You are on page 1of 51

Study Note - 4

HUMAN RESOURCE MANAGEMENT


This Study Note includes

Meaning of Human Resources Meaning of Human Resource Management Objectives (or Role) of Human Resource Management Importance (or neccesity) of Human Resource Management Functions of Human Resource Management Recruitment and Selection of Workers Meaning of Recruitment Sources of Recruitment Methods of Recruitment Meaning of Selection Procedure for Selection Recruitment Practice in India Concept of Dismissal Grounds of Dismissal Procedure for Dismissal Retirement Lay off Redundancy Taylor and Scientific Management Principles of Scientific Management Contributions of Henry Fayol Managerial Qualities General Principles of Management Human Relations School Behavioural Approach Systems Approach Contingency Approach Training Principles of Training Benefits of Training Methods of Training Induction or Orientation Training Concepts of Training, Education and Development Training and Education Training and Development Role of Training and Development Methods of Remunerating labour Questions for Review and Discussion

ORGANISATION & MANAGEMENT FUNDAMENTALS

137

HUMAN RESOURCE MANAGEMENT

4.1. MEANING OF HUMAN RESOURCES


Human resources represent the people at work. In other words, human resources are the sumtotal of the inherent abilities, acquired knowledge, skills and aptitudes of employees. Human resources have different needs, attitudes, values and they behave differently. At the same time, human resources are dynamic and have greatest potential to develop and grow. Performance of an organisation is directly related to the quality of its human resources. Therefore, human resources are to be utilised fully in order to achieve organisational goals. 4.1.1. Meaning of human resource management Human resource management is concerned with managing human resources. It focusses on the effective use of human resources in an organisation. It is concerned with the development of a highly motivated and smoothly functioning work force. It acquires, develops, utilises and maintains human resources in the achievement of organisational goals. Non-human resources (e.g., materials, machines, money, etc.) remain idle without the proper use of human resources. Human resource management is essential to activate non-human resources and in utilising the workforce to achieve organisational goals efficiently. Human resource management is essential, as most of the problems in an organisational set up are human-based ratherthan technical (or economical). Employees in an organisation show different behavioural patterns, needs, drives, goals and experiences. Human resource management tries to understand properly the psychology and the different needs of the personnel of an organisation. It establishes a suitable organisational structure for maintaining a desirable working relationship among all the members of an organisation. Definitions given by eminent management experts : Human resource management plans, organises, directs and controls the functions of procuring, developing, maintaining and utilising the workforce of an organisation. [Michael J. Jucius] Human resource management is the process of developing, applying and evaluating the policies, procedures, methods and programs relating to the personnel in the organisation. [Dale Yoder] Human resource management is that part of the management process which is primarily concerned with the human constituents of an organisation. [RF.L.Breach] Human resource management is the planning, organising, directing and controlling of the procurement, development, compensation, maintenance and separation of human resources for achieving desired organisational goals. [Edwin B. Flippo] 138 Human resource management is concerned with the development of potentialities of
ORGANISATION & MANAGEMENT FUNDAMENTALS

employees so that they get maximum satisfaction from their work and give their best efforts to the organisation. [Pigors and Myers] Thus, human resource management deals with the management of the entire gamut of human resources in an organisation. It attracts and selects capable men, organises them in productive groups, develops their potentials, gives them necessary motivation, boosts and maintains their high morale. 4.1.2. Objectives (or Role) of human resource management Human resource management aims to integrate employees interest as well as managements interest through justice to employees and improving productivity. Integration of employees interest and managements interest is done for ensuring the satisfactory accomplishment of organisational objectives. The main objective of the human resource department is to ensure optimum utilisation of human resources by providing maximum satisfaction to employees. In general, the objectives of human resource management can be enumerated as follows : (i) Maximum individual development: Efficient employees can make quality products. Human resource management provides opportunities for advancement of employees through training and job education. It encourages every employee to realise his full potential. Each employee enjoys job satisfaction through job enrichment and job enlargement. (ii) Healthy industrial relation: Relations between the employer and employees and among the employees themselves should be very cordial for ensuring team spirit, co-operation and coordination. Healthy industrial relations leads to industrial peace and industrial democracy. It maintains harmonious relations between management and the workers by solving their problems through the process of collective bargaining. (iii) Optimum utilisation of human resources: An efficient management should emphasize the effective and efficient utilisation of available human resources so that maximum production is possible at the minimum cost. It makes rational use of qualities, knowledge and potentialities of the existing work force. It utilises employees efforts, talents and skills effectively by creating the proper atmosphere for work. (iv) Integration of individual and organisational goals : The diversity in individual goals and organisational goals should be reconciled. Human resource management aims to secure integration of individual and group goals with organisational goals. Thus, employees feel a sense of involvement, commitment and loyalty towards the organisation. (v) Desirable working relationships : Human resource management aims to establish and maintain productive, satisfying and self-respecting working relationships among members of the organisation. It divides the organisational tasks into functions, positions and jobs to achieve these objectives. It defines the responsibility and authority for each job and its relation with other jobs.
ORGANISATION & MANAGEMENT FUNDAMENTALS

139

HUMAN RESOURCE MANAGEMENT

(vi) Development of team spirit : Human resource management develops a team spirit among the employees. It maintains a sound industrial and human relations so as to secure the willing co-operation of all employees. It develops a sense of belongingness and co-operative attitude among the employees. (vii) Satisfying employees interests: An employee spends the major part of his life with the employer and the organisation. It is the social and even moral duty of an employer to provide highly comfortable working conditions so that employees perform their jobs efficiently and effectively. Employees should also be provided with proper monetary and fringe benefits. They should be provided with adequate safety, healthy working conditions and enough recreational facilities. (viii) Satisfying managements interests: The human resource department assists the management in the following ways (a) Securing maximum productivity of employees; (b) Reducing labour cost per unit; (c) Ensuring loyalty of employees; (d) Developing high morale of employees ; (e) Developing team spirit and co-operative attitude of employees; (f) Intelligent initiative on the part of employees. (ix) Improving organisational effectiveness : Human resource management contributes to organisational effectiveness by building up employees motivation and commitment. Employees and management share information regarding mutual rights, obligations and the philosophy underlying personnel policies, procedures and practices. It maintains a high morale and better human relations inside an organisation by improving the conditions of work. (x) Creating a disciplined atmosphere : Discipline creates obedience and ensures rational behaviour among employees. It helps to maintain ethical behaviour inside the organisation. Human resource management helps to develop a sense of discipline among the work force engaged in the organisation. 4.1.3. Importance (or necessity) of human resource management The importance of human resource management has been so widely recognised that nearly all organisations realise the need for establishing a strong personnel department to ensure better industrial relations. The importance of human resource management can be realised from the following points :

140

ORGANISATION & MANAGEMENT FUNDAMENTALS

(i)

Achievement of organisational goals : Employees are the common denominator of progress. The effective utilisation of skills and talents of employees help in the attainment of organisational goals. Effectiveness of operations: Human resource management helps to increase the effectiveness of employees by their wholehearted collaboration. It creates enthusiasm among workers and motivates them in a particular direction. Satisfaction from work: It helps employees to utilise their potentialities for attaining maximum individual satisfaction from their work. It offers proper monetary incentives, economic and social security to employees. It protects them against the hazards of life such as illness, old-age problems, unemployment, etc. Basis of success of any enterprise: Human resource management is the key to success of any enterprise. It becomes important for achieving the objectives of the organisation. Personal aspect of management is applied by all managers throughout the organisation. Qualified personnel are usually employed in different departments for attaining the objectives of an organisation. Important task of management: The handling of employees is an integral part of every line managers responsibility. Managing the human component is the central task, as all else depends on how well it is done. The personnel department renders assistance to other functional departments to perform their functions. Nervous system of the organisation: Human resource management is the nervous system of the organisation. It is a two-way channel of information reaching out to every part of the organisation. It is a live channel and is used in every action. It is inherent in the dynamism of the structure of the organisation. Dealing with human beings: The human factor is most difficult to manage because emotions, feelings, needs and outlooks differ from man to man. The human resource manager is the controller of human factors and he tries to ensure optimum use of human resources. Thus, human resource management performs the toughest job of dealing with the human part of the organisation. (viii)Professional growth : This contributes to the professional growth by providing maximum opportunities for personal development of each employee. It enhances the knowledge and skills of people and helps to develop them for promotion. It utilises human resources for the benefit of mankind. It motivates employees to work efficiently and secure their willing co-operation.

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

4.1.4. Functions of human resource management Human resource management covers a number of activities as follows : (i) Human resource planning : Human resource is regarded as an important asset of an organisation. Human resource planning is the process of determining manpower requirements of an organisation for achieving the organisational goals effectively. This helps in predicting the number of emplyees (skilled as well as unskilled) 141

ORGANISATION & MANAGEMENT FUNDAMENTALS

HUMAN RESOURCE MANAGEMENT required in the business at different points of time. It also predicts problems of manpower in future projects. (ii) Staff recruitment: Recruitment is a process of identifying sources of human forces and motivating them to apply for a particular job (or jobs) in an organisation. It is a process to discover the sources of manpower to meet the requirements of the staffing schedule. It facilitates effective selection of an efficient work force in an organisation. A well-planned recruiting effort will result in high quality applicants. Staff selection : Selection is the process of choosing the most suitable candidates from among the applicants for the jobs. It involves careful screening and testing of candidates with reference to job specifications. The aim of selection is to pick the right person for the right job. It begins with an initial screening interview and ends with the final employment decision. Staff placement: Placement refers to induction of individuals and assigning of responsibility with reference to particular job. Proper placement of individuals enhances their potentiality and develops overall effectiveness on the job. An individual is considered to be properly placed if he adjusts himself to the job and continues to perform as per expectations. Placement may create problem due to wrong selection or improper placement or both. Staff training: Training is an act of updating (or improving) the knowledge and skill of employees in order to perform a particular job in an effective manner. It aims at increasing the ability of employees so that they can perform the job in an effective and efficient manner. Training can convert raw human resources into developed human resources. It improves the performance of employees on the present job and prepares them for taking up new assignments in the future. Staff remuneration: Remuneration consists of wages, salaries, commissions and bonuses paid to employees as compensation for their service. Remuneration should include both monetary compensation and non-monetary benefits to workers. Satisfactory remuneration attracts an efficient labour force. This helps in increasing output and lowering labour cost per unit. The method of remuneration should be such that it encourages efficiency and promotes satisfaction of workers. Staff promotion : Promotion means uplift of an employee to a senior position with better pay, better service condition, higher power, greater status and prestige. It implies upgrading of an employee to a higher post . involving increase in rank and responsibility. Promotion provides motivation and job satisfaction to employees. Promotion influences the attitude and conduct of the employees behaviour, Staff motivation : Motivation is an inner psychological force that activates and compels employees to behave in a particular manner. Motivation is an act of

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

142

ORGANISATION & MANAGEMENT FUNDAMENTALS

stimulating employees to accomplish a desired course of action. Motivation inspires employees to contribute to the best of their capability for the achievement of organisational goal. (ix) Staff transfer : Transfer is the movement of an employee from one job to another (or from one office to other) without any increase in pay, responsibility and status. Usually, transfer takes place between jobs (or offices) paying approximately the same salary to employees. A transfer may take place either at the intention of the employer or at the request of the employee concerned. (ix) Staff appraisal: Performance appraisal is a systematic way of judging the ability of an employee in performing his tasks. It is a process of evaluating the performance of an employee on a given job and his potential for future development. It helps the employees in improving their job performance. It is helpful in promoting employees to higher positions. Staff dismissal: Dismissal refers to the termination of service of an employee by way of punishment for misconduct or unsatisfactory performance. Termination of service of an employee may take place in any one of three forms, namely, (a) Suspension (i.e., disciplinary action against an employee); (b) Discharge (i.e., permanent loss of job of an employee); (c) Lay-off (i.e., termination of service of an employee when there is no work in an organisation). Staff leadership: Staff leadership is the process of influencing the behaviour of employees to work willingly towards the achievement of specified organisational goals. Leadership is the ability to build up confidence and zeal among subordinates and influencing the task-related activities of group members. The success of an organisation depends to a large extent on the quality of leadership, particularly on the part of the personnel manager. Labour safety and welfare: A better work environment is to be provided to the workers in the following ways: (a) Making arrangements for ventilation of fresh air ; (b) Making provision for adequate light and drinking water ; (c) Rooms, staircases and passages should be kept clean; (d) Provision for sufficient latrin ; (e) Provision for extinguishing fire ; (f) prevention of accidents, etc. Workers should also be provided with adequate welfare facilities, such as, (a) Medical facilities, (b) Employees State Insurance, (c) Pension, gratuity and other postretirement benefits, (d) Canteen facilities, (e) Recreational facilities, etc. (xiii) Industrial relation : It covers all sorts of relationship that an organisation must maintain for its smooth functioning. It is an active relation among the workers, management, trade unions and the State. It gives emphasis on adjustment and cooperation between the employer and its employees. Industrial relation aims at industrial peace and democracy.

