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Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does. According to Flippo, a prominent personality in the field of Human resources, “performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job." Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future. It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals. By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management’s interest in the progress of the employees. OBJECTIVES OF Performance appraisal: • • • • • • • • • • To review the performance of the employees over a given period of time. To judge the gap between the actual and the desired performance. To help the management in exercising organizational control. Helps to strengthen the relationship and communication between superior – subordinates and management – employees. To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future. To provide feedback to the employees regarding their past performance. Provide information to assist in the other personal decisions in the organization. Provide clarity of the expectations and responsibilities of the functions to be performed by the employees. To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development. To reduce the grievances of the employees.
Process of Performance Appraisal • ESTABLISHING PERFORMANCE STANDARDS: The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards.
COMMUNICATING THE STANDARDS :Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained to the. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators. MEASURING THE ACTUAL PERFORMANCE: The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work. COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE: The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees’ performance. DISCUSSING RESULTS: The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees’ future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better. DECISION MAKING: The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers etc. Pre-requisites for Effective & Successful Performance Appraisa
The essentials of an effective performance system are as follows: • Documentation – means continuous noting and documenting the performance. It also helps the evaluators to give a proof and the basis of their ratings. • Standards / Goals – the standards set should be clear, easy to understand, achievable, motivating, time bound and measurable. • Practical and simple format - The appraisal format should be simple, clear, fair and objective. Long and complicated formats are time consuming, difficult to understand, and do not elicit much useful information. • Evaluation technique – An appropriate evaluation technique should be selected; the appraisal system should be performance based and uniform. The criteria for evaluation should be based on observable and measurable characteristics of the behavior of the employee. • Communication – Communication is an indispensable part of the Performance appraisal process. The desired behavior or the expected results should be communicated to the employees as well as the evaluators.
Communication also plays an important role in the review or feedback meeting. Open communication system motivates the employees to actively participate in the appraisal process. Feedback – The purpose of the feedback should be developmental rather than judgmental. To maintain its utility, timely feedback should be provided to the employees and the manner of giving feedback should be such that it should have a motivating effect on the employees’ future performance. Personal Bias – Interpersonal relationships can influence the evaluation and the decisions in the performance appraisal process. Therefore, the evaluators should be trained to carry out the processes of appraisals without personal bias and effectively. Challenges Of Performance Appraisal
In order to make a performance appraisal system effective and successful, an organization comes across various challenges and problems. The main challenges involved in the performance appraisal process are: • Determining the evaluation criteria: Identification of the appraisal criteria is one of the biggest problems faced by the top management. The performance data to be considered for evaluation should be carefully selected. For the purpose of evaluation, the criteria selected should be in quantifiable or measurable terms Create a rating instrument: The purpose of the Performance appraisal process is to judge the performance of the employees rather than the employee. The focus of the system should be on the development of the employees of the organization. Lack of competence: Top management should choose the raters or the evaluators carefully. They should have the required expertise and the knowledge to decide the criteria accurately. They should have the experience and the necessary training to carry out the appraisal process objectively. Errors in rating and evaluation: Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait influencing the evaluator’s rating for all other traits) etc. may creep in the appraisal process. Therefore the rater should exercise objectivity and fairness in evaluating and rating the performance of the employees Resistance: The appraisal process may face resistance from the employees and the trade unions for the fear of negative ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the process of appraisal. The standards should be clearly communicated and every employee should be made aware that what exactly is expected from him/her. Purpose of Performance Appraisal Performance Appraisal is being practiced in 90% of the organizations worldwide. Self-appraisal and potential appraisal also form a part of the performance appraisal processes. Typically, Performance Appraisal is aimed at: • • • • To review the performance of the employees over a given period of time. To judge the gap between the actual and the desired performance. To help the management in exercising organizational control. To diagnose the training and development needs of the future.
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Provide information to assist in the HR decisions like promotions, transfers etc. Provide clarity of the expectations and responsibilities of the functions to be performed by the employees. To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development. To reduce the grievances of the employees. Helps to strengthen the relationship and communication between superior – subordinates and management – employees. The most significant reasons of using Performance appraisal are: Making payroll and compensation decisions – 80% Training and development needs – 71% Identifying the gaps in desired and actual performance and its cause – 76% Deciding future goals and course of action – 42% Promotions, demotions and transfers – 49% Other purposes – 6% (including job analysis and providing superior support, assistance and counseling).
The Balanced Scorecard To evaluate the organizational and employee performance in Performance appraisal management processes, the conventional approach measures the performance only on a few parameters like the action processes, results achieved or the financial measures etc. The Balanced scorecard –an approach given by Kaplan and Nortonprovides a framework of various measures to ensure the complete and balanced view of the performance of the employees. Balanced scorecard focuses on the measures that drive performance. The balanced scorecard provides a list of measures that balance the organizations internal and process measures with results, achievements and financial measures. The two basic features of the balanced scorecard are: • A balanced set of measures based on. the four perspectives of balanced scorecard • Linking the measures to Employee Performance The four Perspectives recommended by Kaplan and Norton for the managers to collect information are: • The financial measures – The financial measures include the results like profits, increase in the market share, return on investments and other economic measures as a result of the actions taken. • The customers’ measures - These measures help to get on customer satisfaction, the customer’s perspective about the organisation, customer loyalty, acquiring new customers. The data can be collected from the frequency and number of customer complaints, the time taken to deliver the products and services, improvement in quality etc. • The internal business measures – These are the measures related to the organization’s internal processes which help to achieve the customer satisfaction. It includes the infrastructure, the long term and short term goals and objectives, organisational processes and procedures, systems and the human resources. • The innovation and learning perspective. The innovation and learning measures cover the organisation’s ability to learn, innovate and improve. They can be judged by employee skills matrix, key competencies, value added and the revenue per employee. BENEFITS OF BALANCED SCORECARD The benefits of the balanced scorecard approach in measuring performance are:
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Gives the complete picture of the employee as well as the organisational performance. It guides users in determining the critical success factors and performance indicators. Strategic review or analysis of the organisational capabilities and performance. Focusing the whole organisation on the few key things needed to create breakthrough performance. Integrating and directing the performance and efforts from the lowest levels in the organisation to achieve excellent overall performance.
Techniques Of Performance Appraisal
1. 360 DEGREE PERFORMANCE APPRAISALS 360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job. 360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can
provide valuable insights and information or feedback regarding the “on-the-job” performance of the employee. 360 degree appraisal has four integral components: 1. Self appraisal 2. Superior’s appraisal 3. Subordinate’s appraisal 4. Peer appraisal. • Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his achievements, and judge his own performance. Superior’s appraisal forms the traditional part of the 360 degree appraisal where the employees’ responsibilities and actual performance is rated by the superior. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superior’s ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees’ abilities to work in a team, co-operation and sensitivity towards others. Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance appraisal have high employee involvement and also have the strongest impact on behavior and performance. It provides a "360-degree review" of the employees’ performance and is considered to be one of the most credible performance appraisal methods.
360 degree appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others’ perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. This technique is being effectively used across the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc. 2. MANAGEMENT BY OBJECTIVES The concept of ‘Management by Objectives’ (MBO) was first given by Peter Drucker in 1954. It can be defined as a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. UNIQUE FEATURES AND ADVANTAGES OF MBO The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals. Some of the important features and advantages of MBO are:
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Clarity of goals – With MBO, came the concept of SMART goals i.e. goals that are: Specific Measurable Achievable Realistic, and Time bound. The goals thus set are clear, motivating and there is a linkage between organizational goals and performance targets of the employees. The focus is on future rather than on past. Goals and standards are set for the performance for the future with periodic reviews and feedback. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment. Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.
3. Assessment Centres Assessment centre refers to a method to objectively observe and assess the people in action by experts or HR professionals with the help of various assessment tools and instruments. Assessment centers simulate the employee’s on-the-job environment and facilitate the assessment of their on-the-job performance. An assessment centre typically involves the use of methods like social/informal events, tests and exercises, assignments being given to a group of employees to assess their competencies and on-the-job behaviour and potential to take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics. An assessment centre for Performance appraisal of an employee typically includes: • • • Social/Informal Events – An assessment centre has a group of participants and also a few assessors which gives a chance to the employees to socialize with a variety of people and also to share information and know more about the organisation. Information Sessions – information sessions are also a part of the assessment centres. They provide information to the employees about the organisation, their roles and responsibilities, the activities and the procedures etc. Assignments- assignments in assessment centers include various tests and exercises which are specially designed to assess the competencies and the potential of the employees. These include various interviews, psychometric tests, management games etc. all these assignments are focused at the target job.
The following are the common features of all assessment centers:
• The final results is based on the pass/fail criteria • All the activities are carried out to fill the targeted job. • Each session lasts from 1 to 5 days. • The results are based on the assessment of the assessors with less emphasis on self-assessment • Immediate review or feedbacks are not provided to the employees. • An organization’s human resources can be a vital competitive advantage and assessment centre helps in getting the right people in right places. The major competencies that are judged in assessment centres are interpersonal skills, intellectual capability, planning and organizing capabilities, motivation, career orientation etc. assessment centres are also an effective way to determine the training and development needs of the targeted employees. TQM and Performance Appraisal According to Sashkin and Kiser, “Total Quality Management (TQM) may be defined as creating an organisational culture committed to the continuous improvement of skills, teamwork, processes, product and service quality and customer satisfaction.” TQM refers to the continuous improvement in the quality of work of all employees with the focus on satisfaction of the customers. Elements of TQM are: • Meeting customers requirements, • Continuous improvement • Empowerment of employees. Both TQM and Performance appraisal/ evaluation are focused on increasing the productivity of the organisation through continuous improvement. They both facilitate the systematic management of all the processes, actions and practices at all levels in the organisation. Some of the benefits of both the performance appraisal and TQM are: • Improvement in the performance of the employees • Brings quality consciousness • Better utilization of resources • Commitment to higher quality. But there also exists a few other schools of thought which refute the compatibility of the TQM and performance appraisal. According to them, both TQM and Performance appraisals differ in their fundamental nature, characteristics and requirements making it impossible to combine them. Some fundamental differences between the two are as follows: • • • TQM is team – based whereas performance appraisals are designed for individuals i.e. it undermines teamwork. TQM focuses on customer satisfaction whereas performance appraisal focuses on the improving the performance of the employees. Performance appraisal generally results in some rewards like increased pay etc. whereas TQM may or may not yield visible results.
Performance appraisal can sometimes, encourage an employee to focus on his personal goals (like his promotion) rather than the organisational goals. Therefore, the suitable practice should be chosen carefully by the top management and the leaders of the organisation.
Performance Appraisal Process Change Management The performance appraisal process provides an opportunity for introducing organizational change. It facilitates the process of change in the organizational culture. The interactive sessions between the management and the employees, the mutual goal setting and the efforts towards the career development of the employees help the organization to become a learning organization. Conducting performance appraisals on a regular basis helps it to become an ongoing part of everyday practice and helps employees to take the responsibility of their work and boosts their professional development. Various studies in the field of human resources have already proved that performance appraisal process can affect the individual performance (in a negative or positive way), thus having an impact on the collective performance. • Performance appraisal: An opportunity for an organisational culture shift • Performance appraisal process focuses on the goal setting approach throughout the organisation. • Performance appraisal helps the clarity and understanding of the roles and responsibilities of the employees. • The performance appraisal processes have the potential positive effects on recruitment • It increases organisational effectiveness i.e. what to do and how to do through a formal and structured approach. • Some evidence of the beneficial effects of team rewards Therefore, performance appraisal is also an important link in the process of change in organization culture.
