Chapter 1

INTRODUCTION TO HUMAN RESOURCE

MANAGEMENT
Objectives:
After studying this chapter, you would be able to:
1) Know the basic concepts of human resource management
(HRM)
2) Be acquainted with the major human resource
management functions.
3) Understand personnel issues under different schools of
thoughts
4) Analyze the context (the environment) within which
human resource management functions.

INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

What is human resource management?

Before giving an answer to this question, it would be better to define
"management" it self. The reason to this is that human resource
management belongs to the broader field of study and practice known
as management.

Management can be defined as the process of reaching

organizational goals by working with and through people and other
resources. Management in all areas of life implies achieving goals with
effective and efficient use of organizational resources.

Organizational resources can be grouped into four major categories:

• Human resources
• Financial resources
• Physical resources
• Information resources

Human resources are among the fundamental resources available to

any organization. Emphasizing the importance of human resources,

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some prominent writers define management as the process of getting
things done with and through other people.

Human resource management (HRM) is thus a part of the field of

management. HRM, can be defined as the utilization of human
resources to achieve organizational objectives. It can broadly be seen
as that function of all organizations which provides for effective
utilization of human resources to achieve both the objectives of the
organization on one hand and the satisfaction and development of
employees on the other hand (Glueck, 1992).
In defining and studying human resources management some points
need to be emphasized:

• Human resources management is concerned with the people

dimension of the organizational management.

• Human resource management is a pervasive activity, meaning

a universal activity in any type of organization : government,
business, education, health, defense, recreation, etc.

• The human resource is said to be the most important ( or

critical) element in an organization since people make the
decisions concerning all other organizational resources.
Therefore, getting and keeping good people is critical to the
success of every organization, whether profit or non-profit,
public or private.
In an organization, managers at all levels must concern themselves
with human resource management at least to some extent. Basically,
it has been said, managers get things done through the efforts of
others, which basically requires effective human resource
management (Monday & Noe, 1990).

A human resource manager is an individual who normally acts in an

advisory, or "staff", capacity, working with other managers to help
them deal with human resource matters. The human resource
manager is primarily responsible for coordinating the management of
human resources to help the organization achieve its goals.

Some writers in the field and other management people may use such
names as "personnel", "personnel management", "manpower
management", and "employee relations" to say the same thing: human
resource management.

Major Human Resource Management Functions

Human resource management functions are the set of activities

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performed in utilizing human resources for better achievement of
organizational objectives. Following are the major elements (Mondy &
Noe, 1990):
1. Human Resource Planning
Human resource planning (HRP) is the process of systematically
reviewing human resource requirements to ensure that the
required numbers of employees, with the required skills, are
available when they are needed. HRP is the process of matching
the internal and external supply of people with job openings
anticipated in the organization over a specified period of time.

2. Recruitment
Recruitment is the process of attracting individuals in sufficient
numbers and encouraging them to apply for jobs with the
organization. It is the process of identifying and attracting a pool
of candidates, from which some will later be selected to receive
employment offers.

3. Selection
Selection is the process of choosing from a group of applicants
the individuals best suited for a particular position. Whereas
recruitment encourages individuals to seek employment with a
firm, the purpose of the selection process is to identify and
employ the best qualified individuals for specific positions.

4. Orientation
Orientation is the formal process of familiarizing new employees
with the organization, their job, and their work unit. Through
orientation (also called socialization or induction) new employees
will acquire the knowledge, skills, and attitudes that make them
successful members of the organization.

5. Training and Development

Training and development aim to increase employee's ability to
contribute to organizational effectiveness. Training is a process
designed to maintain or improve performance (and skills) in the
present job. Development is a programme designed to develop
skills necessary for future work activities. It is designed to
prepare employees for promotion.

6. Compensation Administration
Compensation administration refers to the administration of
every type of reward that individuals receive in return for their
services. In its boarder sense, compensation represents all sorts
of rewards that individuals receive as a result of their
employment.

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 7. Performance Evaluation
Performance evaluation is a formal system of periodic review and
evaluation of an individual's job performance.

8. Safety and Health

Safety involves protecting employees from injuries caused by
work-related accidents. Health refers to the employees
freedom from illness and their general physical and mental
well-being. These aspects of the job are important because
employees who work in a safe environment and enjoy good
health are more likely to be productive and yield long-term
benefits to the organization.

9. Promotions, transfers, demotions and separations

Promotions, transfers, demotions, and separations reflect an
employee's value to the organization. High performers may be
promoted or transferred to help them develop their skills, while
low performers may be demoted, transferred to less important
positions, or even separated.

10. Human Resource Research

Human resource research is a systematic gathering, recording,
analyzing, and interpretation of data for guiding human
resource management decisions. Every human resource
management function needs effective research.

11. Other areas such as employee and labour relations, collective

bargaining, employee rights and discipline, and retirement are
also concerns of human resource management.

Historical Development: an overview

Personnel, according to some writers, at least in a primitive form,
have existed since the dawn of group effort. Certain personnel
functions, even though informal in nature, were performed whenever
people came together for a common purpose. During the course of
this century, however, the processes of managing people have
become more formalized and specialized, and a growing body of
knowledge has been accumulated by practitioners and scholars.

For many decades such responsibilities as selection, training and

compensation were considered basic functions constituting the area
traditionally referred to as personnel. These functions were
performed without much regard for how they related to each other.
From this narrow view the world has seen the emergence of what is
now known as human resources management.

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Human resources management (HRM), as it is currently perceived,
therefore, represents the extension rather than the rejection of the
traditional requirements for managing personnel effectively.

Understanding Personnel issues under different schools of

thoughts: Scientific management and human Relations School

1. Scientific Management

Scientific management is one of the classical schools of thoughts

in management. This approach was initially formulated with the
aim of increasing productivity and makes the work easier by
scientifically studying work methods and establishing standards.

Frederick W. Taylor played the dominant role in formulating this

theory and he is usually named as the father of scientific
management. Scientific management, sometimes called
Taylorism, has a strong industrial engineering flavor. Taylor
himself was a mechanical engineer whose primary aim was
maximizing profits and minimizing costs of production. The
guiding principle of this school was "getting the most out of
workers".

Taylor disliked wastage and inefficiency. During his time, in some

working areas, employees tended to work at a slower pace. And
this tendency, according to him, was a cause for less productivity
and efficiency. Managers were unaware of this practice because
they had never analyzed the jobs closely enough to determine
how much the employees should be producing.

Frederick Taylor based his management system on production-line

time studies. Instead of relaying on traditional work methods, he
analyzed and timed each element of workers' movements on a
series of jobs.

Once Taylor has designed the job, he thereby established how

many workers should be able to do with the equipment and
materials at hand. Next, he implemented a piece-rate pay system.
Instead of paying all employees the same wage, he began
increasing the pay of each worker who met and exceeded the
target level of output set for his job.

Taylor encouraged employers to pay more productive workers at a

higher rate than others. To realize this he developed a differential
rate system, which involves the compensation of higher wages to
more efficient workers (Stoner & Freeman, 1992).

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Frederick Taylor rested his philosophy on some basic principles
(Stoner & Freeman, 1992):

1. The development of a true science of management, so that

the best method for performing each task could be
determined.

2. The scientific selection of workers, so that each worker would

be given responsibility for the task for which he best suited.

3. The scientific training (education) of the worker.

4. Intimate, friendly cooperation between management and

labour.

5. A division of responsibility between management and

labour.

Frederick Taylor saw scientific management as benefiting both

management and the worker equally: management could
achieve more work in a given amount of time; the worker could
produce more and hence earn more-with little or no additional
effort. Taylor strongly believed that employees could be
motivated by economic rewards, provided those rewards were
related to individual performance.

Scientific management, according to Rue and Byars (1992), was

a complete mental revolution for both management and
employees toward their respective duties and toward each other.
It was, at that time, a new philosophy and attitude toward the
use of human effort. It emphasized maximum output with
minimum effort through the elimination of waste and inefficiency
at the operative level.

Scientific management basically had a focus on such areas as:

♦ techniques of production
♦ the most efficient method
♦ rigid rules of performance
♦ using the shortest time possible
♦ workers productivity /efficiency
♦ minimum cost of production hence maximum profit

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 ♦ highly refined tools and materials
♦ training and closer supervision, etc.

Scientific management, because of its fundamental ideas, has

been subject to strong critics. This school of thought was and
still is considered to be limited by its basic assumptions,
particularly, about human beings.

During the time of Taylor, the popular model of human behavior

held that people were rational and motivated primarily to satisfy
their economic and physical needs. Employees were considered
as an extension of machine, as a factor of production, and as an
economic unit. Thus, employees, according to Taylor, could be
motivated solely by economic rewards or material gain.

Nevertheless, the Taylor's model of motivation overlooked the

human desire for job satisfaction and the social needs of workers
as a group, failing to consider the tensions created when these
needs are frustrated. Furthermore, the emphasis on productivity
and profitability led some managers to exploit both workers and
customers of the organization. As a result more workers started
to join labour unions to challenge the behavior of management.

2. The Human Relations Movement

The human relations movement, as the name implies is said to
stress the human element in the work place. This movement
was started as a reaction against the doctrines and practices of
scientific management. According to the beliefs of this theory,
labour is not a commodity to be bought and sold. Workers must
be considered in the context of the groups of which they are a
part (Griffith, 1979).

The human relation was interdisciplinary in nature. It was

founded on new knowledge's developed in the areas of
psychology, group dynamics, sociology, political science, and
labour economics.

The human relations movement basically grew from the

Howthrone Experiments conducted by a scholar known as Elton
Mayo. After extensive studies, Elton Mayo argued that workers
respond primarily to other social context of the work place, and
his conclusions include:

♦ Work is a group activity

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 ♦ the need for recognition, security, and a sense of
belonging is more important in determining workers'
morale and productivity than the physical conditions under
which he works.

♦ The worker is a person whose attitudes and effectiveness

are conditioned by social demands from both inside and
outside the work place.

♦ Informal groups within the work place exercise strong

social controls over the work habits and attitudes of the
individual worker.

The proponents of scientific management are criticized to look

on the employee as an economic unit, a factor of production, and
an extension of a machine who is motivated only by a desire for
material gain. The human relationists, on the other hand,
considered the worker as a complete human being with attitudes
and needs which profoundly affected his work. It follows then
that organizations must provide for the satisfaction of all human
needs to obtain the most from their employees.
Scientific management did not consider the existence of informal
relationship as it exists side by side with the formal one. As
recognized by the human relationists, informal organizations
exist and play important part in the life of the worker. Informal
organizations consist of social relationships among employees.

Informal organization is voluntary in origin, its purpose is not

clear, it has no hierarchy of positions and it ceases to exist when
its members left. Many workers get their satisfaction in the
informal groups where they are treated as individuals, not as a
part of a machine in the plant. The friendliness and recognition
of their co-workers compensate for their impersonal treatment
by the large and complex formal organization.

In these informal and shifting groupings, leaders arise. They are

not elected or appointed, they have no legal standing, but they
assume leadership roles on the basis of their colleagues' esteem,
and together they constitute the informal authority structure.

The attitude of an employee's primary group, as voiced by the

group leader, may determine whether an official directive will be
supported or subverted, whether employees will cooperate with
administrators, or whether work norms will be raised or lowered.
The group can influence a member to interpret rules narrowly or
broadly, to slow down to speed up, to comply or resist.

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 ASSESS CONDITIONS
External
Organizational
Employee
A skillful administrator knows the various informal organization in
his work environment and he knows their leaders. In discussion
with the leaders of informal groups, he hears opinions, which
might not be openly expressed in formal meetings. This leader
recognizes that the informal organization adds a flexible
dimension, which enables the formal organization to adjust to
special cases and situations.

After several studies and investigations Elton Mayo and his

associates tried to show that workers primarily respond to group,
not as individuals. It follows, then, that administrators should not
deal with workers as individual units, isolated from those they
work with, but as members of work groups subject to group
pressure.
The human relations movement also emphasizes that:

• Communication is the life blood of an organization.

Therefore, unlike the thinking of the classical school,
information must flow freely, up, down, and horizontally
through established net works of the formal organization
and non-official networks of the informal organization,

• Participative decision making has strong motivating force.

Participation in decision making increases members' level
of satisfaction, their enthusiasm for their organization and
their positive attitude towards their organization and their
superiors.

The Human Resource Management Model

The Human Resource Management Model includes four interrelated
phases (Milkovich & Boudreau, 1991):

1. Assess human resource conditions,

2. Set objective based on the assessment,

3. Choose a course of action from alternatives generated to achieve

objectives, and

4. Evaluate the results (evaluating the results provides feedback on

the success of the actions).

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EVALUATE
RESULTS SET OBJECTIVES Planning
CHOOSE ACTIVITIES
Staffing
Development
Compensation
Employee/Labour Relations

The Diagnostic Model

The Environment of Human Resource Management

Many interrelated environmental factors affect human resource
management. Such factors are part of either the organization's
external environment or its internal environment. The organization
has little, if any, control over how the external environment affects
management of its human resources. These factors impose influences
of varying degrees on the organization from outside its boundaries.
Moreover, important factors within the firm itself also have an impact
on how the organization manages its human resources.

The environment of an organization consists of the conditions,

circumstances, and influences that affect the organization's ability to
achieve its objectives. Every organization exists in an environment
that has both external and internal components. As such, a human
resource management programme functions in a complex environment
both outside and inside the organization. Human resource managers
therefore should be aware that rapid changes are occurring within the
environment in which organizations operate.

The External Environment

According to Griffin (1990), the external environment consists of
everything outside an organization that might affect it. However, the
boundary that separates the organization from the external
environment is not always clear and precise. The external
environment has a significant impact on human resource management
policies and practices. It helps to determine the values, attitudes, and
behavior that employees bring to their jobs.

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The external environment is composed of two layers: the general
environment and the task environment.

The General Environment

An organization's general environment consists of the nonspecific
dimensions and forces in its surroundings that might affect the
organization's activities. These elements are not necessarily
associated with other specific organization or groups. Instead, they
are general forces or processes that interact with each other and also
affect the organizations as a whole. Each embodies conditions and
events that have the potential to influence the organization and its
human resource management activities in significant ways. The
general environment of most organizations has the following
dimensions:

1) The Economic Environment

The economic environment refers to the general economic
conditions and trends that may affect the human resource
management activities of an organization. The economic
variables include unemployment, demand and supply, inflation,
interest rates, the labour market, and others.

