FChapter 1 Introduction to human resource management • • • • • • • • • • • Definition of HRM Features Scope / functions of HRM Definition of Personnel mgmt Evolution
of HRM / Trends in HRM Difference b/w HRM & PM Challenges before the HR manager Role of HR manager Traits / characteristics of workforce Personnel Philosophy Personnel Mannual
Introduction: The advent of the era of liberalization and globalization along with the advancements in information technology (IT) has transformed the world around us. It has brought to centre stage the importance of HR, more than ever before. The purpose of HRM is to enable appropriate deployment of HR. In a competitive scenario, effective utilization of HR has become necessary and the primary task of organizations is to identify, recruit and channel competent HR into their business operations for improving productivity and functional efficiency. Effective utilization of HR would lead to both accomplishment of individual and organizational goals and creation of assets at the national level. Meaning of HRM: HRM is a part of the management process which is primarily concerned with human constituents of an organization, so as to achieve objectives of the organization and potential of employees. Growth of organizations can partly be stopped or hampered as they can’t maintain an efficient and enthusiastic HR functions. Like- wise the procurement, development compensation, integration and maintenance of human factor in the organization is highly important for organization’s success. HRM looks after all these functions and are part of HRM.
Objectives of HRM: • • • • • • To contribute to strategic business goals. To acquire right men at right jobs at right time in right number. To train and develop the procured people adequately. To compensate and reward them adequately. To motivate, satisfy and maintain high morale of employees. To ensure respect to these employees and establish harmonious relations. • To integrate them into the organization by achieving employees and organization goals. • To develop value based organization culture towards organization development and high performance. Definition: (concept for 3 marks) - Edwin Flippo defines HRM as “planning, organizing, directing, and controlling of procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organizational and social objectives are achieved.” Features of HRM or characteristics or nature (3 or 4 marks) 1. HRM involves management functions like planning, organizing, directing and controlling 2. It involves procurement, development, maintenance of human resource 3. It helps to achieve individual, organizational and social objectives 4. HRM is a multi-disciplinary subject. It includes the study of management, psychology, communication, economics and sociology. 5. It involves team spirit and teamwork. Scope of HRM The scope of HRM refers to all the activities that come under the banner of HRM. These activities are as follows 1. Human resources planning: Human resource planning or HRP refers to a process by which the company identify the number of jobs vacant, whether the
company has excess staff or shortage of staff and to deal with this excess or shortage. 2. Job analysis & design: Another important area of HRM is job analysis. Job analysis gives a detailed explanation about each and every job in the company. Based on this job analysis the company prepares advertisements. 3. Recruitment and selection: Based on information collected from job analysis the company prepares advertisements and publishes them in the newspapers. This is recruitment. A number of applications are received after the advertisement is published, interviews are conducted and the right employee is selected thus recruitment and selection are yet another important area of HRM. 4. Orientation and induction: Once the employees have been selected an induction or orientation program is conducted. This is another important area of HRM. The employees are informed about the background of the company, explain about the organizational culture and values and work ethics and introduce to the other employees. 5. Training and development: Every employee goes under training program, which helps him to put up a better performance on the job. Training program is also conducted for existing staff that has a lot of experience. This is called refresher training. Training and development is one area where the company spends a huge amount. 6. Performance appraisal: Once the employee has put in around 1 year of service, performance appraisal is conducted that is the HR department checks the performance of the employee. Based on these appraisal future promotions, incentives, increments in salary are decided. 7. Compensation planning and remuneration: There are various rules regarding compensation and other benefits. It is the job of the HR department to look into remuneration and compensation planning. 8. Motivation, welfare, health and safety: -
Motivation becomes important to sustain the number of employees in the company. It is the job of the HR department to look into the different methods of motivation. Apart from this certain health and safety regulations have to be followed for the benefits of the employees. The HR department also handles this. 9. Industrial relations: Another important area of HRM is maintaining co-ordinal relations with the union members. This will help the organization to prevent strikes lockouts and ensure smooth working in the company. Challenges before the HR manager/before modern personnel management INTRODUCTION Globalization of Indian economy is compelling organizations to rethink their future strategies. It is now widely recognized that transformation is a pre-requisite to their survival and growth. Business organization in India especially public enterprises are experiencing winds of change. For the HR function, there would not be a more existing and challenging opportunity than managing the complexities of change and transformation. HR today is playing a lead role along with business functions in creating the necessary momentum and internal capabilities. Also, globalization has elevated the importance of HRM development in organization. These changes have led to the notion of the HR system as a strategic asset. 1. Corporate reorganizations: The last 2-3 decades have been characterized by acquisition and mergers of almost unbelievable proportions as well as other forms of corporate reorganization. There have been instances of one corporation purchasing another, two corporations joining forces, companies undergoing massive reorganization. Virtually in every major industry, the number of major players is shrinking. The reorganization continues in an effort to improve competitiveness, either by cutting layers of managers and restructuring the work forces or by gaining economies through combining efforts. It is difficult to imagine circumstances that pose a greater challenge for HR management. Large mergers also involves overlapping companies (HP & Compaq), seeking economies of scale thru combined efforts.