Industrial relations has become one of the most delicate and complex problems of modern industrial society. Industrial progress is impossible without cooperation of labors and harmonious relationships. Therefore, it is in the interest of all to create and maintain good relations between employees (labor) and employers (management). Concept of Industrial Relations: The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. “Industry” refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”. By “relations” we mean “the relationships that exist within the industry between the employer and his workmen.” The term industrial relations explains the relationship between employees and management which stem directly or indirectly from union-employer relationship.
Industrial relations are the relationships between employees and employers within the organizational settings. The field of industrial relations looks at the relationship between management and workers, particularly groups of workers represented by a union. Industrial relations are basically the interactions between employers, employees and the government, and the institutions and associations through which such interactions are mediated. The term industrial relations has a broad as well as a narrow outlook. Originally, industrial relations was broadly defined to include the relationships and interactions between employers and employees. From this perspective, industrial relations covers all aspects of the employment relationship, including human resource management, employee relations, and union-management (or labor) relations. Now its meaning has become more specific and restricted. Accordingly, industrial relations pertains to the study and practice of collective bargaining, trade unionism, and labor-management relations, while human resource management is a separate, largely distinct field that deals with nonunion employment relationships and the personnel practices and policies of employers. The relationships which arise at and out of the workplace generally include the relationships between individual workers, the relationships between workers and their employer, the relationships between employers, the relationships employers and workers have with the organizations formed to promote their respective interests, and the relations between those organizations, at all levels. industrial relations also includes the processes through which these relationships are expressed (such as, collective bargaining, workers’ participation in decision-making, and grievance and dispute settlement), and the management of conflict between employers, workers and trade unions, when it arises. Industrial Relation System An industrial relations system consists of the whole gamut of relationships between employees and employees and employers which are managed by the means of conflict and cooperation. A sound industrial relations system is one in which relationships between management and employees (and their representatives) on the one hand, and between them and the State on the other, are more harmonious and cooperative than conflictual and creates an environment conducive to economic efficiency and the motivation, productivity and development of the employee and generates employee loyalty and mutual trust. Actors in the IR system: Three main parties are directly involved in industrial relations: • • Employers: Employers possess certain rights vis-à-vis labors. They have the right to hire and fire them. Management can also affect workers’ interests by exercising their right to relocate, close or merge the factory or to introduce technological changes. Employees: Workers seek to improve the terms and conditions of their employment. They exchange views with management and voice their grievances. They also want to share decision making powers of management. Workers generally unite to form unions against the management and get support from these unions. Government: The central and state government influences and regulates industrial relations through laws, rules, agreements, awards of court ad the like. It also includes third parties and labor and tribunal courts.
The concept of industrial relations has a very wide meaning and connotation. In the narrow sense, it means that the employer, employee relationship confines itself to the relationship that emerges out of the day to day association of the management and the labor. In its wider sense, industrial relations include the relationship between an employee and an employer in the course of the running of an industry and may project it to spheres, which may transgress to the areas of quality control, marketing, price fixation and disposition of profits among others. The scope or industrial relations are quite vast. The main issues involved here include the following: • Collective bargaining • Machinery for settlement of industrial disputes • Standing orders • Workers participation in management • Unfair labor practices
Importance of Industrial Relations: The healthy industrial relations are key to the progress and success. Their significance may be discussed as under – • Uninterrupted production – The most important benefit of industrial relations is that this ensures continuity of production. This means, continuous employment for all from manager to workers. The resources are fully utilized, resulting in the maximum possible production. There is uninterrupted flow of income for all. Smooth running of an industry is of vital importance for several other industries; to other industries if the products are intermediaries or inputs; to exporters if these are export goods; to consumers and workers, if these are goods of mass consumption. • Reduction in Industrial Disputes – Good industrial relations reduce the industrial disputes. Disputes are reflections of the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully cured by good industrial relations. Strikes, lockouts, goslow tactics, gherao and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial peace. It helps promoting co-operation and increasing production. • High morale – Good industrial relations improve the morale of the employees. Employees work with great zeal with the feeling in mind that the interest of employer and employees is one and the same, i.e. to increase production. Every worker feels that he is a co-owner of the gains of industry. The employer in his turn must realize that the gains of industry are not for him along but they should be shared equally and generously with his workers. In other words, complete unity of
thought and action is the main achievement of industrial peace. It increases the place of workers in the society and their ego is satisfied. It naturally affects production because mighty co-operative efforts alone can produce great results. Mental Revolution – The main object of industrial relation is a complete mental revolution of workers and employees. The industrial peace lies ultimately in a transformed outlook on the part of both. It is the business of leadership in the ranks of workers, employees and Government to work out a new relationship in consonance with a spirit of true democracy. Both should think themselves as partners of the industry and the role of workers in such a partnership should be recognized. On the other hand, workers must recognize employer’s authority. It will naturally have impact on production because they recognize the interest of each other. Reduced Wastage – Good industrial relations are maintained on the basis of cooperation and recognition of each other. It will help increase production. Wastages of man, material and machines are reduced to the minimum and thus national interest is protected.
Thus, it is evident that good industrial relations is the basis of higher production with minimum cost and higher profits. It also results in increased efficiency of workers. New and new projects may be introduced for the welfare of the workers and to promote the morale of the people at work. An economy organized for planned production and distribution, aiming at the realization of social justice and welfare of the massage can function effectively only in an atmosphere of industrial peace. If the twin objectives of rapid national development and increased social justice are to be achieved, there must be harmonious relationship between management and labor. Objectives of Industrial Relations The main objectives of industrial relations system are:• • • • • • • • To safeguard the interest of labor and management by securing the highest level of mutual understanding and good-will among all those sections in the industry which participate in the process of production. To avoid industrial conflict or strife and develop harmonious relations, which are an essential factor in the productivity of workers and the industrial progress of a country. To raise productivity to a higher level in an era of full employment by lessening the tendency to high turnover and frequency absenteeism. To establish and promote the growth of an industrial democracy based on labor partnership in the sharing of profits and of managerial decisions, so that ban individuals personality may grow its full stature for the benefit of the industry and of the country as well. To eliminate or minimize the number of strikes, lockouts and gheraos by providing reasonable wages, improved living and working conditions, said fringe benefits. To improve the economic conditions of workers in the existing state of industrial managements and political government. Socialization of industries by making the state itself a major employer Vesting of a proprietary interest of the workers in the industries in which they. Industrial Disputes
An industrial dispute may be defined as a conflict or difference of opinion between management and workers on the terms of employment. It is a disagreement between an employer and employees' representative; usually a trade union, over pay and other working conditions and can result in industrial actions. When an industrial dispute occurs, both the parties, that is the management and the workmen, try to pressurize each other. The management may resort to lockouts while the workers may resort to strikes, picketing or gheraos. As per Section 2(k) of Industrial Disputes Act,1947, an industrial dispute in defined as any dispute or difference between employers and employers, or between employers and workmen, or between workmen and which is connected with the employment or non-employment or the terms of employment or with the conditions of labor, of any person. This definition includes all the aspects of a dispute. It, not only includes the disagreement between employees and employers, but also emphasizes the difference of opinion between worker and worker. The disputes generally arise on account of poor wage structure or poor working conditions. This disagreement or difference could be on any matter concerning the workers individually or collectively. It must be connected with employment or non-employment or with the conditions of labor. From the point of view of the employer, an industrial dispute resulting in stoppage of work means a stoppage of production. This results in increase in the average cost of production since fixed expenses continue to be incurred. It also leads to a fall in sales and the rate of turnover, leading to a fall in profits. The employer may also be liable to compensate his customers with whom he may have contracted for regular supply. Apart from the immediate economic effects, loss of prestige and credit, alienation of the labor force, and other non-economic, psychological and social consequences may also arise. Loss due to destruction of property, personal injury and physical intimidation or inconvenience also arises. For the employee, an industrial dispute entails loss of income. The regular income by way of wages and allowance ceases, and great hardship may be caused to the worker and his family. Employees also suffer from personal injury if they indulge into strikes n picketing; and the psychological and physical consequences of forced idleness. The threat of loss of employment in case of failure to settle the dispute advantageously, or the threat of reprisal action by employers also exists. Prolonged stoppages of work have also an adverse effect on the national productivity, national income. They cause wastage of national resources. Hatred may be generated resulting in political unrest and disrupting amicable social/industrial relations or community attitudes. Strikes A strike is a very powerful weapon used by trade unions and other labor associations to get their demands accepted. It generally involves quitting of work by a group of workers for the purpose of bringing the pressure on their employer so that their demands get accepted. When workers collectively cease to work in a particular industry, they are said to be on strike. According to Industrial Disputes Act 1947, a strike is “a cessation of work by a body of persons employed in an industry acting in combination; or a concerted refusal of any number of persons who are or have been so employed to continue to work or to accept employment; or a refusal under a common understanding of any number of such persons to continue to work or to accept employment”. This definition throws light on a few aspects of a strike. Firstly, a strike is a referred to as stoppage of work by a group of workers employed in a particular industry. Secondly, it also includes the refusal of a number of employees to continue work under their employer. In a strike, a group of workers agree to stop working to protest against something they think is unfair where they work. Labors withhold their services in order to pressurize their employment or government to meet their demands. Demands made by strikers can range from asking for higher wages or better benefits
to seeking changes in the workplace environment. Strikes sometimes occur so that employers listen more carefully to the workers and address their problems. Causes of strikes: Strikes can occur because of the following reasons: • • • • • • • • • • Dissatisfaction with company policy Salary and incentive problems Increment not up to the mark Wrongful discharge or dismissal of workmen Withdrawal of any concession or privilege Hours of work and rest intervals Leaves with wages and holidays Bonus, profit sharing, Provident fund and gratuity Retrenchment of workmen and closure of establishment Dispute connected with minimum wages TYPES OF STRIKE • Economic Strike: Under this type of strike, labors stop their work to enforce their economic demands such as wages and bonus. In these kinds of strikes, workers ask for increase in wages, allowances like traveling allowance, house rent allowance, dearness allowance, bonus and other facilities such as increase in privilege leave and casual leave. Sympathetic Strike: When workers of one unit or industry go on strike in sympathy with workers of another unit or industry who are already on strike, it is called a sympathetic strike. The members of other unions involve themselves in a strike to support or express their sympathy with the members of unions who are on strike in other undertakings. The workers of sugar industry may go on strike in sympathy with their fellow workers of the textile industry who may already be on strike. General Strike: It means a strike by members of all or most of the unions in a region or an industry. It may be a strike of all the workers in a particular region of industry to force demands common to all the workers. These strikes are usually intended to create political pressure on the ruling government, rather than on any one employer. It may also be an extension of the sympathetic strike to express generalized protest by the workers. Sit down Strike: In this case, workers do not absent themselves from their place of work when they are on strike. They keep control over production facilities. But do not work. Such a strike is also known as 'pen down' or 'tool down' strike. Workers show up to their place of employment, but they refuse to work. They also refuse to leave, which makes it very difficult for employer to defy the union and take the workers' places. In June 1998, all the Municipal Corporation employees in Punjab observed a pen down strike to protest against the non-acceptance of their demands by the state government Slow Down Strike: Employees remain on their jobs under this type of strike. They do not stop work, but restrict the rate of output in an organized manner. They adopt go-slow tactics to put pressure on the employers. Sick-out (or sick-in): In this strike, all or a significant number of union members call in sick on the same day. They don’t break any rules, because they just use their sick leave that was allotted to