When, for example, unemployment is high, the organization is

able to be very selective about whom it hires. Increased or
decreased demand for a firm's products or services will have
important implications for recruitment or layoff. Inflation has had a
significant impact on human resources programme, necessitating
periodic upward adjustments in employee compensation.

2) The Technological Environment

The technological environment includes advances in sciences as
well as new developments in products, processes, equipment,
machinery and other materials that may affect an organization.

Technological advancements have tended to reduce the number

of jobs that require little skill and to increase the number of jobs
that require considerable skill. Technological advances also have
training implication. The challenging areas in human resource
management will be training employees to stay up with rapidly
advancing technology. Because, as technological changes occur,
certain skills also are no longer required. This necessitates some
retraining of the current workforce.

3) The Socio-Cultural Environment

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 The socio-cultural dimension of the general environment is made
up of the customs, values, and demographic characteristics of
the society in which the organization functions.

The socio-cultural dimension influences how employees feel

about an organization. Human resource management, today,
has become more complex than it was when employees were
concerned primarily with economic survival. Today, many
employees have more social concerns than mere economic
interest as early times.

4) The Political-Legal Environment

Political variables are the factors that may influence an
organizations activities as a result of the political process or
climate. The political-legal environment is also made up of the
laws and regulations within which an organization conducts its
affairs.

Government has a significant impact on human resources

management. Each of the functions performed in the
management of human resources, from employee recruitment to
termination, is in some way affected by laws and regulations
established by the government. Human resource managers
must follow all laws and government regulations.

5) The Physical Environment

The physical environment includes the climate, terrain, and other
physical characteristics of the area in which the organization is
located. The physical element can help or hinder an
organizational ability to attract and retain employees. Housing
and living costs can vary from one location to another and can
have a significant impact on the compensation, employees will
expect.

The Task Environment

The task environment of an organization consists of individuals,
groups, and organizations that directly affect a particular organization
but are not part of it. The task environment refers to the specific
environment of an organization and may include (Barney, 1992):

• The Customers
• The Suppliers
• The Regulators
• The Owners

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 • The Competitors
• The Partners
All these elements are much close and specific to a given
organization. Whereas the elements of the general environment
affect virtually all organizations in the society, the elements of
the task environment are pertinent (more relevant) to a specific
organization.

The Internal Environment

The environment that exists within an organization is known as the
internal environment. The internal environment consists those factors
that affect an organization's human resources from inside its
boundaries. The internal environment of an organization includes
(Mondy & Noe, 1990):

• Mission
Mission is the organization's continuing purpose or reason for its
existence. Each management level should operate with a clear
understanding of the firm's mission. The specific organizational
mission must be regarded as a major internal factor that affects the
tasks of human resource management.

• Policy
A policy is a predetermined guide established to provide direction in
decision making. As guides, rather than hard and fast rules, policies
are somewhat flexible, requiring interpretation and judgment in
their use. They can exert significant influence on how human
resource managers accomplish their jobs.

Although policies are established for marketing, production, and

finance, the largest number of policies often relate to human
resource management. Some potential policy statements that affect
human resource management are:

- To provide employees with a safe place to work

- To encourage all employees to achieve as much of their human
potential as possible
- To provide compensation that will encourage a high level
productivity in both quality and quantity.

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 - To ensure that current employees are considered first for any
vacant position for which they may be qualified.

• Organizational Culture
As an internal environmental factor affecting human resource
management, organizational culture refers to the organization's
social and psychological climate. Organizational culture is defined
as the system of shared values, beliefs, and habits within an
organization that interacts with the formal structure to produce
behavioral norms.

Other factors include:

• The organization's management

• The organization's employees
• The organization's structure
• The organization's rules and procedures etc.

Review and Discussion Questions

1. Define " management".
2. What are the major categories of organizational resources?
3. What is human resource management (HRM)?
4. "HRM is a pervasive activity". Explain
5. Human resources are said to be the most important element in
organizations. Why?
6. Define the following terms:
a) Human resource planning b) Recruitment c) Selection
d) Orientation e) Training and development
f) Compensation administration g) Performance evaluation
7. Define "Scientific Management". Who played the dominant role in
formulating this theory?
8. What are the basic principles of Scientific Management?
9. What is "Human Relations Movement"?
10. Describe the major conclusions drawn from the Howthrone
Experiment.
11. How do you compare " Scientific Management" and "Human
Relations Movement"?
12. Describe the human resource management model.
13. What is "environment"?
14. What are the components (layers) of the external environment?
15. Describe the major dimensions of the "general environment".
16. Outline the major components of the "task environment".

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17. What is the difference between the "general environment" and the
"task environment"?
18. Define the internal environment"
19. Describe the components of the "internal environment"

References:

1. Glueck, William, Personnel: A Diagnostic Approach, (Plano,

Texas: Business Publications, Inc. 1992).
2. Mondy, Wayne and Robert Noe, Human Resource Management,
(Boston: Allyn and Bacon, 1990).
3. Stoner, James and Edward Freeman, Management, (5th Ed.
Englewood Cliffs, NJ: Prentice Hall 1992).
4. Rue, Leslie and Lioyd byars, Management: Skills and
Applications, (6th Ed., Illinois: Irwin, 1992).
5. Griffith, Francis, Administrative Theory in Education: Text and
Readings, (Michigan: Pendell Publishing Company, 1992).
6. Milkovich, George and John W. Boudreau Human Resource
Management, (Homewood, Ill: Irwin, 1991).
7. Griffin, Ricky, Management, (3rd Ed., Boston: Houghton Miffin
Company, 1990).
8. Barney, Jayb, The Management of Organization Strategy,
Structure, Behaviour, (Hoston: Houghton Mifflin Company, 1992).

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 CHAPTER- 3
JOB ANALYSIS
Definition
Job analysis is a systematic analysis of each job for the purpose of collecting information
as to what the jobholder does, under what circumstances it is performed and what
qualifications are required for doing the job.

Job analysis deals with complete study of the job embodying every
known and determinable factors, including
1The duties and responsibilities involved in its performance

2The condition under which the work is carried

3The nature of the task

4The qualification required by workers and

5The condition of employment

Job analysis is the determination the task which comprises the job and the skills,
knowledge, abilities, and responsibilities required of the worker for successful
performance and with differentiate the job from all other jobs.

The information collected through job analysis relates to the job and the jobholder. The
requirements relating to the job are termed as job description where as the qualities

16
 demanded from a jobholder is known as job specifications.

N. B. Job description and Job specification are the immediate products of job analysis. The
following chart shows the information, which appears in job description and job
specification.

JOB ANALYSIS

JOB DESCRIPTION JOB SPECIFICATION

1. Name of the job 1. Education
2. Code Number 2. Experience
3. Working Conditions 3. Initiatives
4. Supervision given 4. Training
5. Responsibility 5. Physical requirement
6. Duties performed 6. Mental and visual demand
7. Equipments, tools and machines 7. Personality

STEPS IN JOB ANALYSIS

There are six stapes in doing job analysis
Step1. Decide the use of job analysis information:
It is true that the information generated by job analysis can be utilized for practically all
functions of HRA. Nevertheless, it is important to focus on a few areas in which the job
analysis information is to be used. These areas can be decided on the bases of the need,
priorities, and constraints of particular organization.
Step2. Review relevant background information such as organization chart, and job
descriptions and process flow chart.
Step3. Select representative positions.

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Step4. Carefully analyze the job – by collecting data on job activities, required
employees behavior, working conditions, and human traits and abilities needed to
perform the job.
Step5. Verify the job analysis information with the worker performing the job and with
his or her immediate supervisor. This review can also help gain the employee’s
acceptance of the job analysis data and conclusions, by giving the person chance to
review and modify your description of the job activities.
Step6. Develop a job description and job specification.

METHODS OF COLLECTING JOB ANALYSIS INFORMATION

Interviews, questionnaires, observations, and maintenance of records are the most
popular methods for gathering job analysis data.
A. Interview
The job analysts interview the jobholders for obtaining information about the job. This
method coupled with observation is considered as the most satisfactory method of job
analysis.
Pros
1It’s a relatively simple and quick way to collect information, including information
that might never appear on a written form.
2Skilled interviewers can reveal important activities that occur only occasionally,
informal contacts that wouldn’t be obvious from the organization chart.
3The interviewer also provides an opportunity to explain the need for functions of the
job analysis. And the employee can vent frustrations that might otherwise go
unnoticed by management.
Cons
1It can be extremely time-consuming because of the time required to schedule, get
into, and actually conduct the interview.
2Distortion in information whether due to out right falsification or honest
misunderstanding. Job analysis is often a prelude to chagrining a job’s pay rate.
Employees therefore may legitimately view the interview as an efficiency

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 evaluation that may affect their pay. They may tend to exaggerate certain
responsibilities while minimizing others.
B. Observation
Direct observation is especially useful when jobs consist mainly of observable physical
activities like assembly worker and accounting clerk. On the other hand, observation is
usually not appropriate when the job entails a lot of mental activities (lawyer, design
engineer). By personal observation, the analysts can come to know about facts relating to
jobs though materials, equipments, working condition etc.

C. Written narratives or maintenance of record

Under this method, both the employees as well as his supervisors keep a record of various
facts relating to the job. Since each employee keeps a full record of her/his daily
operations starting from the beginning till end. This method consumes more time than
other methods.
D. Job questionnaires
Under this method, questionnaires are circulated among the workers who report the fact
about the job. This method is highly unsatisfactory as it places greater faith in the job
holder’s ability to provide information.
Pros
1A questionnaire is quick and efficient way to obtain information from a large
number of employees.
2It is appropriate to obtain information from a large number of employees in
relatively shot period of time
Cons
1Questionnaires can be time consuming and expensive to develop.

2There is a possibility that either the respondent or the job analyst will misinterpret the
information.

USES OF JOB ANALYSIS INFORMATION

♥ EEO compliance- job analysis can play a big role in EEO compliance. For Example,

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employers must be able to show that their selection criteria and job performance are
actually related. Doing this, of course, requires knowing what the job entails – which in
turn requires a job analysis.
♥ Job definition – a job analysis results in a description of the duties and responsibilities
of the job. Such a description is useful to the current jobholders and their supervisors as
well as prospective employees.
♥ Orientation - Effective job orientation cannot be accomplished with out a clear
understanding of the job requirements. The duties and responsibilities of a job must be
clearly defined before a new employee can be taught how to perform the job.
♥ Employee safety –A thorough job analysis often uncovers unsafe practices and
environmental conditions associated with a job. Focusing precisely on how the job is
done usually reveals any unsafe procedures.
♥ Manpower planning –It helps in developing labor supply as labor needs are laid dawn
in clear terms.
♥ Recruitment and selection –Job analysis provides guidance in recruitment and
selection of employees, as specific requirements of the job are laid down in concrete
terms. It provides reliable data on the bases of which the employees are selected.
♥ Promotion and transfer-Job analysis helps in evaluating current employees for
promotion and transfers. If information about the job is available –employees can be
transferred from one department to another with out any complication.
♥ Compensation –job analysis information is crucial for estimating the value of each job
and an appropriate compensation. Compensation (such as salary and bonus )usually
depends on the job required skills and education level, safety hazards, degree of
responsibility, and so on-all factors you can assess through job analysis.
♥ Training and development –The job information helps in determining the content,
context and subject matter of training and development program.
♥ Performance appraisal –The standard of performance for employees can be set on the
bases of information provided by job analysis and actual performance can be compared
with these standards. It helps the management in judging the worth of employees.
♥ Job evaluations-Job analysis provide data determining the value of the job in relation
other jobs on the bases of which actual wages for the jobs are fixed.

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Job Description
It is factual and organized statement describing the job in terms of its title, location,
duties, responsibilities, working conditions, hazards, and relationship with other jobs. It
tells us what to be done, how it is to be done and why. The main objective of job
description is to differentiate from other jobs and to set out it outer limits. Job description
is an important document as it helps to identify the job and give a clear idea of what the
job is.

Contents of job description

1.Job identification: Job title, code number of the job, department or division where
the job is located. This part of job description helps to identify and designate the
job.
2.Job summary: It describes the contents of the job in terms of activities or tasks
performed.
3.Job duties and responsibilities: It is the heart of job description. It describes the
duties performed along with frequency of each major duty and responsibilities
concerning custody of money, supervision, training of staff, etc. are also
described in this part.
4.Working condition: The physical environment of the job is described in terms of
heat, light, noise level, dust, etc. Nature of risk and hazards and their possibility of
occurrence are also given.
5.Social environment: Size of work group and inter-personal interactions required to
perform the job are given.
6.Machines, tools and equipments: The name of major machines, equipments, and
materials used in the job are described.
7.Supervision: The extent of supervision given or received is stated in terms of
persons to be supervised along with their job titles. Designation of immediate
superior and subordinates may also be described.
8.Relation with other jobs: The jobs immediately, above and below are mentioned.

21
 It provides an idea of vertical workflow and channel of promotion. It also
indicates to whom the jobholder will report and who will report to him/her.
Specimen of job description
Job title: Manager, wage and salary administration
Code number: HR/1705
Department: Human resource division
Job summary: Responsible for company wage and salary programs, job analysis,
job evaluation, wage and s alary surveys and benefit administration.

Job duties:
♣ Supervises job analysis studies and approves final form of descriptions.
♣ Acts as a chairman of company wide job evaluation committee
♣ Conduct periodic wage and salary surveys in the community and industry
♣ Administer the company’s fringe benefits program.
Working conditions:
Normal working conditions Eight hours per days a week.
Supervision:
Reports to director, human resources, and exercise supervision on officers in the wage
and salary department in human resource division of the company.
Relation ships: → with equivalent levels of other departments.

→ Maintain official social contacts with local officials.

Job Specification
It is a statement of the minimum acceptable human qualities required for the proper
performance of the job. It is a record of the physical, mental, social and psychological,
and behavioral characteristics which a person should posses in order to perform the job
effectively. Physical characteristics include height, weight, vision, hearing, health, age,
hand foot coordination. Mental characteristics consist of general intelligence, memory,
judgment, ability to concentrate, foresight etc. Social and psychological characteristic
include emotional stability, flexibility, personal appearance, pleasing manner, initiative,
drive, conversational ability etc. Other personal characteristics include sex, education,
family, background, job experience, extra-curricular activities, hobbies, etc.