(x)

(xi)

(xii)

ORGANISATION & MANAGEMENT FUNDAMENTALS

143

HUMAN RESOURCE MANAGEMENT

(xiv)

Staff maintenance : The human resource manager is also responsible for maintaining an effective work force. He develops programmes covering various aspects of existing personnel as follows :

(a) Safety aspect (i.e. providing safe working conditions to prevent physical injuries of employees); (b) Health aspect (i.e. providing healthy working environment for mental freshness of employees and improving their productivity); (xv) Welfare aspect (i.e. providing proper amenities to employees such as housing, canteen, recreational facilities, etc.).

4.2. RECRUITMENT AND SELECTION OF WORKERS


4.2.1. Meaning of Recruitment Recruitment is a process of identifying sources of human forces and motivating them to apply for a particular job or jobs in an organisation. It is a process to discover the sources of manpower to meet the requirements of the staffing schedule. It facilitates effective selection of an efficient working force in an organisation. It is a linkage activity bringing together those with jobs and those seeking jobs. It aims at securing as many applications from qualified candidates as possible for decreasing the hiring ratio. A well-planned and well-managed recruiting effort will result in high quality applicants. Recruitment satisfies an organisations needs and shapes its future. The success of an organisation depends on how effectively human resources are managed and utilised. Recruitment is a two-fold function : (a) to discover the sources of manpower to match job requirements and specifications, and, (b) to attract an adequate number of prospective employees to permit meaningful^election of the required personnel. Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organisation. [Edwin B. Flippo] Recruitment is the process to discover potential candidates for anticipated organisational vacancies. [Decenzo and Robbins] Recruitment is the development and maintenance of adequate manpower resources. [Dales S. Beach] Recruitment is the process of generating a pool of qualified applicants for organisational jobs. [Mathis and Jackson]

Thus, recruitment involves identifying sources of potential employees who have the abilities and attitudes to perform the job. It stimulates and encourages prospective employees to apply for the jobs in the organisation. It is a positive process because its objective is to increase the selection ratio. It is a linking activity because it brings together those with jobs to fill and those seeking jobs.

144

ORGANISATION & MANAGEMENT FUNDAMENTALS

4.2.2. Sources of recruitment In order to recruit, both internal as well as external sources may be utilised as follows : 4.2.2.1. Internal sources of recruitments Internal sources refer to the present working force of an organisation. Internal sources of recruitment include personnel already on the payroll of the organisation. The major internal sources of making recruitment are as follows : (i) Promotion : This means appointing an employee to a position of greater responsibility. It refers to shifting of persons to positions carrying better prestige, higher responsibility and more salary. Whenever a clear vacancy exists in a department, it is filled in by promoting a suitable employee from the lower cadre in the same department. Employees seniority, merit, job knowledge and career record are considered at the time of promotion. Transfer: This involves the shifting of an employee from one job to another without changing his responsibility. It is used as a source of internal recruitment to meet personnel demand at the place to which the employee is transferred. Present employees : The present employees of an organisation may be informed about likely vacant positions. The existing employees can recommend their relatives or friends for the jobs suitable for them. Re-employment of ex-employees : This refers to employing the employees who served the organisation in the past but quit voluntarily or due to retrenchment and want to return, if the organisation wishes to re-employ them. Dependents : Dependents and relatives of the deceased and disabled employees can be employed on compassionate grounds. Apprentices : Persons working as apprentices in the organisation may also be hired whenever a clear vacancy exists.

(ii)

(iii)

(iv)

(v) (vi)

4.2.2.2. External sources of recruitment External sources of recruitment include selection of personnel from outside the organisation. It is not desirable for the organisation to rely totally on internal sources for recruitment. It is necessary to inject fresh talent into the organisation from outside also. An organisation may choose employees from the following external sources of recruitment: (i) Advertisements: This is the best method of recruiting personnel for skilled workers, clerical and higher staff. The organisation can advertise its vacancies through newspapers, trade journals, professional journals, radio, television, magazines,

ORGANISATION & MANAGEMENT FUNDAMENTALS

145

HUMAN RESOURCE MANAGEMENT internet, etc. It can be used on a nationwide basis and the management gets a wider range of candidates for selection. (ii) Employment exchanges : These organisations provide information about job vacancies to the job seekers and help employers in finding suitable candidates. The employment exchanges provide the list of candidates to the organisation when they get requisitions from various employers. Educational institutions : Sometimes, educational institutions provide placement services. They offer opportunities for recruiting recent graduates and other diploma holders. Junior level executives or managerial trainees may be recruited from professional and technical institutes (like the IIT and IIM) through campus interviews. Private employment agencies: These agencies (like ABC Consultants Ltd.) serve in the technical and professional areas to provide suitable candidates to employers. These agencies advertise the position, screen applicants and provide a guarantee to the employer for an applicants satisfactory performance. Professional bodies : The professional institutions (like ICAI, ICWAI, ICSI, IIM, IIT etc.) maintain a register of qualified persons from which they recommend the names to the employers when asked for. Professional institutions publish magazines and journals which contain advertisements for job openings. Labour contractors : Contractors are the best sources of getting workers when they are required for short periods. Manual workers may be recruited or hired through contractors, who maintain close links with the workers. Employees recommendation : Present employees ot a concern may also recommend friends or relatives for jobs. Some organisations encourage their existing employees to assist them in getting applications from persons who are known to them. Labour unions list: In certain occupations (like hotels, building trades, etc.) labour unions supply the needed employees. It saves expenses of recruitment and screening. Sometimes, labour unions may be asked to recommend candidates as a courtesy towards the union.

(iii)

(iv)

(v)

(i)

(vi)

(vii)

4.2.3. Methods of recruitment Sources of recruitment are the locations from where prospective employees are available. On the other hand, methods of recruitment are the means by which an organisation establishes contact with potential candidates. The task of recruitment should be conducted in an organised manner, preferably by the personnel department of an organisation. The personnel department should keep in mind the requirements of various departments, both as regards quality and quantity. Various methods employed for recruiting employees may be classified into the 146
ORGANISATION & MANAGEMENT FUNDAMENTALS

following categories : (1) Direct recruitment method : Under this method, workers are recruited directly through campus interviews, scouring, employee contacts, manned exhibits, waiting list, line register of job seekers, etc. Usually, in all such cases, preliminary screening is completed by examining the application form filled in by the candidate and the preliminary interviews. Indirect recruitment method : Under this method, workers are recruited indirectly through advertisements in newspapers, journals, radio, television, internet, etc., in order to get suitable candidates. This method is appropriate when the organisation wants to reach out to a large target group scattered nationwide. Third party recruitment method : Various agencies can be used to recruit employees. These include public and private employment exchanges, management consulting firms, professional bodies, trade unions, labour contractors, etc. These agencies usually provide technical workers, executives, accountants, office assistants, etc., to the employers to suit their requirements.

(2)

(3)

4.2.4. Meaning of Selection Selection is the process of choosing the most suitable candidates from among the applicants for jobs. The purpose of selection is to select the most suitable candidates who meet selection criteria and related constraints. It involves careful screening and testing of candidates with reference to job specifications. It is the process of eliminating unsuitable candidates and finally arriving at the most suitable one. The aim of selection is to pick the right person for the right job. It should aim at the optimal match between the person and the job. Selection is the process by which candidates for employment are divided into two classes those who will be offered employment and those who will not.[Dale Yoder] The selection procedure is adopted for the purpose of ascertaining whether or not candidates possess the requisite qualifications needed for the jobs. [Michael Jucius] Selection is the process by which an organisation chooses from a list of screened applicants, the person or persons who best meet the selection criteria for the position available. [Keith Davis]

Thus, selection is the matching of personal traits of the candidate with the quality and ability needed for performing the job successfully. It is the process of picking out the best suited candidate needed for the job. It begins with an initial screening interview and ends with the final employment decision.

ORGANISATION & MANAGEMENT FUNDAMENTALS

147

HUMAN RESOURCE MANAGEMENT 4.2.5. Procedure for selection The selection procedure starts immediately after recruitment. It is a process of eliminating those candidates who appear unpromising. It is a series of successive hurdles (or barriers) which an applicant must cross. The task of selection is to match the worth and abilities of applicants with the requirements of the job at every stage. Undesirable candidates are screened out and the qualified candidates are retained at every stage. A candidate is selected when he clears all the steps laidjiown in the selection process. The steps involved in the selection process are explained in detail as follows : (i) Reception of applicants : The selection process starts when the applicants come to the employment office of the organisation. The receptionists attitude towards the applicants must be warm and positive. The applicants should be treated in a wellbehaved manner. Receiving of applications : The receptionist in the personnel department gives information about new openings to the visitors and receives their applications. The personnel department may also write to the employment exchanges or advertise the vacancy in the newspapers or tap some other sources of labour force. Scrutiny of applications : All applications received are scrutinised by the personnel department in order to eliminate those applicants who do not fulfil the required qualifications. Thereafter, a list of the candidates eligible for the job is prepared. Preliminary interview: The initial screening is done through a preliminary interview in order to eliminate the unsuitable candidates. The personality of the candidate can be evaluated immediately at this interview. Blank application forms : The applicants selected at the preliminary interview are given blank application forms for supplying detailed information. It is a widely used device for collecting information from candidates. Generally, the information collected in a blank application form relates to the (a) bio-data; (b) educational qualifications; (c) work experience; (d) extra curricular activities ; (e) salary demanded; (f) references ; (g) health conditions, etc. Employment tests : A test is a measurement of an individuals job-related abilities and skills. The worth of a test will be judged from its ability to reject unsuitable candidates and help in selecting appropriate candidates. Various types of tests are applied in the selection process (such as the personality test, intelligence test, aptitude test, achievement test, interest test, judgement test, performance test, dexterity test, situational test, etc.) Interviews : This is a face-to-face, oral and personal appraisal method. An interview is conducted with a view to acting as a check on the information already obtained. It also provides an opportunity to form a better understanding about the candidates.
ORGANISATION & MANAGEMENT FUNDAMENTALS

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

148

Interviews enable the interviewer to judge certain qualities, such as (a) quickness to reactions ; (b) mannerism ; (c) sense of humour ; (d) level of intelligence ; (e) quick reasoning ; (f) cultural level; (g) ability to organise thoughts, etc. (viii) Checking references : An applicant may be asked to provide two types of references, namely, (a) character reference ; and (b) experience reference. The referees may provide significant information about the candidate. Medical examination : This is conducted to get the needed information about the physical condition of the candidate. Only those candidates should be selected who are physically fit and mentally alert. A man with poor health will prove to be a burden rather than an asset to the organisation. Final selection decision : After completing all the above-mentioned stages involved in the selection process, successful candidates are finally selected. The management offers appointment letters to those successful candidates mentioning the post, pay scale, starting salary, probationary period, allowances and other benefits granted to them. The placement and orientation of the employee is also an important step in this direction. An employee should be introduced to his immediate superior and subordinate in the organisation.