Even, sometimes complexity of the situation may slow down the entire process. In the meantime, employees are left wondering what, if any, role they will play in the “new organizations.” Employees may face these potential changes: (jet airways – air sahara merger) • • • • • Loss of job, pay, benefits. Job changes, including new roles and assignments. Transfer to a new geographic location. Changes in compensation and benefits. Staff changes, including new bosses, colleagues, subordinates. • Change in corporate culture, loss of identity.
2. Workplace flexibility: It is expected to be on the rise as the future workplace, the ‘virtual office’ is characterized by creative and flexible work arrangements. As more employees work off-site-up, there will be an increase in emphasis on performance and results as opposed to the number of hours worked. In addition, off-site employees can expect to attend fewer meetings. Specified work will become much more collaborative and management will spend nearly all its time managing cross-functional work teams (A crossfunctional team is a group of people with different functional expertise working toward a common goal. It may include people from finance, marketing, operations, and human resources departments.), which will enjoy a lot of autonomy. In essence, there will be a movement, a trend towards a decentralized model of HR. HR managers will have to accommodate employees in their virtual work locations and find ways to manage corporate culture, socialization and employee orientation. In order to obtain and maintain a competent workforce, they must act as organizational performance experts and shape employees behavior without face to face meetings. (HRM Review – May 2010 pg.16) 3. Retention of the employees: One of the most important challenge the HR manager faces is retention of labor force. Earlier was the time, when an employee would join the organization for a longer period of time. But with ample opportunities available to a candidate, he/she may not have such a long time vision to be with the organization. This may affect the company and its productivity apart from harming the candidate on his personal front. Due to this, many companies have a very high rate of labor turnover therefore HR manager are required to take
some action to reduce the turnover. Higher the rate of turnover, lower the good will of the organization. 4. Retrenchment during recession and other face: The recent recessionary face was very challenging for HR managers across the world. In many places companies reduced the work force due to changing economic situations. Workers / employees who were displaced faced severe problems. Such a situation also leads to a negative atmosphere and attitude among other employees. It leads to fear and increasing resentment against the management. The challenge before the HR manager lies in implementing the retrenchment policy without hurting the sentiments of the workers, without antagonizing the labor union and by creating positive attitude in the existing employees. (HRM Review may 2010- pg 15, “innovative practices of cost-cutting) 5. Women in the work force: The number of women who have joined the work force has drastically increased over a few years. Women employees face totally different problems. They also have responsibility towards the family. The organization needs to consider this aspect also. The challenge before the HR manager lies in creating gender sensitivity and in providing a good working environment to the women employees. (6 months leave for central/state govt.. women employees) (woman child example, journalism example-time shifts, facilities to pregnant woman) (may not be a part of policy, work timing flexibility) (HRM Review May 2010, pg12, “second career internship program”, May 2010, pg 12) 6. Handicapped employees: This section of the population normally faces a lot of problems on the job, very few organization have jobs and facilities specially designed for handicapped workers. Therefore the challenge before the HR manager lies in creating atmosphere suitable for such employees and encouraging them to work better. Significance/importance/need of HRM (5/10mks) HRM becomes significant for business organization due to the following reasons. 1. Objective: HRM helps a company to achieve its objective from time to time by creating a positive attitude among workers. Reducing wastage and making maximum use of resources etc.