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Job specification tells what kind of person is required for a given job. It serves as a guide
in the recruitment and selection processes. See the typical example of job specification of
compensation manager below
Specimen of Job specification
Position title: Manager, wage and salary administration.
Department: Human resource division.
Education and training: →A bachelor degree with at least 3.00 CGPA
→A degree or diploma in law will be desirable qualification.
→ MBA with specialization in HRM.
CHAPTER- 4
HUMAN RESOURCE PLANNING (HRP)
MEANING
Human resource planning involves forecasting the organization’s future demand for
employees, forecasting the future supply of employees within the organization, and
designing programs to correct the discrepancy between the two.
Human resource planning is the process of translating over all organizational objectives,
plans, and programs to achieve specific performance of work force needs. The systematic
and the continuing process of analyzing an organization’s human resource needs under
changeling conditions and developing personnel policies, appropriate to the long term
effectiveness of the organization.
The purpose of human resource planning is to ensure that, in the future, the organization
has enough employees with the appropriate skill so that it can accomplish its long-term
goals.

REASONS FOR HUMAN RESOURCE PLANNING

The major reasons for HRP are:
A. Scarcity of personal in some specialized areas.
One rationale for HRP is the significant lead-time that normally exists between the
recognition of need to fill a job and the squiring of qualified person to fill that need. In
other words, it is usually not possible to go out and find an appropriate person over night.
Effective HRP can also help reduce turn over by keeping employees appraised of their

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career opportunities within the company.
B. To achieve more effective and efficient use of people at work
HRP should precede other HRM activities. It is difficult to envision how an organization
could effectively recruit, select, or train employees with out advance planning. In
addition, efficient use of those human resource already employed by an organization can
really be achieved only through careful planning activities. Especially in today’s
competitive business environment reduction of the work force (down sizing) has almost
become a way of life for organizations. HRP is an essential part of this process as well..

C. More satisfied and better developed employees.

Employee’s working in organizations that use good HR planning systems have a better
chance to participate in planning there own careers and to share in training and
development. Thus, they are likely to feel that their talents are important to the employer,
and they have a better chance to utilize those talents. This situation often leads to grater
satisfaction among employees, and its consequences: lower turn over, lower absenteeism,
fewer accidents, and higher quality of work.
Basically, all organizations are engaged in HRP either formally or informally. Some
organizations do a good job and others a poor job. The long-term success of any
organization ultimately depends on havening the right people in the right jobs at the right
time. Organizations’ objectives and their strategies for achieving those objectives are
meaningful only when people with appropriate talents, skills, and desire are available to
carry out those strategies.

PROCEDURES OF HUMAN RESOURCE PLANNING

The following are the main procedures in HRP:
1.Conducting external and internal environmental scanning.

2.Determining future HR requirements.

3. Determining future HR availabilities.

4.Determining net man power requirement (NMPR)

5.Developing action plan.

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1. Conducting external and internal environmental scanning
A number of external influences affect the conduct of HR management. These include
Economic conditions, labor market, laws and regulations, and labor union. Accordingly,
these factors are also grist for HR planning.
Of the various areas mentioned through environmental scanning, the labor market is most
directly relevant to HR planning. If tight labor market is expected, the organization must
plan to put considerable time and money in to attracting and retaining the needed talent. It
is also important for an organization to scan its internal environment. The monitoring of
key indexes such as employee performance, absenteeism, turnover, and accident rates
help us to learn what is going on in the organization.
2. Determining future human resource requirement
This step involves considering what the organization’s HR needs will be in the future.
This includes the number of employees that will be needed, the type of skills that will be
required, productivity levels needed to complete successfully, and so forth.
The logical place to begin this process is with an organization’s business plan (long-term
and operational plan). These plans usually indicate major sales, production, and financial
goals. This information tells the human resource planner whether volumes will be going
up, staying the same, or going down.
From organizational plan we can infer whether or not there will be any change in the
basic technologies the organization uses to make, and distribute its products /services.
Such changes typically are introduced as a means of increasing employee productivity
and thus reducing future human resource requirements.
3. Determining future human resource availabilities
The task here is to estimate the number and types of employees that will be available in
various job categories at the end of planning period. This phase of HR planning is
designed to answer the question, “how many and what kinds of employees do I currently
have interims of the skills and training necessary for the future?” It all begins with an
inventory of employees expected to be available in various job categories at the start of
planning period. From these figures are subtracted anticipated losses during planning
period due to retirements ,voluntary turnover , promotions, transfers, death, quits,
resignation and others.

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4. Determining net manpower requirements
This requires comparing over all personnel requirement with personnel inventory where
the difference is net requirement.
5. Developing action plans
Once the supply and demand of human resource are estimated, adjustments may be
needed. When the internal supply of workers exceeds the firms demand, a human
resource surplus exists. The alternative solutions include: early retirements, demotions,
layoffs, terminations, attrition, voluntary resignation inducement, reclassification,
transfer, work sharing and hire freezing.

Decisions in surplus conditions are some of the most difficult that managers must make,
because the employees who are considered surplus are seldom responsible for the
condition leading to surplus. A shortage of row materials such as fuel or a poorly
designed or poorly marketed product can cause an organization to have a surplus of
employees.
As a first approach to dealing with a surplus, most organizations avoid layoffs by relying
on attrition, early retirements, and creation of work and the like. Many organizations can
reduce their work force simply by not replacing those who retire or quit.
When the internal supply can not fulfill the organization’s needs, a human resource
shortage exists. If the shortage is small and employees are willing to work over time, it
can be filled with present employees. If there is a shortage of highly skilled employees,
transfer, training and promotions of present employees, together with the recruitment of
employees, are possibilities. This decision can also include recalling employees who
were previously laid off. Now days many organizations make use of part time workers,
subcontractors, and independent professionals in response to changing demands. Using
these kinds of employees give an organization surplus of labor than maintaining more
traditional fulltime employees for all jobs.

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 CHAPTER- FIVE
RECRUITMENT
Meaning
Recruitment is the process of searching for prospective employees and stimulating
them to
apply for jobs in the organization. Source of manpower can be internal or external.
Recruitment is the process of attracting potential new employees to the organization.
This HR
program is closely related to selection, because it supplies a pool of qualified
applicants from
which the organization can choose those best suited for its needs.
Recruitment refers to the process of generating job applicants. Obviously, if an
organization
fails to obtain applicants who are qualified for the job, it will face a problem in
selection phase,
like wise, if too few applicants apply, an organization may be unable to fill all of its
vacancies. It
is there fore critical for organizations to identify and properly utilize effective
recruitment
practice. Recruitment needs are of three types: planned, anticipated and unexpected.

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 Planned
needs arise from changes in organization retirement policy. Resignation, death,
accidents and
illness give rise to unexpected needs. Anticipated needs refer to those movements in
personnel,
which an organization can predict by studying trends in external and internal
environments. Features of recruitment

1Recruitment is a process or a series of activities rather than a single act or event.

2Recruitment is linking activity as it brings together those with job (employer) and those
seeking jobs (employees).
3Recruitment is a positive function as it seeks to develop a pool of eligible person from
which most suitable ones are selected.
4The basic purpose of recruitment to locate the source of people required to meet job
requirements and attracting such people to offer themselves for employment in the
organization.
5Recruitment is an important function as it makes possible to acquire the number and type of
persons necessary for the continued function of the organization.
6Recruitment is a pervasive function as all organizations engage in recruitment activity. But
the volume and nature of recruitment varies with the size, nature and environment of the
particular organization.
7Recruitment is a complex job because too many factors affect it. E.g., image of the
organization, nature of job offered, organizational polices, working conditions,
compensation levels in the organization and rate of growth of the organization etc.

Sources of recruitment
An organization may fill particular job either with some one already employed by the
organization or with some one from out side. Each of these sources has advantages and
disadvantage.
Internal sources: Internal sources consists of the following
Present employee-permanent, temporary and causal employees already on the pay of the

28
 organization are good source. Vacancies may be filed up from such employees through
promotion, transfers, and upgrading and even demotion. Transfer implies shifting of an
employee from one job to another with out any major change in the status and
responsibilities of the employee. On the other hand, promotion refers to shifting of an
employee to a higher position carrying higher status, responsibilities and pay. Retired and
retrenched employees who want to the company may be rehired.
Internal sources have the following advantages:
1Morale and motivation of employees is improved when they are assured that
they will be preferred in filling up vacancies at higher levels. A sense of
security is created among employees.
2Suitability of existing employees can be judged better as record of their
qualifications and performance is already available in the organization.
Chances of proper selection is higher
3It promotes loyalty and commitment among employees due to sense of job
security and opportunities for advancement.
4Present employees are already familiar with the organization and its polices.
Therefore, time and cost of orientation and training is low.
5The time and cost of recruitment is reduced, as there is little need for
advertising vacancies, or arranging rigorous tests and interviews.
6Relations with trade unions remain good because union prefer recruitment
particularly through promotion.
7Filling of a higher-level job through promotion within the organization helps
to retain talented and ambitious employees. Labor turn over is reduced.
8It improves return on investment of human resource.
Internal source, how ever, suffer from some demerits:
First, it may lead to inbreeding. Second, if promotion is based on seniority, really
capable persons may be left out. Third, the choice of selection is restricted. More talented
outsiders may not be employed. Mobility of labor is restricted. Chances of favoritism are
higher and the limited talent of inside restricts growth of business. Finally, this source of
recruitment is not available to a newly established enterprise.

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External sources
An external source of recruitment is recruitment outside the organization. These are;
A. Campus recruiting
Recruiting from colleges and universities is common practice of both private and public
organizations. In college recruiting the organization sends an employee, called recruiter,
to a campus to interview candidates and describes facts about the organizations to them.
Coinciding with the visit, brochures and other literature about the organization are often
distributed. The organization may conduct seminars at which company executives talk
about various facts of the organization.
From the employer’s perspective, campus recruitment offers several advantages, as well
as several shortcomings. On the positive side, many organizations find the college
campus an effective source of applicants. The placement center typically helps locate
applicants have at least some qualification, since they have demonstrated the ability and
motivation to complete a college degree. Another advantage of campus recruitment is
that students generally have lower salary expectations than more experienced applicants.
On the negative side, the campus recruitment suffers from several distinct disadvantages
compared with other recruitment sources. First, most of the applicants have little or no
work experience. Thus, the organization must be prepared to provide some kind of
training to applicants they hire. Second, campus recruitment tends to depend on seasons.
Third, campus recruiting can be quite expensive for organizations located in another city.
Costs such as airfare, hotels, and meals for recruiters as well as applicants visit can
become quite higher for organizations located at a distance from the university.
B. Walk Ins/unsolicited applications
Many applicants search for jobs either by walking in to organizations and completing an
application blank or by mailing a resume in the hope that a position is available.
Corporate image has a significant impact on the number and quality of people who apply
to an organization in this manner. Compensation policies, working conditions,
relationships with labor, and participation in the community activities are some of the
many factors that can positively or negatively influence an organization’s image.
The major advantage of this source is that it is relatively of low cost, because the

30
company is not spending money to advertise and collect the resumes. On the other hand,
there are several disadvantages. First, although there are no advertising costs, there is a
cost associated with processing and sorting the resumes and application blanks. Second,
minorities are less likely to apply for jobs that have not been advertised.
Thus, heavy reliance on this approach may lead to the under representation of minorities
in the work force, which may result in legal problems. This source tends to favor
applicants who are actively searching jobs; highly qualified applicants who are satisfied
with their current jobs are unlikely to apply.
C. Employee referrals
Many organizations involve their current employees in recruiting process. These
recruiting systems may be informal and operated by word of mouth, or they may be
structured with definite guidelines to be followed. Incentives and bonuses are some times
given to employees who refer subsequently hired people.
Employee referral programs have pros and cons. Current employees can and usually will
provide accurate information about the job applicants they are referring, especially since
they are putting their own reputation on line. The new employees may also come with a
more realistic picture of what working in the firm is like after with friends there. But the
success for the campaign depends a lot on employee morale. And the campaign can back
fire if an employee’s referrals are rejected and the employee becomes dissatisfied. Using
referrals exclusively may also be discriminatory if most of the current employees and
their referrals are male or white. Other draw back to the use of employee referrals is that
cliques may develop within the organization because employees tends to refer only
friends or relatives.

D. News paper advertisements

This is method of job recruitment by advertising in a newspaper. If you look at the
edition of news papers such as ADDIS ZEMEN, ETHIOPIAN HERALD, and the
REPOERTER, you will find page after page job advertisements. Given the popularity of
newspaper ads, it is not surprising that this source has several advantages. First, job ads
can be placed quite quickly, with little lead time. News paper ads permits a greater deal
of flexibility in terms of information; they also target specific geographic area . On the

31
negative side , news paper ads tends to attract only individuals who are actively seeking
employment, while some of the best candidates , who are well paid and challenged by
their current jobs, fail to even be aware of these openings. Also, a company may get
many applicants who are marginally qualified or completely unqualified for the job.
Thus, this source may generate a generate a great deal of administrative work for the
organization, with little in return.

E. Television and Radio advertisements

This is method of job recruitment by advertising open positions using television and radio
spots. This recruitment sources offers several potential advantages, particularly compared
with news paper ads. First, television and radio ads are more likely to reach individuals
who are not actively seeking employment. Television and radio ads also enable the
organization to target the audience more carefully, by selecting the channel or station and
the time of day the advertisement is aired.
On the negative side, television and radio ads are rather expensive. In addition airtime
may be quite costly. Also, because the television and radio ads is simply seen or heard,
potential candidates may have a difficult time remembering the information, making
application difficult. For this reason, some employers choose to use the television or
radio ads as a supplement to a more traditional news pepper ads. In sum, despite their
costs, television and radio ads may be highly effective recruitment sources.

F. Recruiting on Internet
A large number and fast growing proportion of employers use the Internet as a recruiting
tool. Employers list several advantages of internet recruiting. First, it is cost effective:
Newspapers can charge from $50 to $100 to several thousands dollars for print ads; job
listings on the internet may cost as little as $10 each. The newspaper ads may keep
attracting applications for 30 days or more. Internet recruiting can also be more timely.
Responses to electronic job listing may come the day the ads is posted, where the
responses to news paper ads can take a week just to reach an employer. Some employers
cite just such a flood of responses as a down side of internet recruiting. The problem is
that the relative ease of responding to internet ads encourages unqualified job seekers to

32
apply; further more, applications may arrive from geographic areas that are un
realistically far away.

