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A policy is a general guide to decision making.policies are
developed for areas where problems have arisen in the past.,or in potential
problem areas which management considers important enough to warrant policy
development.policies free management having to make decisions in areas in
which they have less competence or on matters with which they do not wish to
become involved.this assures some consistency in behavior and allows managers
to concentrate on decisions in which they have the most experience and
After the broadest policies are developed ,some organizations
developed procedures and rules.these are most specific plans which limit the
choices of managers and employees.procedures and rules are developed for the
same reason as policies.

A procedure or rule is a specific direction or action . it tells a manager how to
do a particular large organizations , procedures are collected and put
into manuals , usually called standard operating procedures(SOP,s).
Organizations must be careful to have consistent decision making which flows
from a well-developed but not excessive , set of policies and procedures . some
organizations in effect eliminate managerial initiative by trying to develop
policies and procedures for everything. Procedures should be developed only for
the most vital areas.


it’s a strategic tool.At the beginning of every year, the HR department calls
for self- imposed goals from each staff member. Each goal is given certain
marks and aggregate of all these goals come to 50 marks. At the end of the
year, the management assesses the goals achieved and marks are awarded

accordingly. The goals set by the staff members also include business

The overall purpose of HRM is to ensure that the organization is able to achieve
success through Ulrich and Lake(1990) have remarked:
“HRM systems can be the source of organizational capabilities that
allows firms to learn and capitalize on new opportunities.”
Specifically,HRM aims to:

 ,enable the organization to obtain and retained the
skilled,committed and well motivated workforce it
 enhance and develop the inherent capacities of people
– their contributions , potential and employability –by
providing learning and continuous development
 develop high performance work systems that include
‘rigorous recruitment and selection procedures
,performance contingent incentive compensation
systems,and management development and training
activities linked to the needs of the people’(Becker et
 Develop high –commitment management policies
that recognize that employees are valued stakeholders
in the organization and help to develop a climate of
cooperation and mutual trust;.
 Create a climate in which productive and harmonius
relationships can be maintained through partnerships
between management and employees;
 develop an environment in which teamwork and
flexibility can flourish;
 help the organization to balance and adapt to the
needs of its stakeholders (owners,government bodies
or trustees,management,employees ,
customers,suppliers and the public at large);
 ensure that people are valued and rewarded for what
they do and achieve;
 manage a diverse workforce,taking into account
individual and group differences in employment
needs ,work style and aspirations;
 ensure that equal opportunities are available to all;

 adopt an ethical approach to managing employees
that is based on concern for people ,fairness and
 maintain and improve the physical and mental well-
being of employees.

Staff members/ branches are given business targets and awards are also
granted in the shape of bonus which keeps the institution competitive with
other banks.

Bank Al-falah believes in loyalty and commitment of the employees.
Therefore, we believe that employees should have sense of ownership.

One of the first explicit statements of the hrm concept was made by the
Michigan School (fombrun et al 1984).they held that hr systems and the
organization structure should be managed in a way that is congruent
organization’swith organizational strategy.they further explained that there is a
human resource cycle which consists of four generic processes or functions that
are performed in organizations .these are
The new hrm model is composed of policies that promote mutuality –mutual
goals ,mutual influence, mutual respect ,mutual rewards, mutual responsibilities.
The theory is that policies of mutuality will elicit commitment, which in turn
will yield both better economic performance and greater human development.
The combined contributions of the writers mentioned above and others suggests
that the characteristic features of hrm as a new paradigm for managing people
are that :

 it stresses the importance of gaining commitment to
the organisation’s mission and values –it is
commitment- oriented ;
 it emphasizes the need for strategic fit –the integration
of business and hr strategies;
 it is a top management driven activity.
 the performance and delivery of HRM is a line
management responsibility;

 it contributes in measureable ways to the creation and
maintenance of competitive advantage ,and the focus
is on adding value,especially for shareholders;
 it involves the adoption of a comprehensive and
coherent approach to the provision of mutually
supporting employment policies and practices,ie the
development of integrated HR policies and practices.
 importance is attached to strong cultures and values.
 it is performance-oriented emphasizing the need for
ever higher levels of achievement to new challenges ;
 employee relations are unitarist rather than pluralist
,individual rather than collective;
 organization principles are organic and decentralized
with flexible roles, a focus on process(how things are
done ,especially across traditional organizational
boundries)and more concern for teamwork –flexibility
and teamwork are important;
 there is strong emphasis on delivery of quality to
customers and the achievement of high level of
customer satisfaction;
 rewards are differentiated according to performance
,competence ,contribution or skill.
Of theses characteristics perhaps the most important ones are the emphasis of
HRM on gaining commitment and strategic fit.
Changes in socio economic and political conditions are bound to bring about
changes in the environment within the organizations .the personnel managers of
today may find themselves obsolete because of the rapidly changing business
environment ,and therefore they should constantly update their knowledge and
skills by looking at the organisation’s needs and objectives.some of the
important challenges are :
Evolving the right vision is an entrepreneurial or top management function, but
its utility increases immensely if it percolates and is understood and accepted
down the line. Vision not only provides the fuel and direction to business
strategy, but also helps managers evaluate management policies and make
decisions .penetration of vision shall therefore become an important integral part
of man management in future.
Creating an environment ,which is responsive to external changes ,providing
satisfaction to the members of the organization ,and sustaining it through the
culture ,useful traditions ,practices and even systems,will become another
important dimension of managing managerial personnel.

The practice of IR has undergone sea changes .the notion that the workers must
be disciplined at the manager’s will have to be buried.development of workers
may need simpler and appropriate inputs ,but both the workers and managers
must be managed and developed by the same set of assumptions and HRM
philosophy of the company.
The paradigm of managing managers would include not only assisting them to
acquire new skills and knowledge and to evaluate environmental changes to
evolve business strategies, but also to live in a psychological state of readiness
to continually change.
In designing organizations we will hopefully soon give up uncritical acceptance
of foreign concepts and fads like quality circles,TQM,etc.instead of these
organizational structure and design will primarily be based on
task approach i.e. understanding of the intricacies of
technology, jobs and functions to be performed to
achieve organizational tasks and
people approach ,which takes cognizance of their
strengths ,idiosyncrasies ,aspirations and relationships
at work.
The organizations are ever increasing in size and complexity,multiplying the
number of people working therein.the management of an increased workforce
poses serious problems and challenges especially since the workers are
becoming more conscious of their rights.
In the traditional bureaucratic mode ,the organizations were designed to perform
technical functions with strict compartmentalization of work functions .but in
future human participation will be requird not only in technical functions but
also in establishing the democratic humanistic system.
The workers are becoming much aware of their higher level needs .this
awareness is likely to intensify further in the future workforce .therefore
managers would be required to evolve appropriate techniques of motivating the
workers and getting the work from them .
Major developments that have taken place in the last four decades have been
due to the desire of the organizations members to have greater say and influence
in organizational functioning .thus contemporary organizations are putting
lesser emphasis on the hierarchical structures and thus moving towards a more
equalitarian social system.this is going to be more common in days to come.
In the wake of technological advances new jobs will be created and many old
jobs will become redundant.unemployment resulting from modernization could

be liquidated by properly assessing manpower needs and training of redundant
employees in alternate skills.
It will play a revolutionary role in managerial decision making .it will also have
an increasing impact in coordination and at strategic levels.
To meet with the increasing changes in the legal environment, necessary
adjustments will have to be so that greater utilization of human resources can be
The new generation workforce comprising educated and conscious workers will
ask for higher degree of participations and avenues for self fulfillment. It is
rather difficult to motivate many of the new generation workers than their
predecessors. This is partly due to more change in their value systems and
higher levels of professional competency.

HR functions refer to tasks performed in an organization to provide and
coordinate human resources.human resource functions are concerned with a
variety of activities that significantly influence almostall areas of an
organization and aim at:
ensuring that the organization fulfills all of its equal
employment opportunities and other government
carrying out job analysis to establish the specific
requirements for individual jobs within an
organizations .
forcasting the human resource requirements necessary
for the organization to achieve its objectives----both in
terms of number of employees and skills.
developing and implementing a plan to meet these
recruiting and selecting personnel to fill specific jobs
within an organization.
orienting and training employees .
designing and implementing management and
organizational development programmes.
Designing system for appraising the performance of
individuals .
assessing employees in developing career plans.
designing and implementing compensation systems
for all employees.

Over the past three decades the size of the typical HR department has increased
considerably. this increase reflects both the growth and complexity of the
government regulations and a greater awareness that the HR issues are important
to the achievement of business objectives. Many colleges and universities now
offer specialized degree in human resources at different levels.

 Aligning business strategy with HR strategy.
 Knowledge management and creating learning organization.
 Competence mapping and skill development through assessment
 Developing moral excellence through ethical audit; and creating a
value based culture.
 Reorganization of work through job enlargement and hob enrichment
 Development of mutual trust and synergy among work teams.
 Managing change through people.
 Restructuring and bringing about transformation in the organization to
add value to the business.
 Bringing about rationalization of workforce through internal transfers
and resorting to employee reduction, though not as a first choice.
 Holding opinion surveys to get a feel for the perception of employees
and applying mid course correction, if necessary
 . Corporate excellence is the combination of people , system, product
and marketing excellence.out of these , people excellence is important
because it has a direct bearing on the system, product and marketing.

In any organization the 10 p’s are considered to be most important to bring
excellence---------purpose , perspective , positioning , politics , partnerships
, plans , or policies , product , principles , or (philosophy), people and

purpose basically is the goal , vision and business aim of the organization.
It is the direction-------- a mental view of the relative importance of things.
The image of the company and the product in the market.
judicious and expedient in the dealings.
The state of being a partner or partners , a joint business within or outside the

proper plans of action , translated to business policies.
the product should be innovative , qualitative and cost effective.
set of values , culture and philosophy.
challenging , ethical , commited , high performance , self driven.
output of the organization , results , in terms of both quality and quantity.
Human resource management is now a strategically important area of corporate
governanace, which indicates that HRD policies need to be integrated into the
overall policies of the be precise , it is a cyclic process of
developing mission , vision and business plan through people and translating
those to actionthropugh policies , ensuring results and redefining the objective
Legge believes that the concept of HRM contains the
following internal contradictions.
The complimentarity and consistency of mutuality
policies designed to generate commitment , flexibility
, quality etc.
Problems over commitment as GUEST (1987)asked
,’commitment to what?
HRM appears torn between preaching the virtues of
individualism (concentration on the individual) and
collectivism(teamwork , etc)
There is a potential tension between the development
of a strong corporate culture and employees ability to
respond flexibility and adaptivity.

Inspite of all their protestations to the contrary , the advocates of
HRM could be seen to be introducing alternative and more insidious forms of
control by compliance when they emphasize the need to do . as LEGGE
(1989)pointed out:

In its emphasis on ‘strong culture ‘ in theory HRM is able to achieve a
cohesive workforce ,but without the attendant dilemma of creating
potentially dysfunctional solidarity. for a strong culture is aimed at uniting
employees through a shared set of managerially sanctioned values (quality,
service,innovation.etc)that assumes an identification of employee and
employer interests .such cooperation –through cultural management of course

–reinforces the intention that autonomy will be exercised ‘responsibly’i.e. in
management’s interests.

LEGGE (1998) summed up her reservations about the morality of HRM as

Sadly in a world of intensified competition and scarce resources,it seems
inevitable that as employees are used as means to an end ,there will be some
who will be lose out. They may even be in the majority .for these people the
soft version of HRM may be an irrelevancy, while the hard version is likely to
be an uncomfortable experience.

She contends that management go only in for HRM out of self interest ,regarding
Employees as a means to an end.
HRM is accused by many academics of being manipulative . as WILLMOTT (1993)remarks,HRM
operates as a form of insidious control. It preaches mutuality but the reality is that behind the
rhetoric it exploits workers . it is ,they say a woolf in sheep’s clothes . they note that chief
executives with a mission for HRM tend to adapt the principle of ‘ what is good for the business
must be good for everyone in it.’ Essentially the accusation is that HRM treats employees as means
to an end .however , it could be argued that fi organizations exist to achoieve ends ,which thety
clearly do , and if those can only be achieved through people , which is clearly the case , the
concern of management for commitment and performance from those people is not unnatural and
is not solely attributable to HRM .
As GUEST has suggested there are two contradictory concerns about HRM . the first as
formulated by LFGGE is that while management rhetoric may express concorn for workers ,the
reality ios harsher .KEENOY complains that :
The real puzzle about HRMism is how , in the face of such apparently overwhelming critical
“refutation”, it has secured such influence and institutional presence.’ Other writers however
simply claim that HRM does not work. SCOTT finds that both management and workesr are
captives of their history and find it very difficult to workesr are captives of their history and find it
very difficult to let go of their traditional adversarial orientation.
But these contentions are contradictory. As GUEST remarks:

It is difficult to treat HRM as a major threat (though what is a threat to is not always made
explicit )deserving of serious critical analysis while at the same time claiming that it is not
practiced or is ineffective.

Human Resource Information Systems

Bank alfalah use IS and it does cost effective .bank is choosing
nontraditional structures, designing work to break down barriers among

employees, and using a variety of techniques to ensure workforce flexibility.
While these strategies are very potent for increasing organizational
effectiveness, they can make it difficult to keep track of all the people who work
for the organization. Fortunately, computer hardware and software have made
keeping track of human resources much easier.

Human Resource information systems (HRIS) are systems used to
collect, record store, analyze, and retrieve data concerning an organization’s
human resource. Most of today’s HRIS are computerized, so we will focus on
these. Although it is beyond the scope of this book’s managerial approach to
discuss the technical details of the HRIS, it is worth briefly exploring two
relevant issues; the applications of HRIS, it is worth briefly exploring two
relevant issues; the applications of HRIS and the management of security and
privacy issues related to HRIS.

A computerized HIRS contains computer hardware and software
applications that work together to help manager make HR decisions. The
hardware may be a mainframe computer or a fairly inexpensive personal
computer. The software may be a custom-designed program .


Following are the basic human resource strategies.
Two well known business unit strategies were formulated by PORTER and
MILES and SNOW. Both of these may be used to analyze which HR strategies
represent the best fit with a firm’s business strategy.
PORTER has identified three types of business unit strategies that help a firm
cope with competitive forces and outperform other firms in the industry
.following is a certain set of HR strategies would be best fit.
The overall cost leadership strategy is aimed at gaining a competitive
advantage through lower cost .financial considerations and budgetary constraints
play a critical role here in shaping HR strategies . cost leadership requires
aggressive construction of efficient plant facilities, intense supervision of labour
, vigorous pursuit of cost reductions , and tight control of distribution costs and
overhead . firms that have successfully pursued a low cost leadership strategy .
Low cost firms tend to emphasize structured tasks and
responsibilities,products designed for easy manufacture,and the need to predict
costs with minimal margin o error.the HR strategies that fit a low cost
orientation emphasize efficient ,low –cost production;


Organization have evolved because the overall mission and objectives of most
institutions are too large for any single person to achieve.the cornerstone of the
organization is the jobs performed by employees .the set of jobs is what provides
the input needed to accomplish the mission and objectives. these jobs must fit
together , coordinate , and link directly to the mission if the organization is to be
successful.thus,studying and understanding jobs is a vital part of any hrm analysis involves the formal study of jobs.

Each employee is given a duty list which clarifies. A duty list is designed by
branch manager. Load work is assessed to formulate duty list.

A duty list is designed by branch manager. Load work is assessed to
formulate duty list.

Jobs analysis provides the answer to the questions such as :
1. how much time is taken to complete the job tasks?
2. which tasks are grouped together and considered a job?
3. how can a job be designed or structured so that employees performance
can be enhanced?
4. what is done behaviorally on the job?
5. what kind of person is best suited for the job?
6. how can the information acquired via a job analysis be used in the
development of hrm programs?

basic purpose(s) for collecting information about Job Analysis:

i. Recruitment and Selection.

iii. Performance Appraisal.

iv. Training.

v. To discover unassigned duties.

The language of job analysis must be learned before the specific process and
the techniques are understood to establish the vocabulary some key terms must
be clarified

The process of defining a job in terms of tasks or behaviours and specifying the
education , training , and responsibilities needed to perform the job successfully.
The job analysis provides information about the job that results in a description
of what the job entails.
The job analysis also results in the specification of what kind of traits and
experiences are needed to perform the job.

job description contains the following sections:-
Job identification, Job summary, Responsibilities & duties, Authority of inc
umbent and Job specifications .Untrained staff is given independent
assignment after they are fully trained. Therefore untrained staff is not given
specific assignment.


A coordinated and aggregated series of work elements used to produce an
output .
Consist of responsibilities and duities performed by an individual.there are as
many positions as there are employees.
Group of positions that are similar in their duties , such as a computer
programmer or compensation specialist.
A group of two or more jobs that have similar job duties.
These terms illustrate that in order to prevent confusion and improper usage
the specific meaning of words must be understood.terms such as job and task
are often used interchangeably.this , howver , is technically not correct.since
precision is required by federa and state legislation it is important for the HRM
manager to be accurate in the use of terms.

Observation and Diary/Log (daily listing made by the employees of every
activity in which they engaged along with the time each activity takes).

There are a number of steps that are performed in the job analysis process.
Exhibit depicts these steps.



quantitative approach other than interviews and questionnaires is DOL
(Department of labor job analysis procedure)

written statement of what the worker actually does are also maintained.

Job evaluation is made by the supervisors and HR specialists.

Supervisors and HR specialists are interested in this committee.

42) If all of the above are involved in this committee then in what ratio?

Different types of analysis are made in this regard.

develop compensation plans for managers and professionals, either to attract
and keep good employees To keep up the institutional standard, we develop
compensation plans for your managers and professionals, either to attract and
keep good realize that job evaluation provides us all answers
about the question of how to pay the employees.


“personal and employment planning is the process which helps to provide
adequate humn resources to achieve future organizational objectives .it includes
forecasting future needs for employees of various types ,comparing these needs
with the present workfoce,and determining the numbers and types of employees
to be recruited or phases out of the organisation’s employment group.”

People have always asked :”how do I get prompted?when will I be
promoted?will I have to relocate to be promoted?what is my future going to
be?personel and employment planning is the process that provides answers to
these questions.employees should know about the oppurtuinities ,plans ,and
development programs that exist for them.

All organizations perform personnel planning, formally or informally.the
formal employment techniques are described because methods are typically
unsatisfactory for organizations requiring skilled human resources in a fast
changing labour market it is most important to point out that most organizations
do more talking about formal employment planning than actual
performance.presently only a minority of organizations actually engage in
formal employment planning.therefore personnel and employment planning as a
HRM activity is in stage 2 of development ,or early development.
The major reasons to achieve formal employment planning are to achieve :
1.more effective and efficient use of human resources.
2. more satisfied and better developed employees.
3. more effective equal employment opuurtuniy planning.

Employment planning should precede all other HRM activities.for example
how could you schedule recruiting if you did not know how many people you
needed?how could you select effectively if you did not know the kinds of
persons needed for job openings?careful analysis of HRM activities show that
their effectiveness and efficiency ,which result in increased productivity,depend
on employment planning.

Employees who work for organizations that use good employment planning
systems have a better chance to participate in planning their own careers and to
share in training and development experiences.thus they are likely to feel their
talents are important to the employer and they have a better chance to utiloise
those talents .this often leads to greater employee satisfaction and its
consequences:lower absenteeism,lower turnover,fewer accidents and high
quality of work.
Governments have increased their demands for equal employment
opportunities .information systems that focus on personnel and employment
planning help organizations formally plan employment distribution.therefore it
is easier to complete required government reports and respond satisfactorily to
EEO demands using personnel and employment planning.
In sum effective employment planning assures that HRM activities and
programs will be built o a foundation of good planning .this shpuld cut down on
a number fo surprises that occur involving human resources
availibilty,placement and orientation.not having the right person in the right
place at a particular moment is a surprise and usually a problem.these kinds of
surprises can be reduced through effective personnel and employment planning.

Effectiveness in HRM activites requires the efforts and cooperation of HRM
managers and operating managers.


One of the most important factor affecting planning is the goal of the
controlling interests in the organization.if planning and effective utilization of of
human resources are not a significant goal of the organization ,employment
planning will not be formed properly.if thebgoal of top management include
stabe growth ,employment planning will be less important thanm if thje goals
include rapid expansion ,diversification or other afctors with a significant impact
on future employment needs.
Government policies are another important factor in planning.requirements
for equal employment opportunity and promotion call for women and other
employees in minority groups and special categories.other examples are the
government’s raising the age of mandatory retirement and the encouragement of
hiring handicapped employees and veterans.
The conditions in the labour market also have a significant impact on the
amount nd the type of the employment planning done in an a leser
extent that the government ,unions may restrict the ability to hire and promote
employees , so they too are a factor in planning.

The tupes of people employed and the taks they do alos determine the kind
of planning necessary.need for unskilled employees do not have to be planned
two years ahead.
There are several managerial decisions to be made once demand for people
has been forecast and compared to supply.

Before an organization can make a job offer in must have people
who want the job this chapter describes effective ways to recruit the people
needed to offset shortages in human resources which become apparent as a
result of the personnel and employment planning process.

Recuruiting is that set of activities and organization uses to attract
job candidates who have the abilities and attitudes nedded to help the
organization achiece its objectives.

Recruiting is related directly to a number of P/HRM activities, as
shown in Exhibit 6-1 personal and employment planning determines the number
of employees needed and all subsequent P/HRM activities (such as selection,
orientation, development, compensation) cannot be effective unless good
employees have been recruited.

A Diagnostic Approach to Recruitment
how the recruiting process is affected by various factors in the
environment. The recruiting process begins with an attempt to fing employees
with the abilities and attitudes desired by the organization and to match them
with the tasks to be performed. Whether pot4ential employees will respond to
the recruiting effort depends on the attiudes they have developed toward those
tasks and the organization, on the basis of their past social and working
experiences. Their perception of the task will also be affected by the work
climate in the organization.

Hwo difficult the recruiting job is depents on a number of factors
external influences such as government and union restrictions and the labor
market, plus the employer’s requirements and candidates preferences. External
factors are discussed in this section and the important interaction of the
organization as a recruiter and the employee as a recruit is examined in the next

At this point, you may have determined, for example, that what
your eally want is a job near home, in a small firm in the toy industry, that you
can buy out some day. Answers to these questions will help you narrow the list f
potential employers to a reasonable size.

A far as step 4 is concerned, there are several questions you need
to answer about your values and needs. Questions of this type are almost
unlimited. What you must do first is rank them in importance so you know the
trade offs between them. You will not find a job with all the characteristics you

Then you need to analyze what you have to offer that comprises
your comparative advantages. These can include education (for example, grades,
kinds of courses, skills developed.) interpersonal skills personality traits, and
personal contacts.

After completing steps 3 and 4 you are ready to look for a job.
Use all the sources.

Questions about Employers:
1.Do I have a size preference small, medium, or large or no size?
2.Do I have a sector preference (private, no for profit, public
3.What kinds of industries interest me? This usually based on
interests in company products or services. Do I prefer mechanical
objects or counseling people? This is a crucial question.
4.Have I checked to make sure that the sector or product or
service has good future and will lead to growth in opportunity?

Forecasting Techniques
There are two basic categories of forecasting techniques,
quantitative and qualitative. The example described I figure 5.2 is a highly
simplified version of a quantitative technique. A variety of mathematically
sophisticated quantitative techniques has been developed to estimate labor
demand and supply?

Although used more often, quantitative forecasting models have
two main limitations. First, most rely heavily on past data or previous
relationships between staffing levels and other variables, such as output or
revenues. Relationships that held in the past may not hold in the future, and it
may be better to change previous staffing practices than to perpetuate them.

Second, most of these forecasting techniques were created the
1950s, 1960s, and early 1970s and were appropriate for the large frims of that
era, which had stable environments and work forces. They are less appropriate

today, when firms are struggling with destabilizing forces such as rapid
technological change and intense global competition these forces are creating
major organizational changes that are difficult to predict from past data. For
instance, a clothing manufacture that typically sells its goods to retail stores may
decide to expand its audience by seling its clothes to consumers via the web. The
business may need to recruit people with technogical and other skills that were
previously unnecessary.

Unlike quantitative techniques, qualitative techniques rely on
experts’ qualitative judgment or subjective estimates of labor demand or supply.
The experts may include top managers, whose involvement in and support of the
HRP process is a worthwhile objective in itself. One advantage of qualitative
techniques is that they are flexible enough to incorporate whatever factors or
conditions the expert feels should be considered. In other works, unlike
quantitative methods, qualitative techniques are not constrained by past
relationships, however, a potential drawback of these techniques is that
subjective judgments may be less accurate or lead to rougher estimates than
those obtained through quantitative methods.