(ix)

(x)

4.2.6. Recruitment Practices In India Industries in India depend on the following sources of recruitment : (i) (ii) (iii) (iv) (v) (vi) Internal Sources Public employment exchanges Campus recruitment Executive search agencies/consultants Labour contractors Employee referrals i.e. Recommendation of existing personnel

In public sector enterprises, a specified proportion of vacancies are reserved for scheduled castes, scheduled tribes, physically handicapped, ex-servicemen, other backward classes, etc. Some organisations give preference to local people i.e. sons of the soil. The recruitment programme should be evaluated periodically. The criteria for evaluation may consist of cost per applicant, the applicant/hiring ratio, performance appraisal, tenure of stay, etc. The organisation should first find out how the applicant was attracted to the 4.2.7. Concept of Dismissal Dismissal or discharge refers to terminating the services of an employee by way of punishment for misconduct or unsatisfactory performance. Unsatisfactory performance implies persistent

ORGANISATION & MANAGEMENT FUNDAMENTALS

149

HUMAN RESOURCE MANAGEMENT failure of the employee to perform his job to the specified standards. An employee is dismissed on account of unsatisfactory performance when he has no potential to improve his performance. Misconduct means wilful violation of rules and regulations. It includes indiscipline, insubordination and dishonesty. It also includes unauthorised and prolonged absence from duty. Dismissal is a drastic step and should, therefore, be resorted to with great care. It should be supported by a just and sufficient cause. It should be used as a last step after all attempts to salvage the employee have failed. Before an employee is discharged, he must be given the opportunity to explain his conduct and to show cause why he should- not be dismissed. The principle of natural justice should be followed, Le., the punishment should not be out of proportion to the offence. Dismissal is different from retrenchment, layoff and suspension. Retrenchment means permanent termination of an employees services due to economic reasons such as closing of business. Layq/fmeans thefailure, refusal or inability of an employer, on account of shortage of coal, power or raw materials or accumulation of stocks or breakdown of machinery or by any other reason, to give employment to a workman whose name appears on the muster rolls of his industrial establishment and who has not been retrenched. Layoff is resorted in cyclical and seasonal industries. In mines workers are laid off due to excess of inflammable gas, flood, fire and explosion. Layoff is temporary removal of an employee from the pay roll due to circumstances beyond the control of the employer. Under it the employer-employee relationship does not come to an end. The services of the employee are not terminated and he is expected to be called for work in future. Suspension of an employee is a serious punishment and it is generally awarded only after a proper enquiry. A worker may be suspended for indiscipline during the course of an enquiry. During suspension the employee receives a subsistence allowance. 4.2.8. Grounds for Dismissal A dismissal involves permanent separation of an employee from the payroll due to violation of company rules or due to inadequate performance. An employee may be dismissed from service on the following grounds. 1. When the volume of work does not justify the continuing employment of the persons involved. 2. When the employee fails to work according to the requirements of the job due to incapacity or deliberate slowing down of work. 3. When the employee forfeits his right to a job due to his violation of a basic policy involving safety of others, the morale and discipline of the work. Causes of Dismissal Inefficiency Dishonesty Indiscipline Use of abusive or threatening language to a superior Gambling

150

ORGANISATION & MANAGEMENT FUNDAMENTALS

Insubordination Misconduct Physical unfitness Possession of firearms/narcotics Unauthorised strike Subversive activity Drunk while at work Sleeping on the job 4.2.9. Procedure for Dismissal

Gross negligence Tardiness in work Frequent absences witiiout leave Theft and other criminal activities Wilful damage to companys property Falsifying records of work Failure to use safety devices

Dismissals are generally made in accordance with the standing orders. The action taken should be bonalide and should not be a case of victimisation. The following elements should be present in a dismissal programme. (i) (ii) (iii) (iv) (v) The employee should be given an opportunity to explain his conduct and to show cause why he should not be dismissed, The reasons for dismissal should be clearly stated, The supervisor in charge initiating dismissal action should be fully conversant with the rules and regulations of the organisation. The facts concerning the violation of the rules and regulations should be carefully analysed. ; Adequate provision should be made for review of the dismissed employees case.

The steps involved in dismissal procedure are as follows: 1. Charge sheet. The first step in the procedure is to frame and issue a written charge sheet The charge sheet should be based upon a written complaint against the employee. It should contain details of the offence with which the employee is charged and the allegations of misconduct made against him. The charge sheet should indicate the time limit in which a reply to the charge sheet should be submitted to the concerned authority. The employee is called upon to show cause why he should not be dismissed from service. The contents and implications of the charge sheet may be explained to the employee in his own language and in the presence of some reputed witness before a copy of the charge sheet is handed over to him. If the employee refuses to accept the charge sheet it should be sent to his residential address under registered post with acknowledgement due (Registered A.D.). If the employee refuses to take delivery of the registered letter or if it is returned undelivered it should be published in a local newspaper to ensure its wide publicity.

ORGANISATION & MANAGEMENT FUNDAMENTALS

151

HUMAN RESOURCE MANAGEMENT 2. Receipt of explanation. The employee may submit his explanation within the prescribed period of time or he may ask for an extension of time for its submission in the latter case. The request should be considered in good faith in accordance with the rules of natural justice. 3. Issue of notice of enquiry. In case the explanation received from the employee is found to be unsatisfactory, a notice of enquiry is issued to him. The notice should mention the time, date and place of enquiry and the name of the officer who would conduct the enquiry. The employee is required to be present at the specified time and place, alongwith his witness, if he has any. 4. The Holding of enquiry. On the specified day, time and place the enquiry office will hold the enquiry in the presence of the employee. The contents of the charge sheet and an explanation of the procedure to be followed during the enquiry are communicated to the employee. If the employee pleads his innocence, the enquiry proceeds. But if he pleads guilty, unconditionally and in writing, the enquiry is dropped. The details of the enquiry are recorded and the report is signed by the enquiry officer and the employee. After all the witnesses have been examined against the employee, the defence witnesses and the employee are called upon to submit their statements. The enquiry officer may call all the supporting evidence and documents and thoroughly examine them. 5. The findings. Once the enquiry is over, the enquiry officer has to give his findings. His report must contain the procedure followed, the statements recorded, the documents, produced and examined, the charges made, the explanations given and the evidence produced. The officer should then record his own findings on each of the charges and the grounds on which he has reached to a particular conclusion. He should specifically mention which charges have been proved and which have not been proved. The officer then submits his findings to the authorities entitled to dismiss the employee. 6. Decision. On receiving the report from the enquiry officer the concerned authority may take a decision for dismissal of the employee. 7. Communication of the order. A copy of the dismissal order is then handed over to the concerned employee. 4.2.10. Retirement Retirement is the main cause of separation of employees from the organisation. It may be of two kinds: (a) Compulsory retirement An employee must retire after attaining the specified age. In Government office the retirement age is 58 whereas in the private sector the age is generally 60 years. (b) Premature retirement. An employee may retire before attaining the specified age due to bad health, physical disability, family problem etc. He gets the full benefit of retirement provided the management allows premature retirement. 152
ORGANISATION & MANAGEMENT FUNDAMENTALS

(c) Voluntary retirement When an organisation wants to cut down its operations or to close forever, it may give an option to its employees with a certain minimum service for voluntary retirement in return for a lumpsum payment. This type of retirement is called GoldenHandShake. Retirement is a significant milestone in the life of an employee. It requires a great deal of adjustment on his part. Employees require preparation through communication and counselling. The personnel department and the immediate superior of the retiring employee should bid farewell. At the farewell the employee is thanked for his services and given a token gift. He may be requested to suggest improvements in the organisation. All the dues and benefits of the retiring employee should be paid to him before the farewell. 4.2.11. Layoff Layoff implies temporary removal of art employee from the payroll of the organisation due to circumstances beyond the control of the employer. It may last for an indefinite period. But the employee is not terminated and is expected to be called back in future. The employer employee relationship does not come to an end but is merely suspended during the period of layoff. It is temporary denial of employment. The purpose of layoff is to reduce the financial burden on the organisation when the human resources cannot be utilised profitably. Under Section 2(KKK) of the Industrial Disputes Act, 1947, layoff is defined as the failure, refusal or inability of an employer, on account of shortage of coal, power or raw materials or accumulation of stocks or breakdown of machinery or by any other reason, to give employment to a workman whose name appears on the muster rolls of his industrial establishment and who has not been retrenched. Layoff is resorted in cyclical and seasonal industries. In mines workers are laidoff due to excess of inflammable gas, flood, fire and explosion. According to Section 25(c) of the Industrial Disputes Act, 1947, a laidoff worker is entitled to compensation equal to 50 per cent of the basic wages and dearness allowance that would have been payable to him had he not been laidoff. However, in order to claim this compensation, the laidoff workman must satisfy the following conditions: (a) he should not be a badli or a casual worker, (b) his name must appear on the muster rolls of the industrial establishment, (c) he must have completed not less than one year of continuous service, and (d) he must present himself for work at the appointed time during normal working hours at least once a day. The right to compensation is lost if the worker refuses to accept alternative employment at a place within 5 miles of the establishment from which he has been laidoff. No compensation is payable when the layoff is due to strike or slowing down of production on the part of workers in another part of the establishment. An industrial establishment of a seasonal character or in which work is performed only intermittently or which employs less than 20 workers is not required to pay the compensation.

ORGANISATION & MANAGEMENT FUNDAMENTALS

153

HUMAN RESOURCE MANAGEMENT 4.2.12. Redundancy Some of the employees in an organisation may become redundant or surplus due to reduction in the size or scale of operations. During the present period of globallisation and cut throat competition many firms are downsizing their operations. As a result redundancy of labour occurs. Restructuring of an organisation, amalgamation or merger of two or more firms and changes in technology may also lead to redundancy of staff. In order to streamline their operations and to improve competitiveness, several companies in India have introduced Voluntary Retirement Schemes (VRS). Under such a scheme employees who resign voluntarily are given a lump sum of money depending on the number of years of service left. Such a scheme is also known as Golden Handshake. Redundancy is different from resignation and retrenchment. Resignation means an employee voluntarily leaves the organisation. An employee may resign from his job due to ill health, marriage, better job offer in some other organisation, etc. Retrenchment means permanent termination of an employees services for economic reasons in a going concern. Termination of services on account of disciplinary action, or prolonged illness or retirement and superannuation, or expiry of agreement or on closure of the establishment does not constitute retrenchment. It is terminated due to redundancy of workforce. Retrenchment creates a sense of insecurity and resentment among the staff. Therefore, an employee should be retrenched without humiliation and ill feeling so that he does not speak unkindly of the employer. The Industrial Disputes Act, 1947 lays down the following conditions for retrenchment. (a) The employee must be given one months notice in writing indicating the reasons for retrenchment or wages in lieu of such notice. (b) The employee must be paid compensation equal to 15 days wages for every completed year of service. (c) Notice in the prescribed manner must be served on the appropriate Government authority. (d) In the absence of any agreement to the contrary, the worker employed last must be terminated first. Retrenched workers must be given preference in future employment. Establishments employing 100 or more workers are required to give three months notice and to seek prior approval of the government before retrenching an employee.

4.3. TAYLOR AND SCIENTIFIC MANAGEMENT


Frederick Winslow Taylor and other contributors notably Frank Gilbreth. Lillian Gilbreth and Henry Gantt, investigated the effective use of human beings in industrial organisations, particularly at shop floor levels. Taylor has defined Ihe basic problem of managing as the art of knowing exactly what you want men to do and then see in that they do it in the best and

154

ORGANISATION & MANAGEMENT FUNDAMENTALS

cheapest way. Since Taylor has put the problem of managing on a scientific way, he is often called as the father of scientific management and his contributions as the principles of scientific management. Though his contributions have become traditional in present-day context, still the label scientific management is used for his contributions. It does not mean that presentday management thoughts and practices are not scientific. In fact, management as a science has been taken much later than the contributions of Taylor. Taylor joined Midvale Steel Company in U.S.A. as a worker and later on became supervisor* During this period, he continued his studies and eventually completed his M.E. (Master of Engineering). Subsequently, he joined Bethlehem steel Company. At both these places, he carried experiments about how to increase the efficiency of people. Even after his retirement, he continued to develop scientific management. On the basis of hi experiments, he published many papers and books and all his contributions were compiled in his book Scientific Management. Taylors contributions can be described in two parts: main features of scientific management and principles of scientific management. Main Feature of Scientific Management Taylor conducted various experiments at his work places to find out how human beings could be made more efficient by standardizing the work and better method of doing the work. These experiments have provided the following features of scientific management. 1. Separation of Planning and Doing: Taylor emphasized the separation of planning aspect from actual doing the work. Before Taylors scientific management, a worker used to plan about how he had to work and what instruments were necessary for that. The worker was put under the supervision of a supervisor commonly known as gang boss. Thus supervisors job was merely to see how the workers were performing. This was creating lot of problems, and Taylor emphasized that planning should be left to supervisor and worker would emphasize only operational work. 2. Functional Foremanship: Separation of planning from doing resulted into development of supervision system, which could take planning work adequately besides keeping supervision on workers. For this purpose. Taylor evolved the concept of functional Foremanship based on specialization of functions. In this system, eight persons are involved to direct the activities of workers. Out of these, four persons are concerned with planning : (i) (ii) route clerk, instruction card clerk, time and cost clerk, disciplinarian.