External sources offer the following advantage:

♣ People having the requisite skill, education and training can be obtained.
♣ As recruitment is done from a wider market, best selection can be made irrespective
of caste, sex,
or religion
♣ Expertise and experience from other organization can be obtained.
♣ This source recruitment never “dries up”. It is available to even new enterprises.
♣ It helps to bring new blood and new ideas into the organization, their orientation and
training is
necessary
External sources, however, suffer from the following disadvantages;
◊ It is more expensive and time-consuming to recruit people from outside. Detailed
screening is
necessary as very little is known about the candidates
◊ The employees being un familiar with the organization, their orientation and training
is necessary
◊ If higher levels are filled from the external source, motivation and loyalty of existing
staff are
affected.

33
 SELECTION
MEANING

Selection is the process by which an organization chooses from a list of applicants the
person or persons who best meet the selection criteria for the position available,
considering current environmental conditions.

Selection is the process of matching the qualification of applicants with job requirement.
Selection divides all applicants into the categories- suitable and unsuitable, selection may
be described as a process of rejection because generally more candidates are turned away
than the hired. Selection differs from recruitment. Recruitment technically precedes
selection. Recruitment involves identifying the source of manpower and stimulating them
to apply for jobs in the organization. On the other hand, selection is the process of
choosing the best out of those recruited. Recruitment is positive as it aims at increasing
the number of applicants for wider choice or increase selection ratio. Selection is negative
as it rejects a large number of applicants to identify the few who are suitable for the job.
Recruitment involves prospecting or searching whereas selection involves comparison
and choice of candidates. The purpose of selection is to pick up the right person for every
job. Selection is an important function as no organization can achieve its goals with out
selecting the right people. Faulty selection leads to wastage of time and money and spoil
the environment of the organization.

The significant of Employee Selection

Effective selection is highly important for an organization’s future success because;
1Selection is more powerful ways of improving productivity. Selecting qualified and
competent employees improves the benefits an organization reaps.
2Selection decision is a long lasting decision. Once the decision is made reversing it is very

34
 difficult .If an organization hires poor performers, it can not be successful long, even if it
has a perfect plan and good control system s. In today’s business what makes the kind of
human resource you have, not technology or financial resource.
3Selection affects other HR functions. If less qualified people are selected, then it will be
necessary to budget funds for training them.
Environmental factors affecting selection process.
A. Legal considerations
HRM is influenced by legislation, executive orders, and court decisions. Managers who
hire employees must have extensive knowledge of the legal aspects of selection. They
must see the relationship between useful and legally defensible selection tools.

B. Organizational hierarchy
Different methods of selection are taken for filling positions at varying levels in the
organization. For example, extensive background checks and interviewing would be
conducted to verify the experience and capabilities of the applicant for the sale’s manager
position. On the other hand, an applicant for a clerical position (secretary) would most
likely take only a word processing test and perhaps a short employment interview.

C. Applicant pool (labor market)

The number of qualified applicants for a particular job can also affect the selection
process. The process can be truly selective only if there are several qualified applicants
for a particular position. When the applicants are very few, then selection process
becomes a matter of choosing whoever is at hand.

C. Probationary period
Many Organizations use a probationary period that permits them to evaluate an
employee’s ability based on established performance. Probationary period is required for
either of the following two reasons.
1. a substitute for certain phases of the selection process (If the an individual can
successfully perform the job during the probationary period , other selection
tools may not be needed) or

35
 2. a check on the validity of the selection process ( to determine whether the
hiring decision was a good one)

SELECTION CRITERIA

At the core of any effective selection system is an understanding of what characteristics

are essential for high performance. This is where the critical role of job analysis in
selection becomes most apparent, because that list of characteristics should have been
identified during the process of job analysis and should now be accurately reflected in job
specification. Thus, from a performance perspective, the goal of any selection system is
to accurately determine which applicant’s posses the skill, knowledge, ability and other
characteristics detected by the job. Different selection criteria may, indeed, be needed to
assess these qualitatively different (KSAOs).

Categories of criteria
The criteria typically used by organizations for making selection decision can be
summarized in several broad categories: education, experience, physical characteristics,
and other personal characteristics.

A. Formal education
An employer selecting from a pool of job applicants wants to find the person who has the
right abilities and attitudes to be successful. A large number of cognitive, motor,
physical, and interpersonal attributes are present because of genetic predispositions and
because they were learned at home, at school, on the job and so on. One of the more
common cost- effective ways to screen of many of these abilities is by using educational
accomplishment as a surrogate for of summary of the measures of those abilities. Rather
than using a selection test to measure each of these, the organization might simply require
that applicants have proof that they have completed the specified level of education. For
certain jobs, the employer might go one or more steps further than simply requiring than

36
a certain educational level has been achieved; The employer may stipulate that the
education (especially for college-level requirements) is in a particular area of expertise,
such as accounting or management. The employer might also prefer that the degree be
from certain institutions that the grade point average be higher than some minimum, and
those certain honors have been achieved.

B. Experience and past performance

Another uses full criteria for selecting employees is experience and past performance.
Many selection specialists believe that past performance on a similar job might be one of
the best indicators of future job performance. In addition, employers often consider
experience to be a good indicator of ability and work related attitudes. Their reasoning is
that a prospective employee who has performed the job before and is applying for a
similar job must like the work and be able to do the job will.

C. Physical characteristics
In the past, many employers consciously or unconsciously used physical characteristics
as a criterion. Studies found that employers were most likely to hire and pay better wages
to taller men, and airlines choose flight attendants and company receptionists on the base
of beauty. Many times such practices discriminated against ethnic groups, women, and
hind capped people. For this reason, they are now illegal unless it can be shown that a
physical characteristics is directly related to effectiveness at work. Fore example, visual
acuity (eyesight) would be a physical characteristic that could be used to hire airline
pilots. It might not, however, be legally used for hiring a telephone reservations agent for
an airline.

D. Personality characteristics and personality type

Personal characteristics include marital status, sex, age, and so on. Some employers have,
fore example, preferred “stable’’ married employees over single people because they

37
 have assumed that married people have a lower turnover rate. On the other hand, other
employers might seek out single people fore some jobs since a single person might be
more likely to accept a transfer or a lengthy over sees assignment. Age, too, has some
times been used as a criterion. While it is illegal to discriminate against people who are
over the age 40. However, minimum and maximum age restrictions for the job be used
only if they are clearly job related. Thus, age should be used as a selection criterion only
after very careful thought and consideration.

SELECTION PROCESS
The selection process consists of a series of steps. At each stage facts may come to light,
which may lead to rejection of the applicant. It is a series of successive hurdle or barriers,
which an applicant must cross. These hurdles are designed to eliminate an unqualified
candidate at any point in the selection process. However, every selection procedure dose
not contains all these hurdles. Moreover, the arrangement of these hurdles may differ
from organization to organization. There is no standard selection procedure to be used in
all organization or for all jobs. The complexity 0f election procedure increase with the
level and responsibility of the position to be filled. The strategy and method used for
selecting employees varies from firms to firm and from one job to another.

Steps involved in employee selection may be described as under:

1. Application blank: Application form is a traditional and widely used device for
collecting information from the candidates. Small firms design no application form and
ask the candidates to write details about their age, marital status, education, work
experience, etc. on a plan of sheet of paper. But big companies use different type of
application forms for different jobs. The application form should provide all the
information relevant to selection.

38
2. Preliminary interviews: The preliminary interview is used to determine whether the
applicant’s skills, abilities, and the job preferences match any of the available jobs in the
organization, to explain to the applicant the available jobs and d their requirements, and
to answer any questions the applicant has about the available jobs or the employer. A
preliminary interview is usually conducted after the applicant has completed the
application form. It is generally a brief, explanatory interview screens out unqualified or
un interested applicants. Interview questions must be job related and are not subject to
demonstration of validity.
3. Employment test: A technique that some organizations use to aid their selection
decisions is
employment test. An employment test is a mechanism that attempts to measure
certain
characteristics of individuals. The basic categories of tests are:
i. Aptitude test: means of measuring a person’s capacity or latent ability to learn
and perform the job
ii. Psychomotor test: test that measures a person’s strength, dexterity, and Coordination.
iii. Job knowledge test: Tests used to measure the job related knowledge of the
applicants.
iv. Proficiency test: tests used to measure how well a job applicant can do a
sample of the work to be performed in the job.
v. Interest Test: tests designed to determine how a person’s interest compared
with the interest of successful people in a specific job.
vi. Personality test: tests that attempt to measure personality traits.
vii. Polygraph test: the polygraph, popularly known as the lie detector, is a de
vice that records physical changes in the body as the test subject answers a
serious of questions. The polygraph records fluctuations in blood pressure, respiration,
and perspiration on a moving roll of graphic paper. The polygraph operator makes a
judgment as to whether the subject’s response was truthful or deceptive by studying
the physiological measurements recorded on paper
viii. Graphology (hand writing analysis): use of trained analysis to examine a person’s
hand writing to assess the personality, emotional problems, and honesty.

39
4. Secondary or follow-up interview or Employment interview
Most organizations use the second or follow up interview as an important step in the
selection process. Its purpose is to supplement information obtained in other steps in the
selection process to determine the suitability of an applicant for a specific opening. All
questions asked during an interview must be job related
There are different types of interview and different organizations use one or more of them
to make their selection choices. Interview types that are generally used are discussed
below.
I. Structured interview
In this form of interview, the interviewer follows a predetermined approach designed
to ensure that all pertinent factors relating to he candidate’s qualifications suitability
for the job will be gone over. This type of interview also allows an interviewer to
prepare in advance, questions that are job-related and then complete a standardized
interviewer evaluation form.

II. Semi-structured interview

Here only the major questions to be asked are worked out beforehand. The
interviewer also has the option to prepare in-depth questions in certain areas. Clearly,
the interviewer, in this approach, needs to prepare more adequately and his role also
has greater flexibility than in the structured style. During the course of the interview,
where the occasion rises the interviewer has the freedom to probe In a greater detail
those areas, which appear to require further investigation, The interviewer’s
objective, in the semi-structured format, should be to achieve the ideal balance
between adequate structure facilitating exchange of factual information, with
adequate freedom to develop a clear perception of the candidate’s work.

III. Unstructured interview

This may be defined as the process of active listening. Normally used in
psychological counseling, it is also widely used in selection. The interviewer has a
wider canvas and the choice to prepare a list of topics to be covered rather than the

40
question s. little preparation is required on the part of the interviewer. The interviewer
asks general questions designed to prompt the candidate to discuss him or her self and
often uses a thought or idea expressed on one response as the base for the next
question. The tremendous plus point of the unstructured approach is the freedom the
interviewer has to adapt both to the changing situations and a variety of candidates.
The difficulties, however, lie in the maintenance of job –relatedness and obtaining of
comparable data on each applicant. Spontaneity is the chief characteristics of this
approach but the pitfalls are daunting. In the hands of untrained interviewer, biases
invariably creep in and digressions, discontinuity and a host of subjective elements
may well destroy or negate the fundamental objective of selecting the best available
talent.
IV. Stress interview
This is a special type of interview designed to asses and provides use full information
as to whether a person would be able to cope with stress on the job or not. Stress
interviews are deliberate attempts to create tension and pressure in an applicant to see
how well he or she responds to those tensions and pressures. Methods used to induce
stress, ranges from frequent interruptions and criticism of an applicant’s opinion, to
keeping silent for an extended period of time.

V. Depth Interview
In this case, an attempt is made to cover completely the life history of the applicant
and develop a comprehensive profile based on in-depth understanding of the frozen
aspects of the frozen aspects of his or her personality such as education, extra-
curricular activities, early childhood experiences, etc. as well as the flexible aspects
such as hobbies , interests , hopes , desires, aspirations , goals etc . This is a time
consuming and costly approach best suited for executive selection rather than blue or
white collar workers, its major advantage is in getting a complete, detailed
understanding of the candidate but the price paid in terms of time and money need to
be carefully weighed.

Problems in Interviews

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Despite the wide spread use of the employment interview, it continues to be the
source of a variety of problems of the selection process. There is no doubt that
problems of reliability can develop in the use of interviews when they are less
structured or conducted by relatively untrained interviewers. Following is a list of
some sources of errors in the interview process.
a. Contrast effects or Hallow effect: The order of interviewees’ influence
ratings. For instance , Strong candidates who succeed weak ones look even
stronger by contrast
b. Similarity to interviewer: interviewee’s similarity in sex, age, ethnicity,
religion and or attitude to interviewers may lead to favorable evaluation at the
expense of the expectations of the job.
c. Non-verbal signals: interviewers often fall in to the trap of using non- verbal
behavior patterns as a basis for reaching a decision. Factors such as how a
candidate looks, sits in the chair , maintains eye contact, fidgets or his or her
facial expressions may be allowed to become overriding criteria and this can
easily in by –passing competent candidates
d. Interviewer lack of knowledge: Where this happens there is almost
invariably a miscarriage of justice. The interviewer’s lack of familiarity with
job requirements prevents him or her from identifying those characteristics in
the candidate that makes him or her suitable for the job. Instead, he or she
might well be eliminated for the wrong reasons.
e. Over –emphasis on negative characteristics: quite often, there is a natural
human tendency on the part of interviewers to succumb to the pitfall of
assigning undue emphasis to one or two negative qualities of the applicant .
Very many good aspects suited to the job at hand may be ignored in the
process, the interviewer must consciously attempt to look beyond small
drawbacks in the candidate and take an objective, brad –based view.
f. Snap judgment: there is a tendency for the interviewers to make up their
minds on the first impression of the candidate. Based on the first observation
of the applicant and the first few minutes of discussion, a judgment is arrived
at which in fact, may be quite erroneous. Too often, interviewers from an

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 early impression and spend the rest of the time looking for evidence to support
it. The attempt, on the other hand, should be to collect comprehensive
information about the candidate and reserve judgment until various aspects
and areas have been probed.

5. Reference Checks
The applicant is asked to mention in his application form the names and addresses of two
or three persons who know him or her well. They may be his or her previous employers,
head of educational institutions or public figures. The organization contacts them by mail
or telephone. They are requested to provide their frank opinion about the candidate with
out incurring any liability. They are assured that all the information supplied will kept
confidential.

6. Selection Decision
In most of the organizations, the human resource department carries out selection
process. The decision of this department is recommendatory. The executive of the
concerned department finally approves the candidates short-listed by the department.