HR personnel are typically the people most likely to make formal
use of techniques for forecasting labor supply and demand. However, all
mangers should understand the basics of forecasting techniques some of which
can be used for more purposes than predicting lobor supply and demand. For
those interested in learning more about quantitative and qualitative forecasting,
figure 5.4 outlines some important techniques and their main advantages and

Figure 5.4

Quantitative Methods of Forecasting HR Demand.

Method Description Advantages Disadvantages
Moving Averages data Simplicity Seasonal or
Average about HR demand Data easily cyclical patterns
from recent available. may be ignored.
periods and
projects them into
the future.
Exponential Forecasters can May be used to Mathematical
smoothing vary weights for take into account complexity choice
HR demand factors ignored by of weights may be
assigned to the moving arbitrary.
different pas time average method
periods used to for example,
project future HR cyclical patterns.

Trends Numbers of Easily explained Rough estimates
Projections people hired or re to managers. Relies on past
quested placed on Easily prepared data.
one axis time is by HR planners.
placed on the
other axis. A
straight future to
predict HR

Method Description Advantages Disadvantages
Regression • Mathematic Can include Mathematical
al formula many variables. complexity.
used to Efficient use of Requires large
relate all avail able sample sizes.
staffing to data. Rilies on past data
several .
Linear example,
programming output, Assesses what Managers are
product should be in the skeptical of highly
mix, per future, not what sophisticated
capita probably will methodology.
productivit be. Numerous
y). assumptions must
• Assesses be made.
Actuarial models staffing May not be
simulations level that Reflect past. accurate in
matches individual cases.
Simulations desired
output Useful for Accuracy varies.
levels, considering
subject to alternative HR
Probability certain programs
matrixes constraints Help identify Require some
(for career patterns. mathematical
example, sophistication.
cost). Help perform Accuracy varies.
• Relate turnover
turnover to analysis

First order such Not adequate for
markov factors as Adequate for long term
Model age and considering forecasts.
seniority. alternative Requires
• Use effects of mathematical
scenarios to various HR Sophistication
test the strategies.
effect of
• Define
states in the
n such as Not very useful
Semi Markov strategy More inclusive for considering
model levels than a first alternative effectis
performanc order markov of various HR
e ratings. model. Strategies.
• Identify Requires
time mathematical
period. sophistication.
• Multiply
number of
people in
each job
category by
job position
that current
job position
category is
the chief
• Same as
first order

except that
by job
and the
length of
stay in the
job class.


Method Description Advantages Disadvantages
Delphi technique A group of experts Can involve key Highly subjective
exchanges several decision makers Judgments may
rounds of in process. not efficiently use
estimates of HR Can focus on objective data.
demand or supply what is expected
normally with out or desir4ed in
meeting face to future.
face. Feedback Not bound to the
from other experts past.
is used by each Not bound to the
individual to fine past.
tune his or her
Tominal group A small group of Same as for Same as for Delphi
technique experts meets face Delphi technique technique group
to face. After a group pressure may lead
procedure that discussions can to less accurate
involves open facilitate assessments that
discussion and exchange of could be obtained
private ideas and greater through other

assessments, the acceptance of means.
group reaches results by
judgment participants.
concerning future
HR demand or

The Hiring Process
Once the firm has determined its staffing needs, it needs to hire
the best employees to fill the available positions. the hiring process has
components recruitment, selections, and socialization.

Recruitment it is the process of generating a pool of qualified
candidates for a particular job. The firm must announce the job’s availability. To
the market and attract qualified candidates to apply, the firm may seek applicants
from inside the organization out side the organization or both.

Selection is the process of making a hire or no hire decision
regarding each applicant for job. The process typically involves determining the
characteristics required for effective job performance and then measuring
applicants on those characteristics. The characteristics required for effective job
performance are typically based on a job analysis depending on applicants
scores on various tests and or the impressions they have made in interviews,
managers determine who will be offered a job. This selection process often
involves the establishment of cut scores applicants who score below these levels
are considered unacceptable.

The staffing process is not and should not be, complete once
applicants are hired or promoted. To retain and maximize the human resources
who were so carefully selected, organizations must pay careful attention to
socializing them. Socialization involves orienting new employees to the
organizations and to the units in which they will be working it is important that
new employees become familiar with the company’s policies, procedures, and
performance expectations. Socialization can make the difference between a new
worker’s feeling like an outsider and feeling like a member of the team.
Although socialization is a crucial part of the hiring process, it is an ongoing
activity that continues after hiring. We discuss the socialization process in more
detail in chapter.

Challenges in the Hiring Process
Most people would agree that the best-qualified candidates
should be hired and promoted. In the long run, hiring the best candidates makes
a tremendous contribution to the firms performance. The potential negative
consequences of poor hiring decisions are equally graphic. Poor hiring decisions

are likely to cause problems from day one. Unqualified or unmotivated workers
will probably require closer supervision and direction. They may require
additional training yet never reach the required level of performance. They may
also give customer inaccurate information or give customers a reason to do
business with competitors.

All of this underscores a simple point if a company makes the
right hiring decision to begin with it will be far better off. For this reason, it is
essential that line managers and possibly other line workers be involved in the
hiring process. Although the HR Department has an active role to play in
recruiting, selecting and socializing new employees, line personnel also need to
play a central role in this process. In the end, it is the line managers who will
actively be supervising the new hires, and these managers often have job related
insights that members of the HR department may lack. Further, line workers will
interact with and be the peers of the new hire, and these workers have intimate
knowledge of what is required to do the job well.

Despter the impoertance of selecting the best
available talent, the hiring process is fraught with challenges. The most
important of these are:

• Determining which characteristics that differentiate people are most
important to performance.

• Measuring those characteristics.

• Ejaculating applicant’s motivation levels.

• Deciding who should make the selection decision.

Who should make the decision?
In BANK ALFALAH the HR department routinely makes
staffing decisions, particularly for entry level jobs. There are two good reason
for letting the HR department run the staffing process. The first the first (and
more important) is that the organization must ensure that its employment
practices comply with the legal requirements described in Chapter 3, and
making HR staff responsible for all hiring decisions can help avoid problems in
this area. The second reason is convenience. Since the HR Staff is usually
responsible for processing initial contacts with applicants and is often the
repository of information about applicants, many organization find it easier to let
the Let the HR Department follow through and make hiring decisions.

However, having the HR department Play the central role in
hiring has one obvious drawback, this system leaves the line personnel out of a
process that is critical to the operation’s effectiveness. It is the line personnel out
of a process that is critical to the operation’s effectiveness. It is the line
personnel. After all who are intimately familiar with the line jobs and who must
work with the candidates selected in the hiring process.

If an organization decides to involve line employees in hiring
decisions which ones should it consult? There are at least three separate groups.
The first and most obvious are hire’s coworkers. The third group where
applicable, is the new hire’s subordinates. As we saw in the specialty cabinets
company example that opened this chapter, these groups do not necessarily share
the same view of what characteristics are important in the new employee.

An interesting example of a company that heavily involves
subordinates in haring decisions

Meeting the Challenges of Effective Staffing
As we noted earlier, choosing the right person for a job can make
a tremendous positive difference in productivity and customer satisfaction.
Choosing the wrong person can result in sluggish operations and lost customers.
For these reasons it is important that each step of the staffing process
recruitment, selection, and socialization be managed carefully. We discuss the
first two of steps next.

The aim of recruitment is to attract qualified job candidates. We
stress the word qualified because attracting applicants who are unqualified for
the job is a costly waste of time. Unqualified applicants need to be processed
and perhaps even tested or interviewed before it can be determined that they are
not qualified to avoid these costs the recruiting effort should be targeted solely at
applicants who have the basic for the job.

Sources of Recruiting
A great number recruitment sources are available to organization.
The most prominent of these sources are:

 Current employees many companies have a policy of
informing current employees about job openings before
trying to recruit from other sources internal job posting give
current employees the opportunity to move into the firm’s
more desirable jobs.

 However, an internal promotion automatically creates another
job that has be filled.

 Referrals from current employees studies have shown that
employees who were hired through referrals from current
employees tended to stay with the organization longer and
displayed greater loylty and job satisfaction than employees
who were recruited by other means. However, current
employees tend to refer people who are demographically
similar to themselves, which can creat equal employment
opportunity (EEO) problems.

 Former employees A firm may decide to recruit employees
who previously worked for the organization. Typically, these
are people who were laid off, although they may also be
people who have worked seasonally (during summer
vacations or tax season, for example). Because the employer
already has experience with these people, they tend to be safe

 Print advertisements advertisement can be used both for local
recruitment efforts (newspapers) and for targeted regional,
national, or international searches (trade or professional
publications). For instance, clinical psychologists often find
jobs through listings in the American psychological
association’s monthly newspaper.

 Internet advertising and career sites employers are
increasingly turning to the web as a recruitment tool because
on line ads are relatively cheap, are more dynamic, and of the
internet has expanded dramatically, so companies can connect
with people all over the world who are looking for jobs.

 The web is not only an economical, efficient means to recruit,
it is also a convenient tool for job seekers, thousands of career
web sites exits and almost all are free to people searching for

 Employment agencies many organizations use external
contractors to recruit and screen applicants a position.
Typically, the employment agency is paid a fee based the firm
is looking for an employee with a specialized skill. Another
advantage of employment agency is paid a fee based on the
salary offered to the new employee. Agencies can be
particularly effective when the firm is looking for an
employee with a specialized skill. Another advantage of

employment agencies is that they often seek out candidates
who are presently employed and not looking for a new job,
which indicates that their current employer is satisfied with
their performance.

Recruitment is the process of searching for prospective
employees and stimulation them to apply for the job in the organization.

A planned recruitment programme has the following basic

 Organizational goals and objectives why does the
organization exist, what are the goals and objectives to be

 Job design what are the specific duties and responsibilities
of each employee?

 Job success criteria what distinguishes success full
performance, and how it is measured? For example, for a
slesman, these crieriea could be volume of sales
exceeding Rs 10 lakh repeat sales of more than 60 per
cent, report submission accurately and in time etc.

 Jo specification what traits and qualities in the individual
are related to successful performance of jobs for example,
adequate (5 years) sales experience, above 75 points in
aptitude for sales job good communication skills, etc.

 Sources of recruitment what sources of recruitment are
relevant and economical for the organization?

Job analysis
The first step in success ful selection is accurate analysis of the
job. In performance appraisal as we were told by the employess, is more of a
formality with majority of the employees who are skeptic about is as they felt it
was more of a burden and useless paper work with no results.

The process of performance appraisal in cnm ltd I known as
performance department review (PDR). The salient features of PDR are:

a. Appraisee is asked to prepare self appraisal report for that
particular period.


c. Appraisal is done by immediate manager.

d. Performance during a period is discussed on each area of

e. Each area of responsibility (function) has a priority
attached to it (1=High 2 – medium and 3 low).

We therefore attempt to discuss each source in the following
section to bring out their strengths and weakness.


It is a very important and popular source of generating manpower
companies advertise in widely circulated newspapers. Information about the
company, the job and job specifications ( age education past experience likely
emoluments etc) are included in the advertisement to attract suitable candidates
to apply for the job. This also enables some kind of self screening by the

Employment news is a leading Government publication which
server as a source of recruitment sometimes, advertisements are placed in
comuter professionals business to day for management, etc.

The advertisement is the most fragile contact between
prospective candidates and the potential employer also as each advertisement
competes with many other for attention we can expect a few seconds scan from
the reader. Marketing people have a simple but effective guide AIDA for
creating good advertisements.

A. Attract the readers Attention

B. Generate interest in the vacancy

C. Create desire for the job

D. Stimulate the reader to take action

Employment Exchange
Employment exchanges established in various cities as per public
policy offer yet another important extablished in various cities as per maintain
separate databases for non graduates, graduated and postgraduates in our
country it is obligatory for the government departments and PSUs to notify the
acancies ot the local employment exchange who directs the candidates meeting
the basic qualification requirements.

Placement Agencies
Some agencies and associations are established to supply
candidates in terms of the requirements. The companies intimate their
requirements to them who forward a panel of suitable candidates for recruitment
this is a good source for recruitment especially for professional and managerial
positions. Some agencies like directorate general of resettlement are government
established agencies for rehabilitation of ex-service personal.

Recommendation for Present Employees
PREFERRED FOR THESE JOBS.preliminary creening as the present employee
knows both the company and his acquaintances and presumably would attempt
to please both. In the recruitment of sailors in the Navy, the candidates
sponsored by the serving and retired armed forces personnel are given
preference over others, provided they meet the basic requirements.

The recruitment of relatives is an inevitable component of
recruitment program in family owned firms. Such a policy does not necessarily
coincide with hiring on the basis of merit, but the interest and loyalty to the
enterprise are the off setting advantages.

Questions about Me:

1.How hard do I like to work?
2.Do I like to be my own boss, or would I rather work for
someone else?
3.Do I like to work alone, with a few others, or with large
4.Do I like work at an even pace or in bursts of energy?

5.Does location matter? Do I want to work near home? In warmer
climates? In aki country? Am I willing to be mobile?
6.How much money do I want? Am I willing to work for less
money but in a more interesting job?
7.Do I like to work in one place or many? Indoors or outdoors?
8.How much variety do I want in work?

Available to bank employment agencies, personal contacts,
professional associations, and so on. If you use mail to send resumes, the letters
should be personalized, and telephone follow up is necessary, personal contacts
should be used wherever possible.

. They should include these items, in order of importance:
Position you are seeking.
Specific job objectives
Your career objectives
Reason you are seeking employment.
An indication that you know something about the organization.

The same study found that preferred resumes were personally
typed, no more than two pages in length, and on high quality paper, and so on.
The most important items the managers surveyed in this study were looking for
on a resume were, in order, current address: past work experience: college major
job objectives and goals date of availability for the job career objectives
permanent address tenure on previous jobs colleges and universtie attended
specific physical limitations and job location requirements travel limitations
minor in college grades in college major military experience years in which
degrees, we re awarded: overall grade point average membership in
organizations and awards and scholarships.

Successful job seekers prepare for job interviews.. as with other
skills, practice makes perfect. Practive interviewing before a videotape with a
friend role playing the interviewer. You can learn from each other.

Once you have had job interviews, be sure to follow up those that
interest you by sending a letter or calling the interviewer. This requires you to
write down and remember the interviewer’s some and some details of the job
being offered.

Typical Questions Asked in job interviews:
1.What qualifications do you have that make you feel you will be
a success in your field?

2.How much do you know about our company its product or

3.How did you pay for your college expenses?

4.Why did you choose this particular field of work?

5.What type of position are you most interested in?

6.Why do you want to work for our company?

7.What jobs have you learned from these positions that will help
you in the job with our company?

8.Have you set a goal for yourself about the salary you expect by
age 30? Why? 35? Why?

9.have you what is most important to you making money or
performing a service for people? you have a geographic preference? For example, what size
city do you prefer? Are you willing to relocate?

11.what do you see as your major weakness?

Who does the Recruiting?
Personnel and employment planning gives operating managers
the data needed to set recruiting quotas. In bank sometimes this process is
formalized by authorizations. That is a budgets is prepared showing the
maximum number of people to be recruited and the maximum salary that can be

Who does the recruiting?, In bank alfalahthe P/HRM Department
does it. The branch of the department with this responsibility is called the
employment office or department. It is staffed by recruiters, interviewers, and
clerical employees. employment offices are specialized units which provide a
place to which applicants can apply they conduct the recruiting, both at the work
site and away from it. A typical employment office is shown.

When applicants appear in person at the work site, the
employment office serves a similar purpose. This initial meeting might be called
the reception phase of employment. The applicant is greeted, supplied with an
application blank, and perhaps given some information on present hiring
conditions and the organization as a place to work. If the applicant is treated
indifferently or rudely at this pase, he or she can form a lasting poor impression
of the workplace. The reception phase is a great deal like the initial contact a

sales person makes with a prospective customer, what kind of impression did the
perspective employee in the cartoon get?

All applications are potential employees, as well as clients for the
organizations services or products. There fore, it is vital that those who greet and
process applicants (in person r by phone) be well trained in communication
techniques and interpersonal skills. They should enjoy meeting the public and
helping people in stress ful conditions, for job seeking can be a difficult
experience for many applicants.

Bined into single multifaceted measure. The criteria choice is not
an easy process. One must be careful to evaluate both activities is desirable for
criteria. How do you weigh the importance of multiple criteria? For example, if
the salesperson in being evaluated on both number of calls and sales dollars and
is high on one and low on the other what is the person’s overall rating?
Management must weigh these criteria.

The criteria selected depend on the purpose of the evaluation. If
the purpose is to improve performance on the job, they should be performance
related. If social skills or personality are vital on this or future jobs, these should
be stressed.

Following is the specimen of the form of the bank for recruitment
of employees.

Database Administrator Apply Now

Bank Alfalah Ltd. is pleased to offer permanent employment for the captioned position to
candidates who meet the eligibility criteria and are to be selected through a merit based
selection process. If you fit the eligibility criteria, please fill in the on-line application form
and submit it (only once). While thanking you for your interest in employment with the
Bank, we wish you the best of luck with your future endeavours.

Position Description
This position is responsible for planning, coordinating, and administering SQL SERVER
2000 databases, including configure and tune, Strong development skills (i.e. using stored
proc, triggers, etc.), manage database users and security, automate common database
administration tasks, import and export data with DTS, BCP, and Bulk Insert, Database
Replications, database definition, structure, documentation, long-range requirements,
operational guidelines, Database warehousing, supports to the developers and users. The
DBA is also responsible for installing, upgrading, and patching SQL. The DBA is the
primary point of contact for most general problems related to databases. Candidates must
have strong SQL SERVER experience.
Selected candidates will be posted at the Head Office IT department at Karachi.

A competitive salary and benefit package will be offered to the qualified candidates.
These candidates would be directly reporting to Manager Software Development.
Banking experience will be preferred.

Last date for on-line applications is May 25, 2004

Eligibility Criteria

Minimum graduation from
a reputable institute in
Sciences.Mcs/MS will be

At least 3 years of
experience in
of Sql Server.

Age Limit:
Not more than 28 years.

Specialized Skills:
2000, Data Ware Housing,
Database Replication,
Database Designing.

Fluent spoken and written
communication skills in
Urdu and English.
Permanent residents of
Can work with a team or
act as a team lead

Process Flow
• Only short listed candidates will be invited for preliminary interviews.
• Please note that Bank Alfalah is an ‘Equal Opportunity Employer’ and
qualifying female candidates are encouraged to apply.

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

This definition emphasizes the effectiveness aspect of selection,
but selection decisions must also be efficient. The second purpose of selection is
to improve the proportion of successful employees chosen from the applicant list
at the least cost. The basic objective of selection is to obtain the employees most
likely to meet the organization’s standards of performance. The employees
satisfaction and complete development of their abilities are included in this

The selection Decision
These are types of approaches to the selection decision.

Some studies have been done to contrast and evaluate the various
selection techniques . proposes an interesting combination of the systematic and
clinical approaches to the selection decision which is inexpensive and realistic
enough for the average.

However, perfect reliability is rarely if ever achieved.
Measurement almost always involves some error and that error is noise, or
unreliability. The greater the amount of noise in a measurere, the harder it is to
determine the true signal that the measure is trying to detect. For instance, the
less similar your test scores on the math test you took repeatedly, the more
difficult it is to determine your true mathematical skill level. Also, the less
agreement across interview judges, the more difficult it is to determine your true
level of social skill, conceptually, reliability is the amount of noise in a measure,
but operationally, reliability is assessed by the level of similarity of agreement in
scores over time or among judges.

Ther error with which something is measured can be broken
down into two types deficiency error and contamination error. Deficiency error
occurs when a component of the domain being measured is not included in the
measure. Not including subtraction questions in a test of basic math skills would
yield a deficient measure on e that does not capture the true level of basic math

Contamination error occurs when a measure includes unwanted
influences for example and interviewer may be undue time to accurately assess a
job candidate. Alternatively a job candidate may be exceptional at creating a
favorable first impression that sways an interviewer’s assessment of ther job
skills. Or an interviewer might rate an average job candidate lower than average
because of the contrast with an outstanding candidates who preceded him.

Selection measures, whether tests, interviews, or some other
techniques, are meant to measure job related qualifications. Reliability is an
index of how much error has influenced the measures.

Validity is the extent to which the technique measures the
intended knowledge, skill or ability. In the selection context, this means that
validity is the extent to which scores on a test or interview correspond to actual
job performance. Validity is at the heart of effective selection. It represents how
well the technique used to assess candidate for a certain job is related to
performance in the job. A technique that is not valid is useless and may even
present legal problems. In fact, documentation of the validity of as selection

technique is central to that critical evidence will be the job relatedness (validity)
of the selection techniques.

There are typically two basic strategies for demonstrating the
validity of selection methods content and emprirical a content validity strategy
assesses the degree to which the content of the selection method (say an
interview or a test) is the representative of job content. Job knowledge tests are
often validated using a content validation strategy for instance, applicants for the
job of commercial airline pilot safely and effectively however, passing these
tests does not gurantee that the applicant has the other abilities necessary to
perform well in the cockpit.

And empirical validity strategy demonstrates the relationship
between the selection method and job performance scores on the selection
method (say interview judgments or test scores) are compared to rating s of job
performance. If applicants who receive higher scores on the selection method
also turn out to be better job performers, then empirical validity has been

There are two types of empirical (also known as criterion related)
validity concurrent and predictive. Concurrent validity indicates the extent to
which scores on a selection measure are related to job performance levels, when
both are measured at roughly the workers, to see how well the test might
indicate job performance levels the company give the test to its current work
force. The company then correlated. The correlation between the test scores and
job performance scores indicates the concurrent validity of the test because both
the test and job performance scores are measured concurrently in time.

Predictive validity indicates the extent to which scores on a
selection measure correlate with future job performance. For example, the
company give the test ot all applicant and then checks their job performance
level 12 months later, the correlation between the test scores and job
performance in this case inidicates the predictive validity of the test because the
selection measure preceded the assessment of job performance.

Even if empirical validity is the goal when developing or
choosing a selection measure all measures should have content validity. That is
what content valid but so eassarily guarantee empirical validity, for instance, a
measure, that is content valid but so difficult that no one can earn passing score
will probably not be found to have empirical validity. Further, if empirical
validity is assessed, the two forms concurrent and predictive, each have their
advantages and disadvantages.

Concurrent validation can be done relatively quickly and easily,
however, the validity found with the concurrent approach may not be a good
estimate of how valid a measure may be when used for assessing job applicants.

To illustrate, current workers may not be representative of ob applicants. To
illustrate, current workers may not be representative of job applicants in that
they may be older and tend to be whit e and male. Further current workers may
not be as motivated when taking as employment test as job applicants would be
we see, then that concurrent validity may not be a good estimate of how valid a
selection measure might be in practice.

In contrast, predictive validation most closely matches the hiring
problem of trying to predict who will develop in to the best performers for the
organization. However, determining the predictive validity of a measure requires
a fairly large number of people, at least 30 for whom both selection and job
performance scores are available. Further pre dictive validity cannot be
determined until job performance is measured, perhaps 6 to 12 months later.

Before we proceed to examine specific selection methods, we
need to emphasize an important point concerning reliability and validity.
Selection methods cn be reliable, but not valid however, selection methods that
are not reliable cannot be valid. This fact has a great deal of practical
significance. Whether someone has an MBA or not can be measured with perfect
reliability. But is having an MBA is not associated with improved job
performance, attainment of an MBA is not a valid selection criterion for that job
is seems clear that more highly motivated applicants make better employees, but
if the selection method used to measure motivation is full of errors (not reliable),
then it cannot be valid indicator of job performance.

Selection tools as predictors of job performance.
In this section we look at the most commonly used methods of
selection, in no particular order. Each approach has its limitations as well as its

Letters of Recommendation
In general letters of recommendation are not highly related to job
performance because most are highly positive. This does no mean that all
letter of recommendation are poor indicators of performance, however. A
poor letter of recommendation may be very predictive and should not be ig
A Diagnostic Approach to the Selection Process

Who makes selection Decisions?
In bank alfalah the operating manager makes selection decisions.
In medium sezed and larger organizations, both operating and P/HRM managers
are involved in selection decision.