them on the same day. However, the sudden loss of so many employees all on one day can show the employer just what it would be like if they really went on strike. Wild cat strikes: These strikes are conducted by workers or employees without the authority and consent of unions. In 2004, a significant number of advocated went on wildcat strike at the City Civil Court premises in Bangalore. They were protesting against some remarks allegedly made against them by an Assistant Commissioner Lockouts
A lockout is a work stoppage in which an employer prevents employees from working. It is declared by employers to put pressure on their workers. This is different from a strike, in which employees refuse to work. Thus, a lockout is employers’ weapon while a strike is raised on part of employees. Acc to Industrial Disputes Act 1947, lock-out means the temporary closing of a place of employment or the suspension of work or the refusal by an employer to continue to employ any number of persons employed by him. A lockout may happen for several reasons. When only part of a trade union votes to strike, the purpose of a lockout is to put pressure on a union by reducing the number of members who are able to work. For example, if a group of the workers strike so that the work of the rest of the workers becomes impossible or less productive, the employer may declare a lockout until the workers end the strike. Another case in which an employer may impose a lockout is to avoid slowdowns or intermittent workstoppages. Occupation of factories has been the traditional method of response to lock-outs by the workers' movement. PICKETING When workers are dissuaded from work by stationing certain men at the factory gates, such a step is known as picketing. If picketing does not involve any violence, it is perfectly legal. Pickets are workers who are on strike that stand at the entrance to their workplace. It is basically a method of drawing public attention towards the fact that there is a dispute between the management and employees. The purpose of picketing is: • to stop or persuade workers not to go to work • to tell the public about the strike • to persuade workers to take their union's side GHERAO Gherao in Hindi means to surround. It denotes a collective action initiated by a group of workers under which members of the management are prohibited from leaving the industrial establishment premises by workers who block the exit gates by forming human barricades. The workers may gherao the members of the management by blocking their exits and forcing them to stay inside their cabins. The main object of gherao is to inflict physical and mental torture to the person being gheraoed and hence this weapon disturbs the industrial peace to a great extent. Measures For Improving Industrial Relations The following measures should be taken to achieve good industrial relations:
Strong and Stable Union: A strong and stable union in each industrial enterprise is essential for good industrial relations. The employers can easily ignore a weak union on the plea that it hardly represents the workers. The agreement with such a union will hardly be honored by a large section of workforce. Therefore, there must be strong and stable unions in every enterprise to represent the majority of workers and negotiate with the management about the terms and conditions of service. Mutual Trust: Both management and labor should help in the development of an atmosphere of mutual cooperation, confidence and respect. Management should adopt a progressive outlook and should recognize the rights of workers. Similarly, labor unions should persuade their members to work for the common objectives of the organization. Both the management and the unions should have faith in collective bargaining and other peaceful methods of settling disputes. Workers’ Participation in Management: The participation of workers in the management of the industrial unit should be encouraged by making effective use of works committees, joint consultation and other methods. This will improve communication between managers and workers, increase productivity and lead to greater effectiveness. Mutual Accommodation. The employers must recognize the right of collective bargaining of the trade unions. In any organization, there must be a great emphasis on mutual accommodation rather than conflict or uncompromising attitude. One must clearly understand that conflicting attitude does not lead to amicable labor relations; it may foster union militancy as the union reacts by engaging in pressure tactics. The approach must be of mutual “give and take rather than “take or leave.” The management should be willing to co-operate rather than blackmail the workers. Sincere Implementation of Agreements. The management should sincerely implement the settlements reached with the trade unions. The agreements between the management and the unions should be enforced both in letter and spirit. If the agreements are not implemented then both the union and management stop trusting each other. An environment of uncertainty is created. To avoid this, efforts should be made at both ends to ensure the follow up of the agreements.
Sound Personnel Policies: The following points should be noted regarding the personnel policies. The policies should be: Formulated in consultation with the workers and their representatives if they are to be implemented effectively. Clearly stated so that there is no confusion in the mind of anybody. Implementation of the policies should be uniform throughout the organization to ensure fair treatment to each worker. • Government’s Role: The Government should play an active role for promoting industrial peace. It should make law for the compulsory recognition of a representative union in each industrial unit. It should intervene to settle disputes if the management and the workers are unable to settle their disputes. This will restore industrial harmony. Progressive Outlook: There should be progressive outlook of the management of each industrial enterprise. It should be conscious of its obligations and responsibilities to the owners of the business, the employees, the consumers and the nation. The management must recognize the rights of workers to organize unions to protect their economic and social interests.
Prohibition of Strikes and Lock-Outs Employees are prohibited from striking according to the section 22 of Industrial Disputes Act 1947. Employees, who are working in a public utility service, cannot go on a strike without giving a notice of strike within the six weeks before striking. They can not go on strike either within fourteen days of providing the strike notice or before the expiry of the date of strike specified in any such notice. The same rule applies to the employers. Employers who are carrying on a public utility service can not lockout any of their employees without giving them a prior notice within six weeks before the lock out or within the fourteen days of giving such a notice. Moreover, the notice of strike or lockout is to be given in a prescribed manner showing the number of persons involved in the strike/lockout. The notice of strike or lockout is not necessary when there is already a strike or lockout going on in the company. However, a notice should be issued on the day on which the lockout is declared just to intimate the appropriate authorities about the lockout. The employer is supposed to report the number of notices of strikes received by him to the appropriate Government or the authority prescribed by the government within the five days of receiving such notices. Illegal Strikes and Lock-Outs A strike or a lock-out is illegal if it is declared in noncompliance with the section 22 (as defined above) of Industrial Disputes Act 1947, that is, if the notice period is not served or if the strike is held within the fourteen days of issuing the notice of strike. If a strike or lockout has already taken place and is being referred to a Board, the continuance of such a strike or lock out is not illegal provided it is in compliance with the provisions of act. Moreover, a lockout declared in consequence of an illegal strike or a strike declared in consequence of an illegal lock-out shall not be deemed to be illegal. Penalty for Illegal Strikes and Lock-outs A workman who is involved in an illegal strike can be penalized with imprisonment for a term extendable to a month or with a fine or fifty rupees or both. In similar way, an employer who initiates and continues a lockout is punishable with imprisonment extendable to a month or with a fine of one thousand rupees or both. According to Section 25 of Industrial Disputes Act 1947, no person should provide any sort of financial aid to any illegal strike or lock-out. Any person who knowingly provides such a help in support of any illegal strike or lock-out is punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both. Introduction Of Trade-Unions A trade union is an organization of employees formed on a continuous basis for the purpose of securing diverse range of benefits. It is a continuous association of wage earners for the purpose of maintaining and improving the conditions of their working lives. The Trade Union Act 1926 defines a trade union as a combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive condition on the conduct of any trade or business, and includes any federation of two or more trade unions. This definition is very exhaustive as it includes associations of both the workers and employers and the federations of their associations. Here, the relationships that have been talked about are both temporary
and permanent. This means it applies to temporary workers (or contractual employees) as well. Then this definition, primarily, talks about three relationships. They are the relationships between the: • workmen and workmen, • workmen and employers, and • Employers and employers. Thus, a trade union can be seen as a group of employees in a particular sector, whose aim is to negotiate with employers over pay, job security, working hours, etc, using the collective power of its members. In general, a union is there to represent the interests of its members, and may even engage in political activity where legislation affects their members. Trade unions are voluntary associations formed for the pursuit of protecting the common interests of its members and also promote welfare. They protect the economic, political and social interests of their members. Features of trade unions: • It is an association either of employers or employees or of independent workers. They may consist of :Employers’ association (eg., Employer’s Federation of India, Indian paper mill association, etc.) General labor unions Friendly societies Unions of intellectual labor (eg, All India Teachers Association) • • • • It is formed on a continuous basis. It is a permanent body and not a casual or temporary one. They persist throughout the year. It is formed to protect and promote all kinds of interests –economic, political and social-of its members. The dominant interest with which a union is concerned is, however, economic. It achieves its objectives through collective action and group effort. Negotiations and collective bargaining are the tools for accomplishing objectives. Trade unions have shown remarkable progress since their inception; moreover, the character of trade unions has also been changing. In spite of only focusing on the economic benefits of workers, the trade unions are also working towards raising the status of labors as a part of industry. Objectives Of Trade Unions Trade unions are formed to protect and promote the interests of their members. Their primary function is to protect the interests of workers against discrimination and unfair labor practices. Trade unions are formed to achieve the following objectives: • Representation: Trade unions represent individual workers when they have a problem at work. If an employee feels he is being unfairly treated, he can ask the union representative to help sort out the difficulty with the manager or employer. Unions also offer their members legal representation. Normally this is to help people get financial compensation for work-related injuries or to assist people who have to take their employer to court. • Negotiation: Negotiation is where union representatives, discuss with management, the issues which affect people working in an organization. There may be a difference of opinion between management and union members. Trade unions negotiate with the employers to find out a solution to these differences. Pay, working hours, holidays and changes to working practices are the sorts of issues that are negotiated. In many workplaces there is a formal agreement between the union and
the company which states that the union has the right to negotiate with the employer. In these organizations, unions are said to be recognized for collective bargaining purposes. • Voice in decisions affecting workers: The economic security of employees is determined not only by the level of wages and duration of their employment, but also by the management’s personal policies which include selection of employees for lay offs, retrenchment, promotion and transfer. These policies directly affect workers. The evaluation criteria for such decisions may not be fair. So, the intervention of unions in such decision making is a way through which workers can have their say in the decision making to safeguard their interests. Member services During the last few years, trade unions have increased the range of services they offer their members. These include: Education and training - Most unions run training courses for their members on employment rights, health and safety and other issues. Some unions also help members who have left school with little education by offering courses on basic skills and courses leading to professional qualifications. Legal assistance - As well as offering legal advice on employment issues, some unions give help with personal matters, like housing, wills and debt. Financial discounts - People can get discounts on mortgages, insurance and loans from unions. Welfare benefits - One of the earliest functions of trade unions was to look after members who hit hard times. Some of the older unions offer financial help to their members when they are sick or unemployed. Importance of Trade Unions The existence of a strong and recognized trade union is a pre-requisite to industrial peace. Decisions taken through the process of collective bargaining and negotiations between employer and unions are more influential. Trade unions play an important role and are helpful in effective communication between the workers and the management. They provide the advice and support to ensure that the differences of opinion do not turn into major conflicts. The central function of a trade union is to represent people at work. But they also have a wider role in protecting their interests. They also play an important educational role, organizing courses for their members on a wide range of matters. Seeking a healthy and safe working environment is also prominent feature of union activity. Trade unions help in accelerated pace of economic development in many ways as follows: • by helping in the recruitment and selection of workers. • by inculcating discipline among the workforce • by enabling settlement of industrial disputes in a rational manner by helping social adjustments. Workers have to adjust themselves to the new working conditions, the new rules and policies. Workers coming from different backgrounds may become disorganized, unsatisfied and frustrated. Unions help them in such adjustment. Trade unions are a part of society and as such, have to take into consideration the national integration as well. Some important social responsibilities of trade unions include: • promoting and maintaining national integration by reducing the number of industrial disputes • incorporating a sense of corporate social responsibility in workers