7. Physical examination or Medical evaluation

Applicants who have crossed the above stages are sent for a physical examination either
to the company’s physician to the medical officer approved for the purpose. Such
examination serves the following purposes:
a)It determines whether the candidate is physically fit to perform the job. Those who
are physically unfit are rejected.
b)It revels existing disabilities and provides a record of the employee’s health at the
time of selection. This record will help in settling company’s liability under the
workmen compensation act for claim of an injury.

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 c)It prevents the employment of people suffering from contagious diseases.

8. Final approval or hiring decision

Employment is offered in the form of an appointment letter mentioning the post, the
rank, the salary grade, and the date by which the candidate should join and other
terms and conditions in brief.

9. Reviewing the hiring process

After completing the hiring , the selection process ought to be evaluated . Here are
some considerations in the evaluation :
What about the number of initial applicants? Where there too many applicants? Too
few? Does the firm need to think about changing its advertisement and recruiting to get
the results desired?
What was the nature of the applicant’s qualification? Were the applicants too qualified
enough? Perhaps the advertisements need to be re-worked to attract more appropriate
candidates. In this case, using a job description can help.

How cost effective was the advertising? A simple way to measure is to divide the cost
(not only in birr but in your time) by either the number of total applicants or the number
of applicants that you considered seriously.
Were there questions that needed to be asked but weren’t?
How well did the interviewers do? One way to determine this is to ask the new employee
to critique the interviewing process.
Did employment tests support or help the hiring decision? If not, may be the firm will
have to reconsider the kinds of tests it is administering. Further, the evaluation process
should help the firm decide if the cost and the time involved in the testing is worth it.
Would you have come to the same hiring decision without testing?

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 3. Induction/Orientation
Orientation is the process of acquainting new employees with the organization. Orientation
topics range from such basic items as the location of the company cafeteria to such concerns
as various career paths within the firm.

Hence we can say that induction or orientation is the process through which a new employee
is introduced to the job and the organization. In the words of Armstrong, induction is "the
process of receiving and welcoming an employee when he first joins a company and giving
him the basic information he needs to settle down quickly and start work”.

Orientation is designed to provide a new employee with the information he or she needs to
function comfortably and effectively in the organization. It conveys three types of
information:
 General information about the daily work routines;
 Organization history, objectives, operations, products, etc.

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  Organization policies, work rules and employee benefits.

Thus, orientation/induction is the planned introduction of new employees to their jobs,

coworkers and the organization.

Purposes of orientation
In general, induction serves the following purposes:
a. Removes fears: A newcomer steps into an organization as a stranger. He is new to the
people, workplace and work environment. He is not very sure about what he is supposed to
do. Induction helps a new employee overcome such fears and perform better on the job. It
assists him in knowing more about:
• The job, its content, policies, rules and regulations.
• The people with whom he is supposed to interact. .
• The terms and conditions of employment.

b. Creates a good impression: Another purpose of induction is to make the newcomer feel
at home and develop a sense of pride in the organization. Induction helps him to:
• Adjust and adapt to new demands of the job.
• Get along with people.
• Get off to a good start.

Through induction, a new recruit is able to see more clearly as to what he is supposed to do,
how good the colleagues are, how important is the job, etc. He/she poses questions and seeks
clarifications on issues relating to his/her job. Induction is a positive step, in the sense; it
leaves a good impression about the company and the people working there in the minds of
new recruits. They begin to take pride in their work and are more committed to their jobs.

c. Act as a valuable source of information: Induction serves as a valuable source of

information to new recruits. It classifies many things through employee manuals/handbook.
Informal discussions with colleagues may also clear the fog surrounding certain issues. The
basic purpose of induction is to communicate specific job requirements to the employee, put
him at ease and make him feel confident about his abilities.

Some of the benefits of good employee orientation include the following: Strong loyalty to
the organization; Greater commitment to organizational values and goals; Low absenteeism;

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 higher job satisfaction and Reduction in turnover.

Steps in Induction Program

The HR department may initiate the following steps while organizing the induction program:
 Welcome to the organization
 Explain about the company.
 Show the location, department where the new recruit will work. .
 Give the company's manual to the new recruit.
 Provide details about various work groups and the extent of unionism within the company.
 Give details about pay, benefits, holidays, leave, etc.
 Emphasize the importance of attendance or punctuality.
 Explain about future training opportunities and career prospects.
 Clarify doubts, by encouraging the employee to come out with questions.
 Take the employee on a guided tour of buildings, facilities, etc. and
 Hand him over to his supervisor.

Content of induction
The areas covered in employee induction program may be stated as follows:
1. Organizational issues
History of company; Names and titles of key executive; Employees' title and department;
Layout of physical facilities; Probationary period; Products/services offered; Overview of
production process; Company policy and rules; Disciplinary procedures; Safety steps;
Employees' handbook.

2. Employee benefits
Pay scales, pay days; Vacations, holidays; Rest pauses; Training Avenues; Counseling;
Insurance, medical, recreation, and retirement benefit.
3. Introductions
To supervisors; to co-workers; to trainers; and to employee counselor

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4. Job duties
Job location; Job tasks; Job safety needs; Overview of jobs; Job objectives; Relationship with
other jobs

Need for Induction

1. When a new employee joins an organization, he is a stranger to the organization and vice
versa. He may feel insecure, shy and nervous in the strange situation. He may have anxiety
because of lack of adequate information about the job, work procedures, organizational
policies and practices, etc. Frustration is likely to develop because of ambiguity. In such a
case, induction is needed through which relevant information can be provided; he/she is
introduced to old employees and to work procedures. All these may develop confidence in
the candidate and he/she may start developing positive thinking about the organization.

2. Effective induction can minimize the impact of reality shock some new employees may
undergo. Often, fresher join, the organization with very high expectations, which may be far
beyond the reality. When they come across with reality, they often feel shocked. By proper
induction, the newcomers can be made to understand the reality of the situation. Every
organization has some sort of induction program either formally or informally. In large
organizations where there are well-developed personnel functions, often induction program
are undertaken on formal basis, usually through the personnel department. In smaller
organizations, the immediate superior of the new employee may do this.

Socialization
Socialization is a process through which a new recruit begins to understand and accept the
values, norms and beliefs held by others in the organization. HR department representatives
help new recruits to internalize the way things are done in the organization.

Orientation helps the newcomers to interact freely with employees working at various levels
and learn behaviors that are acceptable. Through such formal and informal interaction and
discussion, newcomers begin to understand how the department/ company is run, who holds
power and who does not, who is politically active within the department, how to behave in
the company, what is expected of them, etc. In short, if the new recruits wish to survive and

48
 prosper in their new work home, they must soon come to 'know the ropes'.

Employee Induction Program: Three Examples

The company takes its new entrants through a structured induction-training program. The
one-day program includes a briefing on the company's market position, the business it is in,
its functioning style, its organizational structure and its HR policies. The entrants are also
familiarized with what others do before being deputed to their own departments. A six-month
behavioral training is also offered in team building, self-development, customer-sensitivity
etc. Finally, the recruits are put through an appraisal process to gauge fitment and progress.

The other company customizes its initiation programs to suit the profile of the new recruit.
For engineers, the program is offered in four parts: (1) familiarize with various functions and
meet division heads (ii) work on shop floor (iii) work at various other departments (iv) work
finally in departments for about 2 months, where they will eventually work.

In the last company the management trainees are picked up from premium B - schools and
undergo introduction training for about 6 months. During this period, the trainees see the
various divisions of the bank to get a holistic view of the bank's operations, and get a chance
to meet each of the bank's business heads. A two-day session dedicated to team building is
also conducted thereafter. After taking charge of the job, the new recruits have to attend a
review session about the job itself.

4. PROMOTIONS, TRANSFERS AND SEPARATIONS

A. Promotion
Promotion means an improvement in pay, prestige, position and responsibilities of an
employee within his/her organization. A mere shifting of an employee to a different job
which has better working hours, better location and more pleasant working conditions does
not constitute promotion. The new job is a promotion for the employee when it carries
increased responsibility and enhanced pay.

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 Purposes of Promotion
 To motivate employees to higher productivity
 To attract and retain the services of qualified and competent employees
 To recognize and reward the efficiency of an employee
 To increase the effectiveness of the employee and of the organization.
 To fill up higher vacancies from within the organization
 To build loyalty, morale, and sense of belongingness in the employee
 To impress upon others that opportunities are available to them too in the organization, if
the perform well.

Types of Promotion
A promotion involves an increase in status, responsibilities and pay. But in certain cases only
the pay increases and the other elements remain stagnant. In other cases, the status only
increases without a corresponding increase in pay or responsibilities. Depending on which
elements increase and which remain stagnant, promotions may be classified into the
following types.
i. Horizontal Promotion
This type of promotion involves an increase in responsibilities and pay, and a change in
designation. But the employee concerned does not transgress (go beyond the limit) the job
classification. For e.g. lower division clerk will be promoted to upper division clerk. In this
case there is no change in the nature of the job.
ii. Vertical Promotion
This type of promotion results in greater responsibility, prestige and pay, together with a
change in the nature of the job.

iii. Dry Promotion

Dry promotions are sometimes given in lieu of increases in remuneration. Designations are
different but no change in responsibilities. The promotee may be given one or two annual
increments.

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B. Transfers
A transfer involves a change in the job (accompanied by a change in the place of the job) of
an employee without a change in responsibilities or remuneration. It differs from a promotion
in that the later involves a change in which a significant increase in responsibility, status, and
income occurs, but all these elements are stagnant in the former. Another difference is that
transfers are regular and frequent, but promotions are infrequent, if not irregular.

Reasons for Transfer

The reasons for transfers vary from organization to organization, and from individual to
individual within an organization. Broadly speaking, the following are the reasons for
transfer:
 Workers are transferred from the surplus department to another department or plant where there
is a shortage of staff.
 Removal of the incompatibilities between the workers and his or her boss and between one
worker and another worker.
 Correction of faulty initial placement of an employee.
 A change has taken place in the interests and capacity of an individual, necessitating his or her
transfer to a different job.
 Over a period of time, the productivity of an employee may decline because of the monotony of
his or her job. To break this monotony, the employee is transferred.
 The climate may be unsatisfactory for an employee’s health. He or she may request a transfer to a
different place where his or her health will not be affected by its climate.
 Family related issues cause transfers, especially among female employees. When they got
married, the female employees want to join their husbands and this fact necessitates transfers
or resignations.

Types of transfers
Broadly speaking, transfers may be classified into three types:

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  Those designed to enhance training and development
 Those making possible adjustment to varying volumes of work within the firm
 Those designed to remedy the problems of poor placement
Specifically, transfers may be production, replacement, versatility, shift and remedial.
i. Production transfers
A shortage or surplus of the labor force is common in different departments in a plant or
several plants in an organization. Surplus employees in a department have to be laid-off,
unless they are transferred to another department. Transfers affected to avoid such imminent
lay-offs are called production transfers.
ii. Replacement Transfers
Replacement transfers, too, are intended to avoid imminent lay-offs, particularly, of senior
employees. A junior employee may be replaced by a senior employee to avoid laying off the
later. A replacement transfer program is used when all the operations are declining and is
designed to retain long-service employees as long as possible.
iii. Versatility transfer
Versatility transfers are affected to make employees versatile and competent in more than
one skill. Versatile options are valuable assets during rush periods and periods when work is
dull. Versatile transfers may be used as a preparation for production or replacement transfer.
iv. Shift transfers
Generally speaking, industrial establishments operate more than one shift. Transfers between
shifts are common, such transfers being made mostly on a rotation basis. Transfers may be
effected on special requests from employees.
v. Remedial Transfer
Remedial transfers are affected at the request of employees and are, therefore, called personal
transfers. It takes place because the initial placement of an employee may have been faulty or
the worker may not get along with his or here supervisor or with other workers in the
department. He or she may be getting too old in his or her regular job, or the type of job or
working conditions may not be well-adapted to his or her present health or accident record. If
the job is repetitive, the worker may stagnate and would benefit by transfer to a different kind
of work.

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C. Separations
When a person joins an organization, the main aim is to work and develop oneself but that
does not necessarily mean that the person will continue working with that organization only.
Besides that there can be various other reasons that may force an individual to leave the
organization.

Separation refers to employee leaving the organization. It means end of service with the
organization. It is called “negative recruitment”.

Exit simply put means separation from the organization. It may take the form of retirement,
either compulsory or voluntary, resignation, dismissal, lay-off or retrenchment. Though it is
end of relationship of an organization with an employee but it can give important guidelines
to an organization about the way it works and what change may be required. Separations are
painful to both the parties and should, therefore be administered carefully.

There may be many causes of separation/employee exit. Broadly these causes can be
classified under the following headings - Avoidable causes and Non avoidable
causes/unavoidable causes.

Employee’s preferences or incompetence or poor health could be considered as unavoidable

causes. Such clear-cut demarcation is not possible in the case of avoidable causes. Avoidable
causes can be on personal reasons like incompatibility with peers or superiors, lack of interest
or aptitude of the given job, perceived fears and apprehensions about one’s own career
prospects, change of technology, change of product mix, production volume, poor working
conditions, etc…

Lay-offs
A lay-off is a temporary separation of the employee from his or her employer at the instance
of the latter without any prejudice to the former. In other words, it refers to separation of
employees for an indefinite period due to reasons, much beyond the control of employer. It is
intended to reduce financial burden of organization. It may be for a definite period on the
expiry of which the employee will be recalled by the employer for duty. It may be occasioned
by one of the following reasons: Shortage of raw materials; accumulation of stocks;
breakdown machinery and for any other reason.

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As the employees are laid off at the instance of the employee, they have to be paid
compensation for the period they are laid off.

The basis for the lay-off may be merit or seniority. If merit is the basis, employees with
unsatisfactory performance are laid of first. If seniority is used as the basis of lay off, then the
employees with the shortest period of service will be first laid off and the older employees
are retained as long as conditions permit. The basis for recalling the employees as soon as the
lay-off is lifted needs to be made clear. Naturally key employees must be the first to be
recalled.

Top management has to decide who are to be laid down. By and large “last in first out
(LIFO)” principle is used; when they are recalled and reemployed, last out first in (LOFI)
principle is used.

Resignations
A resignation refers to the termination of employment at the instance of the employee. This is
a manner of separation taken up by the employee. An employee resigns when he or she
secures a better job elsewhere, or when an employee suffers form ill health, and for other
reasons. The administration of separation caused by resignation is very simple because the
employee himself/herself is responsible for it. However, such process by employee can be in
either of the following two ways - Voluntary resignation and Induced resignation.
In voluntary resignation, the employee seeks separation from the organization due to reasons
of personal nature like lack of promotional opportunities, chances of better employment
elsewhere, health reasons, reasons of dissatisfaction of job etc.