P/HRM manager in charge of selection is called the employment
manager. Some organizations also give employee a voice in the selection choice.
Applicants are interviewed by employes who are then asked to express their
preferences. General more effective select ion decisions are made when many
people are involved in the decision and when adequate in formation is furnished
t those selecting the candidates. The operating manager and the work group
should have more to say about the selection decision than the PH/HRM

Selection Criteria

Bank has a specific selection criteria.
If a selection program is to be successful, the employee
characteristics believed necessary for effective performance on the job should be
stated explicitly in the job specification the criteria usually can be summarized
in several categories education, experience, physical characteristics and personal
characteristics basically , the selefction criteria should list the characteristics of
present employees who have performed well ni the position to be number of
words typed per minute. Only those who meet these criteria are deemed
potential employees and are interviewed.

If general appearance and personal characteristics are deemed
important, preliminary screening is often done through a brief personal
interview in which the personnel/human resource specialist or manager
determines key information and forms a general impression of the applicant on
this basis, the successful applicant then moves to the next step in selection
perhaps with the knowledge that the lack of an essential characteristic has
lessened the chances of being seriously considered for the job. In smaller
organization, if the applicant appears to be a likely candidate for the position the
preliminary screening can proceed as an employment interview (step 3).

The employer must be sure that the criteria used n this first step
do not violate government antidiscrimination requirements. The EEOC has a
publication, affirmative

Step I is part of the reception portion of recruiting (see Chapter
6). The organization has the opportunity to make a good or had impression on
the applicant in this step. James metal works made one kind of impression,
Gunthe4r manufacturing another.

Step 2: Completion of application blank/Biodata from

Applicants who come to an employment office are asked to
complete an application blank after a screening interview. Recruiters often

follow a similar procedure., all applicants who appear qualified, such s Jamie.
Would do so.

About your self when used by a jhighly skilled interviewer, the
unstructured interview can lead to significant insights which might enable the
interviewer to make fine distinction smong applicants as used by most
employment interviewers, however, that is not the case, and it is seldom
appropriate for an employment interviewer to relinquish control to such an

Some interviewers try to induce stress into the employment
interview process. Generally speaking, this is very dysfunctional to the
employment interview process.

A number of studies have examined whether employment
interviews re reliable sources of data. Generally speaking the more structured
the interview and the more training the interviewer has, the more reliable the

Interviewing is a skill that can be learned. The following sections
describe the purposes and phases of effective interviews.

Purpose of selection interviews many employment interviewers
perceive their only task as being to screen and select those individuals best
suited for employment. While this is unquestionably the unquestionably the
main function of the employment interviewees with the value of the
interviewer’s employer.

In addition to the selection and public relations roles, the
employment interviewers perceive their only task as being to screen and select
those individuals best suited for employment. While this is unquestionably the
main function of the employment interview, it is not the only one. A second
purpose is public relations to impress the interviewees with the value of the
interviewer’s employer.

In addition to the selection and u8blic relations roles, the
employment interviewer also must function as an educator. It is the interviewer’s
responsibility to educate the applicants concerning details of the job in question
which are not immediately apparent. The in terviewer must be able to the job in
question which are not immediately apparent the interviewer must be able to
answer the applicants questions with honesty and candor. To be effective, the
interviewer must remain aware fo all three of all these functions while
conducting the employment interview.

Step 4:

A technique some organizations use to aid their selection
decisions is the employment test. Such a test is a mechanism (either a paper and
pencil test or a simulation exercise).

Which attempts to measure certain characteristics of individuals,
such as manual dexterity psychologists or P/HRM specialists develop these with
a procedure that is similar to that described for the weighted application blank.
First those mos knowledgeable about the job are asked to rank (in order of
importance) the abilities and attitudes essential for effective performance in a
job. Thus for a secretarial position, the rank might be (A) ability to type (B)
ability to take shorthand, and (C) positive work attitudes. The psychologist
prepares items or simulations which it is thought will measure these required
characteristics. These are tried out to see if they can in fact separate the qualified
from less qualified (on A and B) and easygoing from less easygoing (on C). On
such items, psychologists prefer those that about half the applicants will answer
with right answers and half with the opposite.

The terms or simulations that distinguish the best from the worst
are combined in the terms or simulations that distinguish the best from the worst
are combined into tests. A measure of effectiveness ( a criterion) is developed,
such as typing 75 words per minute with only I percent errors. All new
applicants are given the test. After about two years, those items that prove to
have been the best predictors of high performance are kept in the test used for
selection, and those found not to be predictive are dropped. This is the validation

It is easy or cheap to validate a test. In a study of 2,500 ASPA
members, it was found that, on average, a validation study costs $6,000 per job,
and some studies cost as chologists base their assessment and interpretation of a
personality. The stimuli are purposely vague in order to reach the unconscious
aspects of the personality. Many techniques are used. The most common are the
Rorschach inkblot test and the thematic apperception test.

Then a trained interpreter analyzes the data set and reaches conclusions about
the personality patterns of the person being examined.
What is Career Development?
Career development is an ongoing organized and formalized effort that
focuses on developing enriched and more capable workers. It has a wider focus,
longer time frame, and broader scope than training. Development must be a key
business strategy if an organization is to survive in today’s increasingly
competitive and global business environment.
Challenges in Career Development
Before putting a career development program in place, management
needs to determine (1) responsible for development, (2) how much emphasis on

development is appropriate, and (3) how the development needs of a diverse
work force (including dual-career couples) will be met.
Application Forms
Organizations often use application forms as screening devices to
determine if a candidate satisfies minimum job specifications, particularly for
entry-level job. The forms typically ask for information regarding past jobs and
present employment status.

A recent variation on the traditional application form is the bio data
form. This is essentially a more detailed version of the application form in which
applicants respond to a series of questions about their background, experiences,
and preferences. Responses to these questions are then scored. For instance,
candidates might be asked how willing they are to travel on the job, what leisure
activities they prefer, and how much experience they have had with computers.
As with any selection tool, the bio data most relevant to the job should be
identified through job analysis before the application form is created. Bio data
most relevant to the job should be identified through job analysis before the
application form is created. Biodata have moderate validity in predicting job

Ability Tests
Various tests measure a wide range of abilities, from verbal and
qualitative skills to perceptual speed. Cognitive ability tests measures a
candidate’s potential in a certain area, such as math, and are valid predictors of
job performance when the abilities tested are based on a job analysis.

A number of studies have examined the validity of general cognitive
ability (g) as a predictor of job performance. General cognitive ability is
typically measured by summing the scores on tests of verbal and quantitative
ability. Essentially, g measures general intelligence. A higher level of g indicates
a person who can learn more and faster and who can adapt quickly to changing
conditions. People with higher levels of g have been found to be better job
performers, at least in part because few jobs are static today.44

Some more specific tests measure physical or mechanical abilities. For
example, the physical ability tests used by police and fire departments measure
strength and endurance. The results of these tests are considered indicators of
how productively and safely a person could perform a job’s physical tasks.
However, companies can often get a more direct measure of applicants’
performance ability by observing how well they perform on actual job tasks.
These types of direct performance tests, called work sample tests, ask applicants
to perform the exact same tasks that they will be performing on the job. For
example, one of Levi Strauss’s work sample tests asks applicants for

maintenance and repair positions to disassemble and reassemble a sewing
machine component.

Work sample tests are widely viewed as fair and valid measures of job
performance, as long as the work samples adequately capture the variety and
complexity of tasks in the actual job. Work sample tests scores have even been
sued as criteria for assessing the validity of general mental ability selection
measures. However, physical ability measures have been found to screen out
more women and minorities than white men. Physical preparation before the
testing has been found to reduce this adverse impact significantly.

Personality Tests
Personality tests assess traits, individual workers’ characteristics that
tend to be consistent and enduring. Personality tests were widely used to make
employee selection decisions in the 1940s and 1950s, but today they are rarely
used to predict job-related behaviors. The arguments against using personality
tests revolve around questions of reliability and validity. It has been argued that
traits are subjective and unreliable, unrelated to job performance, and not legally

Perhaps the main reason personality tests fell out of favor is that there is
no commonly agreed-upon set of trait measures. Many traits can be measured in
a variety of ways, and this lack of consistency produces problems with
reliability and validity. However, recent research on personality measurement
has demonstrated that personality can be reliably measured and summarized as
being composed of five dimensions. The “big five” factors, now widely accepted
in the field of personality psychology follow.

Extroversion The degree to which someone is talkative, sociable,
active, aggressive, and excitable.

- Agreeableness The degree to which someone is trusting, amiable,
generous, tolerant, honest, cooperative, and flexible.

- Conscientiousness The degree to which someone is dependable and
organized and conforms and preserves on tasks.

- Emotional stability The degree to which someone is secure, clam,
independent, and autonomous.

- Openness to experience The degree to which someone is
intellectual, philosophical, insightful, creative, artistic, and curious.

Of the five factors, conscientiousness appears to be most related
to job performance. It is hard to imagine a measure of job performance that
would not require dependability or an organization that would not benefit from

employing conscientious workers. Conscientiousness is thus the most generally
valid personality predictor of job performance.

The validity of the other personality factors seems to be more job
specific, which brings us to two warnings about personality tests. First, whether
or not personality characteristics are valid predictors of job performance
depends on both the job and the criteria used to measure job performance. As
with all selection techniques, a job analysis should be done first to identify the
personality factors that enhance job performance. Second, personality may play
little or no role in predicting performance on certain measures, such as the
number of pieces produced on all factory line (which may depend largely on
such factors as speed of the production line). However, personality factors may
play a critical role in jobs that are less regimented and demand teamwork and
flexibility. Clearly, then, selection procedures should take both personality and
the work situation into account. Same types of people may be better suited for
some work situations than for others. The Issues and Applications feature titled
“Staffing International Positions – A learning Opportunity” highlights an
individual characteristic that may make an important difference in an
international setting.

Psychological Tests
Bank has ong used pencil-and-paper psychological tests to weed out
applicant who might steal on the job. Today, there are broader psychological
tests designed to gauge, for example, whether a job applicant has a strong work
ethic or will be motivated or defeated by the challenges of the job. The questions
and scoring methods must be the same for all applicants, and they must be job
related rather than general inquisitions into employee’s personal lives.

Interviews bank used panel interviews and somehow structured
interciews.attractivenn of personality are effect of personal
charactreistisc on interview.first impression and non verbal
behaviour can undermine an interview’s usefulness.
Although the job interview is probably the most common selection tool it
has often been criticized for its poor reliability and low validity. Countless
studies have found that interviewers do not agree with one another on candidate
assessments. Other criticisms include human judgment limitations and
interviewer biases. For example, one early study found that most interviewers
make decisions about candidates in the first two or three minutes of the
interview. Snap decisions can adversely affect an interview’s validity be cause
they are made based on limited information. More recent research, however,
indicates that interviewers may not make such hasty decisions.

The global economy has forced managers to deal with other countries
cultures and business practices. For individuals, the most extreme cultural
adaptation is an assignment to the live and work in another country. But what
determines how successful these people will be in their adopted setting and
culture? Even organizations experience with international assignments do not
have stellar records in terms of effectively selecting or preparing expatriates
(those who live and work in a foreign country). However, there seems to be
some consensus among managers concerning what it takes to achieve business
objectives in an international context: adaptability. Fortunately, learning
orientation is an indicator of someone’s adaptability and can be both measured
and developed.
Learning orientation is based on a belief that personal characteristics can be
developed and improved. Can learn a lot from “and strongly disagrees with a
statement such a “it is more satisfying to work at thing I do well than to struggle
with those that might be beyond my abilities.”
A number of studies demonstrate the importance of a learning orientation in a
domestic organization environment, but there is good reason to believed that it is
at least as important in an international context. The degree of learning
orientation can be fairly easy and inexpensively measured with questionnaires
and situational exercises. Use of learning orientation could given an expatriate
manager program a competitive edge.
Another criticism is that traditional interviews are conducted in such a
way that the interview experience is very different from interviewee. For
instance, it is very common for the interviewer to open with following question:
“Tell me about your self.” The interview then proceeds in a haphazard fashion
depending on the applicant’s answer to that first question. Essentiality, each
applicant experiences a different selection method. Thus, it is not surprising that
traditional interviews have very low reliability, However, it is possible to
increase the effectiveness of traditional, unstructed job interview by following
the guidelines presented in the Manager’s Notebook titled “Unstructured Does
Not Mean Unprepared: Making the Most of the Hiring Interview.”

Dissatisfaction with the traditional unstructured interview has led to an
alternative approach called the structured interview. The structured interview is
based directly on a through job analysis. It apples a series of job related
questions with predetermined answers consistently across all interviews for a
particular job.

Situational questions try to elicit from candidates how they would
respond to particular work situations. These questions can be developed from
the critical incident technique of job analysis: supervisors and workers rewrite
critical incidents of behavior as situational interview questions, then generate
and score possible answers. During the interview, candidates, answers to the

situational questions are scored on the basis of the possible answers already

 Jo knowledge questions assess whether candidates have the
basic knowledge needed to perform the job.

 Worker requirements questions assess candidates’ willingness
to perform under prevailing job conditions.
Structured interviews are valid predictors of job performance. A number of
factors are probably responsible for this high level of validity. First, the content
of a structured in

Figure 5.10 Examples of structured Interview Questions.

Type Example

Situational You are packing things into your car and
getting ready for your family vacation when
you realize that you promised to meet a
client this morning. You did not pencil the
meeting into your calendar and it slipped
your mind until just now. What do you do?

Job knowledge What is the correct procedure for
determining the appropriate oven
temperature when running a new batch of

Worker requirements Some periods are extremely busy in our
business. What are your feelings about
working overtime?
Teamwork situation require team members to communicate and work toward

common goals. Specific technical skills, which are often the central concern

when selecting people to work in individual jobs, may be much less

important in team situations. The team member should be able to .

 Recognize and resolve conflict Conflict can destroy a
teams effective.
Team member must have the ability to deal with and resolve the

disagreement and clashes that are bound to occur.

 Participate and collaborate in problem solving
Teams are often expected to solve their own problems rather
than look to supervisor for answers.

 Communicate openly and supportive Teams need open
communication, and team member need to support one
another. The inability to communicate, or a tendency to
communicate negatively, could detrimental to team effectives.

 Coordinate and synchronize activities Team operations
require the cooperation of all team members and the
coordination of various task. In addition, effective team
members usually have the following personally

 Conscientiousness Team members must be able to depend on
one another. Someone who does not follow through can cause
problem for the entire group effort.

 Agreeableness team members need to be flexible and tolerant
if they are to meld into an effective unit.
Because current team members are often very sensitive to the requirement

for success on their team, a number of companies are now conducting “team

interviews” to determine whether job candidates possess the necessary skills

and traits. Such interviews are likely to become more popular as the

emphasis on teamwork increases.

meant may be subject to error and bias, but people can be quite good
at assessing a candidate’s fit with their organization.

Whether employers choose to use structured or unstructured
interviews, they need to make sure their interview questions are not
illegal. Companies that ask job applicants certain questions (for
example, their race, sex, national original, marital status, or number
of children) either on application forms or in the interview process
run the risk of being sued.

1. Don’t ask applicants if they have children, plan to have
children, or what child-care arrangements they have made.

2. Don’t ask an applicant’s age.

3. Don’t ask whether the candidate has a physical or mental
disability that would interfere with doing the job. The law
allows employers to explore the subject of a required
physical, medical or job skills test.

4. Don’t ask for such identifying characteristics as height or
weight on an application.

5. Don’t ask a female candidate for her maiden name. Some
employers have asked this to ascertain marital status, another
topic that is off-limits in interviewing both men and women.

A strategic approach to employment has to operate at a number of levels.a
human resource strategy can not be confined to a written consists of
many things.goals and policies involove the long term creation of an
organizational ethors in which appropriate behaviours and motivation can
flourish.plans and strategic decisions determine the broad direction of an
organization and within that specific activities and resource commitments in the
medium term . programs are specific initiatives to implement plants or secure
improvements in aspects of the organization’s work in the short ro medium
One characteristics of HRM in all this is the way a single activity or initiative
can have an impact at a number of levels.for instance , capping a payment- by-
result system to reduce the overall paybill might lower output in the short term
and cause employees to leave the company for better –paid work elsewhere.if
labour turnover is severe , this could joepardize the achievement of the strategic
plan in the medium to long the same time ,there might be a short term
impact on the culture and a longer-term shift from an output focus to a concern
with quality and wastage.the various objectives which such an action might
serve and the possible impacts all need to be thought through.
A strategic approach thus involves , above all , a way of looking at things
which takes account of multiple impacts and interconnected activity.manpower
planning , however ,has often failed to live up to expectations,largely because of
an over – quantitative approach and the difficulty in an uncertain envoirnment of
forecasting an organisation’s demand for outstanding weakness an
the whole project , however , remains the focus on stocks and flows of people ,
and the relative absence of any concept of skill as the basis for work
performance .indeed , this has been a curious deficiency in the theory of
personnel management generally .at a fundamental levels ,HRM is about skills
their acquisition ,utilization,development and retention and the core task of
HRM is the development of a skill supply strategy to realize the aims of the
corporate strategic is an organisation’s skill supply strategy ,with its
overtones of deliverable performance , which turns business strategy into reality.
Manpower planning arose out of the same rational belief in being able to
mange the business environment that animated post-war corporate
planning.each was sustained by the long boom of the 1950’s and 1960’s and
by relatively stable , centralized organizations ahich made planninmg
possible and feasible .many of the early examples of manpower planning
and developments in manpower forecasting were thus in large , centralized
public sector organizations such as the civil service ,the national coal board
and the armed forces.
The preoccupation with forecasting labour supply can also be traced to the
economic circumstances of that time when unemployment was low and the
problem facing many organizations was to ensure a predictable supply pf labour

coming through the organization.increasing uncertainty in the economic
envoirnment has meant that manpower planning has often failed to live up to its
promise.corporate planning has faced the same problem and has moved away
from the mechanics of computing numbers to adopt more creative approaches to
the future .
Manpower planning has five essential elements.
• Analyzing the current manpower resource.
• Reviewing labour utilization.
• Forecasting the demand for labour.
• Forecasting supply.
• Developing a manpower plan.
While these can be seen as sequential steps , in practice thinking about
manpower can begin with almost any of these.this is what makes manpower
planning a dynamic process.for instance , a manufacturing function might
want to introduce new machinery that will do a job to a better standard and
more justify the expenditure , the manufacturing manger will be
expected to show a saving on labour , which may translate into fewer people
.in another case , a downturn in business may provoke an urgent drive to
reduce overheads and cuts in office staff.the point is that manpower
decisions have been trigged outside the personnel or HRM function , and
most certainly outside the hands of anyone who carries the title of manpower
planner.the job of everyone concerned with such decisions is to think
through the implications in these five areas .also because of this , it is better
to shoe it as a circular process, rather than a linear way , as is usually the
The other point that the two examples highlight is that planning can have a
short-,medium -,and long –term aspect for managing broad trends .long term
planning should be done regularly and systematically , and plans kept under
review.the short to medium term , however is what matters to most mangers
.bue this does not excuse them from planning.the emphasis in planning
simply changes-from writing the formal plans to thinking things
through.failure to distinguish the process of planning form the writhing of a
plan is one of the biggest misconceptions in is also what has
kept manpower planning as a backroom function , as the custodian of palns.
The starting point of planning is to have proper records of existing employees
.the advent of relatively cheap personal computers and software specially
designed to hold such records has transformed this activity for the smaller
firm.for larger organizations and more sophisticated tasks , however a pc will be
inadequate .setting up a system also remains a major task.basic records cover:
 Personl data-including data of birth (age),qualifications , special skills
and training records.

 Position data –including current job and work history in the organization
 Financial data—including current pay , how this is made up ,
incremental scale , and pension rights.

Many of these details will traditionally be kept for payroll purposes.when
introducing a personal system it may be simpler and cheaper to extend a payroll
system.on the other hand , this will be less focused and less flexible for the kind
of analysis the personnel/HRM function might want to carry out . this analysis
will comprise both an inventory of employees and an on – going audit include:
By age , service , skills , grades and department .the overall
profile of the workforce generated in this way is basic to any
manpower planning system , and a vital aid to management decision
making on things like can highlight impending
problems,such as the retirement of a whole cohort of employees and
the need for fresh recruitment and training.
Using data on juniers and leavers over a year.along
with headcount analysis , this is basic to forecasting may also identify
problems-for example,particular jobs where there is high turnover – and
stimulate corrective action.
This will be specially geared to alerting management
to problems and the need for corrective action. It will interact with other indices
concerned with productivity .like turnover data,this information clearly needs to
be generated on an going basis , as distinct from basic is likely to be a
natural product of payroll data and the subject of regular reports from line
functions.the introduction of statutory sickness pay which put the onus on
employers for paying out benefits to employees and claiming back from
department of social secyrity , has encouraged employers to maintain more
rigourous records.
Including how salary costs will rise with increments
and reduce with new entrants at lower points in a scale.
With areas of variance.
Analysis in these various ways can identify issues of
performance and productivity and imbalances that may need
to be corrected.

It underpins the shift in manpower planning from macro-
forecasting towards the more problem-centred approach
advocated by armstrong.
The audit activity described above many be supplemented
from time to time by data from other sources concerned with how efficiently
people are being used.whether this is part of a normal auditing process will
depend form company to on and ana;ysis of manning ratios is a
case in point.this may come under review only when cost pressuers or the
example of a competitor cutting indirect staff focuses attention on labour
costs.many large organizations have permanent staffs using work study and
organizations and methods techniques to undertake periodic reviews of working
methods and the efficiency of staff levels.
At first ,forecasting the demand for labour might seem
straightforward.unfortunately it is not.the problem is how to convert volumes of
work into number of people.two of the favoured means of doing this are ratio –
trend analysis and the use of work study standard.
The basic principle here is to say if it takes six people , for example to perform
an existing amount of work , it will take twelve people to do twice as much.
Organizations measure activity levels in a variety of different ways .
telecommunications companies for instance , apparently use the number of
teleohone lines as the critical measure for the volume of activity. Year on year
growth or decline in this can be translated into likely numbers of employees .
with increasing competition in te world telecommunication markets , companies
are paying particular attention to the number of employees , number of
telephone lines , ratio of major competitors. Aggregate figures can then be
broken down into the implication for different functions according to the
historical ratios between them.the ratio between direct and indirect in
manufacturing is a classic one , with subdivisions into foremen
/chargehands:direct workers and inspectors :direct workers.
Work study is a more systematic method ,but limited to manufacturing ,certain
other areas of manual work and large clerical functions .for it to be worth while
and do able in the first place,an activity has to be repeated sufficiently often to
generate a reliable standard and justify the cost of measuring it.
The time taken for an experienced person to perform an operation is assessed
through observation , and a work standard established .allowances for rest
breaks ,fatigue , and idle time are then factored in.if a product goes through a
number of operations , as is likely , the separate standard times are totaled to
produce a standard hour figure for how long a job should take.a manufacturing
or similar budget can then be built up which converts planned output for the year
into total hours required .

There is strong tradition of measuring repetitive work in manufacturing .as
factory work engages direct workers in more sophisticated tasks , however work
study becomes less useful.this highlights a problem demand forecasting in
general has .it needs a reliable base-line and a relatively unchanging the
absence of these conditions ,there is no simple direct path form the corporate
business plan to quantifying manpower requirements .managerial judgment has
to be applied.this is apart form the fact that agreeing changes to existing
manpower allocations is able to be a political process.
Forecasting supply has two components ,internal and external.forecasting
external supply means understanding the impact on recruitment and retention of
such factors as:
 Demographic patterns
 Levels of unemployment
 Developments in the local economy , transport , education
, and housing
 The paly policies of other employers ,locally and
nationally , and their plans for growth and contraction.
While the HR or personnel function should be keeping a
general eye on these as a matter of course , they are likely to
receive closer attention when there are specific palns to grow
a business and there is a perceived gap between requirements
and existing skills and number of employees.
The origins of manpower planning in operational research
,however, have meant that the main focus has been on
developing models for understanding internal supply .the
central concern here is with what is happening in terms of
leavers and joiners , and the changing shape of the workforce
in terms of age , grades,numbers, length of service and
location .this links back, then , to basic manpower inventory
and its analysis.
There are number of simple ways of reflecting people
leaving and joining:
Number of leavers per period
--------------------------------------------------------- * 100
average number employed during that period
this shows the percentage of employees leaving over a
period of time.this rate can be then compared over time and
with that of other fails to discriminate ,
however,between the same job turning over frequently and a
general pattern of turnover.thus many organizations will have
‘hot spot’where it is hard to retain people for long in
particular jobs.the job itself is perhaps unattractive .