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achieving industrial peace
According to Edwin B. Flippo, “Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation”. Recruitment is the activity that links the employers and the job seekers. A few definitions of recruitment are: • A process of finding and attracting capable applicants for employment. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applications from which new employees are selected. • It is the process to discover sources of manpower to meet the requirement of staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of an efficient working force. RECRUITMENT NEEDS ARE OF THREE TYPES • PLANNED the needs arising from changes in organization and retirement policy. • ANTICIPATED Anticipated needs are those movements in personnel, which an organization can predict by studying trends in internal and external environment. • UNEXPECTED Resignation, deaths, accidents, illness give rise to unexpected needs. Purpose & Importance Of Recruitment • • • • • • • • • • Attract and encourage more and more candidates to apply in the organisation. Create a talent pool of candidates to enable the selection of best candidates for the organisation. Determine present and future requirements of the organization in conjunction with its personnel planning and job analysis activities. Recruitment is the process which links the employers with the employees. Increase the pool of job candidates at minimum cost. Help increase the success rate of selection process by decreasing number of visibly under qualified or overqualified job applicants. Help reduce the probability that job applicants once recruited and selected will leave the organization only after a short period of time. Meet the organizations legal and social obligations regarding the composition of its workforce. Begin identifying and preparing potential job applicants who will be appropriate candidates. Increase organization and individual effectiveness of various recruiting techniques and sources for all types of job applicants Recruitment Process The recruitment and selection is the major function of the human resource department and recruitment process is the first step towards creating the competitive strength and the strategic advantage for the
organisations. Recruitment process involves a systematic procedure from sourcing the candidates to arranging and conducting the interviews and requires many resources and time. A general recruitment process is as follows: • Identifying the vacancy: The recruitment process begins with the human resource department receiving requisitions for recruitment from any department of the company. These contain: • Posts to be filled • Number of persons • Duties to be performed • Qualifications required Preparing the job description and person specification. Locating and developing the sources of required number and type of employees (Advertising etc). Short-listing and identifying the prospective employee with required characteristics. Arranging the interviews with the selected candidates. Conducting the interview and decision making
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Sources Of Recruitment Recruitment Home » Sources Of Recruitment Every organisation has the option of choosing the candidates for its recruitment processes from two kinds of sources: internal and external sources. The sources within the organisation itself (like transfer of employees from one department to other, promotions) to fill a position are known as the internal sources of recruitment. Recruitment candidates from all the other sources (like outsourcing agencies etc.) are known as the external sources of recruitment. SOURCES OF RECRUITMENT
Recruitment Vs Selection Both recruitment and selection are the two phases of the employment process. The differences between the two are: • Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation WHEREAS selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts. • The basic purpose of recruitments is to create a talent pool of candidates to enable the selection of best candidates for the organisation, by attracting more and more employees to apply in the organisation WHEREAS the basic purpose of selection process is to choose the right candidate to fill the various positions in the organisation. • Recruitment is a positive process i.e. encouraging more and more employees to apply WHEREAS selection is a negative process as it involves rejection of the unsuitable candidates. • Recruitment is concerned with tapping the sources of human resources WHEREAS selection is concerned with selecting the most suitable candidate through various interviews and tests. • There is no contract of recruitment established in recruitment WHEREAS selection results in a contract of service between the employer and the selected employee. Factors Affecting Recruitment The recruitment function of the organisations is affected and governed by a mix of various internal and external forces. The internal forces or factors are the factors that can be controlled by the organisation. And the external factors are those factors which cannot be controlled by the organisation. The internal and external forces affecting recruitment function of an organisation are: Internal Factors Affecting Recruitment The internal forces i.e. the factors which can be controlled by the organisation are: 1. RECRUITMENT POLICY The recruitment policy of an organisation specifies the objectives of recruitment and provides a framework for implementation of recruitment programme. It may involve organizational system to be developed for implementing recruitment programmes and procedures by filling up vacancies with best qualified people. FACTORS AFFECTING RECRUITMENT POLICY • Organizational objectives • Personnel policies of the organization and its competitors. • Government policies on reservations. • Preferred sources of recruitment. • Need of the organization. • Recruitment costs and financial implications. 2.HUMAN RESOURCE PLANNING Effective human resource planning helps in determining the gaps present in the existing manpower of the organization. It also helps in determining the number of employees to be recruited and what qualification they must possess.
3.SIZE OF THE FIRM The size of the firm is an important factor in recruitment process. If the organization is planning to increase its operations and expand its business, it will think of hiring more personnel, which will handle its operations. 4.COST Recruitment incur cost to the employer, therefore, organizations try to employ that source of recruitment which will bear a lower cost of recruitment to the organization for each candidate. 5.GROWTH AND EXPANSION Organization will employ or think of employing more personnel if it is expanding its operations. External Factors Affecting Recruitment The external forces are the forces which cannot be controlled by the organisation. The major external forces are: 1. SUPPLY AND DEMAND The availability of manpower both within and outside the organization is an important determinant in the recruitment process. If the company has a demand for more professionals and there is limited supply in the market for the professionals demanded by the company, then the company will have to depend upon internal sources by providing them special training and development programs. 2. LABOUR MARKET Employment conditions in the community where the organization is located will influence the recruiting efforts of the organization. If there is surplus of manpower at the time of recruitment, even informal attempts at the time of recruiting like notice boards display of the requisition or announcement in the meeting etc will attract more than enough applicants 3.IMAGE / GOODWILL Image of the employer can work as a potential constraint for recruitment. An organization with positive image and goodwill as an employer finds it easier to attract and retain employees than an organization with negative image. Image of a company is based on what organization does and affected by industry. For example finance was taken up by fresher MBA’s when many finance companies were coming up. 4.POLITICAL-SOCIAL- LEGAL ENVIRONMENT Various government regulations prohibiting discrimination in hiring and employment have direct impact on recruitment practices. For example, Government of India has introduced legislation for reservation in employment for scheduled castes, scheduled tribes, physically handicapped etc. Also, trade unions play important role in recruitment. This restricts management freedom to select those individuals who it believes would be the best performers. If the candidate can’t meet criteria stipulated by the union but union regulations can restrict recruitment sources. 5.UNEMPLOYMENT RATE One of the factors that influence the availability of applicants is the growth of the economy (whether economy is growing or not and its rate). When the company is not creating new jobs, there is often oversupply of qualified labour which in turn leads to unemployment. 6. COMPETITORS
The recruitment policies of the competitors also effect the recruitment function of the organisations. To face the competition, many a times the organisations have to change their recruitment policies according to the policies being followed by the competitors. Recent Trends in Recruitment The following trends are being seen in recruitment: OUTSOURCING In India, the HR processes are being outsourced from more than a decade now. A company may draw required personnel from outsourcing firms. The outsourcing firms help the organisation by the initial screening of the candidates according to the needs of the organisation and creating a suitable pool of talent for the final selection by the organisation. Outsourcing firms develop their human resource pool by employing people for them and make available personnel to various companies as per their needs. In turn, the outsourcing firms or the intermediaries charge the organisations for their services. Advantages of outsourcing are: • Company need not plan for human resources much in advance. • Value creation, operational flexibility and competitive advantage • turning the management's focus to strategic level processes of HRM • Company is free from salary negotiations, weeding the unsuitable resumes/candidates. • Company can save a lot of its resources and time POACHING/RAIDING “Buying talent” (rather than developing it) is the latest mantra being followed by the organisations today. Poaching means employing a competent and experienced person already working with another reputed company in the same or different industry; the organisation might be a competitor in the industry. A company can attract talent from another firm by offering attractive pay packages and other terms and conditions, better than the current employer of the candidate. But it is seen as an unethical practice and not openly talked about. Indian software and the retail sector are the sectors facing the most severe brunt of poaching today. It has become a challenge for human resource managers to face and tackle poaching, as it weakens the competitive strength of the firm. E-RECRUITMENT Many big organizations use Internet as a source of recruitment. E- recruitment is the use of technology to assist the recruitment process. They advertise job vacancies through worldwide web. The job seekers send their applications or curriculum vitae i.e. CV through e mail using the Internet. Alternatively job seekers place their CV’s in worldwide web, which can be drawn by prospective employees depending upon their requirements. Advantages of recruitment are: • Low cost. • No intermediaries • Reduction in time for recruitment.
Employee Retention involves taking measures to encourage employees to remain in the organization for the maximum period of time. Corporate is facing a lot of problems in employee retention these days.
Hiring knowledgeable people for the job is essential for an employer. But retention is even more important than hiring. There is no dearth of opportunities for a talented person. There are many organizations which are looking for such employees. If a person is not satisfied by the job he’s doing, he may switch over to some other more suitable job. In today’s environment it becomes very important for organizations to retain their employees. The top organizations are on the top because they value their employees and they know how to keep them glued to the organization. Employees stay and leave organizations for some reasons. The reason may be personal or professional. These reasons should be understood by the employer and should be taken care of. The organizations are becoming aware of these reasons and adopting many strategies for employee retention. What is Employee Retention? Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project. Employee retention is beneficial for the organization as well as the employee. Employees today are different. They are not the ones who don’t have good opportunities in hand. As soon as they feel dissatisfied with the current employer or the job, they switch over to the next job. It is the responsibility of the employer to retain their best employees. If they don’t, they would be left with no good employees. A good employer should know how to attract and retain its employees. Retention involves five major things: • Compensation • Environment • Growth • Relationship • Support Employee retention would require a lot of efforts, energy, and resources but the results are worth it. 1. Compensation Compensation constitutes the largest part of the employee retention process. The employees always have high expectations regarding their compensation packages. Compensation packages vary from industry to industry. So an attractive compensation package plays a critical role in retaining the employees. Compensation includes salary and wages, bonuses, benefits, prerequisites, stock options, bonuses, vacations, etc. While setting up the packages, the following components should be kept in mind: • Salary and monthly wage: It is the biggest component of the compensation package. It is also the most common factor of comparison among employees. It includes Basic wage House rent allowance Dearness allowance City compensatory allowance Salary and wages represent the level of skill and experience an individual has. Time to time increase in the salaries and wages of employees should be done. And this increase should be based on the employee’s performance and his contribution to the organization. • Bonus: Bonuses are usually given to the employees at the end of the year or on a festival.
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Economic benefits: It includes paid holidays, leave travel concession, etc. Long-term incentives: Long term incentives include stock options or stock grants. These incentives help retain employees in the organization's startup stage. Health insurance: Health insurance is a great benefit to the employees. It saves employees money as well as gives them a peace of mind that they have somebody to take care of them in bad times. It also shows the employee that the organization cares about the employee and its family. After retirement: It includes payments that an Employee gets after he retires like EPF (Employee Provident Fund) etc. Miscellaneous compensation: It may include employee assistance programs (like psychological counseling, legal assistance etc), discounts on company products, use of a company cars, etc.