The remaining four persons are concerned with doing aspect of the work. These are: (i) (ii) (iii) speed boss inspector, maintenance foreman, and 155

ORGANISATION & MANAGEMENT FUNDAMENTALS

HUMAN RESOURCE MANAGEMENT (iv) gang boss.

All of them give directions to workers on different aspects of work. This is against unity of command principle as shown in the following figure.
Managing Director

Managing Director

Managing Director

Route Clerk

Instruction card clerk

Time and cost clerk

disciplinarian

Speed boss

Inspector

Maintenance foreman

Gang boss

Worker

Fig. 4.3 : Functional foremanship. 3. Job Analysis:

Job analysis is undertaken to find out the one best way of doing the thing. The best way of doing a job is one, which requires the least movement, consequently less time and cost. The best way of doing the thing can be determined by taking up time-motion-fatigue studies. (i) Time study involves the determination of time a movement takes to complete. The movement which takes minimum time is the best one, This helps in fixing the fair work for a period. Motion study involves the study of movements in parts, which are involved in doing a job and thereby eliminating the wasteful movements and perfbrrning only necessary movement. Elimination of unnecessary movements in doing a work reduces time taken in performing a work and also the fatigue of workers. Fatigue study shows the amount and frequency of rest required in completing the work.

(ii)

(iii)

156

ORGANISATION & MANAGEMENT FUNDAMENTALS

After certain period of time, workers feel fatigue and cannot work with full capacity. Therefore, they require rest in between. When the rest is allowed, they start working with full capacity. Thus job analysis, as given by Taylor., suggests the fair amount of a days work requiring certain movements and rest periods to complete it. 4. Standardisation: As far as possible, standardization should be maintained in respect of instruments and tools, period of work, amount of work, working conditions, cost of production, etc. These things should be fixed in advance on the basis of job analysis and various elements of costs that go in performing a work. 5. Scientific Selection and Training of Workers: Taylor has suggested that workers should be selected on scientific bases taking into account their education, work experience, aptitude, physical strength, etc. A worker should be given work for which he is physically and technically most suitable. Apart from selection, proper emphasis should be given on the training of workers which makes them more efficient and effective. 6. Financial Incentives: Financial incentives can motivate workers to put in their maximum efforts. If provisions exist to earn higher wages by putting in extra effort, workers will be motivated to earn more. Taylor himself applied the concept of differential piece rate system, which was highly motivating. According to this scheme, a worker who completes thenormal work gets wages at higher per piece and one who does not complete gets at lower rate. Thus there is considerable difference in wages between those who complete the work and those who do not complete. To make the differential piece rate system work. Taylor has suggested that wages should be based on individual performance and not on the position which he occupies. Further, the wage rate should be fixed on accurate knowledge and not on estimates. 7. Economy: While applying scientific management, not only scientific and technical aspects should be considered but adequate consideration should be given to economy and profit. For this purpose, techniques of cost estimates and control should be adopted. The economy and profit can be achieved by making the resources more productive as well as by eliminating the wastages. Taylor has clarified by giving examples of how resources are wasted by not following scientific management. 8. Mental Revolution: Scientific management depends on the mutual cooperation between management and workers. For this cooperation, there should be mental change in both parties from conflict to cooperation, Tayior feels that this is the most important feature of scientific management because in its absence, no principle of scientific management can be applied. In this regard, Taylor has observed as follow: Scientific management is not any efficiency device, not a device of any kind for securing efficiency; nor is it bunch or group of efficiency devices. It is not a new system of figuring costs; it is not a new scheme of paying men; it is not a piecework system; it is not a bonus system; it is not a premium system; it is no scheme of paying men.... It is not divided foremanship or functional foremanship; it is not any of the devices which the average man calls to mind when scientific management is spoken of...

ORGANISATION & MANAGEMENT FUNDAMENTALS

157

HUMAN RESOURCE MANAGEMENT Now. in its essence, scientific management involves a complete mental revolution on the part of the working man engaged in any particular establishment or industry-a complete mental revolution on the part of these men as to their duties toward their work, toward their fellowmen and toward their employers. And it involves the equally complete mental revolution on the part of those on the managements side- the foreman, the superintendent, the owner of the business, the board of directors- a complete mental revolution on their part as to their duties toward their fellow workers in the management, toward their workman and toward all of their daily problems. 4.3.1 Principles of Scientific Management Taylor has given certain basic principles of scientific management. The fundamental principles that Taylor saw underlying the scientific management may be given below : 1. Replacing Rule of Thumb with Science. Taylor has emphasised that in scientific management, organised knowledge should be applied which will replace rule of thumb. While the use of scientific method denotes precision in determining any aspect of work, rule of thumb emphasises estimation. Since exactness of various aspects of work like days fair work, standardisation in work, differentia] piece rate for payment, etc., is the basic core of scientific management, it is essential that all these are measured precise and should not be based on mere estimates. This approach can be adopted in all aspects of managing. 2. Harmony In-Group Action. Taylor has emphasised that attempts should be made to obtain harmony in group action rather than discord. Group harmony suggests that there should be mutual give and take situation and proper understanding so that group as a whole contributes to the maximum. 3. Cooperation. Scientific management involves achieving cooperation rather than chaotic individualism. Scientific management is based on mutual confidence, cooperation and goodwill. Cooperation between management and workers can be developed through mutual understanding and a change in thinking. Taylor has suggested substitution of war for peace, hearty and brotherly cooperation for contentment and strife, replacement of suspicious watchfulness with mutual confidence, of becoming friends instead of enemies. It is along this line, I say, that scientific management must be developed.. 4. Maximum Output. Scientific management involves continuous increase in production and productivity instead of restricted production either by management or by worker. Taylor hated inefficiency and deliberate curtailment of production. His concern was with the large size of the cake. In this opinion, there is hardly any worse crime to my mind than that of deliberately restricting output. He deiced the product to be distributed had outgrown the size. Therefore, he advised the management and workers to turn their attention towards increasing the size of the surplus until the sizes of the surplus becomes so large that it is necessary to quarrel over how it shall be divided.

158

ORGANISATION & MANAGEMENT FUNDAMENTALS

5. Development of Workers. In scientific management, all workers should be developed to the fullest extent possible for their own and for the companys highest prosperity. Development of workers requires their scientific selection and providing them training at the workplace. Training should be provided to workers to keep them fully fir according to the requirement of new methods of working which may be different than the nonscientific methods. 4.3.2. Contributions of Henry Fayol Perhaps the real father of modern management theory is the French industrialist Henry Fayol. His contributions are generally termed as operational management or administrative management. Fayols contributions were first published in the book form titled as Administration Industrielle at Generate in French language, in 1916. Its English translation was published in 1949 Only in the United States of America. Therefore, in the early period, Fayols contributions could not make much impact on the development of management thought. However, after the publication of his book in English, he got prominence in the field of management very quickly. Fayol looked at the problems of managing an organisation from top management point of view. He has used the term administration instead of management emphasising that there is unity of science of administration. For him, administration was a common activity and 1 administrative doctrine commerce, industry, religion, philanthropy and the State on equal footing. His administrative science can be applied equally well to public and private affairs. Therefore, management is a universe phenomenon. However, he has emphasised that principles of management are flexible and not absolute and are usable regardless of changing and specie conditions. Fayol found that activities of an industrial organisation could be divided into six groups: 1. Technical (relating to production); 2. Commercial (buying, selling and exchange); 3. Financial (search for capital and its optimum use); 4. Security (protection of property and person); 5. Accounting (including statistics); and 6. Managerial (planning, organisation, command, coordination, and control). Pointing out that these activities exist in business of every size, Fayol observed that the first five were well known, and consequently he devoted most of his book to analyze the sixth one, that is, managerial activity. Fayol has divided his approach of studying managemenl into three parts : (i) (i) (ii) managerial qualities and training, general principles of management, and elements of management. 159

ORGANISATION & MANAGEMENT FUNDAMENTALS

HUMAN RESOURCE MANAGEMENT

4.4.

MANAGERIAL QUALITIES

Fayol was the first person to identify the qualities required in a manager. According to him, there are six types of qualities that a manager requires. These are as follows :(i) (ii) (iii) (iv) (v) (vi) Physical (health vigour, and address); Mental (ability to understand and leam, judgment, mental vigour, and adaptability); Moral (ehergy, firmness, initiative, loyalty, tact, and dignity); Educational (general acquaintance with matters not belonging exclusively to the function performed); Technical (peculiar to the function being performed); and Experience (arising from the work).

Fayol has observed that the most important ability for a worker is technical; the relative importance of managerial ability increases as one goes up the scalar chain, with insight becoming the most important ability for top level executives. On the basis of this conclusion, Fayol recognised a widespread need for principles of management and for management teaching. He held that managerial ability should be acquired first in school and later in the workshop. In order to acquire managerial knowledge, he developed principles of management to be taught in academic institutions. 4.4.1. General Principles of Management Fayol has given fourteen principles of management. He has made distinction between management principles and management elements. While management principle is a fundamental truth and establishes cause-effect relationship, management element denotes the function performed by a manager. While giving the management principles, Fayol has emphasised two things :(i) (ii) The list of management principles is not exhaustive but suggestive and has discussed only those principles which he followed on most occasions. Principles of management are not rigid but flexible.

According it him, there is nothing rigid or absolute in management affairs; it is all a question of proportion. Therefore, principle are flexible and capable of adapting to every need. It is matter of knowing how to make use of them which is a difficult art requiring intelligence, experience, and proportion. Various principles of management are as follows: (1) Division of work. Fayol has advocated division of work to take the advantages of specialisation. According to him, specialisation belongs to natural order. The workers always work on the same part, the manager concerned always with the same matters, acquire an ability, sureness, and accuracy which increase their output. Each change of work brings in it training and adaptation which reduces output.. .yet division of work 160
ORGANISATION & MANAGEMENT FUNDAMENTALS

has its limits which experience and a sense of proportion teach us may not be exceeded. This division of work can be applied at all levels of the organisation. ; (2) Authority and Responsibility.The authority and responsibility are related, with the latter, the corollary of the former and arising from it. Fayol finds authority as a continuation of official and personal factors. Official authority is derived from the managers position and personal authority is derived from personal qualities such as intelligence, experience, moral worth, past services, etc. Responsibility arises out of assignment of activity. In order to discharge the responsibility proper, there should be parity of authority and responsibility. (3) Discipline. All the personnel serving in an organisation should be disciplined. Discipline is obedience, application, energy, behaviour, and outward mark of respect shown by employees. Discipline may be of two types; self-imposed discipline and command discipline. Self -imposed discipline springs from within the individual and is in the nature of spontaneous response to a skillful leader. Command discipline stems from a recognised authority and utilizes deterrents to secure compliance with a desired action, which is expressed by established customs, rules and regulations. The ultimate strength of command discipline lies it its certainty of application. Such a discipline can be obtained by sanctions in the forms of remuneration, warnings, suspension, demotion, dismissal, etc. However, while applying such sanctions, people and attendant circumstances must be taken into account. This can be learned by experience and tact of the managers. (4) Unity of command. Unity of command means that a person should get orders and instructions from only one superior. The more completely an individual has a reporting relationship to a single superior, the less is the problem of conflict in instructions and the greater is the feeling of personal responsibility for results. This is contrary to Taylors functional foremanship. On this conflicting view, Fayol suggested that, I do not think that a shop can be well run in flagrant violation of this (unity of command). Nevertheless, Taylor successfully managed large-scale concerns. I imagine that, in practice, Taylor was able to reconcile functionalism with the principle of unity of command, but this is the supposition whose accuracy I am not in a position to verify. Fayol has considered unity of command as an important aspect in managing an organisation. He says that should it (unity of command) be violated, authority is undermined, discipline is in jeopardy, order disturbed, and stability threatened. This rule seems fundamental to me and so I have put it to the rank of a principle. (5) Unity of Direction. According to this principle, each group of activities with the same objective must have one head and one plan. Unity of direction is different from unity of command in the sense that former is concerned with functioning of the organisation in respect of its grouping of activities or planning while latter is concerned with personnel at all levels in the organisation in terms of reporting relationship. Unity of direction provides better coordination among various activities to be undertaken by an organisation.
ORGANISATION & MANAGEMENT FUNDAMENTALS