Number of employees with one or more year’s srevice
------------------------------------------------------------------- *100
number employed one year ago
this will show whether rthe workforce is genrally stable or conjunction with the crude turnover rate,it can help
to focus problems.these may include whether the organization
is failing to bring in new blood because of low turnover.
Having a picture of wastage patterns over time is a major
help to an organistion in:
 Planning recruitment and training to renew skills and
experience .
 Developing policies and practices to minimize the loss of
valuable trained people.
 Managing career progression.
 Managing outflows through pension arrangements , and if
necessary , encouraging people to leave to make it
possible to bring in new blood.
Wastage can be plotted in a number of different ways :for
instance,to show when people tend to leave and at what rate
according to length of service.this can be expressed either in
actual numbers or as a percentage of joiners .alternatively ,by
showing the cumulative impact of turnover.
The expectation is that curves will reveal regulatuins in
overall behaviour.early work on the psychology of labour
turnover suugested that there are three major phases in
people’s attachment to an employer:
When the relationship is weak and people either promptly
leave or take a ‘wait’and ‘see’attitude having invested some
commitments in joining already.the latter was seen as more
typical of skilled and professional workers who are likely to
put more effort into assessing a job before taking it.the
induction crisis may therefore be delayed for this group,with
wastage starting at a lower level than before bounding up for
a short period .high unemployment may have changed this
pattern however.
When wastage declines and people think about settling or
steel themselves to leave.
When people have decided to stay and wastage is
consequently low or intermittment.

In addition to these simple indices and principles,operations research has
contributed a variety of mathematical techniques for analyzing labour force
renewal and models for representing internal supply as a series of stocks and essence,what such models attempt to do is ‘map’ the organization as an
employment system and describe or account for its behaviour in one of two
One in which people leave , vacancies accur,and people can therefore be
One where the defining factor is length of service , and promotion is driven by
the numbers in particular grades with an equivalent length of service.
First,you draw a map of the employment system ot show how the organization
manages manpower movements;second you can identify problem areas ,using
data on manpower stocks,flows,age distribution ,length of service,etc;and third
,you take account of the rate of loss and types of wastage.action lans are then
geared to specific problems and estimated labour demand from developments in
the business.a system approach readily lends itself to understanding and
controlling for career progression.for this reason ,although it comes out of the
tradition of manpower planning ,it begins to shade into the more qualitative
approach associated with human resource planning.
Employees are placed in career groups generally comprising more than one
grade .groups are distinguished where there is a significant change in the nature
of the jobor in status.the size of each box indicates the number of employees in
that group .the relative sizes of the different boxes can suggest problems likely
to aruse I the dynamics in the whole system.for instance the number of
supervisors in the middle is a serious bottleneck.the arrow marked R show entry
points into these groups from outside the organization :P shows promotion
routes and T lateral transfers within the organization.
Visual representation of the employment system in this way can the be used to
highlight and challenge the beliefs that underpin it ,the practices which sustain it
and the consequences it can breed.
A trustworthy workforce in finance is paramount and therefore
socialization into steady habits from an early age is important.
Mangers jobs in the past were a development of clerical skills and they
acted as super clercks.
It was possible to recruit young people into banking and finance in this
way because there were enough who were attracted by the job security and clean
work .
The lack of technological expertise in management made it unnecessary
to recruit more highly educated people and specialists from outside.
The various forms of analysis may already have identified problems that
require action .specofic palns to grow or shrink a business or to indroduce
technological change,will demand coordinate action in no of areas affecting
headcount and skills .this may this may involve recrutement , training and
dovelpment retention and redundancy.each of these can involve further set of

human resource initiatives with retention problems ,for example ,typically
exposing issue of pay carrer opertunities and selection and working condition .
Failier of planning have complex causes .one reason may be that the
responsibility for man power planning is detached from the management of
recuretement ,training ,and other ares like pay. therefore there is insuficient
commitement to the planning .a second reason may be that these later activities
are them selfs uncoordinated this also an unusual a third reson is simply that we
invest to much confidence in systematic planning .
The other basic lesson should not be ignored either .a coordinated approach to
man power is also an organizational issue .a lack of integration and over
detemined plans explains y the practice of man power planning has often been
very different from the theory.
The following are some areas a manpower plan may seek to address:
How many and what type of people are required?
Should recruitment or internal development and transfer be preferred and
why?for instance,are there imbalances where transferring people would avoid a
redundancy problem and solve a recruitment one?
What problems exist with recruiting and how might these be overcome ?
might less conventional contracts tap new sources of recruit?
What is a realistic /necessary timetable for recruitment and how should it
be done?
Given the no and types of people required how desirable is it that they
should be trained from within ,and what is the capacity of the training and
development system to deliver them ?
Where will trainees come from among existing employees ,through
those already in the pipeline or new recruits who will first have to be recruit.
How will trainee comes from with in or without?
What kind of trainee program is required ,what r the implication of
taking people off the job ,who will run it how wil it be resourced ,what will it
cost .
What r the requirement for developing people such as managers over
the longer term.
Is the organization making full use of the potential of all employees
,such as its women ,in training and development .
is the problem retaining people too long or losing them too soon ?
are skills or experience being lost or getting stale?
Is pay too low compared to the competition ?
Are the inequity in pay compared with the different groups ?
Is the career system holding people back and frustrating them ?is
promotion unnecessarily slow?
Are people passed over in favour of outsider because they r not being
prepared for promotion through proper training ?

Is the organization recruiting too many high flyers ,all of whom it
cannot hope to satisfy ?
Are new recruits given satisfy information about organization and their
Are selection process recruiting the right people ?
Are working conditions satisfactory ?
Is conflict a problem and does the organization have effective
procedure for consultation ,communication and grievance handling?
How far people be lost through natural wastage or redeployed /
What do the organization agreement says about the procedure for
handling redundancies ?
How and when should it announced with what consultation
Who should be selected how and when?
What can and should the organization do to help people to find new
How long before the redundancies pay for themselves in salary and
wage cost saved?

Orientation is the P/HRM activity which introduces new employees to the
organization and to the employee’s new tasks, superiors, and work groups.
Waling into a new experience or job is often a lonely event. The
newcomer doesn’t usually know what to say or who to say it to, or even where
he or she is supposed to be. It takes time to learn the ropes and a good
orientation Program can help make this time be a positive experience. The first
few days on the job are crucial in helping the employee get started in the right
direction with a positive attitude and feeling.

Orientation has not been studied a great deal. Little scientific research
has been done on whether the programs are adequate. Some experts view
orientation as a kind of training. In terms of the stages of development of
P/HRM functions discussed .
Diagnostic Approach to Orientation
the environmental factors in the diagnostic model that are most important
to effective orientation programs (indicated by an 0): the nature of the employee,
and the nature of the task, the work group, and the leadership. The nature of the
employee and the task are critical factors; for example, managers are given more
detailed orientation programs than other employees. The orientation program
focuses on introducing the new employee to the task, the work group, and the
supervisor-leader. During orientation the work policies of the organization, the
job conditions, and the people the employee will work with to get the job done
are discussed.
The style an organization uses to orient new employees is affected by the
organization and its climate. The diagnostic manager adapts the orientation
program to the individual and gives it a different emphasis manager adapts the
orientation program to the individual and gives it a different emphasis for a
person with 20 years `experience in the industry than for a new employee who is
just out of high school and from a disadvantaged background.
. It is probable that orientation will be done by the P/HRM specialist,
who will get them on the payroll, explain pay and hours, and turn them over to a
supervisor. The supervisor is likely to explain her or his expectations for work,
introduce new employees around, show them the job, and encourage them to ask
for help.
The purposes of Orientation
Effectively done, orientation serves a number of purposes. In general, the
orientation process is similar to what sociologists call socialization. The
principal purposes of orientation are:
To Reduce the Start-up Costs for a new Employee – The new employee
does not know the job, how the organization works, or whom to see to get the
job done. This means that for a while, the new employee is less efficient than the
experienced employee, and additional costs are involved in getting the new
employee started. These start-up costs.

To Reduce the Amount of Anxiety and Hazing a New Employee Experiences
– Anxiety in this case means fear of failure on the job. This is a normal fear of
the unknown foused on the ability to do the job. This anxiety can be made worse
by hazing of the new employees.
Hazing takes place when experienced employees “kid” the new
employee. For example, experienced employees may ask the new worker, “How

many toys are you producing per hour?” When she answers, she is told, “You’ll
never last. The last one who did that few was no longer here after two days.”
Such hazing serves several purposes. It lets the recruit know he or she
has a lot to learn and thus is dependent on the others for his or her job, and it is
“fun” for the old timers. But it can cause great anxiety for the recruit. Effective
orientation alerts the new person to hazing and reduces anxiety.
To Reduce Employee Turnover – If employees perceive themselves to be
ineffective, unwanted, or unneeded and have similar negative feelings, they may
seek to deal with them by quitting. Turnover is high during the break-in period,
and effective orientation can reduce this costly practice.
To Save Time for Supervisor and Co-Workers – Improperly oriented employees
must still get the job done, and to do so they need help. The most likely people
to rpovide this help are the co-workers and supervisors, who will have to spend
time breaking in new employees. Good orientation programs save everyone
To Develop Realistic Job Expectations, Positive Attitudes toward the
Employer, and Job Satisfaction – In what sociologists call the older
professions (law, medicine) or total institutions (the church, prison, the army),
the job exceptions are clear because they have been developed over long years
of training and education. Society has built up a set of attitudes and behaviour
that are considered proper for these jobs. For most of the world of work,
however, this does not hold true. New employees must learn realistically what
the organization expects of them, and their own expectations of the job must
neither too low nor too high. Each worker must incorporate the job and its work
values into his or her self-image.
Orientation helps this process. One way to illustrate how orientation
serves these purposes is with the story of how Texas Instruments developed its
new orientation program (see the box).

Who Orients New Employees?
operating and P/HRM managers run the orientation program in middle-
sized and large organizations.. P?HRM also helps train the operating manager
for more effective orientation behavior.
Relationship of operating and P/HRM managers in orientation

Orientation function Operating manager P/HRM manager
(OM) (P/HRM)
Design the orientation P/HRM is consultant with
program OM

Introduce the new
employee to the
organization and its history,
personnel policies, working
conditions, and rules,
complete paperwork.
Explain the task and job OM performs this P/HRM performs this
expectations to employee
Introduce employee to
work group and new
Encourage employees to OM performs this
help new employee

How orientation Programs Work
A mentor is appointed to orient new employee to the bank.
Orientation programs vary from informal, primarily verbal efforts to
formal schedules which supplement verbal presentations with written handouts.
Formal orientations often include a tour of the facilities or slides, and pictures of
them. Usually, they are used when a large number of employees must be
The formal program usually covers such items as:
- History and general polices of the enterprise.
- Descriptions of the enterprise’ s service or products.
- Organization of the enterprise.
- Safety measures and regulations.
- Personnel Polices and practices.
- Compensation, benefits, and employee services provided.
- Daily routine and regulations.
The material can be presented in a variety of forms . The written material
may be in the form of handouts and booklets or combined into a single
employee handbook. The literature and handouts should be examined to see that
the reading level is right for the employees in question. Frequently they are too
technical or are written at too high a reading level for the employee. A study of
the orientations of disadvantaged employees found that initial presentations
should be in oral form, followed by written materials, to avoid a feeling of
communication overload. The oral, then written, communication pattern should
be followed by both P/HRM specialists and supervisors.
To make sure that the orientation program is complete and works well,
larger organizations prepare checklists of what should be covered. Some are

completed by supervisors .o make sure the supervisor covers all the important
points, some organizations also prepare an orientation checklist to be filled out
by employees.
Orienting Management Trainees
Management trainees are in a special orientation category. Most of these
recruits must adjust from college life to work life. Many organizations have
prepared rather elaborate orientation programs for potential managers which are
called management training programs. There is little doubt that initial
experiences with an organization are important predicators of future managerial
performance. Research studies make that clear.
Formal Management Training Programs
After recruits have been selected to become managers, there are two
distinct approaches to their orientation and placement. The first is to orient them
briefly and let them go to work. This is the approach most organizations take
with nonmanagerial employees. The second is to orient and train them in a
management training program and then assign them to specific positions.
Studies indicate that the most effective management training programs:
Are short (of four to five months `duration’ if possible).
Use on-the-job training and minimize classroom teaching.
Guidelines for conducting an employee orientation:
1. orientation should being with the most relevant and immediate
kinds of information and then proceed to more general policies of
the organization.
2. The most significant part of orientation is the human side, giving
new employees knowledge of what supervisors and co-workers
are like, telling them how long it should take to reach standards
of effective work, and encouraging them to seek help and advice
when needed.
3. new employees should be “sponsored” or directed by an
experienced worker or supervisor in the immediate environment
who can respond to questions and keep in close touch during the
early induction period.
4. New employees should be gradually introduced to the people
with whom they will work, rather than given a superficial
introduction to all of them on the first day. The object should be
to help them get to know their co-workers and supervisors.
5. New employees should be allowed sufficient time to get their feet
on the ground before demands on them are increased.


Before we actually start to consider what people need to learn we
shall examine some of the ways in which people learn. The ways in which

people learn have been a subject of interest for thousands of years, and many
theories seek to explain how people actually learn. A basic understanding of the
learning process is important in order for us to be able to provide appropriate
training techniques which will enable people to learn most effectively. In this
chapter we shall examine different learning theories and the contribution that
they have made to our understanding of the learning process. A range of training
techniques will then be discussed as well as some approaches to learning, which
may also help you to learn more efficiently.
Learning Theories
In order to appreciate more fully the most effective methods to
use in training and development, and in order to understanding current debates
in education or training. It is a good idea to also know a little about learning
Definitions of Learning
There are in fact innumerable definitions of learning and few are
likely to satisfy everyone. Some of the different theories of learning are,
however, reflected in the way we use the word “learning”, and theses are shown
in the following definitions:
The Shorter Oxford Dictionary defines learning as:
1. The action of the verb to LEARN

2. What is learnt or taught

3. Knowledge . . . got by study.

The dictionary definition seems to indicate that learning is a
process in which people are involved and that they will somehow end up with a
certain degree of knowledge as a result of this. Bass and Vaughan (1966), in a
definition which has become widely used, said that

Learning is shown by a relatively permanent change in behavior that occurs as
a result of practice or experience.
This definition sees learning as being shown by a change in
behavior which has resulted from activities or experiences in which the
individual has been involved.
learning has occurred when someone:

♦ ‘knows something they did not know earlier, and can show it

♦ is able to do something which they were not above to do before.’

The last of the three definitions implies that learning could be
about acquiring knowledge, which could be tested, or it could be about acquiring
a new skill, which similarly could be demonstrated.

Theses three definitions of learning serve as a useful starting
point to examine some of the major theories of learning. They illustrate three
differing approaches to learning. The first definition implies that learning is
about acquiring knowledge; we call this approach cognitive. The second implies
that it is about changing behaviour, so we refer to this perspective as behaviorist.
The third definition describes learning as being about both knowledge and
behaviour; we might refer to this as an experiential approach.

Cognitive Theories:
Cognitive theorists would say that learning occurs within the
mind. Ancient scholars such as Plato and Aristotle saw that the exercise of
mental faculties, such as reason, memory and willpower, were important to the
development of the individual. From this came the notion of the importance of
the trained mind. Much education and training in Europe and the United States,
especially in the first half of this century, was based on this approach. This
meant that learning was structured, teaching methods tended to be by telling and
directing (didactic), and the subject matter was perceived to be important in its
own right, with memorising facts and learning rules seen to be of great
importance. This resulted in the ‘chalk and talk’ approach to learning, with
formal class-rooms and lectures where information went from the teacher to the

This traditional approach to learning can still be seen at work
much of the time, and you will see later in this chapter that it relates closely to
some people’s preferred style of learning. It can, however, be criticised as being
too theoretical, and lacking in stimulus for learners of a practical bias. It was in
the search for a more practical, active form of learning that the following
modern developments in cognitive theory took place. The approach that follows
came to be known as discovery learning.

Relatively recent cognitive theorists have been concerned to
discover how we solve problems: whether this is by trial and error, by deductive
reasoning, by seeking more information or help from someone, or by using a
mixture of all these approaches. Some times, the solution comes with a flash of
sudden insight, as in the case of Archimedes’ discovery of how to find weight of
irregularly shaped objects when he realised that he himself displaced by his
presence a certain amount of bath water and that the amounts of displaced water
could be measured.

In fact, you do not have to be a genius to have moments of
insight. Kohler in 1925 studied how an ape would solve the problem of getting a

banana, which was just outside its cage but which was just beyond its reach. The
initial attempts by the ape resulted in it stretching its arms as far as possible
towards the banana, and of course failing in its task. After a short period of time,
however, it reached through the bars of its cage to grasp a short stick and with
the aid of the stick brought the banana into its cage. In a later experiment the
banana was placed even further out of reach. This time the ape reached through
the cage for the short stick which was within its reach and then used this stick to
drag a longer stick, which was previously not within reach, into its cage. Then,
using the longer stick, the ape was able to reach the banana and drag it into its
cage. This showed that the ape was discovering how to use the sticks to get the
reward of the banana.

Pause for thought
It apes can have flashes of insight, so can you. Can you give an

example of a time when you had a sudden flash of insight and realised

that you had learnt something new?

Kohler’s approach to learning relates clearly to discovery
learning, where students or trainees are given tasks to achieve but have to find
clues or stimuli to show them how to proceed. They learn by working through a
process of trial and error to see what does and what does now work. This
method aims to provide a means of unassisted learning in which appropriate
experiences are provided and by which the student or trainee will gain insights
into the best method of achieving the task. This is a very powerful method of
learning, as an individual is usually quite rightly proud of what they have learnt,
especially since they have been actively involved in discovering for themselves
the solution to a problem.

This method, although very effective, cannot always be used.
Time can be a constraining factor, as it takes time to allow people to make
discoveries for themselves. There is also the related problem of costs. Can you
afford as an organization for all of group of trainees to waste valuable materials
in order to discover for themselves something that their manager could have told
them about more quickly and cheaply? There is also the problem of safety to
consider: it is not always practicable to allow people to experiment with
equipment or materials, even if this is a very powerful aid to learning, if they
endanger themselves or others in the process.

Behaviorist Theories:
The work of cognitive psychologists that we have examined so
far focused on what was going on in the brain, and how we learn and memorise
things. In contracts, many learning theorists felt it important to focus on

observable behaviour, as they believe it impossible to study the workings of the
mind in a scientific manner. The behaviorists, like Kohler, generally studied the
behaviour of animals in order to gain insights into how people learn; they were
concerned with studying changes in behaviour and sad that learning occurred if
you could see such a change. The behaviorists made no assumptions about what
the animal was thinking or what was going on in its mind; they were concerned
only with behaviour that they could see.

Pause for thought
Look again at the definitions of learning given earlier. Which of

these definitions reflected to behaviorist view of learning?

The definition by Bass and Vaughan (1966) –

‘Learning is shown by a relatively permanent change in behaviour that
occurs as a result of practice or experience’ – would seem to reflect the
behaviourist view of learning. This definition focuses on the change in
behaviour. It does not relate to what the person might


may provide an improved opportunity of getting a better job or more pay. In
other cases the motivation may be the pleasure of learning something new for its
own sake or for the respect that other people may feel towards you when you
have learnt something impressive. Other people may be motivated to learn by a
sense of curiosity or by anxiety and fear of failure.

The tests and exercises should help you to prove to yourself that
you are learning. They are one way in which you can show your response to
learning. Your response shows what you have learned by giving you the
opportunity to demonstrate a new skill, or by your acquisition of new knowledge
on which you could be tested.

Programmed learning and computer-based training courses were
developed from the behaviourists work; in them the correct response is
immediately rewarded by praise from the manual or computer and you are told
that you have given the correct answer or pressed the correct key and can
progress to the next stage. These will be discussed in more detail in the next

Reinforcement and feedback
The behaviourists used reinforcement to indicate a correct
behavioural response. The reinforcement could be negative or positive. Rewards
such as food for animals or praise for people are positive forms of reinforcement
of the desired behaviours, while punishments are negative reinforcement of

incorrect behaviour. Research tends to suggest that positive reinforcement is
generally more effective than negative reinforcement in gaining a change in
behaviour in the long term, as with negative reinforcement the desired change
often occurs only as long as there is the threat of punishment. When this threat is
withdrawn then behaviour often reverts to the original behaviour.

Reinforcement of your learning could occur by your reading or
viewing something and being tested on this and praised by your tutor for your
efforts, or by your completing a self – check exercise and giving yourself a pat
on the back if you have done well. This will reinforce correct behaviour or show
you that you have the right answers, but won’t necessarily give you any detailed
understanding of what you have done well or of what you did wrong. For that
you also need feedback or knowledge of results.

Knowledge of results of feedback is important if we are to learn
effectively. In a training situation this could be by the trainer giving comments
on the person’s progress, or perhaps by a manger appraising the work of one of
their staff. Giving feedback successfully is a very important skill to develop.
Feedback is away of learning more about ourselves and the effect that our
behaviour has on others. If feedback is given in a constructive manner it should
result in the individual becoming more self-aware, being aware of differing
options and feeling encouraged to develop and grow. Feedback could be given in
a destructive way, in which case the individual would end up feeling bad about
themselves, with a feeling of hopelessness that there were perhaps no
alternatives available to them, and a sense of failure.

When giving constructive feedback one should start with the
positive, and focus first on the behaviour that has been done well before giving
feedback about behaviour that has been done less well. Feedback about incorrect
behaviour, if given skillfully, is extremely important; it doesn’t have to be
destructive, and here it is important to focus on specific aspects of behaviour
that can be changed. General statements such as that was lawful’ are much too
vague to be helpful in that they are just being criticised unless the person who is
giving the feedback also suggests alternative ways of behaving. For example,
you might say ‘The fact that you seemed preoccupied with your paperwork
when Rosalind walked into the room, and took some time before you greeted
her, seemed a very un-welcoming start to an interview. I think that if you had
acknowledged her presence immediately and got up and walked towards her to
greet her it would have been a much more welcoming start to the interview, a
would have been likely to have made Rosalind feel much more at ease.’

Feedback is, as we have shown, a very important part of the
learning process. The saying ‘Practice makes perfect’ could well be modified to
‘Practice with appropriate feedback makes perfect’, since without the feedback
the person could just carry on with the same inappropriate behaviour over and
over again.

Experiential Learning:
Behaviourist and cognitive theories are useful, but each tells only
part of the story. Other theories try to use elements of both to produce a more
holistic view of the learning process. They have focused on learning from
experience – experiential learning – and have recognised the importance of both
behaviourist and cognitive theory and integrated these into the learning cycle.
Their theory also suggests that different people may have different preferred
styles of learning.

The Learning Cycle:

People learn in a variety of ways, and over the years may develop
certain learning habits which enable them to benefit from certain types of
experience more than other types.

The Learning Cycle

Bank employees are learning n the work place are both likely to meer a range of
different learning opportunities. Many students now a days will work to
supplement their student grant and will themselves have a range of work
experiences from which they can learn. Some will be mature students who have
already worked for a number of years, some will be part-time students
combining study with a career, and yet others will be on sandwich course
degrees where they have the opportunity of gaining work experience in a
placement for a period of time. Knowing about their own learning style
preferences may help them to understand and they may become more efficient in
learning from these experiences.

Stage 1 – Having an experience:

More people have plenty of experiences from which they could
learn, but age does not necessarily mean that people have learnt more. Some
people do not use the experiences that they have. One way of learning is to let
experiences come to you (reactive), and the other is to deliberately seek out new
experiences (proactive). Trainers need to provide suitable experiences from
which their trainees can learn (in the form, for example, of case studies, role
plays and other simulations), but trainees, also need to appreciate the need to be
proactive and seek for themselves suitable experiences from which to learn. The
use of suitable individuals who are willing to act as mentors, or forming a
supportive study group of friends, can assist in this process by:

♦ helping to identify suitable experiences from which to learn

♦ reviewing with individuals what they have actually done and helping
to draw out what they have learnt.

♦ encouraging the individual to be proactive and to seek for themselves
suitable learning experiences.