2. Growth and Career Growth and development are the integral part of every individual’s career. If an employee can not foresee his path of career development in his current organization, there are chances that he’ll leave the organization as soon as he gets an opportunity. The important factors in employee growth that an employee looks for himself are: • Work profile: The work profile on which the employee is working should be in sync with his capabilities. The profile should not be too low or too high. • Personal growth and dreams: Employees responsibilities in the organization should help him achieve his personal goals also. Organizations can not keep aside the individual goals of employees and foster organizations goals. Employees’ priority is to work for themselves and later on comes the organization. If he’s not satisfied with his growth, he’ll not be able to contribute in organization growth. • Training and development: Employees should be trained and given chance to improve and enhance their skills. Many employers fear that if the employees are well rained, they’ll leave the organization for better jobs. Organization should not limit the resources on which organization’s success depends. These trainings can be given to improve many skills like: Communications skills Technical skills In-house processes and procedures improvement related skills C or customer satisfaction related skills Special project related skills Need for such trainings can be recognized from individual performance reviews, individual meetings, employee satisfaction surveys and by being in constant touch with the employees 3. Support Lack of support from management can sometimes serve as a reason for employee retention. Supervisor should support his subordinates in a way so that each one of them is a success. Management should try to focus on its employees and support them not only in their difficult times at work but also through the times of personal crisis. Management can support employees by providing them recognition and appreciation. Employers can also provide valuable feedback to employees and make them feel valued to the organization.
The feedback from supervisor helps the employee to feel more responsible, confident and empowered. Top management can also support its employees in their personal crisis by providing personal loans during emergencies, childcare services, employee assistance programs, counseling services, et al. Employers can also support their employees by creating an environment of trust and inculcating the organizational values into employees. Thus employers can support their employees in a number of ways as follows: • By providing feedback • By giving recognition and rewards • By counseling them • By providing emotional support 4.Importance of Relationship in Employee Retention Program Sometimes the relationship with the management and the peers becomes the reason for an employee to leave the organization. The management is sometimes not able to provide an employee a supportive work culture and environment in terms of personal or professional relationships. There are times when an employee starts feeling bitterness towards the management or peers. This bitterness could be due to many reasons. This decreases employee’s interest and he becomes de-motivated. It leads to less satisfaction and eventually attrition. A supportive work culture helps grow employee professionally and boosts employee satisfaction. To enhance good professional relationships at work, the management should keep the following points in mind. • Respect for the individual: Respect for the individual is the must in the organization. • Relationship with the immediate manager: A manger plays the role of a mentor and a coach. He designs ands plans work for each employee. It is his duty to involve the employee in the processes of the organization. So an organization should hire managers who can make and maintain good relations with their subordinates. • Relationship with colleagues: Promote team work, not only among teams but in different departments as well. This will induce competition as well as improve the relationships among colleagues. • Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for him to perform. Otherwise he’ll feel useless and will be dissatisfied. Employees should know what the organization expects from them and what their expectation from the organization is. Deliver what is promised. • Promote an employee based culture: The employee should know that the organization is there to support him at the time of need. Show them that the organization cares and he’ll show the same for the organization. An employee based culture may include decision making authority, availability of resources, open door policy, etc. Individual development: Taking proper care of employees includes acknowledgement to the employee’s dreams and personal goals. Create opportunities for their career growth by providing mentorship programs, certifications, educational courses, etc. Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the employees too. Try to make the current employees stay instead of recruiting new ones.
It is not about managing retention. It is about managing people. If an organization manages people well, employee retention will take care of itself. Organizations should focus on managing the work environment to make better use of the available human assets. People want to work for an organization which provides • Appreciation for the work done • Ample opportunities to grow • A friendly and cooperative environment • A feeling that the organization is second home to the employee Organization environment includes : • Culture • Values • Company reputation • Quality of people in the organization • Employee development and career growth • Risk taking • Leading technologies • Trust Types of environment the employee needs in an organization • Learning environment: It includes continuous learning and improvement of the individual, certifications and provision for higher studies, etc. • Support environment: Organization can provide support in the form of work-life balance. Work life balance includes: 1. Flexible hours 2. Alternate work schedules 3. Wellness 4.Vacations 5. Telecommuting 6. Dependent care • Work environment: It includes efficient managers, supportive co-workers, challenging work, involvement in decision-making, clarity of work and responsibilities, and recognition. Lack or absence of such environment pushes employees to look for new opportunities. The environment should be such that the employee feels connected to the organization in every respect.
Importance Of Employee Retention Now that so much is being done by organizations to retain its employees, why is retention so important? Is it just to reduce the turnover costs? Well, the answer is a definite no. It’s not only the cost incurred by a company that emphasizes the need of retaining employees but also the need to retain talented employees from getting poached. The process of employee retention will benefit an organization in the following ways: • The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of money to a company's expenses. While it is difficult to fully calculate the cost of turnover (including hiring costs, training costs and productivity loss), industry experts often quote 25% of the average employee salary as a conservative estimate.
Loss of Company Knowledge: When an employee leaves, he takes with him valuable knowledge about the company, customers, current projects and past history (sometimes to competitors). Often much time and money has been spent on the employee in expectation of a future return. When the employee leaves, the investment is not realized. Interruption of Customer Service: Customers and clients do business with a company in part because of the people. Relationships are developed that encourage continued sponsorship of the business. When an employee leaves, the relationships that employee built for the company are severed, which could lead to potential customer loss. Turnover leads to more turnovers: When an employee terminates, the effect is felt throughout the organization. Co-workers are often required to pick up the slack. The unspoken negativity often intensifies for the remaining staff. Goodwill of the company: The goodwill of a company is maintained when the attrition rates are low. Higher retention rates motivate potential employees to join the organization. Regaining efficiency: If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. And even after this you cannot assure us of the same efficiency from the new employee. What Makes Employee Leave?
Employees do not leave an organization without any significant reason. There are certain circumstances that lead to their leaving the organization. The most common reasons can be: • Job is not what the employee expected to be: Sometimes the job responsibilities don’t come out to be same as expected by the candidates. Unexpected job responsibilities lead to job dissatisfaction. • Job and person mismatch: A candidate may be fit to do a certain type of job which matches his personality. If he is given a job which mismatches his personality, then he won’t be able to perform it well and will try to find out reasons to leave the job. • • • • • • No growth opportunities: No or less learning and growth opportunities in the current job will make candidate’s job and career stagnant. Lack of appreciation: If the work is not appreciated by the supervisor, the employee feels demotivated and loses interest in job. Lack of trust and support in coworkers, seniors and management: Trust is the most important factor that is required for an individual to stay in the job. Non-supportive coworkers, seniors and management can make office environment unfriendly and difficult to work in. Stress from overwork and work life imbalance: Job stress can lead to work life imbalance which ultimately many times lead to employee leaving the organization. Compensation: Better compensation packages being offered by other companies may attract employees towards themselves. New job offer: An attractive job offer which an employee thinks is good for him with respect to job responsibility, compensation, growth and learning etc. can lead an employee to leave the organization.
Employee Retention Strategies The basic practices which should be kept in mind in the employee retention strategies are: 1. Hire the right people in the first place. 2. Empower the employees: Give the employees the authority to get things done. 3. Make employees realize that they are the most valuable asset of the organization. 4. Have faith in them, trust them and respect them. 5. Provide them information and knowledge. 6. Keep providing them feedback on their performance. 7. Recognize and appreciate their achievements. 8. Keep their morale high. 9. Create an environment where the employees want to work and have fun.
These practices can be categorized in 3 levels: Low, medium and high level.
Attrition Rate The attrition rate has always been a sensitive issue for all organizations. Calculating employee turnover rate is not that simple as it seems to be. No common formula can be used by all the organizations. A formula had to be devised keeping in view the nature of the business and different job functions. Moreover, calculating attrition rate is not only about devising a mathematical formula. It also has to take into account the root of the problem by going back to the hiring stage. Attrition rate: There is no standard formula to calculate the attrition rate of a company. This is because of certain factors as: The employee base changes each month. So if a company has 1,000 employees in April 2004 and 2,000 in March 2005, then they may take their base as 2,000 or as 1,500 (average for the year). If the number of employees who left is 300, then the attrition figure could be 15 percent or 20 percent depending on what base you take. Many firms may not include attrition of freshers who leave because of higher studies or within three months of joining. In some cases, attrition of poor performers may also not be treated as attrition. Calculating attrition rate:
Attrition rates can be calculated using a simple formula: Attrition =(No. of employees who left in the year / average employees in the year) x 100 Thus, if the company had 1,000 employees in April 2004, 2,000 in March 2005, and 300 quit in the year, then the average employee strength is 1,500 and attrition is 100 x (300/1500) = 20 percent. Besides this, there are various other types of attrition that should be taken into account. These are: • • • • Fresher attrition that tells the number of freshers who left the organization within one year. It tells how many are using the company as a springboard or a launch pad. Infant mortality that is the percentage of people who left the organization within one year. This indicates the ease with which people adapt to the company. Critical resource attrition which tell the attrition in terms of key personnel like senior executives leaving the organization. Low performance attrition: It tells the attrition of those who left due to poor performance.
Attrition Costs One of the best methods for calculating the cost of turnover takes into account expenses involved to replace an employee leaving an organization. These expenses are: 1. Recruitment cost The cost to the business when hiring new employees includes the following six factors plus 10 percent for incidentals such as background screening: • Time spent on sourcing replacement • Time spent on recruitment and selection • Travel expenses, if any • Re-location costs, if any n Training/ramp-up time • Background/reference screening 2. Training and development cost To estimate the cost of training and developing new employees, cost of new hires must be taken into consideration. This will mean direct and indirect costs, and can be largely classified under the following heads: • Training materials • Technology • Employee benefits • Trainers’ Time 2. Administration cost They include: Set up communication systems Add employees to the HR system Set up the new hire’s workspace Set up ID-cards, access cards, etc.
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Training And Development
Human Resource Management (HRM), a relatively new term, that emerged during the 1930s. Many people used to refer it before by its traditional titles, such as Personnel Administration or Personnel Management. But now, the trend is changing. It is now termed as Human Resource Management (HRM). Human Resource Management is a management function that helps an organization select, recruit, train and develops. HUMAN RESOURCE MANAGEMENT
Human Resource Management is defined as the people who staff and manage organization. It comprises of the functions and principles that are applied to retaining, training, developing, and compensating the employees in organization. It is also applicable to non-business organizations, such as education, healthcare, etc Human Resource Management is defined as the set of activities, programs, and functions that are designed to maximize both organizational as well as employee effectiveness…………… …………………… Scope of HRM without a doubt is vast. All the activities of employee, from the time of his entry into an organization until he leaves, come under the horizon of HRM. The divisions included in HRM are Recruitment, Payroll, Performance Management, Training and Development, Retention, Industrial Relation, etc. Out of all these divisions, one such important division is training and development. TRAINING AND DEVELOPMENT is a subsystem of an organization. It ensures that randomness is reduced and learning or behavioral change takes place in structured format. TRADITIONAL AND MODERN APPROACH OF TRAINING AND DEVLOPMENT • Traditional Approach – Most of the organizations before never used to believe in training. They were holding the traditional view that managers are born and not made. There were also some views that training is a very costly affair and not worth. Organizations used to believe more in executive pinching. But now the scenario seems to be changing. The modern approach of training and development is that Indian Organizations have realized the importance of corporate training. Training is now considered as more of retention tool than a cost. The training system in Indian Industry has been changed to create a smarter workforce and yield the best results TRAINING AND DEVELOPMENT OBJECTIVES The principal objective of training and development division is to make sure the availability of a skilled and willing workforce to an organization. In addition to that, there are four other objectives: Individual, Organizational, Functional, and Societal. • • • • Individual Objectives – help employees in achieving their personal goals, which in turn, enhances the individual contribution to an organization. Organizational Objectives – assist the organization with its primary objective by bringing individual effectiveness. Functional Objectives – maintain the department’s contribution at a level suitable to the organization’s needs. Societal Objectives – ensure that an organization is ethically and socially responsible to the needs and challenges of the society. Introduction Of Training
TRAINING DEFINED It is a learning process that involves the acquisition of knowledge, sharpening of skills, concepts, rules, or changing of attitudes and behaviours to enhance the performance of employees. Training is activity leading to skilled behavior. • It’s not what you want in life, but it’s knowing how to reach it • It’s not where you want to go, but it’s knowing how to get there • It’s not how high you want to rise, but it’s knowing how to take off • It may not be quite the outcome you were aiming for, but it will be an outcome • It’s not what you dream of doing, but it’s having the knowledge to do it • It's not a set of goals, but it’s more like a vision • It’s not the goal you set, but it’s what you need to achieve it Training is about knowing where you stand (no matter how good or bad the current situation looks) at present, and where you will be after some point of time. Training is about the acquisition of knowledge, skills, and abilities (KSA) through professional development.