161

HUMAN RESOURCE MANAGEMENT (6) Subordination of Individual to General Interest. Common interest is above the individual interest. Individual interest must be subordinate to general interest when there is conflict between the two. However, factors like ambition, laziness, weakness, . etc., tend to reduce the importance of general interest. Therefore, superiors should set an example in fairness and goodness. The agreement between employers and employees should be fair and there should be constant vigilance and supervision. (7) Remuneration of Personnel. Remuneration of employees should be fair and provide maximum possible satisfaction to employees and employers. Fayol did not favour profit sharing plan for workers but advocated it for managers. He was also in favour of nonfinancial benefits though these were possible only in the case of large-scale organizations. (8) Centralization. Everything, which goes to increase the importance of subordinates role, is decentralization; every thing, which goes to reduce it, is centralization. Without using the term centralization of authority, Fayol refers the extent to which authority is centralised or decentralized. Centralization and decentralization are the question of proportion. In small firms, centralization is the natural order, but in large firms, a series of intermediaries is required. Share of authority and initiative left to intermediaries depends on the personal character of the manager, his moral worth, the reliability of his subordinates, and also on the conditions of the business. Since both absolute and relative values of managers and employees are constantly changing, it is desirable that the degree of centralization or decentralization may itself vary constantly. (9) Scalar Chain. There should be a scalar chain of authority and of communication ranging from highest to the lowest. It suggests that each communication going up or coming down must flow through each position in the line of authority. It can be short-circuited only in special circumstances when its rigid following would be detrimental to the organisation. For this purpose, Fayol has suggested gang plank which is used to prevent the scalar chain from bogging down action. His scalar chain and gang plank can be presented as follows A
B C D E F G L M N O P Q

Fig. 4.4 : Scalar chain and gang plank. In the fig at above, A is the top man having immediate subordinates B and L. In turn B and L are having immediate subordinates C and M. This continues to the level of G and Q. Ordinarily, the communication must flow from A to B to C to D and so on while coming from top to down. Similarly, it must flow from G to F to E and so on while going up. It 162
ORGANISATION & MANAGEMENT FUNDAMENTALS

means if any communication is going from F to P, it will flow from F to A via E, D, C and B and coming down to P via L M N and O. Fayol suggests that this scalar chain system take time, and therefore, can be substituted by gang plank (dotted line) without weakening the chain of command. In order to maintain authority, it is desirable that superiors of F and P authorize them to deal directly provided each informs his superior of any action taken. Fayol suggests that this system allows F and P to deal in a few hours with some questions or others which via the scalar chain would pass through twenty transmissions, inconvenience people, involve masses of paper, lose weeks or months to get to a conclusion less satisfactory than the one which could have been obtained via direct contact. (1) Order. This is a principle relating to the arrangement of things and people. In material order, there should he a place for everything and every thing should be in its place. Similarly, in social order, there should be right man in the right place. This kind of orders demands precise knowledge of the human requirements and resources of the organisation and a constant balance between these requirements and resources. Normally, bigger is the size of the organisation, more difficult this balance is. (2) Equity. Equity is the combination of justice and kindness. Equity in treatment and behaviour is liked by every one and it brings loyalty in the organisation. The application of equity requires good sense, experience, and good nature for soliciting loyalty and devotion from subordinates. (3) Stability of Tenure. No employee should be removed within short time. There should be reasonable security of jobs. Stability of tenure is essential to get an employee accustomed to new work and succeeding in doing it well. Unnecessary turnover is both cause and effect of. bad management. (4) Initiative. Within the limits of authority and discipline, managers should encourage, their employees for taking Initiative. Initiative is concerned with thinking out and execution of a plan. Initiative increases zeal and energy on the part of human beings. (5) Esprit de Corps. This is the principle of union is strength and extension of unity of command for establishing team work. The manager should encourage esprit de corps among his employees. The erring employees should be set right by demanding written explanations. Written explanations complicate the matters.

4.5.

HUMAN RELATIONS SCHOOL

Human relations school is a socio psychological approach to management. It suggests that a business enterprise is a social system in which group norms exercise significant influence on the behaviour and performance of individuals. Workers cannot be motivated by economic rewards alone. They require social satisfaction at the workplace. Therefore, managers should create such a climate in the organisation that worker can feel happy. Employee counselling, participative decision- making, cordial supervision, job enrichment and other techniques have 163

ORGANISATION & MANAGEMENT FUNDAMENTALS

HUMAN RESOURCE MANAGEMENT been suggested for keeping workers happy and satisfied. According to Keith Davis, human relations is an area of management practice which is concerned with the integration of people into a work situation in a way that motivates them to work together productively, cooperatively and with satisfaction and achieve organisational goals. The human relation school is based on the following ideas 1. The Individual. According to the human relation school, each person is unique. He brings certain attitudes, beliefs, values, skills, etc. to the job situation. Therefore, an individual is motivated by not only economic factors but by several social and psychological factors. 2. The Work Group. Work is a social experience and most workers find satisfaction in social or informal groups. The norms of such group determine to a great extent the attitudes and performance of workers. Therefore, managers should maintain good inter-personal and inter-group relation to maximise productivity. 3. The leader. As the leader of a work group, a supervisor/manager should provide a pleasant work climate wherein employees are allowed to have say in the decision-making process. He can gain respect and obedience by adjusting to various personalities and situations. 4. The Work Environment. A positive work environment enables employees to satisfy their needs as well as to achieve organisational goals. Positive work environment consists of clearly defined goals, performance linked rewards, feed back on performance, participate decision making, interesting and growth oriented work, open communications, etc. 4.5.1. Behavioural Approach Human relations movement focused on interpersonal relations and overlooked the wider subject of organisational behaviour. Organisational behaviour involves the study of attitudes, behaviour and performance of individuals and groups in organisational setting. Behavioural approach includes the issue of organisational behaviour. It is also known as human resource approach because it stresses development of human beings for the benefit of both the individual and the organisation. Behavioural approach is multi-dimensional and interdisciplinary in nature. Under it the knowledge drawn from behavioural science, e.g., psychology, sociology, anthropology, etc. is applied to understand, explain and predict human behaviour. Therefore, this approach is also known as behavioural science approach. Several sociologists and psychologists, e.g., Albraham H. Maslow, Douglas McGregor, Federick Herzberg, Rensis Likert, Kut Lewin s, Keith Davis, Chris Argysis, L.R. Sayles, George Homans and others have made significant contributions to the development of this approach.

164

ORGANISATION & MANAGEMENT FUNDAMENTALS

Features of behavioural science approach are as follows . (i) (ii) (iii) An organisation is a sociotechnical system. Individuals differ in terms of their attitudes, perceptions and value systems. Therefore, they react differently to the same situation. People working in an organisation have their needs and goals which may differ from the organisations needs and goals. Management should achieve fusion between organisational goals and human needs. A wide range of factors influence relations among people (inter personal relations). Peoples behaviour as individuals may be different from their behaviour as members of a group. Persons working together in an organisation from their own informal groups. Such groups have their own norms, culture and communication systems. Informal groups exercise a significant influence on the attitudes, behaviour and performance of employees.

(iv) (v) (vi)

Thus, behavioural approach js an extension and improvement of human relations movement. It has made significant contributions towards the development of management thought. However, this approach errs by identifying management with psychology. Its conclusions discount theory and stress radical empiricism. They have a clinical bias and lack scientific validity. 4.5.2. Systems Approach Since 1950 researchers began to look at organisations from a systems viewpoint. In -1951 Weiners pioneering work on cybernetics developed concepts of systems control by information feedback. He described an adaptive system as mainly dependent upon measurement and correction through feedback Later Ludwig Von Bertalanffy and Kenneth Boulding evolved the General System Theory (GST). This theory consists of general principles for understanding the physical, mechanical, biological and social entities and the relationship among them. A.K.Rice, E.L. Trist, D.S. Poughm Robert Katz, Kahn have made significant contributions to the development of the systems approach. The main elements of systems approach are as follows (i) (ii) An organisation is a unified and purposeful system consisting of several interconnected, interaction and interdependent parts. The parts or components of a system are called sub-systems. Each sub-system influences the other subsystems and the system as a whole. Different sub-systems are tied together into an organic whole through goals, authority flows, resource flows and information flows.

ORGANISATION & MANAGEMENT FUNDAMENTALS

165

HUMAN RESOURCE MANAGEMENT (iii) The position and function of each sub-system and can be analysed and understood only in relation to the other sub-system to the organisation as a whole. Similarly, the organisation as a system can be analysed and understood only by reference to its sub-systems. Each sub-system derives its strength by its association and interaction with the other subsystems. As a result the collective contribution of the organisation is greater than the aggregate of individual contributions of its subsystem. This is known as synergy. (v) Every system has a boundary that separates it from its environment. The boundary determines which parts are internal to the organisation and which are external. For instance, employees are within the boundary whereas creditors and customers are external to a business firm. Systems are of two types. An open system continually interacts with its environment (the forces lying outside it) whereas a closed system is self contained and isolated from the environment. A business enterprise is an open and dynamic system. It draws inputs (raw materials, machinery, labour, finance, information etc.) from its environment. It converts these inputs into outputs (products and services etc) with the help of conversion process. The conversion or transformation process consists of production and marketing activities and it is also called throughput. It supplies them to the environment.
EN V IR O NM EN T

(iv)

(i)

(v)

(vi)

IN PU TS

T R A N S F O R M A T IO N PROCESS

O U TPU TS

FE ED BA CK

Fig. 4.5.2 : An open system view of organization The reaction or response of the environment to the output is known as feedback. Feedback is useful in evaluating and improving the functioning of the system. Therefore, feedback is the key to system control. As an open system, an organisation has to adapt its structure and processes to the environmental changes, which affect its internal functioning. In other words, an organisation has to be a steady state and in a state of dynamic equilibrium in relation to the external environment. A steady state means internal equilibrium and stability. When 166

ORGANISATION & MANAGEMENT FUNDAMENTALS

an organisations functioning is temporarily disturbed (say, due to power shortage) it may strive to maintain balance and regain its original position. However, if the power shortage becomes a - regular phenomenon, it may have to modify its production schedule or install a power plant or adopt any other adaptive response. It has to move from its original state to a new state of equilibrium, i.e., dynamic equilibrium. Thus, organisations use maintenance (for steady state) and adaptive (for dynamic equilibrium) mechanisms in order to ensure their survival and growth. (i) Some systems tend to disintegrate to dissipate their energy and to become inactive. This tendency is called entropy. On the other hand, other systems have the tendency (called negative entropy) towards order, activity, perpetuation, etc. These are able to generate the required energy and surplus to sustain themselves. Organizations operate on the principle of equi-finality, which means that they have several alternative ways of doing the same goal. Different initial conditions and paths are permissible to reach a single final state. Similarly, a given initial condition to state may be adopted to reach different final states.

(ii)

4.5.3. Contingency Approach The contingency approach is a relatively new approach to organisation and management. It is related to the systems approach. The belief that organisations are open systems widened the perspective further leading to the development of the contingency approach. It is also known as the situational approach. It was developed by managers, consultants and researchers who tried to apply the concepts of earlier approaches to real life situations. They found that the concepts and techniques highly effective in one situation failed to work in other situations. The basic theme of the contingency approach is that there is no single best way of managing applicable in all situations. The best solution is the one that is responsive to the peculiarities of the given situation. Significant differences exist between one situation and others. Therefore, management should deal with different situations in different ways. In other words, the effectiveness of any technique is contingent on the given situation. The conditions and complexities of the situation determine which approach is applicable and effective. The approach or technique should be a match or fit between the situational variables and management variables. It is the responsibility of management to analyze the contingencies or conditions peculiar to each situation and then choose the right approach to deal with it. Contingency approach rejects universality of management concept. It appeals to common sense. But it is much more than common sense. It requires the ability to analyse and diagnose a managerial situation correctly. It also requires knowledge and understanding of different principles, techniques and styles of management. Use of contingency approach is not possible without the ability to match the management knowledge and skills to the demands of the given situation.

ORGANISATION & MANAGEMENT FUNDAMENTALS

167

HUMAN RESOURCE MANAGEMENT The main features of the contingency approach are as follows (i) Management is entirely situational. The application and effectiveness of any technique is contingent on the situation. In other words, the conditions and complexity of the situation determine which measure or technique is applicable and effective. Management should, therefore match or fit its approach to the requirement of the particular situation. To be effective, management policies and practices must respond to environmental changes. The organisation structure, the leadership style, the control system all should be designed to fit the particular situation. Since managements success depends on its ability to cope with its environment it should sharpen its diagnostic skill so as to anticipate and comprehend the environmental changes. Managers should understand that there is no one best way to manage. They must not consider management principles and techniques universal.