Stage 2 – Reviewing the experience

If we are to learn from an experience it is important to review
what has happened. Unfortunately we are often too busy to do this, and some
people never develop the habit of reflection. The individual should be
encouraged to:

♦ think about what actually happened
♦ think of other ways in which the situation could have been handled
♦ make comparisons with what happened in other similar situations
♦ read about the subject
♦ compare theory and practice

Stage 3 – Concluding from the experience

There would be little point in reviewing the experiences unless
we then drew some conclusions from them. This involves scanning the raw
material from lessons to be learned and reaching some conclusions. The
individual should be asked.

♦ What have I learnt from this?
♦ What could I have done differently?

Stage 4 – Planning the next stage

Having reached a conclusion, it is important to try to do things
better next time. In order to be able to do this we need to be able to plan, and
this involves translating at least some of the conclusions into a basis for
appropriate action next time. The individual should be encouraged to:

♦ Stale what they would actually do next time.
♦ Draw a plan of action for handling such a situation again.

Learning Styles
Most people only use one or two learning styles. They developed
this approach as a result of their work with managers, as they became concerned
to discover why one person will learn from a particulars experience. Further

details of their approach are given in the recommended reading. They say that
there are four types of people with differing learning styles which clearly link
with the four stages of the learning cycle. These are activists, reflectors, theorists
and pragmatists and theses will be discussed in turn.

Activists tend to throw themselves into whatever is happening. They seek out
new experiences and tend to be enthusiastic about anything new. They tend to be
open-minded and not sceptical, and this tends to make them enthusiastic about
novelty. They tend to act first and then consider the consequences later. Their
days are filled with activity and they often tackle problems by brainstorming.

Reflectors tend to stand back and observe experiences from different
perspectives. The thorough collection and analysis of data is what is important to
them. So, that they try to put off reaching definite conclusions for as long as
possible. They prefer to take a back seat in meetings and discussions. They listen
to others and get the driff of the discussion before making their own points.
When they act it is as part of larger picture which includes the past as well as the
present and takes into account other people’s observations as well as their own.

Theorists tend to adapt and integrate observations into complex but logically
sound theories. They think problems through in a vertical, step by step, logical
way. They assimilate disparate facts into coherent theories, and tend to be
perfectionists who will not rest easy until things are tidy and fit into a rational
scheme. They value rationality and logic.

Pragmatists are keen to try out new ideas, theories and techniques to see if they
work in practice, They positively search out new ideas and take the first


Training may be defined as a planned programme designed to
improve performance and to bring about measurable changes in
knowledge, skills, attitude and social behaviour of employees for doing a
particular job. Nowadays, training has an additional purpose of facilitating
change. And management training is beasically equipping managers with such
knowledge, skills and techniques as are relevant to managerial tasks and

Expenditures of such magnitude call for a periodic sharp look especially
since organizations are expanding fast and there is a growing demand for finding
benefits commensurate with the escalating costs of training,

What today’s and tomorrow’s training programmes must focus on, are
soft-skills such as interpersonal communication, teamwork, innovation and
leadership. Most importantly, the training has to be comprehensive, systematic,
and continuous and should be closely linked to the strategy with which the
company is planning to fight the copetion. In the future, it is training that will
act as catalyst between people, between strategy and systems, between
customers and the organization.
Prominent on the training agenda of any winning organization must be
retraining, which will involve unlearning old concepts and acquisitions and low
technology era.
Training and development efforts are required due to the following ground
1)the rapid rate of technological and social change in the society.
2)the introduction of automation ,intense market competition from foreign
3)ncreasd recognition by the organization.
4)increased size and complexity of bank.
1)to increase quality and productivity.
2)to help company fulfil its future personnel needs.
3)to improve organizational climate.
4)to improve health and safety of personnel.
5)to develop innovations

Bank Alfalah offers internship positions to graduates who intend to pursue further studies in business or
Commerce or post graduates students who need to do internships as part of their courses of study.

Good academic record and strong recommendation in writing from concerned educational institutions is

Candidates will be interviewed for selection by concerned branch and area management. They will be
evaluated for their intellectual ability, commitment, as well as for their communication and interpersonal
skills. Those interested may please apply with the management of the Bank Alfalah branch nearest to where
you live.

Bank Alfalah’s management believes in developing the potential of the Bank’s
employees to the fullest extent. Training & Development Centre of the Bank is
housed in custom-built, state of the art facility on the 4th floor of the Head Office
building at Karachi. The centre is responsible for providing multi-level high quality
training programmes to all staff members in the following areas:

Consumer banking operations

Credit marketing & credit proposals

Credit administration/documentation

Trade finance operations

Marketing & selling skills

Customer service skills

Performance appraisal skills

Time management & personal effectiveness

It is obligatory for each staff member of the bank to attend at least one training
Wherever the Training Department is unable to provide focused training for certain
groups of staff, reputable external training providers are invited to fill the gap.

Training Needs in a Changed Market Place
In a changed economic set-up with fierce competition, companies relying
on their strategy of beating rivals with new products, new designs, and new
methods of selling, will now have to teach team work and streamlined
production techniques to their employees. On the quality platform, companies
will have to train their workers in developing the mindset and culture for quality
without which the whole effort will fail. Those companies which choose to
compete on the strength of their innovation, will have to training their
employees on creativity and lateral thinking. Companies trying to cut costs will
be compelled to training their employees in problem solving techniques. And
companies that globalize in order to expand their markets will find cross-cultural
training for their managers a vital imperative.

Initially long courses usually for 6 months and subsequently short courses
are held for employee needs are analyzed byTask analysis
and Performance analysis.simulated training I sused.

Electronic methods are used to give training like

Computer based training

Internet based training

Tele training

Video conferencing

Overall training and job rotation is used for managerial training like job

for off the job trainin Both Cost study method and Outside seminars.

training centre is at Karachi and Lahore.

. Whether bank has management or professional development programs depends
a great deal on its size. Smaller enterprises rarely run their own formal
development program; the programs are informal at best. Larger organizations
have elaborate formal programs combining on-the-job will off-the-job

Purposes of Training and Development

There are many reasons why organizations engage in training and
development programs. The most frequently mentioned reasons are:

1. To improve the quantity of output.

2. to improve the quality of output

3. To lower the costs of waste and equipment maintenance.

4. To lower the number and costs of accidents.

5. To lower turnover and absenteeism and increase employees job
satisfaction since training can improve the employees self

6. To prevent employee obsolescence.

In effect, training and development help the organization become more
effienct and effective and the employee to develop and become more satisfied.
Given here are the viewpoints of two executives on the purpose of training.

We support training and development activities to get results.
We’re interested in specific things that provide greater rewards to the employee,
increased return to the stockholder, and enable reinvestment needs

HRM MANAGER is involved in training and development.

evaluation of training is the final phase of the Training and
development program. Cost/benefit analysis generally is more feasible for
training and development than for many other PH/HRM function costs are
relatively easy to compute they equal direct costs of training (trainer cost,
materials costs, and lost productivity, if it is done on company time and indirect
costs (a fair share of administrative overhead of the P/HRM department).

Essentially, the evaluation should be made by comparing the
results (the benefits with the objectives of the training and development program
which were set in the assessment phase. It is easier ot evaluate the results of
some training programs (e.g typing than others e.g. decision making and
leadership). The criteria used to evaluate training and development depend on

the objectives of the program and who sets the criteria management, the
trainers, or the trainees. For example one study found that trainees who were
asked to develop their own evaluative criteria chose standards which varied
from knowledge of the subject to the amount of socializing allowed during
training sessions.

There are three types of criteria for evaluating training internal
external, and participant reaction internal criteria are directly associated with the
content of the program for example did the employee learn the facts r guidelines
covered in the training program. External criteria are related more to the
ultimate purpose of training for example improving the effectiveness of the
employee. Possible e3xternal criteria include job performance rating, increases
in sales volume or decreases in turnover, participant reaction, or how the
subjects feel about the benefits of a specific training or development experience,
Is commonly used as an internal criterion.

Most experts argue that it is more effective to use multiple
criteria to evaluate training. Others contend that a single criterion, such as the
extent of transfer of training to on the job performance or other aspects of
performance, is a satisfactory evaluation approach.

One design for a multiple criterion evaluation system was
developed by Kirkpatrick. He suggests measuring the following:

Participant reaction whether subjects like or dislike the program.

Learning Extent to which the subjects have assimilated the
training program.

Behavior an external measure of changes or lack of changes in
job behavior.

Results Effect of the program on organizational dimension such
as employee turnover or productivity.

At present, most firms assess reaction, but very few measure
behavioral results of training and development (see the box) data that can be
used for evaluation include information on the trainee in the program the
trainee’s immediate superiors and above immediate supervisors; the trainee’s
subordinates (where applicable) no participants from the work setting, including
the subject peers; company records; and non participants from outside the work
setting who might be affected by the program (e.g. clients).

One useful device to address the evaluation issue is to work with
a systematic evaluation matrix. A matrix, because of tis organization can help
those involved with training and development programs to systematically review
relevant issues or resents such a matrix that could be used as a
guideline for evaluating any of the programs and technique .

The relevant issues, skill improvement, training and develop,ent
materials, costs and long term effects, are c rucial questions that can be
answered by use of evaluation it is important to understand that the issues and
questions provide only the direction which evaluation can take. The actual
design and data collection fo the evaluation phase of training and develop ment
requires following the scientific method as used by behavioral scientists. Simply
asking participant if they liked new experiences, new ideas however, this does
not mean that program is good or beneficial for improving performance or
increasing interpersonal skills on the job.


According to bank alfalah following are the development suggestions
for employees.

1)create own personal mission statement.

2)create responsibility for own direction and growth.

3)make enhancement rather than advancement

4)talk to people in position to which you aspire and get their
suggestions on how to proceed

5)set reasonable goals.

Performance evaluation is the P/HRM activity that is used to determine
the extent to which an employee is performing the
job effectively.

Other terms for performance evaluation include performance
review, personnel rating, merit rating, performance appraisal, employee
appraisal, or employee evaluation.

In many organizations, two evaluation systems exist side by side:
the formal and the informal. Supervisors often think about how well employees
are doing; this is the informal system. It is influenced by political and
interpersonal processes so that employees who are liked better than others have
an edge. On the other hand a

Formal performance evaluation is a system set up
by the organization to regularly and systematically
evaluate employee performance.

Although the interest in the use of performance appraisal has
increased over the last thirty years, the practice of formally evaluating
employees has existed for centuries. The performance appraisal system has
undergone a lot of changes over the years as shown below:
1900 : Subjective appraisals
1940 : Increased psychometric sophistication
1950 : Management by objectives (MBO)
1960 : BARS
1970-1990 : Hybrid system and approach
Performance appraisal services the following management objectives.
Providing basis for promotion / transfer/termination. Identifying those
subordinates who deserve promotion or require lateral shift (transfer) or
termination can be used for career planning.
Enhancing employees’ effectiveness. Helping employee identify his strengths
and weaknesses and information him as to what performance is expected from
him, would go a long way in making him understand his role well, and he is
likely to be more effective on the job. The feedback reinforces good
performance and discourages poor performance.
Identifying employees’ training and development needs: Identifying skills
required to be developed needs of employees is necessary to prepare them for
meeting challngens in their current and future employment.

Aiding in designing training and development programmes. Identifying
skills required to be developed would help in tailor-making training and
development programmes.
Removing work alienation. Counseling employees corrects misconceptions
which might result in work alienation. Performance appraisal also helps
employees internalize the norms and values of the organization.
Removing discontent. Identifying and removing factors responsible for Workers
discontent would motivate them for better work performance. Performance
appraisal helps in creating a positive and healthy climate in the organization.
Developing inter-0personal relationship. Relations between superior sub
ordinate can be improved through realization that each is dependent on the other
for better performance and success. By facilitating employees to do
introspection, self-evaluation and goal setting, their behaviour can be modified.
Better inter-personal relationships lead to team-building.
Aiding wage administration. Performance appraisal can help in development
of scientific basis for reward allocation, wage fixation, raises, incentives, etc.
Exercising control. Performance appraisal also provides a means for exercising
Improving communication. Performance appraisal serves as a machanism for
communication between superiors and subordinates.
A formal performance appraisal system can provide a framework within which
appraisers and appraisees can operate. A performance appraisal system can be
developed through a programme comprising the following stages.
Determine overall approach to performance appraisal. The
decisions on the overall approach to introduce performance appraisal should
cover the following.

i) What are the objectives of introducing performance appraisal?

ii) What benefits are anticipated from introducing performance

iii) What are the main features of the approach to performance

Performance is assessed from annual reports and from previous records.

Basic purpose of appraising the employees’ performance is to assess the reward
and to keep up the standard for performance.

If an employee is not performing his/ her duties according to requirements, we
warn the employee.

appraise the employees:

i. Bonuses.

ii. Promotion.

Appraising is done by immediate supervisor, departmental manager, branch
manager, manager stock and chief manager.

For appraising employees’ goal achievement, annually performance of employee
is considered.

Bank follow both Company’s policy and legal and ethical issues.

Immediate supervisor, departmental head and branch manager appraise the
performance of employees.

Appraisal is discussed with employees and their comments are received in this

Interviews are held individually and appraisal comments are discussed with each

Warning is a warning which always means to make the employee to realize
performance which management thinks that is below the performance.

Where and how should PA be introduced ? Performance appraisal is best
introduced on an organization-wide basis starting at the top. The most common
and best method is to set up a project team or working group for this purpose.
Decide who is to be covered? At one time most schemes were restricted to
managers but performance appraisal is now being extended to all the members
of professional, administrative, technical and support staff. The decision as to
who is to be covered should be made at the outset itself.
Decide on whether the same approach should be adopted each level. In most
cases, the essence of the approach is the same for all levels, though performance
measures used vary for different levels.
Set up project team. Project team, consisting of managers and other employees
and facilitated by a member of the human resources department and / or an
outside consultant are a valuable means of getting involvement and ownership.

Define role of human resource department. The role of human resource
department in developing and implementing performance appraisal system is to
convince top management that its introduction will make a significant impact on
the organizational performance.
Decide whether to use outside consultants. External consultants can be used to
advice on and facilitate the introduction of performance appraisal to run training
programmes and, to carry on evaluation studies including the conduct of attitude
surveys. But as they are costly, care must be taken in selecting consultants who
have the required level of experience and expertise.
Define performance management processes and documentation. The project
team needs to pay attention to each point against a background of an
understanding of the objectives to be attained and the culture and structure of the
organization. Particular attention will need to be given to the development of
rating plans and document design. When designing performance appraisal
forms, the aim should be to keep them as simple and brief as possible while
allowing ample `white’ space for comments. It is desirable to issue an overall
description of performance appraisal system to all concerned which sets out its
objectives and methods of operation and the benefits it is expected to provide for
the organization and its employees.
Pilot test : The whole PA system cannot be pilot tested because the cycle lasts
generally for 12 months. Some aspects of performance appraisal like drawing up
performance agreements, objective setting, document completion, etc. can
however be pilot tested. Based on the experience gained, the system may be
Plan implementation programme. The implementation programme should
cover the following;

i) Date of introducing performance appraisal in the whole or different
parts of the organization (phased as necessary)

ii) Procedure for evaluating the process

iii) Briefing / training programme.
The introduction of performance appraisal should have been
planned in the development stage. The main steps are to train everyone on one.
But, in many cases the next job may be quite different and thus the past
performance will not be adequate as predicator of future performance.
It is important for us to clearly understand differences between
the current performance and promotion potential of subordinates. As mentioned
earlier, performance is the resultant behaviour of the subordinate on the task
which can be observed or evaluated. Potential, on the other hand, referes to an

employees abilities to fit into future role. Many managers default in assuming
that a person with abilities to perform well in one job will automatically perform
well in a more responsible position. It is for this reason, people are often
promoted to positions in which they cannot perform adequately. This has been
amply summarized in Peter’s principle __ In any organization, everyone rises to
his level of incompetence’. We must remember that by promoting an employee
with no promotion potential, we may lose a good worker and get a bad
Most performance appraisal forms have a column for potential
for promotion in which a score is required to be filled up. Though this is
supported by words, only the numerical score is recorded for manpower
planning purchases. Ina addition, a statement such as `ready for promotion in X
months/years, if seen by the appraise, is likely to be constructed as a promise.
There are many methods available for identifying potential.
These include assessment centers, psychological tests, assignments, peer-and
self assessment, and action learning programmes. Ideally, potential assessment
should involve the use of more than one technique. This is likely to result in
more reliable judgment.
Performance appraisal comprises the following steps.

- Select performance factors (based on job description) to be evaluated
and set the standards to be achieved.

- Set the performance review period

- Measure actual performance

- Compare performance with set standards and rate it with a suitable

- Communicate the rating to the appraise.

- Use the performance appraisal for the desired purpose
In order to be effective, the criteria for performance appraisal
should be genuinely related to success/failure in the job and should be amenable
to objective judgment. It should also be easy for the appraisers to administer and
appear just and relevant to the employees, and strike a fair balance between
sensitivity tot eh needs of the present job and applicability to the organization.
The earlier concept of merit rating has yielded place to performance
appraisal. In the merit rating system, merit was based upon personality traits
such as leadership, ability to get along with others, decisiveness, creativity,
industry, judgment, initiative and drive. It was difficult to apply this system

reliably since it demanded too much on the quality of personal relationship
rather than employees’ performance. Personality measurement is somewhat
dangerous because we usually like to quantity. The focus earlier was on `what he
is’. In performance appraisal, the focus is shifted to `how he performs’ in work-
oriented activities such as job knowledge, accuracy, clarity, analytical mind,
ability to carry on operations to their logical ends. Performance appraisal is thus,
competence, contribution and commitment and not chance, chemistry and
convenience. Merit rating was generally used for blue-collared jobs whereas
performance appraisal is more comprehensive and can be used for all categories
—workers, supervisors, and managers.
MBO is an example of performance-based appraisal approach
that involves setting objectives and comparing performance against those
objective. Objectives give greater freedom to both management and the
employees in deciding how performance is to be measured. They also have
greater motivationl effect since the standards are discussed and agreed upon both
by the management and the employees.
Performance appraisal is a formal exercise carried out for all
executives and workers/staff with respect to their contributions made towards
the growth of the organization. The aim is to measure the overall performance of
an employee over a period of time, usually one year, by his immediate
supervisor so as to provide a feedback to the employees and aid the
management. Performance appraisal does not merely measure the performance
of the people but has many other benefits. The benefits of a successful appraisal
system can be summed up as follows:
a) For the appraise

ii) Better understanding of his role in the organization – what is
expected and what needs to be done to meet those expectations

iii) Clear understanding of his strengths and weaknesses so as to
develop himself into a better performer in future

iv) Increased motivation, job satisfaction, and self-esteem

v) Opportunity to discuss work problems and how they can be

vi) Opportunity to discuss aspirations and any guidance, support or
training needed to fulfill these aspirations.

vii) Improved working relationships with the superiors
b) For the management

i) Identification of performers and non-performers and their
development towards better performance

ii) Opportunity to prepare employees for assuming higher

iii) Opportunity to improve communication between the employees
and the management

iv) Identification of training and development needs

v) Generation of ideas for improvements

vi) Better identification of potential and formulation of career plans

(c) For the organization

i) Improved performance throughout the organization

ii) Creation of a culture of continuous improvement and success

iii) Conveyance of message that people are valued
The above benefits will be realized only if performance appraisal is
considered as a process of management. It should not become a scheme
devised by the personnel department for management to use in
accordance with the directives of that department, and generate
completed forms which are stored away in employees dossiers and then
forgotten. The probability of achieving the goal---be it short term or long
Performance appraisal helps management to collect data on human
resources and use it for chancing responsiveness of the organization.
Since performance appraisal is done by people who have emotions, there
will always be some subjectivity. Though criterion could be stipulated,
personal likings and biases will influence the evaluation. Every assessor
has a price-expectation of a particular type of behavior. An appraisee
who meets it, will get higher assessment. Being subjective in nature,
there are certain pitfalls which need to guarded against. It be appreciated
that the issue of performance appraisal is very sensitive to the appraise
because it affects his present position (status, and self-esteem) and career
growth. Performance appraisal system must not only be fair, equitable
and transparent, but it must be perceived to be so. This can happen only
If the system has in-built transparency. Some of the common pitfalls
encountered in performance appraisal are the following:
Shifting standards,

Performance appraisal should be based on uniform and fair standards,
lest employees might get confused and the organization night not be able
to decide as to who is suitable and therefore should be promoted. For
example, last year, quantity.
Different rater’s patterns.
Managers differ in rating style---some rate harshly whereas others are
quite lenient. This can be reduced by precise definition on the appraisal
form. For instance, dependability may be defined as confidence you have
in the employees to carry out instruction and the extent to which you con
rely on his ability, punctuality and attendance. The report which is
reviewed by next higher.
Central tendency.
Many appraisal forms require the appraiser to justify out standing or
poor assessment. So many raters may prefer an easier path of rating most
people as average.
First impression.
Some raters may form an overall impression based on some specific
qualities or features of the ratee in the first meeting itself and carry it
forward. Making assessment on too short a time span and inadequate
knowledge is incorrect.
Latest behavior.
At times, the appraisal is influenced by the most recent behaviour,
ignoring the most commonly engendered behaviour during the entire
period. Thus a usually sober person may be treated as arrogant because
he expressed his opinion.
Halo effect.
Some raters have a tendency to rate high/low on all performance
measures based on one of their characteristics. For example an employee
who is just an average work performer but is very good in cricket and
plays Ranji trophy may be given high overall rating. This can be reduced
by rating employees on each of the performance measures.
Horn effect.
Some super-critical bosses have a tendency to compare performance of
their subordinates with what –they-did. This is not correct because the
performance also depend upon the situation. For example a salesman
now operates in a buyer’s market as against seller’s market of
Stereotyping (Rater’s Bias).

Some raters have a standard mental picture about a person because of
that person’s sex, colour, caste, religion, age, style of clothing, political
view, etc. Stereotyping results in an over stimplified view. Such
assessments are based on false assumptions/feelings, rather than facts.
Discretion should not become discrimination.
Spill-over effect. This is allowing past performance to influence present
evaluation. In some organizations, when an employee reports on transfer,
his earlier reports are also transferred along. This biases the mind of the
new boss.
There are other pitfalls such as taking too short appraisal interviews and
failing to support opinions with evidence, inadequate briefing of the
appraise and pre-judging performance. In some of the organizations,
such as PSUs, there is a system called CCR (Character Confidential
Roll) – a system started by East India Co. since it is confidential, it can
be manipulated. The corporate world realized its disadvantages and
introduced self-appraisal systems.
An interaction with over 100 managers of various backgrounds in BHEL
highlighted the following common constraints in implementing
`performance feedback’ as perceived by them:

- A work culture not so conducive to proper giving and receiving of

- Lack of appreciation about the philosophy and benefits of
performance feedback.

- Lack of willingness of superiors/top management in adopting this

- Fears and apprehensions about the use of performance feedback

- Confidentiality in the existing performance appraisal system

- Interference by the trade unions incase of workers

- Lack of proper system / procedure

- Lack of accountability

- Lack of clarity on role, goal, job demands, etc.

- No direct linkages of performance feedback system with

- Lack of proper skill in performance analysis and giving feedback
remind yourself that these activities are actually investments in
yourself and your future, and that no one else is likely to make those
investments for you.
Advancement Suggestions
The advancement suggestions in Figure 9.8 focus on the steps you
can take to improve your chances of being considered for advancement. The
development suggestions are fundamental and provide the necessary base,
but the advancement suggestions provide the necessary attitudes and
organizational presence.

1. Remember that performance in your function is
important, but interpersonal performance is critical.
Advancing in an organization requires excellent interpersonal
skills. The abilities to communicate (both one-on-one and to
groups), to collaborate, to listen, to summarize and to write
concise reports and memos are essential to being considered a
viable candidate for advancement.

2. Set the right values and priorities. Your worth to an
organization increases after you have discovered the
organization’s values and priorities and aligned yourself with
them. For example, some organizations place a high value on
collaboration and teamwork, while others emphasize
independence and individual contribution. Aligning your
behavior with the organization’s values improves your chance
for advancement.

3. Provide solutions, not problems. Nobody. Likes to hear
complaints. So, rather than voicing complaints and pointing
out problems, take some time to think issues through and
offer potential solutions. You’ll be perceived as a much more
valuable member of the organization.

4. Be a team player. You should not try to steal the limelight
for your work groups accomplishments. Rather, you should
try to shine the spotlight on the group’s efforts. When you do,
you’ll be viewed as a facilitator rather than a grandstander.
However, you should be sure that those responsible for
evaluating your performance know of your personal
accomplishments. One way to balance these concerns is to
refuse to seek public praise for your performance but not be
afraid to call attention to your success when appropriate.