ROLE OF TRAINING
Importance Of Training and Development • Optimum Utilization of Human Resources – Training and Development helps in optimizing the utilization of human resource that further helps the employee to achieve the organizational goals as well as their individual goals. • Development of Human Resources – Training and Development helps to provide an opportunity and broad structure for the development of human resources’ technical and behavioral skills in an organization. It also helps the employees in attaining personal growth. • Development of skills of employees – Training and Development helps in increasing the job knowledge and skills of employees at each level. It helps to expand the horizons of human intellect and an overall personality of the employees. • Productivity – Training and Development helps in increasing the productivity of the employees that helps the organization further to achieve its long-term goal. • Team spirit – Training and Development helps in inculcating the sense of team work, team spirit, and inter-team collaborations. It helps in inculcating the zeal to learn within the employees. • Organization Culture – Training and Development helps to develop and improve the organizational health culture and effectiveness. It helps in creating the learning culture within the organization.
• Organization Climate – Training and Development helps building the positive perception and feeling about the organization. The employees get these feelings from leaders, subordinates, and peers. • Quality – Training and Development helps in improving upon the quality of work and work-life. • Healthy work-environment – Training and Development helps in creating the healthy working environment. It helps to build good employee, relationship so that individual goals aligns with organizational goal. • Health and Safety – Training and Development helps in improving the health and safety of the organization thus preventing obsolescence. • Morale – Training and Development helps in improving the morale of the work force. • Image – Training and Development helps in creating a better corporate image. • Profitability – Training and Development leads to improved profitability and more positive attitudes towards profit orientation. • Training and Development aids in organizational development i.e. Organization gets more effective decision making and problem solving. It helps in understanding and carrying out organisational policies • Training and Development helps in developing leadership skills, motivation, loyalty, better attitudes, and other aspects that successful workers and managers usually display.
Methods of Training There are various methods of training, which can be divided in to cognitive and behavioral methods. Trainers need to understand the pros and cons of each method, also its impact on trainees keeping their background and skills in mind before giving training. Cognitive methods are more of giving theoretical training to the trainees. The various methods under Cognitive approach provide the rules for how to do something, written or verbal information, demonstrate relationships among concepts, etc. These methods are associated with changes in knowledge and attitude by stimulating learning. The various methods that come under Cognitive approach are: • LECTURES • DEMONSTRATIONS • DISCUSSIONS • • • • COMPUTER BASED TRAINING (CBT) INTELLEGENT TUTORIAL SYSTEM(ITS) PROGRAMMED INSTRUCTION (PI) VIRTUAL REALITY
Behavioral methods are more of giving practical training to the trainees. The various methods under Behavioral approach allow the trainee to behavior in a real fashion. These methods are best used for skill development. The various methods that come under Behavioral approach are: • GAMES AND SIMULATIONS • BEHAVIOR-MODELING • BUSINESS GAMES • CASE STUDIES • EQUIPMENT STIMULATORS • IN-BASKET TECHNIQUE • ROLE PLAYS Both the methods can be used effectively to change attitudes, but through different means. Another Method is MANAGEMENT DEVELOPMENT METHOD – MANAGEMENT DEVELOPMENT – The more future oriented method and more concerned with education of the employees. To become a better performer by education implies that management development activities attempt to instill sound reasoning processes. Management development method is further divided into two parts: • ON THE JOB TRAINING –
The development of a manager’s abilities can take place on the job. The four techniques for on-the job development are: 1. COACHING 2. MENTORING 3. JOB ROTATION 4. JOB INSTRUCTION TECHNIQUE (JIT) • OFF THE JOB TRAINING –
There are many management development techniques that an employee can take in off the job. The few popular methods are: 1. SENSITIVITY TRAINING 2. TRANSACTIONAL ANALYSIS 3. STRAIGHT LECTURES/ LECTURES 4. SIMULATION EXERCISES 5. CASE STUDY Models of Training Training is a sub-system of the organization because the departments such as, marketing & sales, HR, production, finance, etc depends on training for its survival. Training is a transforming process that requires some input and in turn it produces output in the form of knowledge, skills, and attitudes (KSAs).
THE TRAINING SYSTEM A System is a combination of things or parts that must work together to perform a particular function. An organization is a system and training is a sub system of the organization. The System Approach views training as a sub system of an organization. System Approach can be used to examine broad issues like objectives, functions, and aim. It establishes a logical relationship between the sequential stages in the process of training need analysis (TNA), formulating, delivering, and evaluating. There are 4 necessary inputs i.e. technology, man, material, time required in every system to produce products or services. And every system must have some output from these inputs in order to survive. The output can be tangible or intangible depending upon the organization’s requirement. A system approach to training is planned creation of training program. This approach uses step-by-step procedures to solve the problems. Under systematic approach, training is undertaken on planned basis. Out of this planned effort, one such basic model of five steps is system model that is explained below. Organization are working in open environment i.e. there are some internal and external forces, that poses threats and opportunities, therefore, trainers need to be aware of these forces which may impact on the content, form, and conduct of the training efforts. The internal forces are the various demands of the organization for a better learning environment; need to be up to date with the latest technologies. The three model of training are: 1. System Model 2. Instructional System Development Model 3. Transitional model System Model Training The system model consists of five phases and should be repeated on a regular basis to make further improvements. The training should achieve the purpose of helping employee to perform their work to required standards. The steps involved in System Model of training are as follows: 1. Analyze and identify the training needs i.e. to analyze the department, job, employees requirement, who needs training, what do they need to learn, estimating training cost, etc The next step is to develop a performance measure on the basis of which actual performance would be evaluated. 2. Design and provide training to meet identified needs. This step requires developing objectives of training, identifying the learning steps, sequencing and structuring the contents. 3. Develop- This phase requires listing the activities in the training program that will assist the participants to learn, selecting delivery method, examining the training material, validating information to be imparted to make sure it accomplishes all the goals & objectives. 4. Implementing is the hardest part of the system because one wrong step can lead to the failure of whole training program. 5. Evaluating each phase so as to make sure it has achieved its aim in terms of subsequent work performance. Making necessary amendments to any of the previous stage in order to remedy or improve failure practices.
Transitional Model Transitional model focuses on the organization as a whole. The outer loop describes the vision, mission and values of the organization on the basis of which training model i.e. inner loop is executed. • Vision – focuses on the milestones that the organization would like to achieve after the defined point of time. A vision statement tells that where the organization sees itself few years down the line. A vision may include setting a role mode, or bringing some internal transformation, or may be promising to meet some other deadlines. • Mission – explain the reason of organizational existence. It identifies the position in the community. The reason of developing a mission statement is to motivate, inspire, and inform
the employees regarding the organization.The mission statement tells about the identity that how the organization would like to be viewed by the customers, employees, and all other stakeholders. • Values – is the translation of vision and mission into communicable ideals. It reflects the deeply held values of the organization and is independent of current industry environment. For example, values may include social responsibility, excellent customer service, etc. Instructional System Development Model(ISD)Model Instructional System Development model was made to answer the training problems. This model is widely used now-a-days in the organization because it is concerned with the training need on the job performance. Training objectives are defined on the basis of job responsibilities and job description and on the basis of the defined objectives individual progress is measured. This model also helps in determining
and developing the favorable strategies, sequencing the content, and delivering media for the types of training objectives to be achieved. The Instructional System Development model comprises of five stages: 1. ANALYSIS – This phase consist of training need assessment, job analysis, and target audience analysis. 2. PLANNING – This phase consist of setting goal of the learning outcome, instructional objectives that measures behavior of a participant after the training, types of training material, media selection, methods of evaluating the trainee, trainer and the training program, strategies to impart knowledge i.e. selection of content, sequencing of content, etc. 3. DEVELOPMENT – This phase translates design decisions into training material. It consists of developing course material for the trainer including handouts, workbooks, visual aids, demonstration props, etc, course material for the trainee including handouts of summary. 4. EXECUTION – This phase focuses on logistical arrangements, such as arranging speakers, equipments, benches, podium, food facilities, cooling, lighting, parking, and other training accessories. 5. EVALUATION – The purpose of this phase is to make sure that the training program has achieved its aim in terms of subsequent work performance. This phase consists of identifying strengths and weaknesses and making necessary amendments to any of the previous stage in order to remedy or improve failure practices. The ISD model is a continuous process that lasts throughout the training program. It also highlights that feedback is an important phase throughout the entire training program. In this model, the output of one phase is an input to the next phase.
Training Need Analysis(TNA)
An analysis of training need is an essential requirement to the design of effective training. The purpose of training need analysis is to determine whether there is a gap between what is required for effective performance and present level of performance. Why training need analysis? Training need analysis is conducted to determine whether resources required are available or not. It helps to plan the budget of the company, areas where training is required, and also highlights the occasions where training might not be appropriate but requires alternate action. Training Need arises at three levels: Corporate need and training need are interdependent because the organization performance ultimately depends on the performance of its individual employee and its sub group. • Organizational Level – Training need analysis at organizational level focuses on strategic planning, business need, and goals. It starts with the assessment of internal environment of the organization such as, procedures, structures, policies, strengths, and weaknesses and external environment such as opportunities and threats.
After doing the SWOT analysis, weaknesses can be dealt with the training interventions, while strengths can further be strengthened with continued training. Threats can be reduced by identifying the areas where training is required. And, opportunities can be exploited by balancing it against costs. For this approach to be successful, the HR department of the company requires to be involved in strategic planning. In this planning, HR develops strategies to be sure that the employees in the organization have the required Knowledge, Skills, and Attributes (KSAs) based on the future KSAs requirements at each level. • Individual Level – Training need analysis at individual level focuses on each and every individual in the organization. At this level, the organization checks whether an employee is performing at desired level or the performance is below expectation. If the difference between the expected performance and actual performance comes out to be positive, then certainly there is a need of training.
