifts are common, on a rotation basis. Transfers are also carried out according to an employee’s request. E.g. From day shift to night shift & vice versa.

5) Remedial transfers:

Remedial transfers are also called personal transfers as they are requested by the employee’s. E.g. the initial placement of an employee May be faulty or the worker may not along with his /her superior or with coworkers. The health problem/accident, stagnancy demands a transfer.

Purpose of transfer

1.      To meet the organizational requirements: organizations may have to transfer employees due to changes in technology, changes in volume of production, production schedule, product line, quality of products, changes in volume of production, product line, quality of products, changes in the job pattern caused by change in organizational structure, fluctuations in the market conditions like demands fluctuations, introduction of new lines and/or dropping of existing lines.

2.      To satisfy the employee needs: employees may need transfers in order to satisfy their desire to work under a friendly superior, in a department/region where opportunities for advancement are bright.

3.      To utilize employees better: an employee may be transferred because mgt feels that his skills, experience and job knowledge could be put to better use elsewhere.

4.      To make the employee more versatile: employees may be rolled over different jobs to expand their capabilities. Job rotation may prepare the employee for more challenging assignments in future.

5.      To adjust the workplace: workforce may be transferred from a plant where there is less work to a plant where more is work.

6.      To provide relief: transfers may be made to give relief to employees who are overburdened or doing hazardous work for long periods.

7.      To reduce conflicts: where employees find it difficult to get along with colleagues in a particular section, department or location- they could be shifted to another place to reduce conflicts.

8.      To punish employees: transfers may be affected as disciplinary measures-t o shift employees indulging in undesirable activities to remote, far flung areas.

Benefits of transfer

Ø  Transfer reduce boredom

Ø  It increase job satisfaction

Ø  It correct interpersonal conflict

Ø  It improves  employees morale

Problems of transfer

Ø  Adjustment problems to the employees to the new job , place , environment , superiors

Ø  Transfer from one place to other cause much inconvenience and cost of the employees.

Ø  Company initiated transfer result in reduction in employee contribution

Ø  Discriminatory transfer affects employee morale, job satisfaction commitment. 

3. Demotion

Demotion is the reassignment of a lower level job to an employee with delegation of responsibilities and authority required to perform that lower level job and normally with lower level pay.

Reasons of demotion:

1.      Unsuitability of the employee to higher level jobs.

2.      Adverse business condition

3.      Disciplinary grounds

4.      New technology and new methods

4. Career planning

Career planning is the process by which one selects carrier goals and the path to these goals

The major focus of career planning is on assisting the employees achieve a better match between personal goals and the opportunities' that are realistically available in the organization

Need for career planning

Ø  Every employee has a desire to grow and scale  new heights in his workplace continuously .if there are enough opportunities ,he can pursue his carrier goals and exploit his potential fully

Ø  He feels highly motivated when the organization shows him a clear path as to how he can meet his personnel ambition while trying to realize corporate goals.

Ø  Absence of career plan is going to make a big difference to both the employees and the organization. It leads to higher turnover rate in the organization.

Objectives of career planning

Ø  Attract and retain talent by offering careers not jobs

Ø  Use human resource effectively and achieve greater productivity

Ø  Reduce employee turnover

Ø  Improve employee morale and motivation

Ø  Meet the immediate and future human resource of the organization on timely basis .

External mobility

External mobility means shifting of employees in to and out of an organization. it is defined as the rate of changes in the employees of an organization during definite period. It measures the extent to which old employees leave and new employees join. 

Types of external mobility

Ø  Accessions: it is an addition of new candidate to the existing employees .it include employment of new candidates, reemployment of former employees called back to work after lay off etc.

Ø  Separation :separations  mean termination of employment .they are also called employee turnover

Absenteeism

According to labor bureau Simla defined the term absenteeism as the failure of a worker to report for work when he is scheduled to work

According to Webster dictionary “absenteeism is the practice or habit of being an absence and an absentee is one who habitually stays away.”