5. Be customer oriented. Always keep in mind that anyone
with whom you have an exchange in your “customer”

Whether these interactions are internal or external,
understanding and satisfying customer needs should be a top
priority. When you take a customer-orientation approach to
your job, the organization will recognize you as a high-
quality representative who can be expected to accomplish

6. Act as if what you are doing makes a difference. A sure
way to be overlooked for advancement is to display an
apathetic or negative attitude. Not all tasks or projects to
which you are assigned will spur your interest, but if you
approach these activities with a positive attitude, others will
see you as a contributor and a valuable team player.

Exploring the causes of performance problems
Exploring the causes of performance problems may sound like an
easy task, but it is often quite challenging. Performance can be the result of
many factors, some of which are beyond the worker’s control. In most work
situations, though, observers tend to attribute the causes to the worker. That is,
supervisors tend to blame the worker when they observe poor performance,
while workers tend to blame external factors. This tendency is called
actor/observer bias. The experience of baseball teams provides an analogy.
When a team is losing, the players (workers/actors) point to external causes such
as injuries, a tough road schedule, or bad weather. The manager
(supervisor/observer) blames the players for sloppy execution in the field. And
the team’s owner and the sportswriters (top management/higher observers) hold
the manager responsible for the team’s poor performance.

It is important that managers determine the causes of
performance deficiencies accurately for three reasons. First, determination of
causes can influence bow performance is evaluated. For example, a manager is
likely to evaluate an episode of poor performance very differently if he thinks it
was due to low effort than if he thinks it was due to poor materials. Second,
causal determination can be an unspoken and underlying source of conflict
between supervisors and their workers. Supervisors often act on what they
believe are the causes of performance problems. This is only rational. But when
the supervisor’s perception significantly differs from the worker’s, the difference
can cause tension. Third, of a performance problem determines what is done
about it. For instance, very different actions would be taken if poor performance
was thought to be the result of inadequate ability rather than inadequacies in the
raw material.

How can the process of determining the causes of performance
problems be improved? A starting point is to consider the possible causes
consciously and systematically. Traditionally, researchers believed that two
primary factors, ability and motivation, determined performance. A major

problem with this view is that situational factors external to the worker, such as
degree of management support, also effect worker performance.

A more inclusive version of the causes of performance embraces
three factors: ability, motivation, and situational factors. The ability factor
reflects the worker’s talents and skills, including characteristics such as
intelligence, interpersonal skills, and job knowledge. Motivation can be affected
by a number of external factors (such as rewards and punishments) but is
ultimately an internal decision: It is up to the worker to determine how much
effort to exert on any given task. Situational Factors (or system factors)
include a wide array of organizational characteristics that can positively or
negatively influence performance. System factors include quality of materials,
quality of supervisor. Performance depends on all three factors. The presence of
just one cause is not sufficient for high performance to occut; however, the
absence or low value ofone factor can result in poor performance. For example,
making a strong effort will not result in high

(d) Giving a subjective assessment of performance and being judge
and helper

(e) Giving feedback and being judge and critic

4 Which of the following is a good reason tfor bank to introduce
performance appraisal scheme ?

(a) To improve current performance

(b) To provide a check on their staffs integrity

(c) To check on the honesty of their employees

(d) To clarify the employee’s contract

(e) To discipline individuals

5 Appraisal schemes may not be as effective as they should be because of a
number of problems. Which of the following is not one of the problems
associated with the introduction of performance appraisal schemes ?

(a) The organization is not clear about the purpose of its appraisal

(b) The performance appraisal scheme is too objective in the
judgements made

(c) Information is kept secret from the employee

(d) The performance appraisal scheme is too subjective in the
judgements made

(e) Appraisal is used as part of the disciplinary process

Rewards have five aspects which have to be taken care of – value
of rewards, amount of rewards, timing of rewards, likelihood of rewards, and
their fairness. A reward system has the following important features:

a) An incentive plan may consist of both ‘monetary’ and ‘non-
monetary’ elements. Mixed elements can provide the diversity
needed to match the needs of individual employee.

b) The timing, accuracy and frequency of incentives are the very
basic of a successful incentive plan.

c) The plan requires that it should be properly communicated to the
employees to encourage individual performances, provide
feedback and encourage redirection.


Promotion is a term which covers a change and calls for greater
responsibilities, and usually involves higher pay and better terms and conditions
of service, and therefore, a higher status or rank. A promotion may be defined as
an upward advancement of an employee in an organization to another job, which
commands better pay/wages, better status/prestige, and higher
opportunities/challenges/responsibilities and authority, better working
environment / facilities, hours of work, and a higher rank.

A promotion is a vertical move in rank and responsibility. It may
involve some measure of skill and responsibility (for example, it may be from a
machinist B grade to machinist A grade), or an entirely different type of work
(for example, from salesman to a sales manager). Promotions are usually given

a) Put the worker in a position where he will be of a greater value to
the company and where he may derive increased personnel
satisfaction and / or income.

b) Recognize an individual’s performance and reward him for his
work so that he may have an incentive to forge ahead.

c) Increase an employee’s effectiveness.

d) Build up morale, loyalty and a sense of belonging on the part of
the employees when it is brought home to them that they would
be promoted if they deserve it.


Reward for an employee-covering both monetary compensation
and non-monetary recognition – must meet his basic needs and conform to the
three parameters of external equity, internal equity and individual equity. The
external equity must ensure fairness vis-à-vis compensation standards in the
industry, internal equity must ensure a fair deal for him within the organization
in comparison to his colleagues and the individual equity must reward his
unique contribution to the company. Crucially, while theses three factors are
related to broad forces such as the cost of living, the rate of inflation, pay scales
in the industry and pay scales within the organization, the company can link the
rewards directly to its strategic goals by pegging it to the employee’s
contribution towards achieving them. Thus companies will be able to ensure that
their pay systems are integrated firmly into their into their business.

This will provide the opportunity to link the appraisal and reward
process into a seamless whole. Translating the corporate goals into specific,
quantifiable goals for every employee will form the cornerstone of the
evaluation process, leading to feedback on how close or how far from those
goals the employee is at the end of the appraisal period. Thus a company that
needs quick results, for instance, will build short-term goals into its evaluation

In fact, new dimensions of measuring performance will emerge
continuously. The switch to teamwork, for instance, will force team based
appraisal and reward systems to be designed and implemented accordingly. And
in an age of increased automation employee productivity will have to be
assessed and rewarded differently.

Linking the form of reward to business objective will yield
positive results. For instance, startups that need entrepreneurial action from its
employees will have to offer large quantum of cash, goal-linked incentive pay,
and possibly, stock options to link compensation to profits. However, mature
companies whose focus is on managing their earnings per share and protecting
market share will have to seek out managerial talent and reward it with flexible,
tax-friendly, compensation packages, with benefits designed to improve the
quality of life.

Companies that are flattening their structures with close
promotion routes as promotions within the new hierarchy will fall. They will
have to dismantle the promotion mindset in their people, equate growth with
lateral movement and increase and improvise their reward systems to link pay
packets to performance.


An important element of motivation that is frequently forgotten,
possibly because it carries a negative connotation, is the self-interest motivation.
People act in ways that they believe are in their best interest. Whether their
behaviour is truly in their best interest or not is irrelevant, the key point is that
they believe it is! From a managerial stand point, if we can understand what an
individual believes is in his best interest, which includes an awareness of his
need structure, we can try to develop a unique reward package tailored to his
need and his specific self interest. Given that all people do not place the same
value on any group of rewards, w are admitting that rewards must be flexible
and adjusted to each individual’s needs. We also try to structure his job so that
he envisages that when he acts in the best interest of the organization keeps
waste to minimum, maximizes his output, maintains quality standards, follows
directions of his boss-he also acts in his own best interest. This logic brings us
back to the expectancy model and the importance of rewards in this model.

If we want the organizational rewards to given us the greatest
return in terms of effort made by employees, the following points become, clear
as a result of the expectancy model:

a) Rewards must be linked to behaviour that the company classifies
as desirable.

b) Employees should perceive that his behaviour which leads to a
good job performance, is also compatible with his self-interest.

c) Employees should perceive the reward they will receive as a path
to satisfy their own needs.

d) Managers should analyze and interpret the needs of their

Regarding the fourth point, those managers who treat their
subordinates homogeneously in terms of reward are failing in individualizing
reward to align with individual needs. An obvious, but incorrect way to learn
about an individual’s needs and self-interest is to ask him. Some people find it
difficult to talk about such a subject, while others may not consciously know
what their needs and self-interest are. What we must do, then, is to develop
awareness in observing other’s needs through what they say, what they don’t
say, and, most importantly, how they behave.

Most organizations believe that the reward system is designed to
pay off for merit. The problem is that the definitions of merit are often
debatable. Some define merit as being ‘deserving’, while to others, merit is
being ‘excellent’. Deserving rewards may take into consideration such factors as
intelligence, effort or seniority. A major contributor to the problem is the

difficulty of defining excellence. If excellence is performance, we concede how
unsatisfactory our efforts have been at trying to measure performance. Creation
of quantifiable and meaningful performance measures of almost all white-collar
jobs, and many blue-collar jobs, has eluded us. While few will disagree with the
view point that the merit concept for distributing rewards is desirable, what
constitutes merit is highly debatable.

The popular criteria by which rewards can be distributed are:

(a) Performance: Performance is the output. To reward people in the
organization, therefore, requires some agreed-upon criterion for defining
performance. A difficult issue with performance is differentiating between
quantity and quality. For example, an individual may generate a high output but
his performance standards might be quite low. Hence, where controls are not
instituted to protect against such abuses, we often find quantity replacing quality.

(b) Effort: The rewarding of effort represents the classical example of
rewarding means rather than the ends. In organizations, where performance is
generally of a low caliber, rewarding of effort may be the only criterion to
differentiate rewards on the assumption that those who try, should be
encouraged. In many cases, effort can count more than actual performance. The
employee who can show his effort, without really putting one, will stand to be
rewarded more than his sincere counter parts.

(c) Seniority: Seniority dominates most government organizations in the world,
and while they do not play an important role in business organizations, there are
evidences that length of time on the job is a major factor in determining the
allocation of rewards. The greatest virtue of seniority is that relative to other
criteria, it is easy to decide an employee’s seniority. So seniority represents an
easy quantifiable criterion which can be substituted for performance.

(d) Skills held: Another practice that is not uncommon in organizations is
to allocate rewards on the basis of skills of the employee. Regardless of whether
the skills are used, those individuals who possess the highest skills or talents will
be rewarded commensurately. Where such practices are used, it is not unusual to
see individuals become ‘credential crazy’. The requirement that an individual
needs a university degree in order to attain a certain level within the organization
is utilizing skills as a determinant of rewards. When individuals enter an
organization, their skill level is usually a major determinant of the compensation
that they will receive. In a competitive market, skills become a major element in
the reward package.

(e) Job difficulty: The complexity of the job can be a criterion by which
rewards can be distributed. For example, those jobs that are highly repetitive and
can be learnt more quickly, may be viewed as less deserving in reward than
those that are more complex and sophisticated. Jobs that are difficult to perform,

or are undesirable due to stress or due to unpleasant working conditions, may
have to carry with them rewards that are higher in order to attract workers to
these activities.

(f) Discretionary time: The greater is the discretion called for on a job,
the greater is the impact of mistakes and a need for good judgement. In a job
that has been completely programmed, that is, where each step has been
procedurized and there is no room for decision making by the incumbent, there
is a little discretionary time. Such jobs require less judgement and lower rewards
can be offered. As discretionary time increases, greater judgmental abilities are
needed and rewards must commensurately be expanded.

The above classifications suggest that there are a number of
determinants by which rewards can be allocated. Most organization consider
merit as the major criterion that will determine rewards. However, what
constitutes merit is a value judgement. Performance, too, is a variable that is
frequently cited as the basis on which rewards are allocated. Again we are faced
with problem of measurement as well as the belief that other criteria such as
effort, or seniority are as important or more important than performance in
evaluating an individual’s contribution to the organization and determining the
rewards for that contribution. In addition to attempting to utilize simple,
quantifiable standards when such are difficult or impossible to attain,
performance can be manipulated to emphasize visible behaviours. Some aspects
of the job are more highly visible than others, yet the invisible factors may be as
relevant or more relevant to the performance of that job. For example, it is a lot
easier to evaluate an individual on whether he arrives at and leaves from work
on time than to assess the creativity he demonstrates in the decisions he makes
on the job.

Non-Monetary Rewards
Recognition is fast becoming its own reward. Bank is eginning to
believe that money-what Fredrick Herzberg called the hygiene factor-only
denotes the price of an employee. For value, companies must institutionalize
non-monetary rewards and recognition systems to motivate their employees.
Recognition is a basic requirement for creating a positive work culture in the
origination. It enthuses employees and encourages them to innovate products
and processes.

Types of Non-Monetary Rewards
Non-Monetary rewards may take the form of treats, knick-
knacks, awards social acknowledgement, office environment, tokens or on-the-
job rewards .motivates employees to perform better.

a) Costs the organization next to nothing.
b) Builds tremendous self-esteem among employees.
c) Makes employees more loyal to the company.

d) Creates an atmosphere where change is not resented.

Various forms of non-monetary rewards

The following are the demerits of non-monetary rewards:

a) Demotivates people if processes are not transparent.
b) Could result in unhealthy competition among employees.
c) May lead to shortsighted , and hasty decision-making.
d) Work intrudes on the family life of employees.
e) Will never work if monetary rewards are inadequate.

Compensation Management

Employees, in exchange of their work, generally expect some
appreciation. Money is considered the most important motivation for employees,
though non-financial incentives work efficiently. The goals of compensation
management are to design the lowest-cost pay structure that will attract,
motivate and retain competent employees.

Compensation is what employees receive in exchange for their
contribution to the organization. Compensation management helps the
organization obtain, maintain and retain a productive workforce.Search for
Rewarding Jobs

Rising educational levels and the assurance that everyone’s basic
needs will be met by government funds will result in an increased desire for jobs
that provide challenge, autonomy, and self-fulfillment. Life aspirations of new
entrants to the work force will be considerably higher than those of their parents
a generations earlier. In addition to having jobs that provide the means of
survival, workers will increasingly be seeking jobs that are in themselves
intrinsically rewarding.

A Norwegian researcher perceives the same problem:

If you don’t make changes in the way people work, an increasing
number of companies and industries will find that there are simply no more
people to do the work for them, even when these people are going hungry. If the
people can’t get decent work, then they will let the welfare state and the
technocrats who are willing to stay in the rat race take care of them.

The Managerial Perspective
experience raises several important questions that managers and
HR personnel must face in designing and administering compensations
programs, such as the following:

♦ Who should be responsible for making salary decisions?
♦ Should pay be dictated by what other employers are paying?
♦ What types of activities should be rewarded with higher
♦ What criteria should be used to determine salaries?
♦ Which employee groups should receive special treatment
when scarce pay resources are allocated?

The pay system is one of the most important mechanisms that
firms and managers can use to attract, retain, and motivate competent employees
to perform in ways that support organizational objectives. It also has a direct
bearing on the extent to which labor costs detract from or contribute to business
objectives and profitability.

The HR department plays an important role in designing
administrative rules and procedures to ensure fair allocation of pay, control labor
costs, and maintain parity with competitor’s pay levels for similar jobs.
However, bank many choices in terms of which pay policies and practices to
use. The challenge for top managers, in consultation with HR personnel, is to
pick those that are most appropriate to the firm. Most managers at all levels of
the organization enjoy some discretion in making pay decisions for subordinates.
Such decisions should be equitable and relate to criteria such as unique skills,
performance level, and the flexibility to perform multiple tasks.

In the first part of this chapter, we define the components of compensation and
examine the nine criteria used to develop a compensation plan. Then we explore
the process of designing a compensation plan and the legal and regulatory
influences Employees are covered by insurance and are appointed on their salary

All employees are either on regular basis or contractual relationship for a fixed
period. Therefore salary is paid on monthly basis and no salary is paid before the
end of each month.

All employees are either on regular basis or contractual relationship for a fixed
period. Therefore salary is paid on monthly basis and no salary is paid before the
end of each month.

All employees are either on regular basis or contractual relationship for a fixed
period. Therefore salary is paid on monthly basis and no salary is paid before the
end of each month.performance bonus is based upon their performance.

There are 9 grades of officers and salary is paid in accordance with the respected
salary scale. Therefore, salary is not dictated by influence.

Bank pay competitive salaries and working conditions are compatible. Therefore,
employees are satisfied.

Increments to employees are paid on the basis of performance. Performance is
assessed on the basis of achievement of goals and assessment by branch

Clear cut policy is available for pay rates.

, HR department does have a relative data.

Internet surveys (like are used for specifying salaries.

What is Compensation?

As shows, an employee’s total compensation has three
components. The relative proportion of each (known as the pay mix) varies
extensively by firm. The first and (in most firms) largest element of total
compensation is base compensation, the fixed pay an employee receives on a
regular basis, either in the form of a salary (for example, a weekly or monthly /
paycheck) or as an hourly wage. The second component of total compensation is
Pay incentives, programs designed to reward employees for good performance.
Theses incentives come in many forms (including bonuses and profit sharing).
The last component of total compensation is benefit, sometimes called indirect
compensation. Benefits encompass a wide variety of programs (for example,
health insurance, vacations, and unemployment compensation), the costs of
which approach 41 percent of workers compensation packages. A special
category of benefits called perquisites, or perks, are available only to employees
with some special status in the organization, usually upper-level managers.
Common perks are a company car a special parking place on company grounds,
and company-paid country club memberships.

Compensation is the single most important cost in most firms.
Personnel costs are as high as 60 percent of total costs in certain types of
manufacturing environments and even higher in some service organizations.
This means that the effectiveness with which compensation is allocated can
make a significant difference in gaining or losing a competitive edge. For
instance, a high-tech firm that provides generous compensation to managerial
and marketing personnel but underpays its research and development staff may
lose its ability to innovate because competitors constantly pirate away its best
talent. Thus how much is paid and who gets paid what are crucial strategic
issues for the firm; they affect the cost side of all financial statements and
determine the extent to which the firm realizes a low or high return on its payroll

Designing a Compensation System
An employee’s paycheck is certainly important for its purchasing
power. In most societies, however, a person’s earnings also serve as an indicator
of power and prestige and are tied to feelings of self-worth. In other words,
compensation effects a person economically, sociologically, and psychologically.
For this reason mishandling compensation issues likely to have a strong negative
impact on employees and ultimately, on the firm’s performance.

Internal versus External Equity
Fair pay is pay that employees generally view as equitable. There
are two forms of pay equity. Internal equity refers to the perceived fairness of
the pay structure within a firm. External equity refers to the perceived fairness
of pay relative to what other employers are paying for the same type of labor.

In considering internal versus external equity, managers can use
two basic models: the distributive justice model and the labor market model.

The Distributive Justice Model
The distribute justice model of pay equity holds that employees
exchange their contributions or input to the firm (skills, effort, time, and so
forth) for a set of outcomes. Pay is one of the most important of these outcomes,
but non-monetary rewards like a company car may also be significant. This
social-psychological perspective suggests that employees are constantly (1)
comparing what they bring to the firm to what they receive in return and (2)
comparing this input/outcome ratio with that of other employees within the firm.
Employees will think they are fairly paid when the ratio of their inputs and
outputs is equivalent to that of other employees whose job demands are similar
to their own.

Some employees compare their input/outcome ratio to that of employees in
other firms, but most compare themselves to their peers in the same
organization. From this perspective, then, the compensation system’s key task is
to ensure that salaries and wages are set so that employees perceive a fair
input/outcome balance within the firm and to a lesser extent outside it.

The Labor Market Model
According to the labor market model of pay equity, the wage rate
for any given occupation is set at the point where the supply of labor equals the
demand for labor in the market place (W in Figure 10.3). In general, the less
employers are willing to pay (low demand for labor) and the lower the pay
workers are willing to accept for a given job (high supply of labor), the lower
the wage rate for that job.

The actual situation is a great deal more complicated than this
basic model suggests however. People base their decisions about what jobs they

are willing to hold on many more factors than just pay. The organizations
location and the job’s content and demands are just two of theses factors.
Moreover, the pay that an employer offers is based on many factors besides the
number of available people with the skills and abilities to do the job. Theses
factors include historical wage patterns, the presence or absence of unions, and
internal organizational politics. A complete exploration of this topic is beyond
the scope of this book. However, the basic point of the labor market model is
that external equity is achieved when the firm pays its employee the “going rate”
for the type of work they do. A firm cannot stray too far in either direction from
the market wage. If it offers pay much below the going rate, it may be unable to
attract and retain qualified workers. If it pays much more than the going rate, it
may be unable to charge competitive prices for its product because its labor
costs are too high.

Balancing Equity
Ideally, a firm should try to establish both internal and external
pay equity, but these objectives are often at odds. For instance, universities
sometimes pay new assistant professors more than senior faculty who have been
with the institution for a decade or more, and firms sometimes pay recent
engineering graduates more than engineers who have been on board for many

You may wonder why the senior employees accept lower pay
instead of leaving and competing for higher-paying positions elsewhere. Senior
faculty are usually tenured, which means they would given up job security if
they went to another university. Furthermore, both college professors and
engineers work in fields where the knowledge base is constantly changing,
making recent graduates (who are more likely to be aware of new developments
in their fields) somewhat more valuable employees.

In addition to balancing internal and external equity, many firms
have to determine which employee groups pay will be adjusted upward to meet
(or perhaps exceed) market rates and which groups pay will remain at or under
market. This decision is generally based on each groups relative importance to
the firm. For example, marketing employees tend to be paid more in firms that
are trying to expand their market share and less in older firms that have a well-
established product with high brand recognition.

In general, emphasizing external equity is more appropriate for
newer, smaller firms in a rapidly changing market. These firms often have a high
need for innovation o remain competitive and are dependent on key individuals

to achieve their business objectives. Much of the relatively new high-tech
industry fits this description.

A great emphasis on internal equity is more
appropriate for older larger, well-established firms. These firms often have a
mature product employee who plan to spend most of their career with the firm,
and jobs that do not change often. Much of the regulated utilities industry fits
this description.

Fixed versus Variable Pay
Firms can choose to pay a high proportion of total compensation
in the form of base pay (for example, a predictable monthly paycheck) or in the
form of variable pay that fluctuates according to some pre-established criterion.
For example Bank Pays its employees (except for those at the highest executive
ranks) almost exclusively in the form of fixed compensation or base pay.
There is a great deal of variation in the way BANK fixed versus variable
pay questions.for select employee groups (such as sales), variable pay can be as
high as 100 percent. For select employee group (such as sales), variable pay can
be able pay increases as an employee’s base pay increases, indicating that those
in higher level positions earn more but their overall compensation is more
subject to risk. Employees are provided educational loans to its employeesfor
their children.

Job ranking (raking method).

The ranking method requires a committee typically composed of
both management and employee representatives to arrange jobs in a simple rank
order, from highest to lowest. No attempt is made to break the jobs down by
specific weighted criteria.

The committee members merely compare tow jobs and judge3
which one is more important or difficult. Then they compare another job with
the firs two, and so on until all the jobs have been evaluated and ranked.

The most obvious limitations to the ranking method is its sheer
unmanageability in the situation where are a large number of jobs.

Other drawbacks to be considered are the subjectivity of the
method there are no definite or consistent standards which justify the rankings
and because jobs are only ranked in terms of order, we have no knowledge fo the
distance between the ranks,

Job grading (classification method).

It is aslightly more sophisticated method than job ranking,
thought still not very precise.

In thks method each job is assigned agrade or class. These
classifications are created by identifying some common denominator skills,
knowledge, responsibilities with the desired goal being the creation of.


Building New Workers’ Confidence

A positive experience in the first few days on the job can be
critical to the new here’s motivation and success in the organization. Employee
orientation whether it is a large scalee endeavor or a one on one process, can
help create positive perception of the organization studies have found well
planned orientation to pay off interms of fewer employee mistakes, lower
turnover, better work attitude, and improved communication. Here are steps you
can take to create a positive orientation experience.

Give a call

Ask the new employee’s supervisor or a coworker to call few
days before his or her start date as a welcome and to answer any questions this
simple preliminary call can reduce first day anxiety,

Let them know the rules

You or another designated person should in form the new worker
about any written or unwritten rules for example:

 Is there a dress code?

 Is there mission statement?

 What are the department goals? How is success

 Where do you get office supplies?

 Where should the worker park?

 Is there an e-mail policy?