2. Facilitates professional growth: Due to proper HR policies employees are trained well and this makes them ready for future promotions. Their talent can be utilized not only in the company in which they are currently working but also in other companies, which the employees may join in the future. 3. Better relations between union and management: Healthy HRM practices can help the organization to maintain co-ordinal relationship with the unions. Union members start realizing that the company is also interested in the workers and will not go against them therefore chances of going on strike are greatly reduced. 4. Helps an individual to work in a team/group: Effective HR practices teach individuals teamwork and adjustment. The individuals are now very comfortable while working in team thus teamwork improves. 5. Identifies person for the future: Since employees are constantly trained, they are ready to meet the job requirements. The company is also able to identify potential employees who can be promoted in the future for the top-level jobs. Thus one of the advantages of HRM is preparing people for the future. 6. Allocating the jobs to the right person: If proper recruitment and selection methods are followed, the company will be able to select the right people for the right job. When this happens the number of people leaving the job will reduce as the will be satisfied with their job leading to decrease in labor turnover. 7. Improves the economy: Effective HR practices lead to higher profits and better performance by companies due to this the company achieves a chance to enter into new business and start new ventured thus industrial development increases and the economy improves. Personnel Vs Human Resources at Various levels Human Resources denotes the total sum of all the components skills, creative ability etc. - with all the people (employed, selfemployed, unemployed, employers, owners etc.) whereas personnel are limited to employees of organizations only.
Human Resources, even at the organization level, includes all resources of all the people who contribute their services to the achievement of organizational goals and also others who contribute their services to create hurdles in the achievement of the said goals. Functions of Human Resources Management: . There are two broad functions of H R M. They are: 1. Managerial Functions 2. Operational Functions Managerial Functions: Managerial functions of Personnel management include planning, organizing, directing, co-ordinating and controlling. Planning: It is the charting out of programmes and changes in advance in the achievement of organizational goals. Hence, it involves planning of human resources requirements, recruitment, selection, training etc. It also involves forecasting of personnel needs, changing values, attitudes and behaviour of their employees and their impact on the organization. Organizing: In the words of J.C. Massie, an organization is a "structure and process by which co-operative groups of human beings allocated its tasks among its members, identifies relationships and integrates its activities towards a common objective." Given the complex relationships that exist between specialized departments and the general departments, many top managers seek the advice of personnel manager. In this manner, the organization establishes relationships among the employees so that they can together contribute to the achievement of organizational goals. Directing: After planning and organizing comes the execution of the plan. The willing and effective co-operation of employees towards the achievement of organization’s goal has to be brought about by proper direction. Identifying and utilizing maximum potentials of people is possible through motivation and command. Direction, therefore, is an important managerial function in ensuring optimum employee contribution. Co-ordinating:
It is the task of matrixing various employees’ efforts to ensure successful goal achievement. The Personnel manager co-ordinates various managers at different levels as far as the personnel functions are concerned. Controlling: After planning, organizing, directing and coordinating, the various activities, the performance is to be verified in order to know, at various points of time, whether the activities are performed as per plans and directions. It involves checking, verifying and comparing actual with the plans, identification of deviations if any and correcting the deviations. Auditing training programmes, analyzing labor turnover, overseeing morale surveys, conducting exit interviews are some of the controlling functions of personnel management. Operative Functions: The operative functions of H R M relate to employment, development, compensation and relations. All these are interacted by managerial functions. Also, they are to be performed in conjunction with management functions. Human Resources Planning Recruitment Selection Induction Placement