Types of absenteeism

Ø  Authorized absenteeism: if an employee absents himself from work by taking permission from its superior and applying for leave.

Ø  Unauthorized absenteeism: if an employee’s absents  himself from work without  informing or taking  permission  and without  applying for leave

Ø  Willful absenteeism: if an employee  absents  himself from duty willfully is called  WA

Ø  Absenteeism caused by circumstances beyond  ones control: IF AN EMPLOYEE ABSENTS HIMSELF FROM DUTY due TO THE CIRCUMSTANCES  beyond his control like involvement in accidents or sudden sickness

Features of absenteeism

Ø  The rate of absenteeism is the lowest on pay day; it increases considerably on the days following the payment of wages and bonus.

Ø  Absenteeism is generally high among the workers below 25 years of age and those above 40 years age

Ø  The rate of absenteeism varies from department to department with an organization generally it is high in the production department.

Causes of absenteeism

The following are the general causes of absenteeism:

(1) Maladjustment with the working conditions: If the working conditions of the company are poor, the workers cannot adjust themselves with the company’s working conditions. Then they prefer to stay away from the company.

(2) Social and Religious Ceremonies: Social and religious functions divert the worker’s attention from the work.

(3) Unsatisfactory Housing Conditions at the work place.

(4) Industrial Fatigue: The industrial fatigue compels the workers to remain outside the work place.

(5) Unhealthy Working Conditions: The poor and intolerable working conditions in the factories irritate the workers. Excess heat, noise, either too much or too low lighting, poor ventilation, dust, smoke etc. cause poor health of the workers. These factors cause the workers to be absent.

(6) Poor Welfare Facilities: Though a number of legislations concerning welfare facilities are enacted, many organizations fail to provide welfare facilities. This is either due to the poor financial position of the companies or due to the exploitative attitude of the employee.

(7) Alcoholism: Workers mostly prefer to spend money on the consumption of the liquor and enjoyment after getting the wages. Therefore the rate of absenteeism is more during the first week of every month.

(8) Indebtness: The low level wages and unplanned expenditure of the workers force them to borrow heavily. The research studies indicate that the workers borrow more than 10 times of their net pay. Consequently, workers fail to repay the money. Then they try to escape from the place to avoid the money lenders. These leads to absenteeism.

(9) Maladjustment with the Job Demands: The fast changing technology demands higher level skills from the workers. Some workers fail to meet these demands due to their lower level education and / or absence of training.

(10) Inadequate Leave Facilities: The inadequate leave facilities provided by the employer forces him to depend on E.S.I. leave which allows the workers to be away from the work for 56 days in a year on half pay.

(11) Unsound Personnel Policies: The improper and unrealistic personnel policies result in employee dissatisfaction. The dissatisfied employee’s in turn prefers to be away from work.

(12) Low Level of Wages: Wages in some organizations are very poor and they are quite inadequate to meet the basic needs of the employees. Therefore, employees go for other employment during their busy seasons and earn more money. Further, some employees take up part- time jobs. Thus, the employees resort to moon lighting and absent themselves from work.

Minimizing the absenteeism

Ø  Selecting the employee by testing them thoroughly regarding their aspiration, value  systems responsibility and sensitiveness

Ø  Adopting a humanistic approach in dealing with the personal problems of employees

Ø  Following a proactive approach  in identifying and redressing  employee grievance

Ø  Providing hygienic working condition

Ø  Providing welfare ,measures and fringe benefits

Ø  Providing high wages and allowances based on the organizational financial positions.

Ø  Improving the communication network, particularly the upward communication.

Ø  Providing the leave facility based on the needs   of the employees and organizational requirement.

Ø  Providing safety and health measures

Ø  Providing cordial human relations and industrial relations.

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Module-5

Compensation and benefits administration

Compensation:

Compensation is what employees receive in exchange for their contribution to the organization.