 Is there a sexual harassment or discrimination policy?

Explain who’s who

Provide a list of important people and places and their phone
numbers. You might include items on this list such as the mailroom, receptionist,
maintenance, technical support, security, and key colleagues.

Do it with class

Given a number of new hires, organize an orientation class and
provide an opportunity for them to meet each other and realize they’re not alone.
Cover the employee manual and any company video introducing them to the
organization and its top managers.

Do the tour

Take new hires on a tour of the operation and help them to lean
their way around.

Help them hit the ground running

Make sure they have all necessary keys and identification.

Make it fun

Welcome them to their new work area with a basket of gift
wrapped office supplies. This inexpensive gesture can make the first day more
like a celebration.

The new directions program is divided into four phases.

Phase on e acclimates workers by providing expectations and
work training.

Phase two is a one day training session that gives new hires
information on the company’s history, strategy, policiesand benefits.

Phase three spans the first three months on the job and focuses on
training workers about the market, its customers, and business plans.

Phase four carries on through at least six months and consists of
interim reviews and feedback.

The program has helped reduce the company’s high turnover rate
for first year employs.

Salaries for Everone?

Typically, most employees are paid salaries. The advantage
claimed for this move is that blue collar workers become more integrated in to
the organization, and this improves the climate of employee relation, no study

clains that it improves productivity, and the reports of its effects on absenteeism
are mixed. Some studies claim absenteeism decreases. Other have found that it
in creases, but management controls and peer pressure later bring it down to
acceptable levels.

Some individuals propose that if all employees are paid salaried,
it is possible that the long run security of positions will be diminished with
hourly workers, if business is down it is relatively easy for an organization to
reduce the hours worked daily or weekly, save the labor costs, and adjust to the
realities of the marketplace. On the other hand, if every one is on salary,
management tends to lock toward full layoffs or reduction in the labor force by
attritionor termination. Providing salaries for everyone changes labor costs from
variable to fixed, and this can have serious employment security implications.

The success of a total lalaries program requires stable mature,
responsible employees, a cooperative union, willing supervisors, and a work
load that allows continuous employment. Cautionis urged in dadopting this
approach until the full range of possible consequences is carefully evaluated.

The methods for paying employees on the basis of output are
usually referred to as incentive forms of compensation. Incetives can be paid
individually to the work group, or on an enterprise wide basis. Incentive
compensationassumes it is possible and useful to tie performance directly to pay,
and issue discussed indetail in chapter 13.

Individual Incentives

Perhaps the lodest form of compensation is the individual
incentive plan in which the employee is paid for work done in the bank.

These methods seek to achive the incentive goal of

Are individual incentives effective? The research results are
mexed. Most studies indicate they do increase out pur. Although profit.increases,
other performance criteria may suffer. There is also evidence thath there are
individual differences in the effect of incentives on performance. Some
employees are more inclined to perform motivation to work.

Incentive plans to work, they must be well designed and
administered, it appears that an individual incentive plan is likely to be more
effective under certain circumstances these are when:

• The task is liked.

• The task is not boring

• The supervisor reinforces and supports the system.

• The plan is accecpable to employees and
managers and probably includes them in the plan’s

• The standards are carefully designed

• The incentive is financially sufficient to in duce
increased out put.

• Quality of work in not expecially important.

• Most delays in work are under the employees

Executive Compensation

Executives in the bank are compensated by salaries. In the private
sector, business executives receive salaries too, but many of them also receive
incentive compensation such as bonuses. In addition, executives n all sectors
receive benefits and special treatment which are usually ccalled perqusites).

A fundamental questions in executive compensation is why
business executives should be paid incentive as well as salaries a number of
answers can be give. Firs, it is argued that these incentives improve
performance, and that is good for stockholders and employees. A second reason
is that inceptive compensation is a way of retaining talented executives. Many
have altermative employment opportunities with other corporations or as
entrepreneurs. The third reasons is that business executives are more lidely to
control their own compensation in the private sector that in the public sector,
where legislative bodies determine it, or in the third sevtor, where boards,
normally from out side the enterprise, have a great deal of control. For these and
other reasons, the compensation of business executives tends to be lucrative and
innovative enough to sidestep the ever-changing tax laws.

Executive Salaries

Merit pay is used an incentive for employees.

Salaries of executives in the public sector are generally known to
the public. Salaries of executives in the third sector have not been widely
studied. In general, the highest salaries are paid in the private sector. There are
many studies of this form of compensation.

To give you some idea of the salaries and bonuses of some top
executives in organizations you probably have done business with, let’s look at
some 1980 data. Remember these figures are just for the salary and bonus
portions of compensation.

Some studies have been done on the relationship of the size and
kind of business tosalary amount. With regard to size, in general, as the firm
increases in size, the top executive’s salary increases. Several studies have
examined the relative salaries of executives in different industries. For example,
one study found that in companies with sales larger than $ 10 billion, motor If
top managers beeives that pay is a motivator to higer performance, it follows
that they will pay themselves in a way that rewards performance. And if
performance is defined as more profits, pay should be correlated with profits.
Some studies indicate that this done. Other studies show that top executive pay
is correlated with sales, a proxy for size.

More sophisticated studies point out that simple correlations such
as these are not likely to explain very much. The factors which influence
executive pay are ownership and market concentration. One study found that in
closely held firms executive pay was correlated with profitability. Other studies
agree with this, and it makes sense. In firms where the owners can put pressure,
executives are likely to encourage higher profitability in firms with no strong
ownership interest, executives can set their salaries similar to those of executives
in equal –size firms, regardless of profitability.

Two types of bonuses are given:

1): Performance bonus.

2): General bonus.

for fund size for bonus only because of the profit of the bank.

A bonus is a compensation payment that supplements salary and
can be paid in the present or in the future. In the latter case, it is called a deferred
bonus.. their compensation consists of salaries, bonus, benefits contingent pay or
the amounts of deferred compensation received based on performance
incentives, and stock gains or gains from shares or cash from exercising stock

Let’s Complete the discussion of the seven criteria for effective
compensation introduced. A compensation system which meet all these criteria
will accomplish the objective of providing a system of rewards which is
equitable to employer and employee alike, so that the employee’s satisfaction
and production are both heightened. As we discussed, an effective compensation
systems should be:

 Adquate the legal definition of adequacy as set forth in
minimum wage and other legislation. The managerial
definition of adequacy, or pay-level policies designed to
pay the going wage, was also described.

 Equitable job evaluation i one technique to be used to
attin equity..

 Incentive providing discussion theory behind the merit or
incentive pay system. This chapter will discuss how
incentive pay systems are designed and how raises are
used as a form of incentive.

The other four criteria, which will be discussed primarily in this
chapter, state that the compesation plan should be:

 Secure. The extent to which the employee’s pay seems
secure to him or her.

 Balanced. The extent to which pay is reasonable part of
the total reward package. Which includes benefits,
promotions, and so on chapter 15 discusses benefits.

 Cost effective. The extent ot which the pay system is cost
effective for the organization.

 Acceptable to the employee. Whether employees think the
pay system makes sense. Three aspects of this will be
discussed: whether pay should be secret: compensation
communication to achieve acceptability and employee
participation in pay decision making.

Methods of Payment

 Assigned to the job, based on the position’s potential
impact on company profitability.

 The actual bonus payments are spreads over one year
period.A limit (cutoff level) is put on the total of the
bonus to be paid in one year.

The excess funds are reserved for leaner years.

bank pay bonuses, in the belief that this leads to better
profitability and other advantages for organization. Bonuses involve large
expenditures of funds. They vary from 80 percent of top executive salaries to 20

percent of the salaries of lowest level participants in spirt of wide usage and high
costs, there is little research support for their effectiveness. Unless more research
does support the payment of bonuses, many may conclude they are an example
of management’s power to pay it self what it wants. This I an issue that can have
an impact on the image the public holds abou the ethics of chief executives
running organizations.

suggests a systematic and logical approach to bonuses plan has
these features:

 The total bonus for top executives is based on percentage
of net profits after a reasonable earnings per share for the

 The standard bonus per executive is based on number of
bonus points.

At present the cafeteria systems is not feasible in the public
sector because of the usual rigid pay classification and the system of a single
salary plus fixed benefits. But it is possible and I being used in the private and
third sectors.

Compensation Administration Issues

Managers make policy decisions on three issues in compensation
administration for employees and executives. These issues involve the extent to
which (1) compensation will be secret, (2) compensation will be secure, and (3)
raises will vary with performance.

Pay Secrecy or Openness

The first compensation issue to be discussed is the extent to
which the pay of employees is known by others in the enterprise.who would
your fell if your co-workers could fing out what you make would you care. As in
other issures, employees differ on this.

There are degrees for secretiveness and openness on pay
information. In many institution and organizations, pay ranges and even an
individual’s pay are open to the public and fellow employees .This is called the
open system.

The opposite is the secret system, in which pay is regarded as
privileged information known only to the employee, her or his superior, and
such staff employees as P/HRM and payroll. In the most secrecy oriented
organizations, employees and told they cannot discuss pay matters and
specifically their own pay. Recently, the national labor relations board ruled that
this is not a legitimate policy.

In the bank, secrecy is clearly the predominant pattern. Should
this be changed research is mixed some findings favor the open system other the
secret system. Before an open system is tried, the individual’s performances
must be obfectively measurable, and the measurable aspects of the jobs to be
rewarded must be the significant ones. There should be little need for
cooperation among jobs, and employees must also prefer the open system.

There is increasing recognition that some employees want a more
open pay system. The opeming up of a system and providing more information
to employees certainly has its costs and benefits. However if an organization
wishes to reduce the manipulative aura surrounding pay, actual or perceived, it is
going to have to share additional pay information with employees. As more
firms post job openings to make employees aware of opportunities, informations
on pay becomes critical decision point.

As a step in deciding how much secrecy or how much openness
is neede, managers first must clearly determine through observation 9listing,
talking, discussions in groups) what their employees want to know about pay.
Then managers must eecide if providing pay information will harm or benefit
the firm finally, the conditions cited above conceming the objective measuring
of performance, degree of inter dependence, and causal relationship on
performance must be carefully weighed.

Security in Pay
Current compensation can be a motivator of performance. But the
belief that there will be future security in compensation may also affect it.
Various plans for pr0oviding this security have been developed the guranteed
annual wage, supplementary unemployment benegits, severance pay, seniority
rule, and the employment contract.

A bank provide a guaranteed annual wage to employees who
meet certain characteristics. For this type of plan to work, general employee
management relations must be good. And the demand for the product or service
must be the supplementary unemployment benefits approach the
employer adds to unemployment compensation payments to help the employee
achieve income security if not job security In bank the employer provides some
income bridge from employment to unemployment and back to employment.
This is severance pay. Typically, it amounts to one week’s pay for each year of
service. About 25 percent of union contracts require such severance pay. This
does’t guarantee a job, but I helps the employee when a job is lost.

In times of layoff security for most employees is their seniority,
the contract normally specifies how seniority is to be computed Seniority
guarantees the jobs ( and thus the compensation) to the employees with the
longest continuous employment in the organization or work unit. Even in

nonunionized situations, a strong seniority norm prevails which gives some
security to senior employees.

Pay Raises
The issues in evolved in pay increased, or raises, are the mains
bothering .The first issue the timing of raises, if the organization accepts the
position that pay affects performance favorably, raises should be closely tied to
performance. Employs generally prefer raises to be ass frequent and as large as
possible (except possibly for executives with tax problems), but there may be
individual differences in timing preferences. However, administrative costs for
personnel and supervisory evaluation usually limit pay raises to annual events
annual raises can be given to every one at the same time or tied to annual
performance reviews dating from the date of hire.

One problem with the current timing of raises is that raises tend
to get buried. A raise usually is given on an annual basis, so it is divided in to 12
parts and mixed up with increases in taxes and insurance deductions. The take
home paycheck often looks the same after the raise. A new attempt ot deal with
this problem is the lump sum raise. This allows the employee to elect of speread
the raise over as many as 12 paychecks as desired or to take it at one time in a
lump sum if the employee elects the lump sum raise for the entire year at the
start of the year, the employer deducts the interest that would other wise accrue
to the sum and pays it out. If the employee leaves before the full year is over, the
proportion of the raise not earned id deducted from the last paycheck.

The second aspect of raises is the use of the cost of living as a
criterion. Most pay experts believe that an organization must adjust its pay
scsale to reflect the amount of inflation in the economy to some degree, so
employees will not perceive a growing in equity as compared to those who
receive cost of living adjustments. A 1981 survey showed that only a few
occupational groups actually gained in buying power because of taxes an
inflationThere are several ways to adjust for cost for living increases. Pay be
adjusted yearly or at regularly intervals, or by automatic cost of living
adjustment (cola). The third issue is what criteria should be used to allocate
raises, other than cost of living factors. This takes us back to the issue of pay for
performance or for merit or seniority. The negative impact on employees who do
not receive merit raises can be a problem in merit pay systems. Many employees
feel a fair pay raise system includes merit pay for current and past performance
(seniority, and so).

The final issue is How large must a raise be for it to affect
satisfaction and performance? Not much research has been done in this area.
Several theories have been advanced to suggest that pay increases should be
related to current pay, past pay increases, current consumption, or some
combination of these if they are to influence the employee’s satisfaction or

performance. On study found larger individual differences in regard to an
effective pay increase policy. The researchers studied two groups of employees
those who perceived the increase as primarily a form of recognition were
anticipated changes in the cost of living and exacted pay increases, for those
who valued the money increases it self the best predictors were expected
changers in the cost of living, the last pay factors, or all individuals were
influenced by more than one factor. The researchers recommend against flat
percentage increase in view of their findings, because current pay was not
significant factor in predicting meaningful pay increases.

This research shows how preceding studies over simplified the
specification of raises. More research is needed to provide better guidelines on
the size of effective pay raises, given these individual differences. Perhaps a
cafeteria approach to pay and benefits, in cluding pay raises, might help with
this problem. Obviously the organizations ability to pay and other factors are
important, in addition to the employees’ perceptions of what a good raise is.

Pay Compression
The fair labor standards sets a legal minimum wage that must be
paid employees. However, union power and labor market conditions often push
for higher minimum rates of pay. These pressures often result in setting higher
levels of pay at the levels. This further results in what is called pay compression.

Pay compression exists when jobs requiring advanced levels of
education and experience, more skills and higher degrees of responsibility
receive smaller increases in the compensation opportunities. Those performing
jobs requiring more knowledge, greater skills and increased responsibilities find
that rewards are in adequate for these added contributions.

Payment and Motivation
Performance or its introduction has temporarily improved performance,
provides the impetus for a continued search for better reward systems. The
reminder of this chapter will discuss the theory of reward systems and a review
of the problems. The final section will discuss the policy implications in the
rewards area.
A body of experience, research, and theory has been developed about the way in
which money satisfies and motivates employees. These theories seem to validate
the general assumption of managers that money can be used to motivate
employees, but they also suggest cautions, limitations, and contingencies that
are often either forgotten or are difficult to implement in practice. Some of the
problems described above are the result.
Pay is Important to Individuals

Virtually every study on the relative importance of pay to other potential
rewards (extrinsic and intrinsic) has shown that pay is important it is
consistently ranked among the top five rewards. Infact, in more than one-third of
45 studies conducted, pay was ranked number one as a valued reward. An
opinion polling organization, reviewing data from the past two decades, found
that pay and benefits were ranked first or second in importance by employees in
every job classification (see Table-5-1). Because it is so important, pay has
power to influence people’s membership behavior (where they go to work and
whether the stay) and their performance.
Table 5-1 Top Five Work Values
Rank Managers Professionals Clerical
1. Pay & Benefits Advancement Pay & Benefits
2. Advancement Pay & Benefits Advancement
3. Authority Challenge Supervision
4. Accomplishment New Skills Respect
5. Challenge Supervision Security
However, the importance of pay and other rewards is affected by many
factors. Money, for example, is likely to be viewed differently in early, middle
and later career because needs for money versus other rewards (status, growth,
security, etc.) are different in each stage. An other important factor in national
cultureEven within a single culture, shifting national forces may alter people’s
needs for money versus other rewards. High inflation tends to encourage people
to emphasize the importance of money, while periods of slow growth or
unemployment place a greater premium on intrinstic rewards. Or employment
Rewards and Employee Satisfaction
There are some general conclusions to be drawn about the relationship
between rewards and employee satisfaction. Since dissatisfaction among
employees can lead to turnover, absenteeism, and with holding of effort,
organizations seek employee satisfaction to maintain or improve organizational
effectiveness. But employee satisfaction with pay is not a simple matter. Rather,
it is a function of a number of factors which organizations must learn to manage:
1. The individual’s satisfaction with rewards is, in part, a function of
what is expected and how much is received. Feelings of satisfaction
or dissatisfaction arise when individuals compare the nature of their
job skills. Education, effort, and performance (input) with the mix of
extrinsic and intrinsic rewards they receive (output).
2. Employee satisfaction is also affected by comparisons with other
people in similar jobs and organizations. In effect employees

compare their own input/output ratio with that of others. People vary
considerably in how they weight various inputs in that comparisons.
There is a tendency to weight more heavily those things in which
they excel, certain skills, or a recent incident of effective
performance. Individuals also tend to overate their own performance
compared to that to their supervisors. For example. It has been found
that may employees rate their performance in the eightieth percentile.
Given the fact that an organization cannot pay everyone at the
eightieth percentile, it is not surprising that many employees feel
they are being under paid relative to others in the organization. The
problem of unrealistic self-ratings exists in pat because supervisor in
most organizations do not communicate a candid evaluation of their
subordinates’ performance to them. Unless supervisors have
exceptional communication skills, such candid communication to
subordinates seriously risks damaging their self-esteem. The real
dilemma is that failure to communicate a candid appraisal of
performance makes it difficult for employees to develop a realistic
view of their own performance, thus increasing the possibility of
dissatisfaction with the pay they are receiving.
3. The misperception of the rewards of others is a major source of
dissatisfaction. There is evidence that individuals tend to
overestimate the pay of fellow workers doing similar jobs while
under-estimating their performance (a defense or self-esteem
building mechanism). Misperceptions of rewards and the
performance of others also occur because organizations do not
generally make available accurate information about salaries or
performance levels of their employees. Managers are understandably
reluctant to publish information on individual salaries and
performance appraisals. Such information is likely to reveal some
inequities in the pay system, and could also lead to dysfunctional
competitiveness between employees. Nonetheless, it is not surprising
that, given the known tendencies toward misperception, the lack of
such information leads to the perception of inequities.

4. Finally, overall satisfaction is the result of a mix of rewards, rather
than any single reward. The evidence seems to be clear that intrinsic
rewards and extrinsic rewards are both important, and that they are
not directly substitutable for each other. Employees who are paid
well for repetitious, boring work will be dissatisfied with the lack of
intrinsic rewards, just as employees paid poorly for interesting,
challenging work may be dissatisfied with extrinsic rewards.

Pay and Membership Behaviour

Bank give the most desirable rewards will be best able to attract and
keep people, particularly the better employees. Substantial rewards lead to
higher satisfaction, which is generally associated with lower turnover, though
turnover is also a function of the labor market and the economy.. High total
compensation does not, however, ensure that the best employees are retained. To
do this, a company must also pay its better performers more than it pays poorer
performers; and the difference must be significant (recognizing that the
significance of the difference is a subjective judgment on the part of individual
employees)” A less than significant differential will result in feelings of inequity
when better performers compare their input-output ratio with that of poorer
performers. A well constructed and administered pay-for-performance system
will then result in retention of better performers, and the turnover of the poorer
performers – those the organization may want to lose despite the significant
replacement costs incurred. An operational test of a company’s success in doing
this is to correlate individual employee satisfaction with performance ratings. A
low correlation or a negative one indicates problems. The problem may be in the
design of the pay plan; it may also be in the administration of that plan. Later in
the chapter we will examine some of the problems that can occur in
administering a pay-for-performance system.

Pay and Motivation
From the organization’s point of view, rewards are intended to
motivation certain types of behaviour, But under what conditions will rewards
actually motivate employees? Important rewards must be perceived to be tied to
effective performance in a timely fashion. In other words, individuals will
behave in a way that will lead to rewards they value. Motivation depends on the
situation and how it is perceived by employees, but ht needs people do or do not
possess will make them more or less susceptible to motivating situations. For
example, individuals with a high need for achievement are more likely to be
motivated by situations that provide them an opportunity to satisfy that need
than individuals whose need for achievement is low. A person who has a high
need for money or advancement will be more motivated to perform in a situation
that provides money or advancement will be more motivated to perform in a
situation that provides monetary rewards or promotions than an individual who
is low in these needs.

An expectancy theory model has been developed to suggest the
conditions necessary for employee motivation:

1. Employees must believe that effective performance (or certain
specified behavior) will lead to certain rewards: for example; at
taining certain results will lead to a bonus, or a certain
performance will lead to approval or disapproval from or

2. Employees must feel that the rewards offered are attractive. Not
all rewards are equally attractive to all individuals because of
differences in needs and perceptions. Some employees may
desire promotions because they seek power while others may
want a fringe benefit such as pension because they are older and
are concerned about retirement security.

3. Employees must believe that a certain level of individual effort
wil lead to achieving the corporation’s standards of performance.

Unless employees believe that their efforts can have a reason able
probability of affecting performance. The model suggests a highly instrumental
view of motivation. Motivation to exert effort is triggered by the prospect of
desired rewards; money recognition, promotion, and the like. If effort leads to
performance, and performance leads to desired rewards, the employee is
satisfied and motivated to perform again. Motivation can be sustained over time
only if successive experience in the organization leads the person to believe that
this sequence is repeatable (that is, to trust the reward system), that his or her
efforts can affect certain performance outcomes, and that the organization will
reward these achievements. The dotted line between performance and rewards
and the feedback loop to motivation are intended to show that motivation is a
function of the performance-reward relationship.

It should be noted that the “ability” box between “effort” and
“performance” is intended to indicate that performance is a function of ability as
much as effort. Ability reflects not just the individual’s skills and talents, but
also the training and information provided by the organization. Effort thus
combines with ability to produce a certain level of performance.

As we have already mentioned, rewards fall into two categories:
extrinsic and intrinsic. Extrinsic rewards are provided by the organization in the
from of money, perquisites, or promotions or from supervisors and co-workers
in the form of recognition.

Intrinsic rewards are those rewards which accrue from the performance of the
task itself: satisfaction of accomplishment, sense of influence, sense of
competence, or self-congratulation on a job well done. The process of work and
the individual’s response to it provide the intrinsic reward. But bank seeking to
increase intrinsic rewards must provide a work environment that allows these
satisfactions to occur. This is why bank is redesigning work and delegating
responsibility to enhance employee involvement.

In the expectancy mode, satisfaction is a result of performance, not a
cause of it as is often though. Satisfaction does influence motivation indirectly,
however, because satisfaction that follows rewards for performance strengthens
the employee’s belief in the linkage between effort, performance, and rewards.

Satisfaction of certain needs can also heighten or reduce those needs. For
example, the experience of promotion or achievement may heighten the need for
further advancement and achievement. On the other hand, already having a lot
of money could lessen the satisfaction derived from yet another incremental
increase in pay.

The implications of the expectancy model for the use of pay as a
motivator are not simple. The model could lead to the erroneous conclusion that
an organization need only relate pay and other valued rewards to achievable
levels of performance. First, this is not the only factor an organization needs to
control in order to motivate employees. Management-worker relationship, the
opportunity to development and a sense of contribution to meaningful goals are
all very important ingredients in motivation. Second, the linkage between
rewards and performance is a difficult one to achieve. It is not easy to develop
good measures of performance, to communicate a performance evaluation to
subordinates so they will accept it, to identify which rewards so that important to
employees, or to control the distribution of rewards so that better performers
obtain more than poor performers. Yet all of these factors directly affect
employees or to control the distribution of rewards so that better performers
obtain more than poor performers. Yet all of these factors directly affect
employee preparation concerning the linkage between rewards and performance.
Judging by a national survey of randomly selected individuals, majority of
workers fail to see a direct linkage in their organization: only 27.2 percent of
those surveyed said they were likely to get a pay increase or bonus if they
performed well.

There are numerous reasons for the apparent difficulty organizations
have in linking pay to performance. The lack of visibility of pay increases or
bonuses makes it difficult for employees to judge if a relationship exists between
these rewards and performance.