(ii)

(iii)

(iv)

Several examples can be given to illustrate and explain the contingency approach. For example there are several forms of organising work. The functional structure is the most common. But in a dynamic environment, matrix structure may be more appropriate because of the need for sharing authority and power. The choice of the form of organisation should be made according to the requirements of the enterprise. Similarly several incentives-monetary and non-monetaryare available for motivating employees. The choice of motivational technique should be based on the needs and expectations of the people to be motivated. To take another example, an effective leader should change his/her style to match the given situation. Thus the contingency approach has applicability and usefulness for all the functions of management. Contingency approach may be viewed as if and then approach as shown below. If represents environmental or situational variables, which are independent. Then represents management variables (concepts, principles, and techniques) which are dependent on the environment. : THEN Management Variables

IF Environment Variables Fig. 4.5.3. : Contingency Modal 168

ORGANISATION & MANAGEMENT FUNDAMENTALS

In order to operationalise the contingency approach, managers have to take four sequential steps :(i) (ii) (iii) (iv) analyse and understand the situation, study and examine the validity of various concepts, principles and techniques to the situation at hand, make the right choice by matching the technique to the situation, and implement the choice.

Tom Burns. G.W.Stalker, Joan Woodward. James Thompson, Paul Lawrence, Jay Lorsch. Jay Galbraith and other pioneers have made significant contributions to the development of contingency approach. Burn and Stalker conducted a study of Scottish and English electronics firms in the 1950s. They found that organisations operating in a stable environment adopted mechanistic structures while those operating in a dynamic environment used organic structure. Joan Woodward analysed the influence of technology7 on organisation structure of about 100 British firms during the 1960s. She classified the technology adopted by these firms into three types- units of small batch production, mass or larger batch production, and continuous process production. She found that span of control, inter- persona! relationships, ratio of managers to non managers, participation in decision making, use oi committees and other structural aspects of these firms differed according to the type of the technology used. Lawrence and Lorsch also found empirically that organisations functioning in a complex environment adopted a higher degree of differentiation and integration than those working in a simple environment. Jay Galbraith revealed that the amount of information required by an organisation depended on the level of uncertainties, interdependence anc adaptation mechanisms. Critical Evaluation Contingency approach provides a clear view of the realities of the managerial job. The classical approach suggests pre- conceived principles and techniques as having universal. validity ignoring the situational differences. The contingency approach avoids this organic stand and suggests situation specific solutions. It is free from value judgments and exhorts managerial choices to be made in the light of environmental factors. To this extent, the approach is open minded and pragmatic. Contingency approach has commonsense value and wide-ranging particle utility. It widens the horizons of managers from the concepts, principles and techniques of management theory. It goads them to be alert and adaptive to changing situational needs. It promotes analytical, critical and multidimensional thinking with the help of which managers can innovate new and better approaches and widen their choice. The contingency approach does not suggest that the findings of earlier approaches are useless. Rather it attempts to integrate them and make them contingent upon the demands of the situation. It recognizes that managerial functions and principles are useful but should be used
ORGANISATION & MANAGEMENT FUNDAMENTALS

169

HUMAN RESOURCE MANAGEMENT with discretion and care to suit the specific situation. The contingency approach accepts that .organisations and their environment are too dynamic to be always effectively managed in the same manner . Managers must be capable of changing their approach and style to match the changes in the environment. This approach stresses the need for a comparative study of organisations so as to develop guidelines for coping with different situations. The contingency approach is more eclectic than the other approaches. It recognises that management thought has not advanced to the point at which definite prescriptions for the best way to manage in every situation is made available. The contingency approach is not free from criticism. Critics argue that it adds confusion to the practice of management by stressing that it all depends on the situation. The manager is swamped with so many ideas, which are humanly impossible to comprehend. He has no tested and proven prescriptions to depend upon. Critics also point out that without a theoretical foundation, it is almost impossible to research, to gain valuable information, or develop a knowledge base. Some critics argue that the approach does not incorporate all aspects of the systems theory. The approach is very complex and suffers from paucity of literature. It suggests a reactive strategy for coping with the environmental changes. A proactive approach would be more effective for managers. It is also said that there is nothing new in contingency theory because even classical theorists like Fayol cautioned managers to use principles in the light of changing conditions.

4.6. TRAINING
Training starts after the recruitment of the employees. Training is the process through which employees are made capable of doing the job prescribed to them. According to Elippo, Training is the act of increasing the knowledge and skill of an employee for doing a particular job. According to Dale Yoder, Training is the process by which manpower is filled for the particular jobs it is to perform. According to Beach, Training is the organised procedure by which people learn knowledge and skills for definite purpose. The purpose of training is to achieve a change in the behaviour of those trained and to enable them to do their jobs in a better way. The trainees will acquire new manipulative skills, technical knowledge problem solving ability or attitudes etc. Training is not a one-step process but it is a continuous or never ending process. Training makes newly recruited workers fully productive in the minimum of time. Even for old workers, training is necessary to refresh them and enable them to keep up with new methods and techniques. Advantages of Training. According to Dale S. Beach, Training is vital and necessary activity in all organisations. It plays a large part in determining the effectiveness and efficiency of the establishment. Following are the advantages of imparting training to the personnel. (A) Advantages to the Organisation 1. Training is a follow-up of selection procedure. Training helps in curing defects in the selection process. It helps in choosing the most appropriate individuals for different jobs. 170
ORGANISATION & MANAGEMENT FUNDAMENTALS

2. Training brings about an improvement of the quality and quantity of output by increasing the skill of the employees. Training makes the fresh and old employees more skilled and accurate in performance of their work. 3. Trained personnel will be able to make much better and more economical use of materials and equipment than untrained employees, thus reducing the cost of production. 4. Since trained personnel commit few mistakes, they will require less supervision. The management can well-afford to focus its attention on other basic functions. 5. Training can help reduce turnover, absenteeism, accidents, grievances rates. Supervisory training in labour relations, administration etc. may improve supervisor-subordinate relationships. 6. The training will create a feeling among the workers that they are being properly cared for, and that the employer is sincere to them. This will improve relations between the employers and employees. Training, thus, develops a sense of duty towards their employer and builds up confidence in the organisation. (B) Advantages to the Employees 1. 2. 3. As employees acquire new knowledge and job skills, they increase their market value and wage-earning power. This increases their pay and status. The possession of useful skill enhances their value to their employer and thereby increases their job security. Training also qualify them for promotion to more responsible jobs.

Limitations of Training. There are some limitations of the training. They are 1. Training is a costly and expensive process. 2. Training may result in dislocation of work and loss of output because regular office work is likely to be interrupted or delayed because of the time spent in training. 3. It is difficult to obtain good training instructors and leaders. 4. Self-reliance and capacity for new ideas might be stifled. 4.6.1. Principles Of Training Training is different from education. Education is broader in scope than training. The purpose of training is to develop the skill required for a particular job whereas the purpose of education is to develop the individual. Training usually has a more immediate utilitarian purpose than education.

ORGANISATION & MANAGEMENT FUNDAMENTALS

171

HUMAN RESOURCE MANAGEMENT Following are the important principles of training : 1. Training must conform to the individual intelligence and efficiency of the trainees. 2. Training must be supported by motivation. Motivation enables the trainees to learn quickly. 3. Training must be imparted by qualified and well-trained trainers and instructors. 4. Every trainee must be provided with course of progress reports. This enables the trainees to improve and rectify themselves. 5. The training of a complex and complicated jobs should be provided in parts. 6. Trainees must be encouraged to have sufficient practice. 7. Rewards and punishments must follow the process of training. 8. The approach of training should be systematic and authentic. 4.6.2. Benefits Of Training The main benefits of training are given below: 1. Increased productivity. Training increases the knowledge and skills of employees. Therefore, well-trained employees give better performance on the Job. Training results in higher quantity and quality of output. 2. Job satisfaction. Training builds self-confidence in the employees and enables them to achieve the required level of performance. Their enthusiasm pride and interest in the job and their morale goes up. Their attitude becomes more positive and co-operative. Turnover and absenteeism are reduced. 3. Reduction in accidents. Generally, trained employees are less accident-prone than the untrained ones. Proper training develops safety attitudes and helps to reduce the accident rate. 4. Better use of resources. Well-trained employees make better use of machines and materials. As a result the rate of spoilage or wastage of materials is reduced. There is less breakage of machinery and tools. The maintenance cost is reduced and life of machines is increased. Cost of production per unit is reduced. 5. Reduced supervision. Trained employees need less guidance. Therefore, need for supervision is reduced. The span of supervision can be increased and the costs of supervision reduced. 6. Greater flexibility. An organisation with trained personnel can introduce latest technology to reduce costs of production. Trained employees show less resistance to change. The enterprise can easily adjust to short-term variations in the volume of work. 7. Management by exception. Trained employees are self-dependent and can perform routine work independently. Therefore, superiors can easily delegate authority and reduce their workload. They can practise management by exception and devote their time and energy to more important policy matters. 172
ORGANISATION & MANAGEMENT FUNDAMENTALS

8. Stability and growth. An enterprise having a pool of trained personnel can maintain its effectiveness despite the loss of key personnel. It can more easily replace executives. It can also meet the personnel needs for growth and expansion. Training provides a second line of personnel which helps to ensure long-term stability and growth of the organisation. 4.6.3. Methods of Training 1. On-the-Job Training (OJT). In this method the trainee is placed on a regular job and taught the skills necessary to perform it. The trainee learns under the guidance and supervision of the superior or an instructor. The trainee learns by observing and handling the job. Therefore, it is called learning by doing. Several methods are used to provide on-the-job training, e.g., coaching, job rotation, committee assignments, etc. A popular form of on-the-job training is Job Instruction Training (JIT) or step by step learning. It is widely used in the United States to prepare supervisors. It is appropriate for acquisition or improvement of motor skills and routine and repetitive operations. The JIT involves the following steps: (a) Preparing the trainee for instruction. This involves putting the trainee at ease, securing his interest and attention, stressing the importance of the job, etc. (b) Presenting the Job operations or instructions in terms of what the trainee is required to do. The trainee is put at work site and each step of the job is explained to him clearly. (c) Applying and trying out the instructions to judge how far the trainee has understood the instructions. (d) Following up the training to identify and correct the deficiencies, if any. OJT method provides immediate feedback, permits quick correction of errors and provides extra practice when required. But it needs skilled trainers and preparation in advance. Merits. The main advantages of OJT is that the trainee learns on the actual machine in use and in the real environment of the job. He gets a feel of the actual job. Therefore, he is better motivated to learn and there is no problem of transfer of training skills to the job. Secondly, this method is very economical because no additional space, equipment, personnel or other facilities are required for training. The trainee produces while he learns. Thirdly, the trainee learns the rules, regulations and procedures by observing their day to day applications. Fourthly, this is the most suitable method for teaching knowledge and skills which can be acquired through personal observation in a relatively short time period. It is widely used for unskilled and semiskilled jobs, e.g., machinist, clerical and sales jobs. Fifthly, line supervisors take an active part in training their subordinates. Demerits. In on-the-job training, the learner finds it difficult to concentrate due to noise of the actual work-place. Secondly, this method is often haphazard and unorganised. The superior