However, individual competence can also be linked to individual need. The methods that are used to analyze the individual need are: • Appraisal and performance review • Peer appraisal • Competency assessments • Subordinate appraisal • Client feedback • Customer feedback • Self-assessment or self-appraisal • Operational Level – Training Need analysis at operational level focuses on the work that is being assigned to the employees. The job analyst gathers the information on whether the job is clearly understood by an employee or not. He gathers this information through technical interview, observation, psychological test; questionnaires asking the closed ended as well as open ended questions, etc. Today, jobs are dynamic and keep changing over the time. Employees need to prepare
for these changes. The job analyst also gathers information on the tasks needs to be done plus the tasks that will be required in the future. Based on the information collected, training Need analysis (TNA) is done. Training-Design The design of the training program can be undertaken only when a clear training objective has been produced. The training objective clears what goal has to be achieved by the end of training program i.e. what the trainees are expected to be able to do at the end of their training. Training objectives assist trainers to design the training program. 1. The trainer – Before starting a training program, a trainer analyzes his technical, interpersonal, judgmental skills in order to deliver quality content to trainers. 2. The trainees – A good training design requires close scrutiny of the trainees and their profiles. Age, experience, needs and expectations of the trainees are some of the important factors that affect training design.
3. Training climate – A good training climate comprises of ambience, tone, feelings, positive perception for training program, etc. Therefore, when the climate is favorable nothing goes wrong but when the climate is unfavorable, almost everything goes wrong. 4. Trainees’ learning style – the learning style, age, experience, educational background of trainees must be kept in mind in order to get the right pitch to the design of the program. 5. Training strategies – Once the training objective has been identified, the trainer translates it into specific training areas and modules. The trainer prepares the priority list of about what must be included, what could be included. 6. Training topics – After formulating a strategy, trainer decides upon the content to be delivered. Trainers break the content into headings, topics, ad modules. These topics and modules are then classified into information, knowledge, skills, and attitudes. 7. Sequence the contents – Contents are then sequenced in a following manner: • From simple to complex • Topics are arranged in terms of their relative importance • From known to unknown • From specific to general • Dependent relationship 8. Training tactics – Once the objectives and the strategy of the training program becomes clear, trainer comes in the position to select most appropriate tactics or methods or techniques. The method selection depends on the following factors: • Trainees’ background • Time allocated • Style preference of trainer • Level of competence of trainer
• Availability of facilities and resources, etc 9. Support facilities – It can be segregated into printed and audio visual. The various requirements in a training program are white boards, flip charts, markers, etc. 10. Constraints – The various constraints that lay in the trainers mind are: • Time • Accommodation, facilities and their availability • Furnishings and equipments • Budget • Design of the training, etc
Training Implementation To put training program into effect according to definite plan or procedure is called training implementation. Training implementation is the hardest part of the system because one wrong step can lead to the failure of whole training program. Even the best training program will fail due to one wrong action. Training implementation can be segregated into: • Practical administrative arrangements • Carrying out of the training Implementing Training Once the staff, course, content, equipments, topics are ready, the training is implemented. Completing training design does not mean that the work is done because implementation phase requires continual adjusting, redesigning, and refining. Preparation is the most important factor to taste the success. Therefore, following are the factors that are kept in mind while implementing training program: • The trainer – The trainer need to be prepared mentally before the delivery of content. Trainer prepares materials and activities well in advance. The trainer also set grounds before meeting with participants by making sure that he is comfortable with course content and is flexible in his approach. Physical set-up – Good physical set up is pre-requisite for effective and successful training program because it makes the first impression on participants. Classrooms should not be very small or big but as nearly square as possible. This will bring people together both physically and psychologically. Also, right amount of space should be allocated to every participant. Establishing rapport with participants – There are various ways by which a trainer can establish good rapport with trainees by: • Greeting participants – simple way to ease those initial tense moments • Encouraging informal conversation • Remembering their first name • Pairing up the learners and have them familiarized with one another • Listening carefully to trainees’ comments and opinions
• Telling the learners by what name the trainer wants to be addressed • Getting to class before the arrival of learners • Starting the class promptly at the scheduled time • Using familiar examples • Varying his instructional techniques • Using the alternate approach if one seems to bog down
Reviewing the agenda – At the beginning of the training program it is very important to review the program objective. The trainer must tell the participants the goal of the program, what is expected out of trainers to do at the end of the program, and how the program will run. The following information needs to be included: • Kinds of training activities • Schedule • Setting group norms • Housekeeping arrangements • Flow of the program • Handling problematic situations Training Evaluation
The process of examining a training program is called training evaluation. Training evaluation checks whether training has had the desired effect. Training evaluation ensures that whether candidates are able to implement their learning in their respective workplaces, or to the regular work routines. Purposes of Training Evaluation The five main purposes of training evaluation are: Feedback: It helps in giving feedback to the candidates by defining the objectives and linking it to learning outcomes. Research: It helps in ascertaining the relationship between acquired knowledge, transfer of knowledge at the work place, and training.
Control: It helps in controlling the training program because if the training is not effective, then it can be dealt with accordingly. Power games: At times, the top management (higher authoritative employee) uses the evaluative data to manipulate it for their own benefits. Intervention: It helps in determining that whether the actual outcomes are aligned with the expected outcomes. Process of Training Evaluation Before Training: The learner’s skills and knowledge are assessed before the training program. During the start of training, candidates generally perceive it as a waste of resources because at most of the times candidates are unaware of the objectives and learning outcomes of the program. Once aware, they are asked to give their opinions on the methods used and whether those methods confirm to the candidates preferences and learning style. During Training: It is the phase at which instruction is started. This phase usually consist of short tests at regular intervals After Training: It is the phase when learner’s skills and knowledge are assessed again to measure the effectiveness of the training. This phase is designed to determine whether training has had the desired effect at individual department and organizational levels. There are various evaluation techniques for this phase. Techniques of Evaluation The various methods of training evaluation are: • Observation • Questionnaire • Interview • Self diaries • Self recording of specific incidents Role of Organization in Training and Development An organization has a very close relationship with the trainee and the trainer because it is the first contact for both. The demand for the training in the organization increases when the organization wants: • To hire new people – training as a means of training new recruits • To Expand – When the company wants to increase its headcount • To increase certain number of staff (in position) by a certain date • To enhance the performance of employees • Organization’s name to be a part of training unit
Demand for training also increases when there is change in the nature of job, change in taste of consumer, change in methods of product development, etc. The organization goes through the following steps for the transfer of training to the field. But the problem arises when the organization outsource the training process. In this situation the organization assumes that the trainer must be aware of the type of training need s of the participants and their organization and their content will meet those needs. This leads to failure of the program, which results in collusion. Therefore, it’s a foremost duty of the organization to make the trainer and their organization aware of their culture, climate, responsibilities of organization, etc. .
Why SAP ? SAP is becoming increasingly popular these days as: SAP allows customizing the software to specific needs of the company SAP is user-friendly, familiar looking, and has an experience of windows based applications SAP can be used worldwide It is easy to process user transactions with SAP SAP increases liability SAP improves the effectiveness and efficiency of the employees SAP improves upon the business process efficiencies SAP gives reliable, accurate, and instant information Old software systems do not meet the need of companies SAP is a affordable and no special software is required to access SAP supports all the fields, such as Marketing, Finance, Human Resource, Logistics, Operations, etc.
Payroll & Compensation Management
Human Resource is the most vital resource for any organization. It is responsible for each and every decision taken, each and every work done and each and every result. Employees should be managed properly and motivated by providing best remuneration and compensation as per the industry standards. The lucrative compensation will also serve the need for attracting and retaining the best employees. Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness. Components of Compensation System Compensation systems are designed keeping in minds the strategic goals and business objectives. Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities. Components of a compensation system are as follows:
Types of Compensation Compensation provided to employees can direct in the form of monetary benefits and/or indirect in the form of non-monetary benefits known as perks, time off, etc. Compensation does not include only salary but it is the sum total of all rewards and allowances provided to the employees in return for their services. If the compensation offered is effectively managed, it contributes to high organizational productivity. • Direct Compensation • Indirect Compensation \ Need of Compensation Management • A good compensation package is important to motivate the employees to increase the organizational productivity. • Unless compensation is provided no one will come and work for the organization. Thus, compensation helps in running an organization effectively and accomplishing its goals. • Salary is just a part of the compensation system, the employees have other psychological and selfactualization needs to fulfill. Thus, compensation serves the purpose.
The most competitive compensation will help the organization to attract and sustain the best talent. The compensation package should be as per industry standards.
Strategic Compensation Strategic compensation is determining and providing the compensation packages to the employees that are aligned with the business goals and objectives. In today’s competitive scenario organizations have to take special measures regarding compensation of the employees so that the organizations retain the valuable employees. The compensation systems have changed from traditional ones to strategic compensation systems. Evolution Of Compensation Today’s compensation systems have come from a long way. With the changing organizational structures workers’ need and compensation systems have also been changing. From the bureaucratic organizations to the participative organizations, employees have started asking for their rights and appropriate compensations. The higher education standards and higher skills required for the jobs have made the organizations provide competitive compensations to their employees. Compensation strategy is derived from the business strategy. The business goals and objectives are aligned with the HR strategies. Then the compensation committee or the concerned authority formulates the compensation strategy. It depends on both internal and external factors as well as the life cycle of an organization. Evolution of Strategic Compensation In the traditional organizational structures, employees were expected to work hard and obey the bosses’ orders. In return they were provided with job security, salary increments and promotions annually. The salary was determined on the basis of the job work and the years of experience the employee is holding. Some of the organizations provided for retirement benefits such as, pension plans, for the employees. It was assumed that humans work for money, there was no space for other psychological and social needs of workers. Change in Compensation Systems With the behavioral science theories and evolution of labour and trade unions, employees started asking for their rights. Maslow brought in the need hierarchy for the rights of the employees. He stated that employees do not work only for money but there are other needs too which they want to satisfy from there
job, i.e. social needs, psychological needs, safety needs, self-actualization, etc. Now the employees were being treated as human resource. Their performance was being measured and appraised based on the organizational and individual performance. Competition among employees existed. Employees were expected to work hard to have the job security. The compensation system was designed on the basis of job work and related proficiency of the employee.
Maslow’s Need Hierarchy Today’s Modern Compensation Systems Today the compensation systems are designed aligned to the business goals and strategies. The employees are expected to work and take their own decisions. Authority is being delegated. Employees feel secured and valued in the organization. Organizations offer monetary and non-monetary benefits to attract and retain the best talents in the competitive environment. Some of the benefits are special allowances like mobile, company’s vehicle; House rent allowances; statutory leaves, etc. IMPORTANCE OF COMPENSATION Compensation and Reward system plays vital role in a business organization. Since, among four Ms, i.e. Men, Material, Machine and Money, Men has been most important factor, it is impossible to imagine a business process without Men. Every factor contributes to the process of production/business. It expects return from the business process such as rent is the return expected by the landlord, capitalist expects interest and organizer i.e. entrepreneur expects profits. Similarly the labour expects wages from the process. Labour plays vital role in bringing about the process of production/business in motion. The other factors being human, has expectations, emotions, ambitions and egos. Labour therefore expects to have fair share in the business/production process. Therefore a fair compensation system is a must for every business organization. The fair compensation system will help in the following: • An ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed.