Compensation is a comprehensive payment including pay, incentives and benefits offered by employers for hiring the services of employees.

Nature of compensation

Ø  Base pay : it is the basic compensation an employee gets usually as a wage or salary

Ø  Variable pay: it is the compensation that is linked directly to performance accomplishment { bonus ,incentives , etc)

Ø  Benefits: these are indirect rewards given to an employees or group of employees as a part of organizational membership {health insurance, vacation, pay, retirement pension etc.

Objectives of compensation planning

The most important objective of any pay system is fairness or equity. The term equity has three dimensions:

Ø  Internal Equity: This ensures that more difficult jobs are paid more

Ø  External Equity: This ensures that jobs are fairly compensated in comparison to similar jobs in the labor market.

Ø  Individual Equity: It ensures equal pay for equal work: each individual pay’s fair in comparison to others doing the same/similar jobs.

Ø  New & Desired Behavior: loyalty, commitment, initiative

Ø  Control costs: effective compensation management ensures that employees are neither overpaid nor underpaid

Ø  Comply with legal rules: Compensation should satisfy with government rules, bonus, allowances, benefits etc.

Ø  Ease of operation: Compensation management should be transparent and easy to understand

Employee compensation is designed to have 3 objectives

1. To attract capable employees to the organization

2. To motivate than towards superior performance

3. To retain their services over an extended period of time.

Components of compensation

Compensation consists of mainly 2 types’ monetary benefits & non-monetary benefits

1. Monetary benefits:

a. Wages & salary: Wages represent hourly rates of pay & salary refers to the monthly rate of pay. Wages & salaries are subject to annual increments. They differ from employee to employee and depend upon the nature of job, seniority & merit.

b. Increments: Also called as ‘payments by results’. Incentives are paid in addition to wages & salaries. Incentives depend upon productivity, sales, profit or cost reduction efforts.

There are 2 types of incentives

 Individual incentive is given to specific employee based on his performance.

 Group incentive is given to a group to a based on the team effort in achieving the goals. The amount is divided equally to its members.

C. Fringe benefits Includes employee benefits such as provident fund, medical care, hospitalization, accident relief, health & group insurance, canteen, uniform, recreation and etc…

d. Perks: These are given to executives & include company car, club membership, paid holidays, furnished house, stock & shares. Perks are essential to retain competent executives.

2. Non-monetary benefits:

Challenging job opportunities, recognition of merit, growth prospects, competent supervision, comfortable working conditions, job sharing & flextime.

Salary slip

Basic + HRA + medical + education = gross salary

Loans + PF + tax -                              deductions

                                                           Net salary

Wages and salary administration

Employee compensation may be classified into two types –base compensation and supplementary compensation

Ø  Base compensation refers to monetary payments to employees in the form of wages and salary

      The term wage implies remuneration to workers doing manual work.

      The term salaries is usually defined to mean compensation  to office managerial  , technical and professional staff

Ø  Supplementary compensation includes incentive payments based on an actual performance of an employees or a group of employees. The term compensation administration involves or wage and salary administration denotes the process of managing a company’s compensation programmes The goals of compensation administration are to design a cost effective pay structure that will attract  motivate and retain competent employees.

 Objectives of wage and salary administration

Ø  To establish a fair and equitable remuneration offering similar pay for similar work

Ø  To attract qualified and competent personnel

Ø  To retain the present employees by keeping the wage levels in tune with competing units

Ø  To control labor and administrative cost in line with the ability of the organisation to pay .

Ø  To improve motivation and morale of employees and to improve union management relationship

Ø  To project a good image of the company and to comply with legal needs relating to wages and salary

Principles of wage and salary administration

Ø  Wage and salary should be sufficiently flexible

Ø  Job evaluation must be done scientifically

Ø  Wage and salary administration plans must always be consistent with overall organizational plans and programmes.