On the other hand, induced resignation implies avoiding termination on grounds of discipline.
Meaning the individual may be induced or persuaded to leave due to any other serious
charges brought against him/her, and the proceedings of which might result in conviction and
termination of service.

Dismissal or discharge
Dismissal is the termination of services as a punishment for some major offences done by the
employee. Such punishment is awarded through a judicial or quasi-judicial process in which
ample opportunity is given to the employee who has been accused to defend him/her, call

54
witnesses in defending his/her case, etc. A dismissal needs to be supported by just and
sufficient reason. Principle of natural justice is applied in such proceedings and also in the
award of punishment. In case the reason of discharge is attributed to incompetence, poor
health or those due to organizational reasons, the employee must be given adequate notice
and must be properly explained the reasons of discharge.

The following reasons lead to the dismissal of an employee: Excessive absenteeism; Serious
misconduct; False statement of qualification at the time of employment and Theft of
company’s property.

Suspension
When any serious charge is brought to light against an employee, and a prime-facie case is
made out against him, it is normally a practice to suspend the employee, during the period of
investigation. These are done mostly for the purpose of preventing the employee from
tampering with the documents or influence the witness by making use of his opportunity and
power, which such employment provides.

During the suspension period, he is paid a reduced amount of salary, which is called
“subsistence allowance”. Depending on the results of the enquiry, at the end, he is either re-
established if found “not guilty” or discharged or dismissed if found “guilty” of charges. If he
is re-established, the areas of pay and allowances during period of suspension are paid to him
and his service seniority is restored.

Retrenchment
It refers to the termination of the services of employees because of the replacement of labour
by machines or the closure of a department due to continuing lack of demand for the products
manufactured in that particular department of the organization. In other words, it is the
termination of the services of an employee, permanently due to any reason, which is
economical but not discipline. It is acceptable if it can be proved, that retrenchment alone can
save the company. This may happen due to change of technology, competition, high-rise of
cost of production, mounting losses etc. On retrenchment, employee is entitled for gratuity in
addition to some compensation. The general principle for retrenchment is “last in first out

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(LIFO)”.

Retrenchment differs from lay-off in that, in the latter, the employee continues to be in the
employment of the organization and is sure to be recalled after the end of the period of lay-
off. But in retrenchment the employee is sent home for good, and his or her connections with
the company are severed immediately.

Retrenchment differs from dismissal as well. An employee is dismissed because of his or her
own fault. On the other hand, retrenchment is forced on both the employer and the
employees. Moreover, retrenchment involves the termination of the services of several
employees. But dismissal generally involves the termination of the service of one or two
employees.

Retirement
Here there are two ways in which retirement can take place.
i.Compulsory retirement schemes
This type of separation method applies to persons working in an organization who have
reached a particular age. Currently most employers fix their compulsory retirement ages at
between 60 and 65.
ii.Voluntary Retirement Scheme (VRS)
VRS is yet another type of separation. Beginning in the early 1980s, companies both in
public sector and in private sector have been sending home surplus labor for good, not strictly
by retrenchment, but by a novel scheme called the VRS, also known as the Golden Hand
Shake Plan. Handsome compensations are paid to those workers who opt to leave.

Management prefers pay hefty sums and reduces staff strength than retaining surplus labour
and continuing to pay them idle wages. Further, VRS is perceived as a painless and time-
saving method of trimming staff strength, easing out unproductive older workers and other

56
dead wood. Unions, too, can not object as the schemes are voluntary.

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 ABSENTEEISM AND TURNOVER

1. Absenteeism
• Refers to the failure on the part of employees to report to work though they are scheduled to
work. In other words, unauthorized absences constitute absenteeism.

• is calculated as follows:
Number of persons - days lost
Average number of persons X number of working days

If the absenteeism rate is four percent, then only 96 out of 100 people are available for work.

It amounts to absenteeism when an employee is scheduled to work but fails to report for duty.
Obviously absenteeism reduces the number of employees available for work. It costs money
to the organization, besides reflecting employee dissatisfaction with the company.

Like employee turnover, there is avoidable and unavoidable absenteeism. Absenteeism is

unavoidable when the employee himself or herself falls sick, his or her dependents at home
suddenly become unwell or there is an accident inside the plant. Unavoidable absenteeism is
accepted by managers and is even sanctioned by labor laws.

Avoidable absenteeism arises because of night shifts, opportunities for moonlighting and
earning extra income, indebtedness, lack of job security, job dissatisfaction and unfriendly
supervision. This absenteeism needs intervention by the management. Managers should take
steps to remove causes of absenteeism. On the positive side, managers must create a work
environment which will make the employees realize that it makes sense to work in the
factory rather than staying at home and waste their time.

Controlling Absenteeism
Many factors influence whether employees attend work on any particular day. The two most
immediate causes are the employee's ability to attend and motivation to attend.

Ability corresponds closely to involuntary absenteeism. Major reasons employees may not be
able to attend include personal illness, family problems that keep employees from the job,
and difficulties with personal or public transportation. Although involuntary absenteeism of
this sort can be predicted to some extent (and hence controlled) through the selection process,

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factors influencing ability to attend are not easily changed by management actions.

The major opportunity to control absenteeism comes through the employee's motivation to
attend. Managers often try to influence motivation through direct policies and practices
regarding attendance. Most common are policies against voluntary absenteeism, frequently
combined with penalties for offenders. These policies, however, appear to be generally
ineffective.

More promising results come from organizations that have experimented with the use of
positive rewards for good attendance, such as cash bonus, recognition, or time off with pay.
Although not always successful, such policies often reduce absenteeism.

Another approach, so called no fault absenteeism, recognizes the inherent difficulties in

distinguishing between voluntary and involuntary absenteeism. Organizations using this
approach recognize that some absenteeism is inevitable and permit a certain amount each
year without penalty (perhaps three to five occurrences). They make no attempt to determine
whether the absenteeism was voluntary or involuntary. Claimed advantages include; reduced
supervisory time trying to determine whether an absence was “legitimate”, placing
responsibility for attendance squarely on employees and improved attendance.

Some organizations are also taking a second look at traditional paid-sick leave policies.
Increasingly, managers believe that sick leave plans that provide payment for a fixed number
of days’ leave each year actually encourage absenteeism. Employees see sick leaves as a
benefit to be used whether needed or not. Recommendations to reduce the use of such plans
(that is improved attendance) typically involve some positive rewards if sick days are
accumulated rather than taken.

In summary, attendance is contingent on many factors. Some of these are outside the control
of the individual and hence are essentially outside management’s ability to influence. Others,
however, appear to be at least partially within the organization’s control. Positive rewards for
good attendance (such as cash bonuses, recognition, or time-off with pay), perhaps combined
with negative sanctions for absenteeism, can lead to improved attendance.

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2. Turnover
Turnover is the shifting or movement of a workforce into and out of a business enterprise.

The turnover rate is calculated as:

Number of Separations during one year
Average Number of employees during the year

Managerial activities necessary to control involuntary turnover are very different from
activities required to control voluntary turnover.

Voluntary turnover presents yet another set of issues for management to consider. It is caused
by many factors. Major influences are employee’s perceptions of the ease of movement and
the desirability of movement. Ease of movement depends largely on the personal
characteristics of the employees and on economic conditions. For example, employees with
the best work qualifications are likely to find it easier to leave and find alternative
employment opportunities. Also young employees are much more likely to terminate
voluntarily than the older employees. Economic conditions as reflected by unemployment
levels are negatively related to voluntary turnover.

Voluntary turnover is influenced by employee perceptions of the desirability of leaving,

which depends partly on what opportunities for other work are seen within the existing
organization. Employees may want to leave their current jobs but stay with the organization
if other jobs are available through transfer or promotion. To some extent, these opportunities
are within the control of management and hence can be used to influence turnover.

A major factor that influences desirability to leave is employee satisfaction. The greater the
satisfaction, the lower the probability of leaving. The relationship is especially strong when
economic conditions in the external labor market are favorable.

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 CHAPTER- 5
PERFORMANCE APPRAISAL
A. Definition
Performance appraisal can be defined as a human resource activity that is used to
determine the extent to which an employee is performing his job effectively. Performance
is said to be a result of employee’s efforts abilities and role perception.

Performance appraisal is the process of determining and communicating to an employee

how he or she is performing the job and, ideally, establishing plan of improvement. Other
terms of performance appraisal include: performance review, personnel rating, merit
rating, performance evaluation, employee appraisal and employee evaluation.

B. Purposes of performance appraisal

1.To provide information towards strength and weakness of employees in their job
performance.
2.To provide data for management for judging future job assignments, promotions
and compensation.
3.To provide information to help maintain an equitable and competitive pay structure

4.To supply general information on training needs for the organization or

departments
5.To improve motivation by increased understanding of goals, the means of attaining
the goals and the rewards associated with achievement.
6.To improve performance by developing strength and dealing with weakness.
7. To provide legally defensible reason for promotions, transfer, reward and
discharges.

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C. Who appraises the employee performance?
In designing an appraisal system, another significant factor worthy of consideration is the
appraiser. Who should actively make the appraisal?. The individual and group of
individuals who usually do the appraisal include the immediate supervisor, employee’s
peers, employees themselves (self- appraisal), and subordinates.

I. Immediate Supervisor
Appraisal of employees’ performance by their supervisors is the traditional and most
frequently used approach. In fact, this is one of the major responsibilities of all managers.
This approach is used because it is assumed that the supervisor has greatest opportunity
to observe the subordinate’s behavior. It is also assumed that the supervisor is able to
interpreter and analyzes the employee’s performance in light of the organization
performance objectives. In most organizations, the employee’s supervisor is responsible
for making reward decisions such as pay and promotion. If the immediate supervisor
appraises the employee, the supervisor can possibly link effective performance with
rewards. Supervisors are also in the best position to know the job requirements, to
observe employees at work and to make the best judgment.

II. Employee’s peers

In an organizational setting, a peer is a person working with and at the same level of an
employee. The peer appraisal is frequently called “mutual rating system “. In effect, each
employee apprises each of the other members of the work group. Employee’s peers
represent a credible source of performance data not only because of their frequent
contacts to each other but also because of their interdependence to accomplish common
assignments and common objectives. Performance feed back from peers, based on
observational data, provides employees with a view of their level of performance.
III. Employee self appraisal

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In many organization self – appraisal is used for developmental purpose. It is getting
acceptance that comprehensive self-appraisal may serve as a vehicle of professional
improvement, ensuring lasting change and development of employee’s competence and
quality of performance. Self –appraisal helps an employee to analyze his or her actual
current level of performance in the light of desired performance competence. It is also
generates performance data on weakness, strength and potential of the employee, which
the appraiser, in the time of appraisal program, might not ascertain.

IV. Subordinate appraisal

Some organizations are now using subordinate appraisals, where by employees appraise
their superiors. This is use full in trying to develop better superior- subordinate relation
ship, and in improving the human relationship of managers. Finally, two or more
approaches may be used in combination to appraise the performance of employees. That
is supervisor’s appraisal may be supported by self appraisal or peer appraisal. Such an
approach may help to offset bias and favoritism that may be realized when appraisal is
conducted only by a single designated appraiser. This approach not only helps to make
appraisal results more objective but also to get the cooperation and commitment of
employees to the system of performance appraisal.

D. Performance appraisal process (steps)

Performance evaluation involves:
A.Establishing performance standards for each position and the criteria for evaluation

B.Establishing evaluation policies on when to rate, how to rate and who should rate

C.Have raters gather data on employees performance

D.Have raters (and employees in some systems) evaluate employee’s performance

E.Discuss the evaluation with the employee

F.Make decisions and file the evaluation

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E. PERFORMANCE APPRAISAL METHODS

I. Graphic rating scale method

This method is the simplest and the most popular technique for appraising performance.
A graphic rating scale lists traits (factors) such as quality of work, job knowledge,
attendance, accuracy of work and cooperativeness. And a range of performance values
from unsatisfactory to outstanding is obtained for each factor. You rate each subordinate
by circling o checking the score that best describes his/he performance for each factor.
You then total the assigned values for the traits.

II. Alternation ranking method

This method involves ranking employees from best to worst on a factor or factors traits.
Since it is usually easier to distinguish between the worst and best employees, an
alternation ranking method is most popular. First, list all subordinates to be rated, and
then cross out the names of any not well enough to rank. Then indicate the employee who
is the highest on the characteristics being measured and also the one who is the lowest.
Chose the next highest and the next lowest till all employees have been ranked.

III. Paired comparison method

This method helps to make the ranking more precise. For every factor (quality of work,
quantity of work etc.), you pair and compare every subordinate with every other
subordinate.
Example, suppose a rater is to evaluate six employees. The name of these employees is
listed on the left side of a shit of paper. The evaluator then compares the first employee
with the second employee on a chosen performance criterion, such as quality of work. If
he/she believes the first employee has produced more work than the second employee a
check mark is placed by the first employee’s name. The rater then compares the first
employee with the third, fourth, fifth and sixth employee on the same performance
criteria, placing a check mark by the name of the employee who produced the highest

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result in each paired comparison. The process is repeated until each employee has been
compared to every other employee on all of the chosen performance criteria. The
employee with the most check mark is considered to be the best performer. Likewise, the
employee with the fewest check marks is taken as the least performer. One major
problem with the paired comparison method is that it becomes too wide especially when
comparing more than five or six employees.

IV. Critical incident method

With this method the supervisor keeps a log of positive and negative examples (critical
incidents) of a subordinates work related behavior. Every six months or so, supervisors
and subordinates meet to discuss the latter’s performance, using the incidents as
examples.

V. Management by objective (MBO)

MBO requires the manager and workers set specific measurable goals and then
periodically discuss the employees’ progress towards these goals through out the
implementation process the term MBO generally refers to a compressive, organization
wide goal setting and appraisal program consisting of six steps, which include:
_ Set organizational goals
_ Set departmental goals
_ Discuss the goals with the workers
_ Define expected results
_ Performance review
_ provide feedback

VI. Essay appraisal

It is performance evaluation method in which the rater prepares a written statement
describing the individual’s strength, weakness and past performance. There are criticisms
about the accuracy and relevance of this method. This is mainly because comparing
essays written by the same or different raters is difficult since skilled writes can paint
better picture of an employee than unskilled writers.