Performance Appraisal Training HUMAN RESOURCE Management Development DEVELOPMENT Career Planning Development Organization Change & Organization Development Job Evaluation Wage & Salary Administration Fringe Benefits
Morale Job Satisfaction Communication Grievance & Disciplinary Procedures Quality of Work Life & Quality Circles
Definition of Personnel Management:
Role of HR Manager: The role of the HR manager must parallel the needs of his or her changing organization. Successful organizations are becoming more adaptive, flexible, quick to change direction and customer-centered. Within this environment, the HR professional, who is considered necessary by line managers, is a strategic partner, an employee sponsor or advocate and a change mentor. Strategic Partner In today’s organizations, to guarantee their viability and ability to contribute, HR managers need to think of themselves as strategic partners. In this role, the HR person contributes to the development of and the accomplishment of the organization-wide business plan and objectives. The HR business objectives are established to support the attainment of the overall strategic business plan and objectives. The tactical HR representative is deeply knowledgeable about the design of work systems in which people succeed and contribute. This strategic partnership impacts HR services such as the design of work positions; hiring; reward, recognition and strategic pay; performance development and appraisal systems; career and succession planning; and employee development. Employee Advocate (support) As an employee sponsor or advocate, the HR manager plays an integral role in organizational success via his knowledge about and advocacy of people. This advocacy includes expertise in how to create a work environment in which people will choose to be motivated, contributing, and happy. Fostering effective methods of goal setting, communication and empowerment through responsibility, builds employee ownership of the organization. The HR professional helps establish the organizational culture and climate in which people have the competency, concern and commitment to serve customers well. In this role, the HR manager provides employee development opportunities, employee assistance programs, gain sharing and
profit-sharing strategies, organization development interventions, due process approaches to problem solving and regularly scheduled communication opportunities. Change Champion The constant evaluation of the effectiveness of the organization results in the need for the HR professional to frequently champion change. Both knowledge about and the ability to execute successful change strategies make the HR professional exceptionally valued. Knowing how to link change to the strategic needs of the organization will minimize employee dissatisfaction and resistance to change. The HR professional contributes to the organization by constantly assessing the effectiveness of the HR function. He also sponsors change in other departments and in work practices. To promote the overall success of his organization, he champions the identification of the organizational mission, vision, values, goals and action plans. Finally, he helps determine the measures that will tell his organization how well it is succeeding in all of this. The HR manager’s role is very delicate otherwise, as he is caught between the conflicting interests of management and labor. He has to be loyal to the management but also should honor his duties to the workers. PERSONNEL VS HUMAN RESOURCES MANAGEMENT Personnel Management 1. Personnel means persons employed. Personnel management is the management of people, skills employed. 2. Employee in personnel management is mostly treated as an economic man as his services are exchanged for wage / salary. Human Resources Management 1. Human Resources management is the management of employees’ knowledge, abilities, talents, aptitudes, creative abilities etc. 2. Employee in human resource management is treated not only as economic man but also as social and psychological man. Thus, the complete man
3. Employee is viewed as a commodity or tool or equipment which can be purchased. 4. Employees are treated as cost centres and therefore management controls the cost of labor. 5. Employees are used mostly for the organizational benefit. 6. Personnel function is treated as only a secondary function.
is viewed under this approach. 3. Employee is treated as a resource. 4. Employees are treated as profit centres and therefore, invests capital for human resource development and future utility. 5. Employees are used for the multiple benefits of the organisation, employees and their family members. 6. Human resources management is a Strategic Management function.