Ø  Wage and salary administration plans and programmes should be responsive to the changing  local and national conditions

Factors influencing compensation or wages/salary levels

Ø  External Factors

      Labor Market: Demand & supply of Labor influence wage and salary fixation. A low wage may be fixed when the supply of Labor exceeds the demand for it. A higher wage will have to be paid when the demand exceeds supply e.g. skilled Labor.

      Cost of living: This is very important as the prices are raising every day, a rise in the cost of living is sought to be compensated by payment of DA (dearness allowance). DA increase depends on the movement of consumer price index (CPI)

      Labor unions: Presence or absences of labor organization often determine the quantum of wages paid to employees. Management in non-unionized factories enjoys freedom to fix wages & salaries as they please. Because of large scale unemployment, these employees hire workers at little or even less than the minimum wages.

      Labor Laws: There are numerous laws to protect an employee’s salary packages. They are as listed below.

Payment of wages act 1936 – to avoid irregularities.

Payment of minimum wages 1948 – to pay minimum wages

Payment of bonus act 1965 – specified rate / profit sharing

Equal remuneration act 1976 –for male & female workers

Payment of gratuity act 1972 – Superannuation (Retirement Benefit)

      Society: (Price of the organizational goods and services prices) decides the remuneration of employees. For this reason, consuming society is important in remuneration decisions. Hence financial position of the employer & the state of the national economy has a role in the wage fixation.

      Economy: The state of economy decides the salary & wage fixation. A depressed economy, recession will probably increase the Lab our supply. This in turn lowers the salary rate.

Ø  Internal Factors

      Business Strategy: The strategy of the company, if is to achieve rapid growth, remuneration should be higher than what competitors pay. Otherwise it is vice versa.

      Job evaluation & performance appraisal: Job evaluation establishes wage differentials

      The employee: Performance, seniority, experience, potential, education & sometimes luck. Management increases pay based on performance whereas union demands pay increase based on seniority. Young managers are paid heavily because of their potentials.

Job evaluation

“Job evaluation is the process of analyzing and assessing the various jobs systematically to ascertain their relative worth in an organization”.

Jobs are evaluated on the basis of their content & are placed in the order of their importance, in this way; a job hierarchy is established in the organization.

The purpose of job evaluation is to fix the salary among various jobs. Here jobs are ranked & then wages are fixed and not the job holders. For job holders, separate evaluation performance evaluation is carried out.

Salary structure

The hierarchy of salary grades and salary ranges established for an organization.

Salary Fixation

Ø  Define unlimited number of salary components according to the types such as loan, advance, allowance and deductions etc.

Ø  Define unlimited number of deductions; deductions can be triggered by date, fixed amounts or percentage.

Ø  Salary components can be calculated in amount, number of days worked or on a percentage basis

Ø  Maintain complete history of all salary components provided to the employee from date of join

Ø  Promotion of employee includes change in department, position, salary components, facilities, leave privileges and other requisites

Ø  Compensation management to do what-if scenario for changing salaries and allowances by percentage or fixed amount.

Incentives

Ø  Incentive plan envisage a basic rate usually on time basis applicable to all workers  and incentive rates payable to the more efficient  among them as extra compensations for their  estimable performance in terms of time costs and  quality .

Ø   It is an expectation that encourages people to behave in a certain way.

Incentives aim to provide value for money and contribute to organizational success

Types of incentives

Ø  Remunerative incentives (or financial incentives) are said to exist where an agent can expect some form of material reward — especially money — in exchange for acting in a particular way.

Ø  Moral incentive are said to exist where a particular choice is widely regarded as the right thing to do, or as particularly admirable, or where the failure to act in a certain way is condemned as offensive.

Ø  Coercive incentives are said to exist where a person can expect that the failure to act in a particular way will result in physical force being used against them (or their loved ones) by others in the community — for example, by inflicting pain in punishment, or by imprisonment, or by confiscating or destroying their possessions

Profit sharing

Profit sharing is a scheme whereby employers undertake to pay particular portion of net profits to their employees on compliance with certain service condition and qualification  

Features of profit sharing

Ø  The agreement is voluntary and based on joint consultation made freely between the employers and employees.