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VII. Checklist method
This is performance evaluation method in which the rater answers with a yes or no, a
series of questions about the behavior of the employee being rated.

VIII. Work standards

It is a method, which involves setting a standard or an expected level of out put and then
comparing each employee’s level of performance to the standard. This approach is most
frequently used for production employees.

IX. Multi-rater assessment (or 360 degree feedback)

This is one of most recently popular method of evaluation. With this method managers,
peers, customers, supplies or collogues are asked to complete questionnaires about the
employee being assessed. The person under evaluation also completes a questionnaire.
The HR department provides the result to the employee, who intern gets to see how
his/her opinion differs from those of the group participating in the assessment.

X. Computerized and web based performance evaluation.

Nowadays several relatively inexpensive performance appraisal software programs are on
the market. These programs generally enable managers to keep notes on subordinates
during the year and then to electronically rate employees on a series of performance
factors. The programs finally generate written text to support each part of the evaluation.

F. Appraising performance: Problems and solutions

Regardless of which technique or system is used there are many problems which may
encounter in the process of using them. None of the techniques is perfect; they all have
limitations. Some of these limitations are common to all of the techniques while others
are more frequently encountered with some ones. The problems generally include:

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I. Unclear standards of evaluation
Problems with evaluation standards arise because of perceptual differences in the
meanings of the words used to evaluate employees. Thus good, adequate, satisfactory and
excellent may mean different things to different evaluators. This difficulty arises most
often in graphic rating scales but may also appear with essays, critical incidents and
checklists. There are several ways to minimize this problem. The best way is to develop
and include descriptive phrases that define the meaning of each dimension or factor and
training raters to apply all ratings consistently which will at least reduce the potential
rating problems.

II. Hello effect

It is a problem, which arises in performance evaluation when a supervisor’s ratings of a
subordinate on one trait bias the ratings of the person on other traits. Halo error can be
either negative or positive, meaning that the initial impression can cause the ratings to be
either too low or too high. Being a ware of this problem is a major step towards avoiding
it. Supervisory training can also alleviate the problem. Besides allowing the rater to
evaluate all subordinates on one dimension before proceeding to another dimension can

reduce this type of error.

III. Central Tendency

A Central tendency error occurs when a rater avoids using high or low ratings and assigns
average ratings. For example, if the rating scale ranges from 1 to 7, they tends to avoid
the highs (6 and 7) and lows ( 1 and 2) and rate most of their people between 3 and 5.
This type of “average” rating is almost useless-it fails to discriminate between
subordinates. Thus, if offers little information for making HRM decisions-regarding
compensation, promotion, training, or what should be feedback to rates. Raters must be
made aware of the importance of discriminating across rates and the use of evaluations.
This sometimes stimulates raters to use less central (average) ratings. Rankings
employees instead of using graphic rating scale can reduce this problem, since ranking
means you cannot rate them all average.

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IV. Constant error
This problem occurs when a supervisor has a tendency to rate all subordinates either high
or low. Some raters see every thing as good- these are lenient raters. Others-raters see
everything as bad these are harsh raters. This strictness or leniency problem is especially
severe with graphic rating scales, when firms do not tell their supervisors to avoid giving
all their employees high or low ratings. One mechanism used to reduce harsh and lenient
rating is to ask raters to distribute ratings- forcing a normal distribution. For example, 10
percent of subordinates will be rated as excellent, 20 percent rated as good, 40 percent
rated as fair, 20 percent rated below fair, and 10 percent rated as poor.

V. Decency of Events Error

This rating error occurs when a manager evaluates employees on work performance
most recently, usually one or two months prior to evaluation. Raters forget more about
past behavior than current behavior. Thus many workers are evaluated more on the
results of the past several weeks than on six months average behavior. Some employees
are well aware of this difficulty. If they know the date of the evaluation, they make their
business to be visible and noticed in many positive ways for several weeks in advance.
This problem can be mitigated by using techniques such as critical incident or MBO or
by conducting irregularly scheduled evaluations.

VI. Contrast effects

In individual evaluation techniques each employee is supposed to be rated with out any
regard to another employee’s performance. Some evidences however show that
supervisors have very difficult time doing this. If the supervisor lets an employee’s
performance the ratings that are given to some one else, it is said that a contrast effect has
occurred. Supervisors who rate their employees should take the greatest care in
evaluating workers separately based on their performance.

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VII. Personal bias error
A personal bias rating error is an error related to a personal bias held by a supervisor.
There are several kinds of personal bias errors; some can be conscious such as
discrimination against some one because of the appraiser’s personal characteristics like
age, sex and race. Some supervisors might try to “play favorites” and rate the people they
like better than people they do not like. Other personal bias errors occur when a rater
gives a higher rate because the worker has qualities or characteristics similar to the rater.
.
IX. Problem with the appraised
For a system of performance appraisal to function well, it is important that employees
regard it as potentially valuable to improve their competence and to achieve
organizational goals successfully. However, most efforts of performance evaluation are
narrowly focused and oversimplified that they give little regards to the favorable
perception of employees.

A substantial amount of employee’s negative attitude towards appraisal results from their
doubt about the validity and reliability, and performance feedback or ratings presented by
their appraisers. Employees often question appraisers’ competence in appraisal, and
consequently tend to lose trust and confidence in their appraisers and often resist
accepting performance ratings.

Another appraisal problem often realized is employees’ reaction to appraisal result of low
ratings. Most employees have difficulty in facing up to appraisal results involving
negative feedback about their performance. Such a feedback often develops in employees
a sense of tension, friction, insecurity, embarrassment, frustration, anger, resentment, and
anti- feelings and action.
Performance appraisal may be less effective than expected if the employee is not work-
oriented and if he sees work only as a means of personal satisfaction. Such an employee
may see an appraisal program as only a system of paper work , unless the appraisal
results is so negative that the employee fears termination of his employment.

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In sum, for performance appraisal to work well, the employee must understand it, must
feel that it is fair, and must be work oriented. One way to foster this understanding is for
the employees to participate in the design and operation of the system and to train them to
some extent in performance appraisal.

In general, there are problems with performance appraisal: with the appraisers, and with
the employees. It is, however, believed that the suggestions presented hereunder may
improve the system of performance appraisal.

G. HOW TO AVOID APPRAISAL PROBLEMS

I. Improving validity and reliability of performance criteria
Validity problem – performance criteria are intended to accurately or objectively
measure the performance and potential of employees. When more subjective criteria are
used, the appraisal becomes less valid for decision making and career guidance. The most
common validity errors are caused due to the hallo effect, the recent behavior bias, the
central tendency and the similar to me errors.
Reliability problems: Appraisals may lack reliability because of the inconsistent use of
differing standards and lack of training in appraisal techniques.

II. Adopting multiple appraisal and different timing

Because of bias and halo effect, it may be more use full to adopt multiple rather than
single appraisal techniques. While the ratings of one appraisal may not be valid, the over
all pattern of several ratings provides an indication of over all performance and potential
for development. Appraisal can be improved by being done several times a year rather
just once. This overcomes the bias of regency.
III. Providing better feedback
The result of the appraisal , along with suggestions for improvement , should be
communicated to the appraised as soon as possible .the skill with which the appraiser
handles the appraisal feedback is the factor in determining whether the appraisal program
is effective in changing employee behavior or not.

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 CHAPTER- 9
TRAINING AND DEVELOPMENT
A. Meaning
Training and development can be defined as planned efforts by organizations to
increase
employees’ knowledge, skills and abilities.

Training refers to the method used to give new or present employees the skills they need
to perform their jobs.

Training is any process by which the aptitudes, skills and abilities of employees to Perform
specific jobs are increased. It is the act of increasing the knowledge and skills of an employee
for
doing a particular job.

Development is the systematic process of education, training and growing by which a

person learns and applies information, knowledge, skills, attitudes and perceptions.

Development is said to include training to increase skills and knowledge to do a particular job
and education concerned with increasing general knowledge and understanding. This shows
that
development involves learning opportunities aimed at the individual growth but not restricted
to a
specific job. Training is usually related to operational or technical employees while
development
is for managers and professionals. However, they are also many times used interchangeably.

B. OBJECTIVES OF TRAINING AND DEVELOPMENT

Training and development has many objectives which include:

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 I. To provide the knowledge skills and attitudes for individuals to undertake their current
jobs more effectively
II. To help employees become capable of assuming other responsibilities with in an
organization either at more senior or at their current levels (developing their potentials)
III. To help employees to adapt to changing circumstances facing organizations such as new
technologies, new business environment, new product etc
IV. To reduce wastage and increase efficiency
V. To minimize input and maximize output
VI. To relieve supervisors from close supervision and get time for other duties
VII. To lower turnover and absenteeism and increase employees’ job satisfaction
VIII. To lower the number and cost of accidents

D. PROCESS OF TRAINING AND DEVELOPMENT

To achieve objectives and gain the benefits of human resource development, human
resource managers must assess the needs, objectives, content and learning principles
associated with training and development. It is often the responsibility of human resource
management department to conduct assessment of training and development needs of
employees and those of the organization in order to learn what objectives should be
sought. Once objectives are set, the specific content and learning principles and the
appropriate training methods are considered.
The following are the logical steps to be undertaken to create an effective program of
training and development.
1)Determining training needs
2)Determining training and development objectives
3)Deciding which training technique to use and develop the training program
content.
4)Establishing learning principle
5)Conducting training and development programs before, during and after
implementation.

1. Analyzing Training and Development needs

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A major problem with training and development is identifying who needs how much of
what type of training and development .The training and development needs of an
organization fall into two independent categories namely , organizational needs and
employee’s training needs.

I. Organizational training needs

Training should not be undertaken for its own sake. It must be geared to the objectives of
the particular organization. No organization can plan a realistic training and development
unless a thorough diagnosis of present human resource position has been made and its
future plans and type of human resource requirements have been decided up on . It is ,
therefore, essential to know what the present skills are and , based on the agreed
objectives, what training is required to meet the development of the necessary skills for
the achievement of the objectives .
The following questions are relevant to this
1Present position
a. What human resource does the organization have?
b. What training has these human resource had?
c. What are the deficiencies, or what skills are lacking?
2Based on organizational objectives
a.Who needs to be trained?
b.What categories of employees need special training program?
c.How many of each category needs to be trained?
d.How much time is available for the training?
The above are some basic questions that the human resource manager should ask before
the organizations is made to draw up a training program.

II. Employee’s Training Needs

Training and development needs may also express in terms of skills that are expected to
be available in the individual employee. As in case of organizational training needs,
certain basic questions have to be asked with regard to the training needs of individual

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employees. The following are some of the questions that might be asked:
1What does the employee have to do?
2What particular skills does he need in order to work effectively?
3What skills does he have?
4What skill must he acquire to do the job well?

In general, training and development needs are said to be existed in an organization when
there is a gap between the existing performance of an employee (or group of employees)
and the desired performance .To asses whether such a gap exists requires skills inventory
and analysis in the organization.
There are different methods of gathering information to determine the need for training
and development of human resources. The most frequently used ones are the following:
1Organizational analysis
2Task analysis or analysis of job requirement
3Performance analysis
4Supervisory recommendations
5Employee suggestions
6Observations
7Test of job knowledge test and questionnaire survey
8Management requests

2. Determining training and development objective.

After training needs have been determined, objectives must be established for meeting
those needs. Effective training objectives should state what will result for the
organization, departments or individuals when the training is completed. The out comes
should be described in writing.

3. Choose the appropriate training techniques and principles

There are many training methods to be used. Appropriateness of training techniques
depend on: cost effectiveness, desired program content (teaching specific skills,
providing knowledge or influencing attitude), appropriateness of the principles, trainee’s

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preference and capabilities, trainer preference and capabilities and training principles.
Training can be conducted either on the job; that is with in the actual work environment
or off the job; that is out side the actual work.

Among the training methods are:

1.Position rotation: this is a formal, planned program that involves assigning trainees
to various jobs in different parts of the organization.
2.Coaching: the trainee is placed under a close guidance and supervision of the
trainer (immediate supervisor) and he/she is given an opportunity to perform
an increasing range of tasks and the coach’s experience.
3.Internship: refers to a joint program of training where schools and different
organizations cooperate to train students by assigning them to different jobs.
4.Case study: it is a method of classroom training in which the learner analyses real
or hypothetical situations and suggests not only what to do but also how to do
it.
5.Lectures, seminars, conferences and workshops: a lecture is a semi-formal
discourse in which the instructor presents a series of events, concepts,
principles and theories and express problems or explains relationships.
Conference brings together individuals with common interests to discuss and
attempt to solve the problem. A seminar is a group of persons gathered
together for the purpose of studying a subject under the leadership of an
expert. In workshops a group of persons with common interest or problems
after performing professional or vocational work meet for an extended number
of time to improve their individual proficiency, ability or understanding.
6.Apprenticeship: involves learning from more experienced employees. It is
generally followed in technical fields in which proficiency in acquired in
direct association with work and direct supervision.
7.Distance and internet-based training: firms today use various forms of distance
learning method for training. Distance learning methods include traditional
paper and pencil correspondence courses, as well as tale-training, video

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 conferencing and Internet based classes.
8.Vestibule training: setting up a training area very similar to the work area in
equipment , procedures, and environment ,but separated from the actual one
so trainees can learn with out affecting the production schedule

4. Establishing learning principle

Learning principles are guidelines to the way in which people learn most effectively. The
more they are included in training, the more effective training is likely to be .
The following learning principles are suggested to be applied in the process of human
resource development.
1Need for positive motivation
2Need for relevance
3Need for continuity and change
4Need for application of the system approach
5Need for over coming resistance to training
6Need for training the rainier
7Need for feed back

5. Evaluating training program success

The final step in conducting a training program is to evaluate its success. There are four
basic reasons why you should assess the program’s success:
a.Justifying expenses: because any human recourse program takes money and time, it
is important to justify the expense, particularly given today’s emphasis on cost
cutting and accountability. Failure to prove the cost- effectiveness of a program
can come back to haunt even the best-run program. In addition demonstrating the
cost effectiveness of a training program will enhance your own credibility.
b.Making decisions about future programs: once you have run a program, your
company might question whether the program should be repeated, changed or
discontinued. By evaluating its success, a much more informed choice can be
made.
c.Making decisions about individual trainees: Depending on the purpose trainees

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 may need to pass the program in order to be certified or qualified for a particular
task or job. In many cases, passing the program will involve more than simply
attending all sessions. The trainee may need to have a certain grade or score on
some types of tests. Formal evaluation of each participant’s performance may
therefore be necessary.
d. Reducing professional liability: If you design or deliver a training program , you or
Your organization might be held legally responsible if a trainee subsequently become
injured or killed in the course of performing the task or job. Thus, It is important to
evaluate a training program to ensure that it can be defended against legal challenges.