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It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable. Such a system should be well defined and uniform. It will be apply to all the levels of the organization as a general system. The system should be simple and flexible so that every employee would be able to compute his own compensation receivable. It should be easy to implement, should not result in exploitation of workers. It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers. Such system would help management in complying with the various labor acts. Such system should also solve disputes between the employee union and management. The system should follow the management principle of equal pay. It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel. Sound Compensation/Reward System brings peace in the relationship of employer and employees. It aims at creating a healthy competition among them and encourages employees to work hard and efficiently. The system provides growth and advancement opportunities to the deserving employees. The perfect compensation system provides platform for happy and satisfied workforce. This minimizes the labour turnover. The organization enjoys the stability. The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job. The business organization can think of expansion and growth if it has the support of skillful, talented and happy workforce. The sound compensation system is hallmark of organization’s success and prosperity. The success and stability of organization is measured with pay-package it provides to its employees.
Job Analysis Job analysis is a systematic approach to defining the job role, description, requirements, responsibilities, evaluation, etc. It helps in finding out required level of education, skills, knowledge, training, etc for the job position. It also depicts the job worth i.e. measurable effectiveness of the job and contribution of job to the organization. Thus, it effectively contributes to setting up the compensation package for the job position. Importance of Job Analysis Job analysis helps in analyzing the resources and establishing the strategies to accomplish the business goals and strategic objectives. It forms the basis for demand-supply analysis, recruitments, compensation management, and training need assessment and performance appraisal. Components of Job Analysis Job analysis is a systematic procedure to analyze the requirements for the job role and job profile. Job analysis can be further categorized into following sub components. • Job Position Job position refers to the designation of the job and employee in the organization. Job position forms an important part of the compensation strategy as it determines the level of the job in the organization. For example management level employees receive greater pay scale than non-managerial employees. The nonmonetary benefits offered to two different levels in the organization also vary.
• Job Description Job description refers the requirements an organization looks for a particular job position. It states the key skill requirements, the level of experience needed, level of education required, etc. It also describes the roles and responsibilities attached with the job position. The roles and responsibilities are key determinant factor in estimating the level of experience, education, skill, etc required for the job. It also helps in benchmarking the performance standards. • Job Worth Job Worth refers to estimating the job worthiness i.e. how much the job contributes to the organization. It is also known as job evaluation. Job description is used to analyze the job worthiness. It is also known as job evaluation. Roles and responsibilities helps in determining the outcome from the job profile. Once it is determined that how much the job is worth, it becomes easy to define the compensation strategy for the position. Therefore, job analysis forms an integral part in the formulation of compensation strategy of an organization. Organizations should conduct the job analysis in a systematic at regular intervals. Job analysis can be used for setting up the compensation packages, for reviewing employees’ performance with the standard level of performance, determining the training needs for employees who are lacking certain skills.
Pay-Structures Once job analysis has been done organizations need to decide upon the pay structures. Pay structure refers to the process of setting up the pay for a job in an organization. The process deals with internal and external analysis to estimate the compensation package for a job profile. Internal equity, External equity and Individual equity are the most popular pay structures. Job description provides the in depth knowledge about the job profile and its worth.
Pay structures are the strong determinant of employee’s value in the organization. It helps in analyzing the employee’s role and status in the organization. It provides for fair treatment to all employees. Pay structures also include the estimation of incentives.
The level of incentives also depends on the level of job position in the organizational hierarchy. • Internal Equity The internal equity method undertakes the job position in the organizational hierarchy. The process aims at balancing the compensation provided to a job profile in comparison to the compensation provided to its senior and junior level in the hierarchy. The fairness is ensured using job ranking, job classification, level of management, level of status and factor comparison.
• External Equity Here the market pricing analysis is done. Organizations formulate their compensation strategies by assessing the competitors’ or industry standards. Organizations set the compensation packages of their employees aligned with the prevailing compensation packages in the market. This entails for fair treatment to the employees. At times organizations offer higher compensation packages to attract and retain the best talent in their organizations.
Salary-Surveys Organizations have to bridge the gap between the industry standards and their salary packages. They cannot provide compensation packages that are either less than the industry standards or are very higher then the market rates. For the purpose they undertake the salary survey. The Salary survey is the research done to analyze the industry standards to set up the compensation strategy for the organization. Organizations can either conduct the survey themselves or they can purchase the survey reports from a reputed research organization. These reports constitute the last 2-5 years or more compensation figures for the various positions held by the organizations. The analysis is done on the basis of certain factors defined in the objectives of the research.
Objectives of Salary Survey • • • • • To gather information regarding the industry standards To know more about the market rate i.e. compensation offered by the competitors To design a fair compensation system To design and implement most competitive reward strategies To benchmark the compensation strategies
Types of Compensation Surveys There are two types of compensation surveys undertaken by the organizations. • Standard Surveys Standard surveys are undertaken by organizations on a regular basis. These surveys are conducted annually based on the organizational objectives. These surveys attempt to cover the same companies every year and provide the same time of analysis. The reports are published annually by the research organizations. The organizations willing to formulate their compensations strategies based on the surveys purchase the reports from the research organization. • Custom Surveys At times, a few organizations need to know some specific information. The surveys which cater this need are known as custom surveys. The organizations either higher research organizations to conduct theses surveys for them or they themselves conduct the survey by sampling few of the competitors on their own. These surveys do not have any time interval. They are undertaken as the need arises. They focus on important issues usually one or two. Survey Reports The survey reports consist of the analysis and conclusion drawn from the evaluative data based on the objectives of the study. The reports also include the data, facts and figures to support the analysis and conclusion. The supportive data and annexure provided in the report form the basis for the un-biased conclusion and validation of the analysis Direct Compensation Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time. • Basic Salary Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services. • House Rent Allowance Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work. • Conveyance
Organizations provide for cab facilities to their employees. Few organizations also provide vehicles and petrol allowances to their employees to motivate them. • Leave Travel Allowance These allowances are provided to retain the best talent in the organization. The employees are given allowances to visit any place they wish with their families. The allowances are scaled as per the position of employee in the organization. • Medical Reimbursement Organizations also look after the health conditions of their employees. The employees are provided with medi-claims for them and their family members. These medi-claims include health-insurances and treatment bills reimbursements. • Bonus Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. The bonus amount usually amounts to one month’s salary of the employee. • Special Allowance Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest loans; insurance, club memberships, etc are provided to employees to provide them social security and motivate them which improve the organizational INDIRECT COMPENSATION Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. They include Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes. • Leave Policy It is the right of employee to get adequate number of leave while working with the organization. The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc. • Overtime Policy Employees should be provided with the adequate allowances and facilities during their overtime, if they happened to do so, such as transport facilities, overtime pay, etc. • Hospitalization The employees should be provided allowances to get their regular check-ups, say at an interval of one year. Even their dependents should be eligible for the medi-claims that provide them emotional and social security • Insurance Organizations also provide for accidental insurance and life insurance for employees. This gives them the emotional security and they feel themselves valued in the organization. • Leave Travel The employees are provided with leaves and travel allowances to go for holiday with their families. Some organizations arrange for a tour for the employees of the organization. This is usually done to make the employees stress free. • Retirement Benefits Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age • Holiday Homes
Organizations provide for holiday homes and guest house for their employees at different locations. These holiday homes are usually located in hill station and other most wanted holiday spots. The organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house. • Flexible Timings Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons. Payroll Management Payroll is defined as a method of administrating employees’ salaries in the organizations. The process consists of calculation of salaries and tax deductions of the employees, administrating the retirement benefits and disbursements of salaries to employees. It can also be called as an accounts activity which undertakes the salary administration of employees in the organization. Administrating the employees’ salaries is not an easy task, the HR and accounts department work together to calculate and disburse the salary to the employees. Thus, payroll management can be further subdivided into two sub processes, i.e. Payroll accounting and payroll administration. • Payroll Accounting Payroll accounting involves calculations of employees’ salaries and tax deductions. It also undertakes the activities such as preparation of tax returns, maintaining the payroll records, etc. • Payroll Administration Payroll Administration involves managerial activities such as maintaining employees’ records, referring employment laws. Here, the HR comes into picture which maintains the daily record if employees attendance.
Database of employees is maintained. Employee’s details such as name, employee ID, basic salary, daily attendance, etc are recorded. Gross Salary is calculated after adding the allowances and incentives to the basic salary of the employee. Net salary is calculated by deducting the tax and other calculated deductions (loan installments, etc). Components Of Payroll Payroll refers to the administration of employees' salaries, wages, bonuses, net pay, and deductions. It consist of the employee ID, employee name, date of joining, daily attendance record, basic salary, allowances, overtime pay, bonus, commissions, incentives, pay for holidays, vacations and sickness, value of meals and lodging etc. There are some deductions such as PF, taxes, loan installments or advances taken by employee. Payroll is administered on monthly basis and annual basis. While administrating the monthly payroll basic salary, HRA, conveyance, and other special allowances such mobile, etc are considered. There are some deductions which are provident fund (12%) of the salary, taxes and other deductions.
Deductions such as tax and loan/advances taken by the employee from organizations are deducted only where applicable. Dearness Allowance and House rent allowance is provided at a fixed rate stated by the employment law. Provident fund is deducted from the gross salary of employee on the monthly basis as per the employment law, which is provided later to the employee. Organizations also contribute the same amount to the provident fund of the employee. Annual payroll consists of leave travel allowances, incentives, annual vouchers/reimbursements, and medical reimbursements. bonuses, meal
Allowances, incentives, bonuses and reimbursements are based on organizational policies. Some organizations provided the allowances on a fixed rate say 10% or 12% of the basic salary. Some organizations go for performance based incentives. Payroll Management Processes Calculation of gross salaries and deductible amounts is a tedious task which involves risk. Some of the organizations use the traditional manual method of payroll processing and some go for the
advanced payroll processing software. An organization opts for any of the following payroll processing methods available:: 1. Manual System Manual payroll system is the traditional payroll system which involves pen and ink, adding machine, spreadsheet, etc instead of computers, software and other computerized aids. The process was very popular when there were no computerized means for payroll processing. Now-a-days it is only few small scale organizations in the remote areas that use the manual payroll. Sometimes the construction industry and manufacturing industry also use the manual payroll systems for the contractual labour, as theses contracts are on daily/weekly basis. There is full control in the hands of owner. But the process is tedious, time consuming and risky as it is more prone to errors. 2. Accountant Accountant is a professional having a degree/diploma course in finance/accountancy. He/she is responsible for all the activities related to payroll accounting. He/she has the sound knowledge of accounting principles and globally accepted standards. The process adds costs to the organization. It involves paying someone who is responsible for calculating the salaries of others. The financial control regarding salary goes in the hand of accountant. 3. Payroll Software In today’s computerized environment, payroll system has also developed itself into automated software that performs every action needed by the payroll process. It helps in calculating the payable amounts and deductions very easily. It also helps in generating the pay slips in lesser time. Automated calculations result in no errors. Data is validated automatically by the software. It needs professionals to make use of the software for its efficient working. 4. Payroll Outsourcing Payroll outsourcing involves a third party (an outsourcing company) in the calculations of salaries and deductions. The outsourcing organization is responsible for all the activities of the payroll accounting. It saves time and cost for the organization. If there is more number of employees (say more than 9001000) in the organization, payroll outsourcing would be very much beneficial. The data is provided to the consultants/outsourcing firms. The various payroll functions undertaken by the outsourcing organizations are as follows: • Analysis of Payroll records, payroll taxes • Medical claim processing • Employee Insurance & Provident fund processing • Quality Audit procedures & planning
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