Ø  The payments may be in the form of cash, stock of future credits of some amount over and above the normal remuneration that would otherwise be paid to employees in a given situation.

Ø  The employees should have some  minimum  qualification  such as term  or satisfy  some other condition of service which may be  determined  by the management  

Ø  The agreement on profit sharing having been mutually accepted is binding and there is no room on the part of the employer to exercise carefulness in a matter which is vital to the employment.

Ø  The amount to be distributed among the participants is computed on the basis of some agreed formula, which is to be applied. In all circumstances.

Ø  The amount to be distributed depends on the profits earned by an enterprise

Ø  The proportion of the profits to be distributed  among the employees is determined  in advance

Bonus

The extra payment to the workers beyond the normal wage

The important recommendation of the bonus:

Ø  Bonus is a right of the worker as the worker has the share in the prosperity of the company.

Ø  Bonus should be paid unit wise, with a view to creating a sense of belongingness among the workers.

Ø   bonus should be paid from the available surplus

Ø  Allocation of the surplus for the bonus should be 60% of the available surplus.

Ø  The bonus should be paid to employees whose salary is up to 1,600.

Ø  Employees working in the factories under the factory act 1948  expect the employees of general insurance companies  ,universities .colleges , hospitals  dept of govt and public  undertaking the eligible to receive bonus

Employee Stock Ownership Plans (ESOPs)

Ø  Definition: A trust set up by a company to allot some of its stock to its employees over time. Used as an employee incentive, the plan often provides tax benefits to the company.

Ø  Employee Stock Ownership Plans (ESOPs) are similar to profit-sharing plans and allow owners of privately held companies to share ownership with their employees. They are good ways to motivate employees and increase the distribution of company shares and create markets for them.

Ø  Technically, ESOPs are defined-contribution employee benefit plans that invest primarily in the stock of the employer company. As such, most ESOPs distribute the company's stock to employees as a benefit, rather than selling employees the shares.

Ø  ESOPs are commonly used to give retiring owners a way to cash out all or part of their holdings without selling the entire company. But creating a market for shares of the company can also be used to raise funds for expansion. ESOPs are easy to set up and are used by thousands of employers.

Pay for performance

Ø  Pay for performance (human resources), a system of employee payment that links compensation to measures of work quality or goals

Ø  Pay for performance advertising, a new business model used in online advertising whereby an ad agency charges a marketer for the results achieved by the ad campaign .

Ø   Pay for performance (healthcare), an emerging movement in health insurance, in which providers are rewarded for quality of healthcare services

Benefit administration

Ø  Benefits administration involves the creation and management of employee benefits, as well as providing a means for employees to be trained in understanding how the benefits work, and what types of standards employees must meet in order to qualify for the benefits.

Ø  Often, benefits administration occurs within the Human Resources department of a larger company, although smaller companies may designate the function of benefits administration to other areas or individuals. Here is some background on what an effective administrator does on a daily basis

Employee welfare

Ø  Employee welfare defines as “efforts to make life worth living for workmen”.  These efforts have their origin either in some statute formed by the state or in some local custom or in collective agreement or in the employer’s own initiative.

Ø  To win over employee’s loyalty and increase their morale.

Ø  To combat trade unionism and socialist ideas.

Ø  To build up stable labor force, to reduce labor turnover and absenteeism.

Ø  To develop efficiency and productivity among workers.

Ø  To save oneself from heavy taxes on surplus profits.

Ø  To earn goodwill and enhance public image.

Ø  To reduce the threat of further government intervention.

Ø  To make recruitment more effective (because these benefits add to job appeal).