E. MANAGEMENT DEVELOPMENT
Management development is any attempt to improve managerial performance by
imparting knowledge, changing attitudes or increasing skills. The ultimate aim is, of
course, to enhance the future performance of the company itself.
The general management development process consists o f
I. Assessing the company’s strategic needs (fore instance, to fill future executive
opining, or to boost competitiveness),
II. Apprising the managers performance, and then
III. Developing the managers (and future managers)
One of the most important management development techniques is succession planning.

Succession planning
Succession planning is a process by which one or more successors are identified for key
posts (or groups of similar key posts), and career moves and/or development activities are
planned for these successors. Successors may be fairly ready to do the job (short-term
successors) or seen as having longer-term potential (long-term successors).
Succession planning therefore sits inside a very much wider set of resourcing and
development processes which we might call succession management. This encompasses
the management resourcing strategy, aggregate analysis of demand/supply (human
resource planning and auditing), skills analysis, the job filling process, and management
development (including graduate and high flyer programs).

What do organizations want from succession planning?

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Organizations use succession planning to achieve a number of objectives including:

I. Improved job filling for key positions through broader candidate search, and faster
decisions

II. Active development of longer-term successors through ensuring their careers

progress, and engineering the range of work experiences they need for the future.

III. Auditing the ‘talent pool’ of the organization and thereby influencing resourcing
and development strategies

IV. Fostering a corporate culture through developing a group of people who are seen
as a ‘corporate resource’ and who share key skills, experiences and values seen as
important to the future of the organization.

Of these, it is the active development of a strong ‘talent pool’ for the future which is now
seen as the most important. Increasingly, this is also seen as vital to the attraction and
retention of the ‘best’ people.

Who does Succession planning cover?

Succession planning covers only the most senior jobs in the organization (the top two or
three tiers) plus short-term and longer-term successors for these posts. The latter groups
are often manifesting as a corporate fast stream or high potential population who are
being actively developed in mid-career through job moves across organizational streams,
functions or geographical boundaries.

Many large organizations also adopt a ‘devolved’ model where the same processes and
philosophy are applied to a much larger population (usually managerial and professional)
but this process is managed by devolved organizational divisions, functions, sites or
countries. It has to be said that few organizations successfully sustain the devolved
model, usually because it is not really seen as a high priority and not adequately

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facilitated by HR.

How are succession and development plans produced?

Succession plans normally cover both short- and longer-term successors for key posts,
and development plans for these successors. Where a number of jobs are of similar type
and need similar skills, it is preferable to identify a ‘pool’ of successors for this collection
of posts.

Typical activities covered by succession planning include:

a. Identifying possible successors

b. Challenging and enriching succession plans through discussion of people and posts

c. Agreeing job (or job group) successors and development plans for individuals

d. Analysis of the gaps or surpluses revealed by the planning process

e. Review, i.e. checking the actual pattern of job filling and whether planned individual
development has taken place.

The process is essentially one of multiple dialogues. Preliminary views are collected,
usually from senior line managers, and then these views are tested and amended in a
number of such dialogues: up the management line; with HR professionals; and in a
committee of peers. The use of succession or development committees to challenge and
agree plans is an important way of generating cross-boundary moves. They also help to
ensure that the view taken by the organization of an individual is based on objective
evidence.

The level of secrecy in succession planning is gradually being reduced. All employees
should understand that such a process exists and how it works. Those covered by the
process should have an opportunity to make an input about their own career aspirations,

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preferences and constraints. They should also get feedback from the process in terms of
how they are viewed by the organization, their perceived development needs and the
kinds of job moves for which they would be considered.

How Succession Planning Helps

Succession planning establishes a process that recruits employees, develops their skills
and abilities, and prepares them for advancement, all while retaining them to ensure a
return on the organization's training investment. Succession planning involves:

Understanding the organization's long-term goals and objectives

Identifying the workforce's developmental needs
Determining workforce trends and predictions
In the past, succession planning typically targeted only key leadership positions. In
today's organizations, it is important to include key positions in a variety of job
categories.
With good succession planning, employees are ready for new leadership roles as the
need arises, and when someone leaves, a current employee is ready to step up to the plate.
In addition, succession planning can help develop a diverse workforce, by enabling
decision makers to look at the future make-up of the organization as a whole. Effective
Succession planning ultimately results in:
Better retention
Valuable training goals
Increased preparation for leadership
Greater employee satisfaction
Enhanced commitment to work and the workplace
Improved corporate image

F. CAREER DEVELOPMENT
Career development is an on going, formalized effort by an organization that focuses on

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 developing and enriching the organization’s human resource in light of both the
employee’s and the organization’s needs.

Why career development?

From the organizations point of view point, career development can reduce costs due to
employee turnover .If a company assists employees in developing career plans, these
plans are likely to be closely tied to the organizations; therefore, employees are less likely
be quit. Taking an interest in employees’ careers can also improve moral, boost
productivity, and help the organization become more efficient. The fact that an
organization shows interest in an employees’ career development has a positive effect on
that employee. Under these circumstances, employees believe that the management
regards them as part of over all plans and not just as numbers. An emphasis on career
development can also have appositive effect on the way employees view their job and
their employers.
From organization’s viewpoint, career development has three major objectives:
a. To meet the immediate and future human resource needs of the organization on a
timely basis.
b. To better inform the organization and individual about potential career paths within
the organization.
c. To utilize the existing human resource programs to the fullest by integrating the
activities that select, assign, develop, and manage individual careers with the
organizations plans.

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 CHAPTER-5
WAGE AND SALARY ADMINISTRATION (COMPENSATION)
Definition
Compensation is the human resource management function that deals with every type of
rewards individuals receive in exchange for performing organizational task

Compensation refers to all forms of pay or rewards going to employees and arising from
their employment, and it has two main components: direct financial payments (in the
form of wages, salaries, incentives, commissions and bonuses), and indirect payments (in
the form of financial benefits like employer –paid insurance and vacation)

Employees need to be rewarded for the service they provide an organization. The
organization, on the other hand, has the obligation to reward employees fairly
according to the contribution they provide to the organization. Organizational reward
includes, both intrinsic and extrinsic, that are received as the result of employment by
the organization

Compensation should be equitable to the employer and employee alike. It should be

adequate in order to meet the needs of the employees, the employers and also meet the
minimum requirements of governments, union and management: just like HRM
functions, compensation policies and procedures are also affected by internal external
factors in the environment including government regulations, economic conditions,
unions influence and demand, the labor market wage rates offered by competitors
organization’s financial conditions, it’s size and philosophy and strategy, etc

COMPENSATION POLICIES
Certain policies must be formulated before a successful compensation system can
be developed and implemented. Naturally, these policies are strongly in flounced
by the organization’s objectives and its environment. Policies must deal with the
following issues:

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1Minimum and maximum levels of pay (taking in to consideration the worth of the
job to the organization, the organization’s ability to pay, government
regulations, union influences and market pressure)
2General relation ship among levels of pay (e.g. between senior management,
operating management, and operative employees, and supervisors)
3The division of the total compensation dollar (i.e. what portion goes in to base
pay, in to incentive programs and in to benefits). In addition to these issues,
organizations must make decisions concerning how much money will go in to
pay increase for next year, who recommend them, how rises will generally be
determined

IMPORTANCE OF COMPENSATION
1. To employees:
A. It is the primary (and often the only) source of income for
employees and their family.
B. It determines employees ` social status. An income level is often
used as a measure of a person’s worth.
C. It is a faire reward for the work employees perform and the benefit
they provide for the employer.
2. To employers
A. To attract capable employees to the organization
B. To motivate employees to wards superior performance
levels
C. To retain current employees

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FACTORS AFFECTING COMPENSATION DECISIONS
A. EXTERNAL FACTORS
1. Government: government rules, regulations, executive’s orders, and laws have
their influence on an organization’s compensation policy. Every government provides
laws for compensation in areas like, minimum wage rate, equal pay provision –to avoid
pay differentials based on sex in jobs requiring substantially equal skill, effort,
responsibility, and working conditions .etc

2. Cost of living: cost of living as measured in terms of consumer price index may
affect the organization’s compensation policy as it tries to adjust its employee’s
earnings to the rate of inflation. This process is called cost of living adjustment (COLA).
As per the policy of the organization, compensation could be adjusted.

3. Comparable wage rate: the wage pattern in the industry and community could
have an impact on the compensation policies and practices of organizations. Comparing
wages and salary rates in a given areas may help in ensuring that the organization is
offering a salary that is not substantially higher or lower than those paid by others in the
same area. Comparison could also be done based on occupation to provide a comparable
pay to similar occupations around the country.
In order to insure that comparable level of payment is offered to employees,
organizations conduct salary and wage survey on other companies to avoid costly
mistakes. These could also be done to offer comparable benefit packages to employees

4. Market condition: Regardless other factors involved, the supply and demand
relationships in the labor market will determine the wage and salary level in
organization.

5. Union’s influences: union and labor relations laws also influence pay plan design.
Historically, the wage rate has been the main issue in collective bargaining. However,
union also negotiate other pay related issues, including time off with pay, income security
(for those in industries with periodic lay offs), cost of living adjustments, and benefits
like health care.

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B. INTERNAL FACTORS
1The size and age of the organization: It is argued that large and new
organizations tends to pay higher wages compared to small and old ones

2The labor budget (resource allocation strategy)

3Managerial philosophy and strategy .As top –level management has the
final say on pay level decisions, their views and strategies affect payment
decisions

Maintaining a sense of equity among employees

Internal and external considerations
The primary objective of any basic wage and salary system is to establish a structure and
system for the equitable payment of employees, depending on their job and their level of
performance on their job.

There are several policy issues that need to be addressed for establishing a fair and
equitable compensation system. Most basic wage and salary system establish pay ranges
for certain jobs based on the relative worth of a job to the organizations and wage and
salary survey. Determining the relative worth of a job to the organization maintains fair
and equitable pay structure internally by comparing jobs within the organization while
wage and salary surveys ensures that the payment range is comparable to the payment
systems in other similar establishments or occupation s .An individual’s performance on
the job should then determine where that individuals pay fall within the job’s range

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Determining internal fairness: Conducting Job Evaluation
Job evaluation
It is a systematic determination of the value of each job in relation to other jobs in the
organization. If it is done properly, the relative value of the jobs is reflected in the relative
wage rate for the jobs.
It involves
1To enumerate the requirements of a job

2The jobs contribution to the organization

3Classifying it according to importance

Steps in job evaluation

1. Gather information on the job being evaluated. The information is obtained
from job analysis.
2. Determining factors that are to be used in determining the worth of different
jobs to the organization like education, skill, initiative, responsibility,
working conditions physical and mental effort, experienced, etc.
3. Determining the method of evaluation that will use the chosen factors for
evaluating the relative worth of the different jobs .The most common kind of
job evaluation methods include point method, factor comparison, job
classification, and job ranking.
4. Grading jobs according to their importance

Determining External Equity: Using wage and salary survey

It is used to collect comparative information on the policies, practices and methods of
wage payment from selected organizations in a given geographic location or particular
type of industry. Conducting wage and salary survey is useful to ensure external equity
by providing information about the labor market. It also helps in correcting employees’
misconception about certain jobs as bring too important or paying. Employees will also
be motivated when they know that they are getting a comparable payment with
employees other organizations.

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 In order for the survey to be effective, it is essential to identify the jobs to be surveyed
and also the organizations and their geographic location. Then the appropriate wage
survey will be designed. Some of the issues usually included in the survey include:

1Length of workday

2Starting wage rates

3Base wage rate

4Overtime time pay

5Vacation and holyday practice

6Pay ranges, incentives plan, etc

Employee Benefits (fringe benefit)

It refers to benefits given to employees in addition to salaries or wages. Unlike wages and
salaries, benefits are not usually related to employees’ performance. Broadly classified
there are two types of fringe benefits.

A. Time-of pay: this are payments for the time not worked and include pay vacations,
paid holidays, paid sick leaves, pension programs, rest periods, etc.
Example: Paid vacations- organizations provided employees a certain number of paid
vacation days in a year. The number of days may vary according to how long an
employee has worked for an organization. Usually, paid vacation times increases with
seniority.
Sick leaves:- providing employees with pay for days not worked because of illness
Pension programs: it represents a fixed payment other than wages, made regularly to
former employees or their surviving dependents.

B. Non-pay benefits: these are benefits not paid in cash but include expenditures
on items such as medical services, transportation, accommodation, insurance, cafeteria
services, education programs, child care services, and others.
Example: Health insurance: Medical insurance program designed to cover a portion or

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 total medical expense incurred by an employee. It may include coverage for
hospitalization, outpatient doctor bills, prescription drugs, dental, eye, medical health
care, etc.
Accident and disability insurance: it is designed to protect the employees who experience
a long term or permanent disability.

Methods of payment
There are three basic methods of payment

a)Time-based payment: it is a payment computed in terms of some time unit-

hours, days, weeks, months, years, etc. remuneration does not vary according to
quantity and quality of performance. One good example is salary.
Advantage:
- It is easy to administer since it is fixed amount
- It improves employees’ integration to the organization by enhancing
employees’ security. (Knowing what they earn at the end of a certain
period to time)
Disadvantages:
- It is not a good motivator as it is not associated with performance.
- In times of need to reduce costs due to financial problems, organizations are
forced to lay-off salaried employees as opposed to reducing working hours
and keeping employees with the organization

b)Performance-based payment method: in this method, remuneration

depends upon the quality and quantity or work.
Advantages:
It may result in motivation of employees to improve performance.
Disadvantage:
1. Incentive pay system however, is applicable only in a relatively limited number
of situations most notably where employee or group out put can be counted or

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 assessed in dollar terms.
2. It may result in scarifying quality of work for quantity
3. The administration of incentive system is also problematic because employees
are motivated to “beat the dame” by keeping standards low so that they can
maximize their pay with a minimum effort. As a consequence, an adversarial
relation ship may develop between the employees and managers responsible for
the pay system.

C.Combination of time-based and output-based methods: it involves

paying salaries to employees and adding other output related payments (like
bonus or commissions) to create a financial incentive for employees.

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