ORGANISATION & MANAGEMENT FUNDAMENTALS

173

HUMAN RESOURCE MANAGEMENT .or experienced employee may not be a good trainer. Thirdly, in this method the trainee may cause damage to costly equipment and materials. On-the-job training is, however, the most widely used and accepted method of training. It is suitable for all levels of employees, workers, supervisors and executives. It is appropriate for teaching knowledge and skills which can be learnt in a relatively short period of time and where only a few persons are to be trained on the job. In order to make on-the-job training successful, some conditions must be satisfied: (a) what and how to teach should be carefully, decided, (b) the instructor should be carefully selected and trained, and (c) a definite follow-up schedule should be used to judge the results of training. 2. Vestibule training. In this method a training centre called vestibule is set up and actual job conditions are duplicated or simulated in it. Expert trainers are employed to provide training with the help of equipment and machines which are identical with those used at the workplace. Merits. The main advantage of vestibule training is that the trainee can concentrate on learning without disturbance of the workplace noise. Secondly, the interest and motivation of the trainee are high as the real job conditions are duplicated. Thirdly, this method is essential in cases where on-the-job training might result in a serious injury, a costly accident, or the destruction of valuable equipment and material, e.g., aeronautical industry. Fourthly, correct method can be taught effectively.by the trained instructor who knows how to teach. Fifthly, it permits the trainee to practice without the fear of being observed and ridiculed by the superior/co-worker. Lastly, it is a very efficient method of training a large number of employees of the same kind of work at the same time. This method is also useful when it is not advisable to put the burden of training on line supervisors and when special coaching is needed. It is often used to train clerks, bank tellers, inspectors, inactive operators, testers, typists, etc. Demerits. Vestibule training is the most expensive method because of additional investment in classroom, equipment and expert trainers. Secondly, the training situation is somewhat artificial and the trainee does not get a feel of the real job. Thirdly, separation of training from the supervisory responsibilities may lead to problems in the organisation. 3. Apprenticeship training. In this method, theoretical instruction and practical learning are provided to trainees in training institutes. In India the Government has established Industrial Training Institutes (ITIs) for this purpose. Under the Apprenticeship Act, 1962 employers in specified industries are required to train the prescribed number of persons in designated trades. The aim is to develop all-round craftsmen. Generally a stipend is paid during the training period. Thus, it is an earn when you learn scheme. Merits. The main advantage of this method is that it combines theory and practice. Secondly, the trainees acquire skills which are valuable in the job market. Thirdly, apprenticeship programmes provide skilled workforce to industry. Demerits. Apprenticeship training is time consuming and expensive. Many persons leave the training programme midway as the training period ranges from one year to five years. Apprenticeship training is the oldest method of training. It is particularly suitable for learning crafts and technical trades wherever job proficiency is the result of a relatively long training 174
ORGANISATION & MANAGEMENT FUNDAMENTALS

period. Draughtsman, machinist, printer, tool maker, pattern designer, mechanic, carpenter, weaver, fitter, jeweller, engraver, electrician, etc. are examples of such areas. 4. Classroom training. Under this method, training is provided in company classrooms or in educational institutions. Lectures, case studies, group discussions, and audio-visual aids are used to explain knowledge and skills to the trainees. Classroom training is suitable for teaching concepts and problem solving skills. It is also useful for orientation and safety training programmes. Some companies maintain their own training institutes or schools. Special training courses are designed, e.g., management course for foremen, computer course for typists, etc. Courses in retraining and upgrading may also be conducted. Small firms depend on outside schools and courses. 5. Internship training. It is a joint programme of training in which educational institutions and business firms cooperate. Selected candidates carry on regular studies for the prescribed period. They also work in some factory or office to acquire practical knowledge and skills. This method helps to provide a good balance between theory and practice. But it involves a long time period due to slow process. This method of training is used in professional work, e.g., MBBS, CA, ICWA, Company Secretaries, etc. 4.6.4. Induction Or Orientation Training Induction or orientation refers to the activities involved in introducing the new employees to the organisation and its policies, procedures, rules and regulations. When a new employee reports for work, he must be helped to get acquainted and adjusted with the work environment and the fellow employees. Induction or orientation is basically a socialising process by which the organisation seeks to make an individual its agent for the achievement of its objectives. The individual also seeks to make an agency of the organisation for the achievement of his personal goals. It provides the foundation for the new employee to start working efficiently and comfortably on the new job. It enables the new employee to learn the work values and behaviour patterns acceptable to the organisation. The main objectives of orientation are as follows: 1. Clarifying the job, 2. Developing realistic expectations about the organisation, 3. Reducing the amount of stress and anxiety of the new employee, 4. Reducing start up costs, and 5. Strengthening the relationships between new employee, his superior and peers. In small firms the orientation is generally informal. But in big organisations it may be a formal programme of two to four weeks. When a formal orientation course is to be conducted several days after the new employee joins duty, initial introduction should be given by the supervisor of the new employee. He should be given a friendly welcome and introduced to the other employees. He should be given a general idea about the rules, regulations, working conditions, etc. A formal orientation programme is necessary because the early job experiences have significant impact on the long-term career commitment of the individual. In the absence of a formal
ORGANISATION & MANAGEMENT FUNDAMENTALS

175

HUMAN RESOURCE MANAGEMENT programme, the new employee may form wrong impressions and he may take a lot of time in adjusting himself in new surroundings. A formal orientation programme generally provides information regarding the following: 1. The history of the organisation, 2. Products and services of the company, 3. Organisation structure of the enterprise, - 4. Location of departments and units, 5. Personnel policies and practices, 6. Employees facilities and services, 7. Rules and regulations, 8. Grievance procedure, 9. Safety measures, and 10. Standing orders. Some organisations conduct an interview with the new employee after the induction programme is over. This interview helps to judge the effectiveness of the induction programme. It also reveals the dissatisfaction and misgivings which the employees might still be having. Further information and explanations can be given to clear his doubts and misunderstanding. Organisation and Management Fundamental that of workers. Supervisory trainees are told how to cooperate with others, how to command respect and obedience etc. The main methods of supervisory training are role playing, case study, committee assignments, sensitivity training, in basket game, special projects, selective readings etc.

4.7. CONCEPTS OF TRAINING, EDUCATION AND DEVELOPMENT


Training is an organised process for increasing the knowledge and skills of people for doing a particular job. It is a learning process involving the acquisition of skills and attitudes. The purpose of training is to improve the job performance. Training is a continuous process because a person never stops learning. Training should be differentiated from education and development. 4.7.1. Training and Education Training is concerned with imparting specific skills for particular purpose. The purpose of training is to bring about improvement in the performance of work. It includes the learning of such skills as are required to do a specific job in a better way. The major burden of training falls on the employer. On the other hand, education is broader in scope and more general in purpose. It involves increasing general knowledge and understanding of total environment. Formal education is given in a school or college whereas training is vocational and is generally imparted at the workplace. Training has a more immediate utilitarian purpose than education. The major burden of education falls on the State. However, in many cases the two may take place simultaneously.

176

ORGANISATION & MANAGEMENT FUNDAMENTALS

4.7.2. Training and Development Training implies learning the basic skills and knowledge required for a particular job. On the other hand, development involves the growth of the individual in all respects. In training nonmanagerial employees the primary focus is on imparting manual skills, technical procedures and routine methods. But managers require generalised conceptual skills. Training is job-centred whereas development is career-bound. Management development aims at increasing the capacity for further tasks of greater difficulty. Therefore, the contents and techniques of employee training may differ from those of management development. Development is more akin to education than to training. It involves developing the whole person physically, mentally and socially. Difference between Education and Training SI No. 1. Basis of Difference Meaning Education Training

2.

Objective

3. 4. 5. 6. 7. 8.

Place Liability Burden of expenses Importance Scope Nature

Education is a process of learn- Training is a process of increasing which increases knowledge ing knowledge, skills and and understanding of a person. attitude of an employee to do a particular job. Main aim of education is to Main aim of training is to increase the knowledge of a increase the knowledge of a person. person to do a particular job Education is obtained in Training is obtained in a instischools, colleges, universities tute or at a training centre and institutes. Training is, a liability of the It is not a liability of an enterprise to educate its employees. employer itself Education expenses are generally borne by employees Expenses of training are generally borne by enterprises.

Education increases the knowl- Training increases ability and edge and understanding skill Education is a wide term and covers several aspects Education is of theoretical nature. Training is a narrow term and is limited to a particular aspect. Training is of practical nature

ORGANISATION & MANAGEMENT FUNDAMENTALS

177

HUMAN RESOURCE MANAGEMENT Difference between Training and Development SI Basis of No. Difference 1. Meaning Training Training is a process of increasing the knowledge, skills and attitude of an employee to do a particular job. Development Development is a process of learning and growth which is helpful in overall growth of employees

2.

Objective

3. 4. 5. 6.

Time Nature Suitability Means & Methods Scope

Main aim of training is to enable Main aim of development is the the employees to do a particular overall growth of employees. job Development is related with Training is related with present present and future period. Relationship period. Development is a careerTraining is a job-centred process centred process. Training is more suitable for workers and employees There are various methods of training Scope of training is limited and it is a part of development process Development is more suitable for managers and executives. Development can be attained with effective leadership and managerial courses
Development is a wide term and includes training

7.

4.7.3. Role of Training and Development No organization has a choice of whether to train its employees or not, the only choice is that of methods. The primary concern of an organization is its viability, and hence its efficiency.There is continuous environmental pressure for efficiency, and if the organization does not respond to this pressure, it may find itself rapidly losing whatever share of market it has. Training imparts skills and knowledge to employees in order that they contribute to the organisations efficiency and be able to cope up with the pressure of changing environment. The viability of an organization depends to a considerable extent on the skills of different employees, specially that of managerial cadre, to relate the organization with its environment. Bass has identified three which necessitate continuous training in an organization. These factors are technological advances, organizational complexity, and human relations. All these factors are technological advances, organizational complexity, and human relations. All these factors are related to each other. For example, technological advances tend to increase the size of the organization which increases its complexity. Similarly technological advances create human problems also. Thus training can play the following roles in an organization.

178

ORGANISATION & MANAGEMENT FUNDAMENTALS

1. Increase in Efficiency. Training plays active role in increasing efficiency of employees in an organization. Training increases skills for doing a job in better way. Though an employee can learn many things while he is put on a job, he can do much better if he learns how to do the job. This becomes more important specially in the context of changing technology because the old method of working may not be relevant. In such a case, training is required even to maintain minimum level of output. For example, working on automatic machine requires skills different than that required to handle manually-operated machines. Raw employees cannot handle such a machine. Similar changes are taking place in managerial jobs also. 2. Increase in Morale of Employees. Training increases morale of employees. Morale is a mental condition of an individual or group which determines the willingness to cooperate. High morale is evidenced by employee enthusiasm, voluntary conformation with regulations, and willingness to cooperate with others to achieve organizational objectives. Training increases employee morale by relating their skills with their job requirements. Possession of skills necessary to perform a job will often tends to meet such human needs as security and ego satisfaction. Trained employees can see the jobs in more meaningful way because they are able to relate their skills with jobs. 3. Better Human Relations. Training attempts to increase the quality of human relations in an organization. Growing complexity of organizations has led to various human problems like alienation, interpersonal and intergroup problems. Many of these problems can be overcome by suitable human relations training. Many techniques have been developed through which people can be trained and developed to tackle many problems of social and psychological nature. 4. Reduced Supervision. Trained employees require less supervision. They require more autonomy and freedom. Such autonomy and freedom can be given if the employees are trained properly to handle their jobs without the help of supervision. With reduced supervision, a manager can increase his span of management. This ; may result into lesser number of intermediate levels in the organization which can save much cost to the organization. 5. Increased Organizational Viability and Flexibility. Trained people are necessary; to maintain organizational viability and flexibility. Viability relates to survival of the organization during bad days, and flexibility relates to sustain its effectiveness despite the loss of its key personnel and making short-term adjustment with the existing personnel. Such adjustment is possible if the organization has trained people who can occupy the positions vacated by key personnel. The organization which does not prepare a second line of personnel who can ultimately take the change of ; key personnel may note be quite successful in the absence of such key personnel for whatever the reason. In fact, there is no greater organizational asset than trained and motivated personnel, because these people can turn the other assets into productive whole. 4.7.4. Methods of Remunerating Labour There are many well-known systems of remunerating labour, each of which specifies a distinct method of calculating the wages payable to workers. In practice, these basic systems have been 179

ORGANISATION & MANAGEMENT FUNDAMENTALS

HUMAN RESOURCE MANAGEMENT modified and adopted in numerous ways to suit the needs of inaividual concerns. This accounts for the very large number of methods of wage payment in use. Methods of labour remuneration may be broadly classified into two basic types, viz. Time Rate System and Payment by Results. These may be further subdivided into the following main types :
SYSTEMS OF REMUNERATION

TIME RATE SYSTEM

PAYMENT BY RESULTS

Time Rate

Measured Day Work

Differential Time Rate

Piece work

Premium of Time and Bonus Methods

Incentive Schemes for Indirect workers Group ystem Cost efficiency bonus schemes

High Wage Plan

Measured Day Work

Combination Piece Work

Taylor System

Straight

Halsey and Halsey-Wair System

Merrick System

Differential

Rown System

Barh System

Gantt and Bonus System

Emerson System

Points Schemes

Accelerated Premium System

Bedaux System

Haynes System

Fig. 4.7.4.