Principles of Employee Welfare Service

Following are generally given as the principles to be followed in setting up a employee welfare service:

Ø  The service should satisfy real needs of the workers.  This means that the manager must first determine what the employee’s real needs are with the active participation of workers.

Ø  The cost of the service should be calculated and its financing established on a sound basis.

Ø  There should be periodical assessment or evaluation of the service and necessary timely on the basis of feedback

Types of Employee Welfare Services

1. Safety Services:

Components of a Safety Service

Ø  Appointment of safety officer: In big organizations, the appointment of a safety officer to head the safety department is a must.  In small organizations, the personnel manager may look after the functions of this department.

Ø  Support by line management: The head of the safety department, whether enjoying a staff or a functional position, by him, cannot make a plan safe. His appointment line management into assuming that all its safety problems have been solved.

Ø  Elimination of hazard :Although complete elimination of all hazards is virtually an impossibility but following steps can be taken to help reduce them

1. Job safety analysis: All job procedures and practices should be analyzed by an expert to discover hazards.  he should then suggest changes in their motion patterns, sequence and the like.

2. Placement: A poorly placed employee is more apt to incur injury than a properly placed employee.  Employees should be placed on jobs only after carefully estimating and considering the job requirements with those which the individual apparently possesses.

3. Personal protective equipment: Endless variety of personal safety equipment is available nowadays which can be used to prevent injury

4. Safeguarding machinery: Guards must be securely fixed to all power driven machinery.

5. Materials handling: Though often ignored, the careless handling of heavy and inflammable materials is an important source of several injuries and fire.

6. Hand tools: Minor injuries often result from improperly using a good tool or using a poorly designed tool.  Therefore, close supervision and instruction should be given to the employees on the proper tool to use a proper use of the tool.

7.Safety training, education and publicity :Safety training is concerned with developing safety skills, where as safety education is concerned with increasing contest programmes, safety campaigns, suggestion awards, and various audiovisual aids can be considered as different forms of employee education.

8. Safety inspection: An inspection by a trained individual or a committee to detect evidence of possible safety hazards (such as poor lighting, slippery floors, unguarded machines, faulty electrical installations, poor work methods and disregard of safety rules) is a very effective device to promote safety.

1.      Health Services:

The prevention of accident constitutes only on segment of the function of employee maintenance.  Another equally important segment is the employee’s general health, both physical and mental.

 There are two aspects of industrial health services

Ø  Preventive

Ø  Curative, the former consists of

Ø  pre-employment and periodic medical examination,

Ø  removal or reduction of health hazards to the maximum extent possible,

Examination over certain classes of workers such as women, young persons and persons exposed to special risks.

2.      Counseling Services:

An employee very often comes across problems which have emotional content.  For example, he may be nearing retirement and feeling insecure or he may be getting promotion and feeling hesitant to shoulder increased responsibility or he may be worried due to some family problem.

Ø   Employee Welfare Officer:  Section 49 of the factories act provides that in every factory wherein 500 or more workers are ordinarily employed the employer shall appoint at least one welfare officer.

Health of Employees

Ø  Cleanliness:  Every factory shall be kept clean by daily sweeping or washing the floors and work rooms and by using disinfectant where necessary.

Ø  Disposal of wastes and effluents:  Effective arrangements shall be made for the disposal of wastes and for making them harmless.

Ø  Ventilation and temperature:  Effective arrangements shall be made for ventilation and temperature so as to provide comfort to the workers and prevent injury to their health.

Ø  Dust and fume:  Effective measures shall be taken to prevent the inhalation and accumulation of dust and fumes or other impurities at the work place.

Ø  Overcrowding: There shall be in every work room of a factory in existence on the date of commencement of this act at least 9.9cubic meters and of a factory built after the commencement of this act at least 4.2 cubic meters of space for every employee.

Ø  Lighting: The State Government may prescribe standards of sufficient and suitable lighting.

Ø  Drinking Water: There shall be effective arrangement for wholesome drinking water for workers at convenient points.