. Whenever we ask managers of bank what their biggest problem
is, the answer in the vast majority of cases comes back—motivating
subordinates. How can I motivate my people? This is a challenging question that
will not go away. Therefore, this chapter will provide a discussion about

programs that managers can use to create conditions which will motivation
subordinates to exert the necessary effort to achieve performance.
Before we examine the elements of motivation, it is vital that we clearly
understand exactly what the term means. Motivation has been defined as

“all those inner striving conditions described as wishes, desires,
drives, etc………. It is an inner state that activates of moves.”

More specifically, the term motivation has often been called an intervening
variable. Intervening variables are internal psychological processes which are
not directly observe able and which account for behavior. Thus, motivation
cannot be seen, heard, or felt, but can only be inferred from behavior
A Diagnostic Approach To Motivation

the factors in the diagnostic model that are extremely important to understanding
motivation among employees. The individual factors are very significant. A
person’s abilities, attitudes, preferences, and internal motivational level all play
a role. Internal environmental factors also play a major role in motivation. The
task itself may stimulate an employee. On the other hand, It may bore or under
stimulate an employee. A work group cab also stimulate behavior and work
effort. In any event, leader style and action can stimulate or dampen an
employee’s motivation.

Motivation And Behavior
A commonly accepted principle is that all behavior is motivated and that people
have reasons for doing the things they do or for behaving in the manner that they
do. This means that all human behavior is designed around the desire for need

The process of motivation
an unsatisfied need is the staring point in the process of
motivation. That need is deficiency within the individual, and provides the spark
which begins the chain of events leading to behavior. An unsatisfied need causes
tension (physical or psychological)within the individual, leading the thereby
reduce the tension. Note that this activity is complete. For example, a thirsty
person needs water is driven by thirst, and is motivation by a desire for water in
order to satisfy the need. Thus the continuous process bebins with an unsatisfied
need and ends with need satisfaction, with goal-directed behavior as a part of the
These managerial actions are needed because employees:

1. Inherently dislike work.
2. dislike responsibilities for decision making.
3. have little ambition and want job security above all.

Thus, a manager who accepts theory X would engage in authoritarian and
directive practices. These practices result from the manager’s assumptions
abut how and why subordinates behave.
The opposite of Theory called Theory Y. manger using Theory Y assumed
that employees are:
1. Not lazy and want to do challenging work.
2. interested under proper condition in accepting responsibility.
3. interested in displaying ingenuity and creativity.
An analysis of McGregor’s Theory X-Theory y distinction displays a
traditional and a behavioral approach to motivation. The distinction lies in
the assumptions managers.

Physiological needs
This category consists of the basic needs of the human
body, such as food, water and sex. Physiological needs will dominate when all
needs are unsatisfied. In such a case, no other needs will serve as a basis for
motivation. As Maslow state, “A person who than for anything else.

Safety Needs
These needs include protection from physical harm, ill
health, economic disaster, and the unexpected. From a managerial standpoint,
safety needs manifest themselves in attempts to ensure job security and to move
toward greater financial support.

Social needs
These needs are related to the social nature of people and
to their need for companionship. This level in the hierarchy is the point of
departure from the physical or quasi-physical needs of the two previous levels.
No satisfaction of this level of needs may affect the mental health of the

Esteem Needs
These needs comprise both the need for the awareness of
one’s importance to others (self-esteem) and the need for the actual esteem of
others. The esteem of others must also be regarded as warranted and deserved.
The satisfaction of esteem needs leads to self-confidence and prestige.

Self-Actualization Needs
Maslow defines these needs as the “desire to become and
more what one is to become everything one is capable of becoming. This means
that the individual will fully realize the potentialities of his or her talents and
Obviously, as a person role varies so will the external
aspects of self-actualization. Whether the person is a college professor, a
corporate manager, a parent or an athlete being effective in that particular role is
the needs. Thus when people are able to achieve self-actualization they will tend
be motivation by increased opportunities to satisfy that level of needs.

Implications for Managers
The needs hierarchy model is widely accepted and referred to by practicing
manager. It is easy to comprehend has a great deal of “commonsense” validity,
and points out some of the factor that motivation people in organization. Most
organization in the united states and Canada have successfully satisfied lower
level needs. Through the wages or salary they receive, individuals are able to
satisfy the physiological needs of themselves and their families.
Although Maslow’s needs hierarchy does not provide a complete understanding
of human motivations or the means to motivate people, it does provide an
excellent starting point for the student of management. We shall use it in this
chapter as the foundation for an understanding of motivation in organizations.

Management’s Use of the Need Hierarchy Model
Nonsatisfaction of Needs

Unsatisfied needs of subordinates must be determined by
managers who are attempting to create a positive motivation setting. Individuals
are often unsuccessful in their attempts to satisfy needs. In order to improve our

understanding of motivation, it is necessary to explore what happens when needs
are not satisfied.
Empathy with those who use it and will realize that such behavior may not be a
true indication of the person’s actual character.
What has been said thus far about motivation is summarized. It also indicates
that if a person is successful in achieving a goal, the next unsatisfied needs
emerges. If, however, attempts are met with frustration, the person either
engages in constructive behavior (indicated with a minus sign because of its
negative effects). In either case, the person returns to the next unsatisfied needs
which emerges.

The two factor theory
Frederick herzberg advanced an approach to motivation based on
a study of need satisfactions and on the reported motivational effects of those
satisfactions on 200 engineers and accountants. His approach is often referred to
as the two factor theory of motivation.
In their study, Hertzberg and his associates asked the subjects to
think of times when they felt especially good and especially bad about their jobs
each subject was then asked to describe the conditions which led to those
fellings. The subjects identified different work conditions for each of the
feelings.l for example, if managerial recognition for doing an execellent job led
to good feelings about the job, the lack of managerial recognition was seldom
indicated as a cause of bad feelings.

Maintenance and motivation factors
Based on this research herberg reached the following tow
Al though employees are dissatisfied by the absence of some job
conditions the presencd of those conditions does not build strong motivation.
Herberg called the conditions maintenance factors, also called hygiene factors,
sin ce they are necessary to maintain a reasonable level of satisfaction.

As a simple interaction ,communication involves one person transmitting
information about something to another person and vice –versa.however
,although sending and receiving are essential ,theyu do not adequately describe
the importance of interpersonal communicatin.
Communication is the essence of all is the focal point for
business managers ,is central to control and survival,and is essential for all
employees.if there is one activity that is foundational for all planning ,organizing
,directing and controlling,it is communication.without productive
communication ,decisions can not be made or implemented;achievement is
impossible .if we have to pick just one area of human relations to concentrate
on, it would probably be communication.therefore communication skills __roal
,written,and nonverbal __should be improved.communication allows the
accomplishment of objectives.
There are many definitions of communications and many disciplines that
claim communication as their own invention.because of this the word means
many things to many people .
“communication is the sending and receiving of messages, the sharing of ideas
and attitudes .”
ideas stress an intrapersonal view of communication .messages
emphasize the interpersonal side of communication.attitudes overlap intra and
interpersonal communication and suggest the importance of nonverbal
communication.if communication is to be productive ,it must result in
understanding between sender and receiver.
Through communication people process information ,tests ideas ,
exchange opinions and achieve consensus on decisions .through communication
they develop interpersonal relationship and form subgroups from a large number
of individuals .communication is the organizing element on the job.
For communication to be productive the people involved must see some reason
for interaction.
The most obvious communication goal is to be heard. There are however other
goals that proceed and succeed this vital goal. They are to:
the sender wants the other person to listen to what he or she says.
once the reciever’s attention is gained ,a manager would want to present
ideas in a manner acceptable to the needs and levels of the would want to make sure the employees structured its
ideas in their minds the same way management had originally framed them ,
because communication is basically a process of exchanging meanings.if

similarly a reconstructinf concepts is inadequate misunderstandings will
occur.however in many verbal exchanges a receiver who is not actively trying
to to understand and respond to your message bears some responsibility for the

although acceptance of one’s opinions and beliefs is not essential to getting
others to do what one wishes,it is helpful for the long life of the group.
not only do sendera want others to listen to them,understand what they say,and
accept their ideas ,they also want others to do what they suggest.actio is one way
to check communication results .it is,in fact ,the main criterion for speaking or
friends seldom have the problem of understanding one another that enemies do.
It is impossible to discuss communication without relating it to the work
situation.thus we will now explore communication according to flows,networks
,interactions and feedback in organization.but before we get tooo far into the
subject ,let,s measure your personal verbal communication habits .
All phase of communication ,whether interaction takes place in a two person
dyad or in a large group,depend on communication.but how do your
communication works?
Communication is often described as information flowing vertically or
horizontally , upward or downward or literally.contrast is made ,also between on
way or two way flows .one of the most important advantages of two way
communication is its role in decision making.people who have to carry out a
proposal have an opportunity to react to it and contribute to the decision .there
are also advantages to one –way communication ,however for example :
Speed is accomplished more with one way communication .however ,one –way
messages have a lower probability of acceptance than two –way masseges .
Appearance of one –way messages is more impressive than that of two –way
messages because directives appear businesslike and official .
Covering up of mistakes is easier with one-way communication;senders will not
have to hear someone imply or say there is an easier or better way to say what
was said.
Protection of one’s power is more readily accomplished with one –way
communication than with one –way communication ,when mistakes
occur,the sender can blame the receivers for failure to listen .in two –way
communication ,the sender shares the blame .

Simplification of managerial life is better accomplished with one –way
communication than with two-way.whan communication is two-way people
must deal with other’s feelings,attitudes and perceptions .they must also deal
more directly with people.
Planfulness,orderliness and systemization characterize one –way communication
.two way communication is not as neat because it is difficult to predict what
embrassing questions will be asked when questions are solicited.
However ,we can surmise that two-way communication is more valid since it
allows for more accurate transmission of information.
Vertical communication involves messages that flow up and down the
organization hierarchy.downward communication is the most frequent
communication flow in the business .it involves directives , policies , procedures
, instructions ,goals or objectives.however downward communication is a one
way process.”I told you what to do ,now to do “.it can also be a stifling process
in which people feel they have no say about how things are done .
Some types of downeard communications are identifiable,as was just noted
.if these of types of communication are unclear ,employees will not respond in
the way managers wish.if these types are limited , people may give only
minimal compliance.upward communication involves workers relaying
information to their superiors.this type of message flow provides
feedback.therefore it is two way and as a general rule ,improves morale.people
feel as though they have a voice in how things are done .they are listened to
upward communication benefits both the company and the individual.
Both upward and downward communication are related to formal
organization .lines connect the various units within the hierarchy .systems of
responsibility and explicit delegations of duties are clearly drawn.exact
statements of the nature ,content,and direction of communication are
provided.because of this highly formality , some companies try to establish more
informal atmosphere.
Should be the strongest flow of
information in a work group because it allows the massage exchange among
people on same level of authority. It is particularly prevalent at the lower level
and leads to better understanding among workers then vertical comunication
does. Good horizontal communication typically deals with the task coordination
,problem solving ,information sharing and conflict resolution horizontal
communication atmosphere provide a good opertunity to banish certain
communication barriers.
Vertical or horizontal communication is usually considered formal
communication because it follows the chain of command on most organizational
charts.the system of communication that does not follow the chain of command
and therefore has no official sanction is reffered to as the creates an

informal organization that departs from formal tasks and hierarchy and creats its
own channels of communication and dependence.
The grapevine is fast and selective,and it has company – influence .it is
doubtful it could ever be destroyed.hence,if managers understand how the
grapevine works , they van influence and use the grapevine network by
supplying accurate data.
Every group develops its own unique structure and pattern of communication
.these patterns connect the sender and receiver into a functioning social
organization and are called NETWORKS.they show us who talks to whom .
One factor affecting communication networks is group members
have fewer chances to speak ingroups of twelve than of addition feelings
of threat and inhabition increase with group size.similarly discussion diminishes
as group size increases; fewer people participate in the group .the gap between
the participator and the other group members tends to grow proportionately
greater as size increases.
Often the communication network is present; at other times the pattern
arises during interaction .other combinations are possible,however.these
networks allow us to visualize who talks to whom , about what,and in what
Centralized patterns such as the whel and chain networks are usually better
than decentralized networks like the circle .for simple ,problem solving,for
example, centralized patterns are accurate .but if the problem is
complex,decentralized networks are more accurate.morale and worker
satisfaction are higher in decentralized networks .thus,centralized patterns are
superior in accomplishing tasks , and decentralized networks are superior in
fostering group cohesiveness and interaction.
Any person’s behaviour affects those in the group .if you choose not to be
an active member and participate by actively may influence
Others to remain uninvolved.if you don’t better yourself , why should they?
If on the other hand ur behaviour can influence other to participate actively.
You can improve group interaction .a though full well timed question could
leave the group in a positive direction .so could soothing over a sensitive area
where potential disruption could develop into non constructive conflict.
Two style of interaction that can influence a group either positively or
nagitively are those of the peace maker and a democratic group member .a peace
maker gets a concenses and keeps people together a democratic group member
ties to include very one in the discussion by learning to be sensitive to be
participation and interaction level of a group work you can make large
contribution to the group by spoting potential trouble areas
Have u ever listen to the some one who always seemed to talk for thirty
minutes and could say more about nothing then any one else?our participants
contribution to any meeting should not be too lengthy or complicated other

member may have difficulty to understand his or her position ,or they may stop
listening altogether when that person start talking .
Sometimes a person biased version of a situation blinds him or her .are you
that way about certain subjects ?group participants should strive to be
objectivetowards all contribution by others. They should reserve decision until
all group has had a chance to interact for a while.descusion should not be an
arena for public debate ,promotion or competition .a closed mind works against
the good that a group can accomplish .
Have you talked to someone you knew wasn’t listening o you ?how did you
feel? group members should listen to one other as much as they desire to be
heard . one way is to let your body language tell the others you are aware of
them and are interested in their thoughts. You can nod your head knowingly ,or
use brief encouragements like “I see ,” “that’s a good idea,”,” I m glad you say
that ,” or “uh ,huh ,” the quantity of listening to others is very important in the
life of a work group.
COHASSIVENESS is the ability of a group to work and stay together .as a
group develops a higher level of cohesion ,it communication more because
members are open , supportive ,and trusting . highly cohesive groups interact
more consequently ,group members feel pressure to interact and communicate .
In all communications , feedback determines level of understanding . if feed
back is discouraged ,a work groups vitality and problem –solving ability will
suffer . the terms interaction and communication are often used synonymously.
Group interaction is the communicative feedback provided by and for the
Communication at the work is important. Knowing the nature of
communication , we can say that peoples productivity cannot be improved
without improving their communication knowledge and skills .the managers
objective are to search for and use communication skills that will improve
understanding . unfortunately ,many problems arise along the way .
Communication difficulties result from real or imagined problems. Therefore
, a communication barriers is anything that blocks message flow so that a
receiver does not get the intended messages .
Nonproductive communication may occur because people do not want to
communicate, they do not provide feedback , they fail to listen ,or they try to
show off their knowledge . becoming aware of the potential ,communication
barriers is the starting point in copying with breakdowns. Some common
communication problems are allness , by passing , ambiguity , and status .

Allness is the tendancy people have to believe that whatever they say about a
particular subject is all that there is to say about that subject. Allness occurs
when , failing to remain objective and openminded.
1. people are unaware they are abstracting .they assume they have covered
the subject completely ,
2. people select different details from a given situation and assume they
know everything.
3. people evaluate a group on the unconscious assumption that their
experience with one or few members would be the same with all of the
4. people close their minds to new or different ideas.
Allness is a common affliction among most of us , but particularly among
advertisers. For example , the following advertising slogans take full advantage
of allness ;
Any time people are dogmatic rigid or deaf to new ideas they are suffering from
the disease of allness. The crue for such mistake is to remember many
particulars are left out of everything you say hear read or write .there is always
more information then what is presented. There is always an eteetera.
By passing is the tendancy of individuals to not recognize that one word
can have different meanings .
Like bypassing ,result from different word meaning in a given context.
Communication problems also result from an involvement of different peopl’s
ego’s,status relationships ,or positions in the work groups.status can be
measured by job titles,office pakcements ,windows,desk sizes,parking spaces
and so forth.the two major status determinants are probably the nature of
people’s work and the size of their paychecks ‘however.dissatisfaction arises
when one person or group percievs another as out of line.communication
problems often arise , and the status ladder must be realigned to reduce the
percieved inconsistencies.
Good communication is at best a difficult process .even though there are
many barriers to communication ‘the situation is not hopeless,however.infact
almost any serious effort to improve communication will have beneficial of the best ways to start improving communication is to become
aware of communication problems.the normal result of any communication is a
partial misunderstanding.thus decisions must be made as to how large a margin
of difference in understanding can be tolerated.
Four specifiv ways to cope with the barriers and therby improve
communication between management and staff are to recognize the reciever’s
frame of reference ,to use feedback,to reinforce words with actions ,and to use
quality circles as an intervention technique.a quality cirtcle is a meeting of a
small group of workers to identify , analyze and provide solutions to problems in

their work is usually made up of a group of people who work together to
produce a part of a product or a service.a typical quality circle has five to ten
members and conducts its meetings during work hours.its purpose is to propose
answers to management For quality control problems.
A number of organizations have employed qulity circles .one key of quality
circles is that they are results orientsed .people are there to seek ways to
accomplish the original goal.instead of waiting to
Know whose fault it is and assigning nlame ,they want a solution .when a
communication breakdown accurs , solutions can be found tough participative
Within the last two decades interest has developed in nonverbal communication
research.nonverbal communication has much to do with the way we perceive
and respond to others .since our ability to communicate goes far beyond our
ability to speak , understanding the neture of nonverbal communication will
provide us with another technique for achieving understanding among
is yet another principal of improving human relationships.success depends ,in
part on sensitivity to the feelings of others and on competence ,and interest.
The conclusion of nonverbal communication research suggests we are
constantly communicating information about ourselves.these nonverbal
significantly effect our sending and receiving of messages .the specific signals
that alert us to what to send or how to receive are cues.
Nonverbal cues are signals that do not require a person’s concentrated
efforts.these cues may be intentional or unintentional .the expressions of feelings
,emotions and attitudes are nonverbal and can relay be concealed from others
.messages frequently consists of intentions that are logically inconsistent with
the verbally professed statements .if persons are having difficulty
communicating their thoughts and feelings by verbal symbols .two concepts are
especially pertinent.first we cannot communicate.nonverbal cues go out
constantly.second if our words say one thing and our nonverbals signal
something else ,people will pay more attention to nonverbal things.
The study of body motions concern five major areas :the face
,gestures,postures,body shape and physical appearance.each of these areas
provokes certain actions from other people and may assist or impede productive
The face is the most visible indicant of our emotions and feelings.with over
100 possible expressions ,the face accurately reflects our feelings towards others
and provides feedback on other’s comments.
Perhaps the part of the face most likely to yield information is the eyes
.when communicationg with others ,or when establishing or maintaining
relationships ,increase eye contact.

Gesture can expres one message or an entire language .although the hands are
most prominent , h ewhole body can send a message .successful sales people
confirm that prospects send nonverbal messages of acceptance or rejection by
folding or unfolding their artms ,leaning forward or racling in their chairs ,and
crossing or uncrossing their legs.gestures can be large ,expensive ,assertive and
outgoing or they van be limited , self protected and close to the body.but as with
mimes every moment has a message.
Posture also provides us with information .the way we sit ,stand ,walk or lie
down express feelings ,interst ,involvement or tension.for example body
language as well as physical barriers can be used to get rid of time wasting
office guests .a manger may rise and remain standing when someone enters his
or her office.
Postures tell whether one wishes to include or exclude other people in one’s
thpught or conservation ,whether one is open or closed to certain ideas. it tells
whether one is warm toward certain people ,whether one likes or dislikes certain
ideas ,whether one can become emotionally involved .it also says something
about one’s role ans status in certain groups.
There are theree general body types ,
1 . ectomorph
2. endomorph
3. mesomorph
most people stereotype each physique .endomorphs are talkative ,old
fashioned ,sympathetic ,weak, dependent,and trusting .some researches contend
endomorphs encounter negative prejudice in job interviews ans promotional
decisions .and in fact a number of endomprphs are going to court and charging
employers with job bias.furthermore ,ectomorphs are often portrayed unfairly as
uncool wimps .
meosmorphs are stereotypes as handsome,adventurous,mature and self
reliant.for example you only need to lok at modles used in advertising to
appreciate this stereotype.of course ,anyone can exibit characteristics of all these
groups .so try not to let societal attitudes affect the way you relate to each of
these types of people.
Physical attractiveness is alos a factor in nonverbal communication .body
color, smell ,hair lnght and clothing influence the quality and quantity of
communication that occurs among people.based sololy on physical appearance
,many people will make decisions regarding dating,ourtship,and marriage,not to
mention hiring and firing.
Spatial relationship also effects the quality and quantity of communication
among people .distances between people in daily interactions or arrangements of
furniture in houses and offices may enhance or stifle understanding .personal
space varies among nationalities .native Americans who tend to talkm at arms
length ,mark of a generous amount of personal soace in which to operate

.however members of certain other nationalities customarily interact within
inches of each other.
Soace is often refferd to as territory which assumes certain ownership rights
of an area without any legal basis .

Although time is cukturally defined ,being on time ,ahead of time ,or behind
time communicates certain things in our society .deadlines are a way of life ,and
we view spactically anyone who does not wear a watch .those who are always
late are disrespectful ,we think;they have little interest in us.the language of time
is very eloquent .it can create auras of hostility or warmth.
Vocal qualities such as pitch ,attriculation and tempo produce certain
responses from others.vocal characteristics such as laughing ,crying ,whispering
,yawning and sighning also provokes certain actions ,even when no conscious
attempt was made to manipulate the voice .thus ,voice may be the most
important element in certain asoects of persuation.
Another large area of nonverbal communication is silence.therefore it is
helpful to know how to deal witn silence in a work group.what happens , for
example when no one talks to us ? silence may have a on eor a combination of
meanings .it might represent either fear or anger. in either case ,silence retards
our ability to relate to others .
These rules will helpall of us overcome some of the verbal and nonverbal
. 1. seek to clarify your ideas before communicating.
2.examine the true purpose of each communication.
3. consider the total physical and humen setting whenever youi communicate .
4. consult with others ,where appropriate in planning communication. mindful when you communicate ,of the overtones as well as the basic
content of your message.
6.take the opportunity when it arises ,to convey something of help or value to
the receiver .
7.follow up your communication.
8.communicate for tomorrow as well as today.
9. be sure your actions support your communication.
10. seek not only to be understood but to understand—be a good listener
in bank alfalah branch manager acts as arbitrator.grievance is also used
for settling disputes.


Bank alfalah is providing health and safety facility to its employees.

Following are the features of this scheme.

Bank is providing free hospitalization to its employees upto 100000 for officer

Policy of bank alfalah health and safety is ensured with adamjee insurance

Company is offering free hospitalization in those hosp[itals which are on the
panel of ittefaq hospital,rasheed hospital massod hospital etc.

Bank is also providing health and safety facility to the parents of bak employees
upto 75000 for officers rank.

Bank is also proviving life insurance facility to its employees and this is based
purely on employers contribution.

Bank is providing proper lighting facility to employees and good working
conditions so that employees feel comfortable.

jobs’s working conditionThe offices are maintained as a branch of corporate
body and all necessities among these are available.

For employee health and safety, different types of measures are provided
regarding lighting, canteen, spittoons, wash rooms etc.

Following are the terms and conditions of employment in bank alfalah.

1)employees are hired on the following two basis.

Contract basis
Permanent basis
Employees who are hired on contract basis are often those who are more than
the age of 60 and due to their experience bank hired those people.
Employees who are hired on permanent basis are routine work through
manpower planning.

2)employee must be qualified upto the requirement of the job.they normally
considers MBA’S and M.COM AND MA ECONOMICS for jobs.for
recruitment at bachelor level they demand four year degree in bachelor.

3)employee must work faithfully in the organization.

4)employee must not leave the job without any solid reason.

5)employee must contribute some amount towards their provident fund and
remaining will be contributed by the bank.

6)employee mst get the training for required job and employee must rty to
improve his or her work through effective training programmne.

7)employee will be allowed 10 sick leaves and 10 casual leaves.

Bank alfalah is providing retirement scheme to its employees like other banks.

Following are the features of retirement scheme.

Bank contributes one pay of each employee towards its gratuity and this is the
lump sum amount which is payable to the employee at the time of retirement.

Bank contributes a portion of basic salary towards provident fund of its
employees and same portion is being deducted by the employee.

Bank is not offering any kind of pension benefit to its employees.

Percentage of provident fund is different for each employee as bank is following
variable pay plan.