To the above list, two other types, viz. indirect incentives like profit sharing and copartnership schemes, and non-monetary incentives may be added. Though strictly not systems of remuneration, these are methods of giving incentives to workers.

180

ORGANISATION & MANAGEMENT FUNDAMENTALS

Time Kate System. Known by various other names such as time, work, day work, day wages, and day rate, the Time Rate system is perhaps the oldest system of remunerating labour. In this system, the worker is paid on his attendance at a specified rate of pay regardless of his outturn. The wage rate for a day worker which may be fixed on hourly, daily, weekly, fortnightly, or monthly basis depends upon the nature of his trade and skill. The rate is fixed taking into account the rates prevalent in the particular industrial locality for similar trade and skill. The rate may either be a fixed one, or there may be a progressive scale of pay starting from a minimum and rising up to a maximum, in stages, through periodical increments. Time work is most suitable for the two extreme grades of workers, viz. the highly skilled and the unskilled (including learners and apprentices) and for certain types of work, such as (i) Where output of the worker is beyond his control, e.g. where his speed of work is restricted by the speed of the machines or conveyor belts, or where his work is inter-linked with and is dependent upon the work done by other workers. (ii) Where output cannot be measured nor can any standard time be fixed for it, e.g. maintenance and repair work. (iii) Where close supervision of work is possible. (iv) Where quality, accuracy and high precision in work is of primary importance. As the time-worker has no necessity for nor a tendency to speed up work, this results in less spoilage. (v) Where increase in production or productivity is not commensurate with the incentive paid. The advantages of the time rate system are as follows (a) (b) (c) Calculation of wages is simple involving less clerical expenditure. The worker easily understands the calculation. He is assured of a steady income for each wage period.

Although time rate of payment is widely applied, the disadvantages and shortcomings attached to the system far outweigh its merits. These are summarized below (i) From the workers point of view, the system does not encourage initiative. As the same rate and amount of wages are paid to the fast and the slow workers, there is no incentive for increased efficiency and outturn. (ii) Decrease in productivity leads to rising labour cost and reduction in profit. (iii) Decrease hi production results in upsetting of production schedules, creation of bottlenecks in production, and increase in the cost per unit. (iv) Estimates of labour cost and quotations given to customers, if based on time work, may ultimately prove to be wrong as the actual performance will depend upon the inefficiency

ORGANISATION & MANAGEMENT FUNDAMENTALS

181

HUMAN RESOURCE MANAGEMENT or efficiency of the time worker. The employer is entirely dependent on the workers in regard to the quantum and rate of production. (v) Standards for labour are difficult to set. .

Payment by Results. System of remunerating labour in which the payments made have direct relation with the outturn of the workers are known as systems of Payment by results. For many such systems, the attendance of the worker or the time he takes for doing a job has no bearing on the rate or amount of payment. A special feature of these systems is that the worker gets a direct financial incentive and he is at liberty to increase his outturn and thus receive payment according to his ability, energy, and speed of work. Systems of payment by results may be broadly grouped into four categories, namely (a) Systems in which the payment is directly proportionate to the workers output, e.g. straight piecework system ; (b) Systems in which the proportion of the payment to the outturn increases progressively with increase in production, e.g. differential piecework system ; (c) Systems in which the rate of payment decreases with increase in outturn, e.g. premium bonus methods ; and (d) Systems with earnings varying in proportions which differ at different levels of production, e.g. accelerated premium systems. Requisites for a Successful Incentive System of Payment. For the successful working of an incentive of payment by results, the following factors should be kept in view :1. 2. 3. 4. 5. 6. 7. The system should be simple and easily understandable by the workers. Proper understanding and cooperation keep up workers morale. The cost of operating the system should be reasonably low. The scheme should be such as to be susceptible to easy supervision. The incentive should be large enough to induce workers to achieve it. The time lag between the performance of the work for which the payment of the incentive is due and the actual payment should be reduced to the minimum. The system should be fair enough to meet the viewpoint of the employer as well as the employees and it should be applied in a manner that would be fair to both. The rates and standards fixed should be reasonable so that each worker gets a fair chance to earn the incentives. Unreasonably high standard of performance which the worker is not capable of achieving should not be set.

182

ORGANISATION & MANAGEMENT FUNDAMENTALS

8. 9.

For work above the standard, the reward should be sufficiently high. The system should be flexible so that minor changes, as necessary in the method of calculation, can be easily made in order to suit changes in production methods. Such variations should not seriously affect the basic system of payment, The workers must be properly educated and motivated by the desire to earn money. There should be an equitable distribution of work and no worker should suffer a deduction of earnings for factors beyond his control, such as for stoppage of work due to lack of tools, instructions, or materials, or due to power failure or due to breakdown, or slowdown of the plants. Such contingencies should be covered by(a) including extra time in the standard, wherever practicable, or (b) payment of idle time wages, or (c) payment of minimum guaranteed wages.

10. 11.

12. 13. 14.

There should be a satisfactory system of inspection so that workers are paid only for good performance. The incentive system should be conducive to the setting up of standard costs and budgetary control. Working conditions should be as uniform as practicable so that the worker can fully control the rate of his output. Factors which normally affect output adversely are : deterioration in the quality of the input material and tools, machines of low efficiency, noise, dust, fumes, bad lighting, etc. There should be no rate cutting and no ceiling should be placed on an individuals earning. Standards once set should not be altered unless there is a change in the method of production. Payment should be made in accordance with what has been agreed upon by the employer and the worker. The system should be introduced on a permanent basis and should not be discontinued in times of financial stringency. No incentive system should be introduced only as a stopgap arrangement in order to temporarily tide over labour troubles. Workers putting in the same amount of effort should get uniform incentives irrespective of the jobs involved. Indirect workers should also be included so as to get the benefit of incentive plans.

15.

16.

17. 18.

Advantages and Disadvantages of payment by Results. The advantages of systems of payment by results are summarized below (i) Initially in the process of work measurement carried out for the purpose of fixation of standard time, all useless efforts and movements are detected and eliminated and the most economical method of doing a task is determined. This, by itself, reduces labour costs.
ORGANISATION & MANAGEMENT FUNDAMENTALS

183

HUMAN RESOURCE MANAGEMENT (ii) Loss of production time is reduced and there is maximum utilization of the resources like space, plant and machinery. (iii) There is an increase in productivity ; more work is turned out in a shorter period of time. (iv) Increase in production results in lower costs due to the reduction in fixed cost per unit of production. (v) The earnings of the workers go up; this raises personnel morale. (vi) It is possible to estimate labour costs and set labour standards accurately. (vii) Less supervision work is required. Unless proper measures are taken, systems of payment by results often turn out to be disadvantageous. For example : (i) With the increase in the tempo of work, the quality of production is likely to deteriorate. This can, no doubt, be obviated by a strict system of inspection and quality control but at higher costs. (ii) If the rates are not equitable for the various grades of workers employed on similar tasks, they would cause discontent. However correct and fair the rate fixing may be, workers are not prepared to accept almost any kind of job ; they are reluctant to undertake jobs which, in their opinion, are unrenumerative. (iii) In their eagerness to speed up in order to earn more, the workers may disregard safety precautions and thus expose themselves to greater risks of accidents. (iv) Most of the payment systems are expensive and need additional expenditure for installation and operation. (v) Group systems of payment by results, if not properly organized, result in dissatisfaction among the workers constituting the group. (vi) Discontentment may also be due to inefficient workers being jealous of the efficient workers who earn higher wages. Efficient workers may lose the friendship, cooperation and regard of their colleagues. (vii)The workers may be satisfied with a lower wage level and may not like to exert for achieving the standard expected, particularly where day rates are guaranteed. They may also be under the apprehension that if they earn high bonus, the rates may be cut. Supplementary Financial Incentives. So far, incentive plans based on output have been discussed. Incentives supplementary to production and payable in addition to the normal wages, may be given to the employees for various other purposes and in a number of ways. Some of these are mentioned below : (a) For reducing the cost of material by getting greater yields, reducing waste as fuel,

184

ORGANISATION & MANAGEMENT FUNDAMENTALS

power, steam, compressed air, etc. These methods are used when the cost of material is proportionately high. A normal percentage of waste is fixed for each item of production as a standard per unit and all reductions below the standard are rewarded by a suitable bonus proportionate to the saving effected. The method is similar to the cost efficiency bonus plans. (b) For improving quality. This is used when the quality of a product is of paramount importance. A high standard for inspection of quality is laid down and a bonus is paid in inverse proportion to the rejections detected in course of inspection, (c) For good maintenance work so that breakdown is reduced.

(d) For regular attendance and punctuality (time-keeping or Attendance bonus). This is used for discouraging absenteeism and tardiness and it is usually given as a percentage of the basic wages. (e) For safety precautions. This is used to obviate payment of compensation when the job is of a hazardous nature. The bonus is mostly in the form of a cash reward or prize. (f) (g) Prizes and cash awards for suggestions, technological improvements, etc. Special awards for long periods of service.

Non-Monetary Incentives (or Psychological Incentives). These incentives, usually given in the form of amenities or facilities, do not offer cash reward to the employee for any specific or measured work done. Such non-monetary benefits create a psychological effect by making the working conditions and terms of employment lucrative enough to induce the employee to increase his efforts. The benefit goes to all the employees in the undertaking and is not limited to any individual, class, or:; group. As a result of this and also because there is no immediate return which can be linked with individual effort, the employees take the benefits for granted and the incentive element , is lost. Non-financial benefits may be offered in several ways. A few examples are mentioned below: (a) Favourable working conditions (b) Medical facilities for the individual and his family (c) Education facilities (d) Welfare measures (e) Cheap grains (f) Subsidized canteen (g) Recreational amenities (h) Housing facilities .

ORGANISATION & MANAGEMENT FUNDAMENTALS

185

HUMAN RESOURCE MANAGEMENT (i) Pension schemes (j) Fund contributions (k) Protective clothing, liveries, uniforms, etc. (l) Tea, milk, etc. for specially arduous work. It will be noted from the above list that some of the benefits offered are obligatory under law or are given as a matter of convention. Such benefits cannot, strictly speaking, be termed as incentives. They are non-financial only so far as the employee is concerned. The employer has to incur expenditure to provide for the incentive. Non-financial incentives offer the following advantages (a) Reduce labour turnover. (b) Impart satisfaction to the employees and create a sense of loyalty and cooperation in them. (c) Reduce absenteeism. (d) Create a reputation for the undertaking so that the best labour is attracted. Payment of Salaries/Compensation to Managerial Personnel. The determination of equitable compensation payable to managerial personnel poses a difficult problem for the management. It is difficult to measure the job worth of euch personnel, there are no market rates available as guides since an individual having the same designation as another in a sister concern may have different jobs assigned and be paid different rates of pay, and, there is no definite relationship between the pay of a manager and the number of men he supervises. As a result of these problems, pay scales of executives particularly those holding higher or top positions are usually fixed on more or less arbitrary basis. The common practice is to compensate the managerial personnel by allowing perquisites or fringe benefits in addition to their salary. Some of these are : (i) (ii) (iii) (iv) (v) (vi) Bonus on profits. This may be related to the profit of the managers Division or to the overall profit of the business. Benefits of conveyance, house, electricity etc. Membership of clubs. Rights to buy shares of the company at advantageous price. Medical aid. Pension, gratuity and other deferred fringe payment.

It may be noted that some of these fringe benefits are now being made admissible to nonmanagerial personnel as well but the compensation to managerial personnel would be definitely on a higher scale to take care of additional hours of work put in and the added skill, efficiency and responsibility required by their jobs.

186

ORGANISATION & MANAGEMENT FUNDAMENTALS

Exercise 4
QUESTIONS FOR REVIEW AND DISCUSSION

1. Write down the steps involved in the recruitment various sources available for recruitment. 2. State the principles of scientific management. 3. Differentiate between training and development. 4. What are the requisites of a successful incentive system of payment ? 5. Discuss the important methods of imparting training to the employees ? 6. Write short note on contingency approach 7. Explain the advantages of training. 8. How does training help in employee development? 9. What is on the Job Training? Explain its merits and demerits:.10. What do you understand by off-the-job training? Describe its advantages limitations. 11. Explain orientation training.

ORGANISATION & MANAGEMENT FUNDAMENTALS

187