Ø  Spittoons:  There shall be sufficient number of spittoons placed at convenient places in the factory

Social Security

The connotation of the term “Social Security” varies from country to country with different political ideologies.            

There are some components of Social Security:

Ø  Medical care

Ø  Sickness benefit

Ø  Old-age benefit

Ø  Family benefit

Ø  Maternity benefit 

Fringe benefits

It refers to the extra benefits provided to employees in addition to the normal compensation paid in the form of wage or salary

Meanings

Ø  Nominal wage : it is the wage paid or received in monetary terms

Ø   Real wage: real wage is the amount of wage arrived after discounting nominal wage by the living cost.

Ø  Take home salary: it is the amount of salary left to the employees after making authorized deduction like contribution to the provident fund, life insurance premium, income tax and other charges.

Ø  Minimum wage: it is the amount of remuneration which could meet the normal needs of the average employee regarded as a human being living in a civilized society.

Ø  Statutory minimum wage: it is the amount of remuneration fixed according to the provision of the minimum wages act 1948.

Ø  The living wage :  according to the committee on fair wage the living wage is the highest amount of remuneration and naturally it would include the amenities which a citizen living in a modern civilized society is entitled to expect , when the economy of the country is sufficiently advanced  and the employer is able to meet the expanding aspirations of his workers

Ø  The fair wage : fair wage are equal to that received by workers performing  work  of equal skill ,difficulty and unpleasantness

Ø  Incentive wage :this is the amount of remuneration paid to a worker  over and above  the normal wage  as an incentive  for employees contribution  to the increased production  or saving in time  or material.

Ø  Standard wage rate: it is the amount of  wage fixed for a unit of time fixed  on the basis of job evaluation standard

Wage salary survey

Minimum Wages in India

Ø  In India, 422.6 (94%) million workers out of the total workforce of 457.5 million belong to the unorganized/informal sector. These workers contribute to more than 60 per cent to India’s GDP growth.

Ø  Among other sectors, these workers work as farm laborers, landless laborers, factory workers and construction workers.

Ø  The Minimum Wage Act, 1948 provides for fixation and enforcement of minimum wages in respect of schedule employments to prevent sweating or exploitation of labor through payment of low wages.

Ø  The objective of the Act is to ensure a minimum subsistence wage for workers. The Act requires the appropriate government to fix minimum rates of wages in respect of employment specified in the schedule and review and revise the minimum rates of wages at intervals not exceeding five years. 

Ø  With effect from November 2009 the National Floor Level Minimum Wage has been increased to Rs 100 from Rs 80 (in September 2007). The National Minimum Floor Level Wage was Rs 66 in 2004, Rs. 45 in 1999, Rs. 40 in 1998 and Rs. 35 in 1996

What are Salary Surveys

Ø  Salary Surveys are tools used to determine the median or average compensation paid to employees in one or more jobs.

Ø  Compensation data, collected from several employers, is analyzed to develop an understanding of the amount of compensation paid.

Ø   Surveys may focus on one or more job titles, geographic regions, employer size, and or industries.

Ø  Salary surveys may be conducted by employer associations, survey vendors, or by individual employers.

Ø  Survey data is often time sensitive and may become out-of-date quickly. Because of the time sensitive information, surveys are often identified by the year or quarter in which the data was collected.

Ø  The purpose of salary surveys provide a means for comparison of salaries at the company

Types of data gathered in a salary survey

Salary Surveys are analyses of compensation data.

Ø  This data may include quantifiable aspects of compensation such as:

      Base salaries

      Increase percentages or amounts

      Merit Increases

      Salary Ranges

      Starting Salary

      Incentives/Bonuses

      Allowances and Benefits

      Working Hours

Ø  Salary Surveys may also include non-quantifiable aspects of compensation such as:

      Educational Requirements

      Geographic Location

      Source of Hire (Internal/External)

      Working Conditions 

Notes by

-Chandana

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