EVOLUTION OF HRM HRM emerged during the 1970s. People continued to refer to it by its older, more traditional title such as personnel management. With the change in time, even the trend of calling PM changed to HRM. The concern for the welfare of workers in the management of business enterprises has been in existence since ages. Kautilya’s Arthashastra states that there existed a sound base for systematic management of resources during as early as the 4th century BC. Elsewhere, HR in organizations received the management’s attention much earlier. As early as in 1800 BC itself, ‘minimum wage rate’ and ‘incentive wage plan’ were included in the Babylonian Code of Hammurabi. Experts of HRM in our country have tried to chronicle the growth of the subject only since the 1920s. This was the period when state intervention to protect the interests of workers was felt necessary because of the difficult conditions which followed the First World War (1914 – 1918), and the emergence of trade unions. The royal
Commission (1931) recommended the appointment of labor-welfare officers to deal with the selection of workers and to settle their grievances. The factories act 1948, made appointment of welfare officers compulsory in industrial establishments employing 500 or more workers each. In course of time, two professional bodies, the Indian Institute of Personnel Management (IIPM) and the National Institute of Labor Management (NILM), were set up. IIPM had its headquarters at Kolkata and NILM at Mumbai. These two places were the premier centers of traditional industry (jute and cotton respectively) in preindependent India. The aftermath of Second World War (1939 – 1945) and the country’s political independence witnessed increased awareness and expectations of workers. During the 1960s the personnel function began to expand beyond the welfare aspect, with labor welfare. IR and personnel administration integrating into the emerging profession called personnel management (pm). Simultaneously, the massive thrust given to the heavy industry in the context of planned economic development, particularly since the 2nd Five year plan and the accelerated growth of the public sector in the national economy resulted in a shift in focus towards professionalization of management. By the 1970s, a shift in professional values was visible. It shifted from a concern for welfare to a focus on efficiency. In the 1980s, professionals began to talk about new technologies, HRM challenges and HRD. The two professional bodies, IIPM & NILM, merged in 1980 to form the National Institute of Personnel Management (NIPM). In the 1990s, the emphasis shifted to human values and productivity through people. Reflecting this trend, the American society for personnel administration (ASPA) was renamed as the Society for Human Resource Management (SHRM). Thus, beginning in the 1920s, the subject of HRM has grown into a matured profession. TRAITS/CHARACTERISTICS OF THE WORKFORCE: In every country, working population occupies a prominent position in all aspects including industry, commerce, services and so on. It comprises persons who are actively engaged in any productive work/activity. Workforce or working class is a class of wage workers/earners earners who do not have their own means of production and
who earn a living by selling their labor to the employer. Workforce consists of three main forces, industrial workers, farm / agricultural workers and office or shop employees. Each category has its own professional skill, development and changes in numerical strength and composition. The industrial workers, being the core o f the working class, remain as the most powerful, numerous and influential workforce. The present workforce in India includes unskilled, semi-skilled and skilled workers. In addition, it also includes technicians, engineers as well as experts in the field of telecommunication, computer programming and so on. We are mainly concerned with industrial labor force which functions in the field of industrial production. Important Characteristics of Today's Workforce are as follows: (1) Composition of Workforce: According to National Sample Survey Organization (1999 - 2000), the total employment in both organized and unorganized sector in India was 397 million. Of this, 28 million (7.1 percent) were in the organized sector and the remaining 369 mn (92.9 %) were in the unorganized sector i.e. in agriculture, construction, trade, transport, communication and manufacturing, etc. Out of a total of 28.1 million worker in the organized sector, 19.4 million (69%) were employed by the public sector and nearly 8.7 million (31%) were employed by the private sector. This suggests that the share of the organized private sector in total employment was barely 2.2 per cent of total employment. At present, private sector is given ample scope to expand activities. As a result, large scale employment opportunities will be available in the organized private sector in India in the near future. (2) Employment in Factories: In 1999, the employment in factories (Under Factories Act, 1948) was of the order of 7.44 million. Taken together (factories, mines and plantations) it accounted for 9 million in 1999 which is just 2.2 per cent of the total workforce estimate of 402 million. In short, factory workforce is a very small portion of total labor force in the country. However, this industrial laborforce/workforce is given special attention by the government because of its contribution in the industrial production. This category of workforce is growing rapidly. (3) Roots in villages: Industrial workforce has its roots in
villages. Workers have left their traditional occupations and have migrated to cities and urban areas for employment. Many of them have still retained their attachment to land and rural life. However, the situation is fast changing in recent years. The migratory character of industrial workforce has practically ended in recent years. Now, we have industrial workers well settled in big cities for two or more generations. A new class of industrial laborforce (without roots in villages and agriculture) is emerging in our towns and cities. This is visible in cities like Mumbai, Kolkata, Ahmadabad and so on. Direct recruitment, provision of training facilities to employees etc. are, now, possible due to stable and urban based industrial workforce. (4) Limited education: Industrial workforce in India was largely uneducated over years. As a result, they were paid less and also exploited. Their participation in management was practically absent. The general trend was to organize strike for meeting their demands. However, the situation has changed due to their long period stay in cities. The labor force is now educated. They also take the benefit of training facilities provided by the employer. Workers, even, demand training opportunities for promotions and responsible positions within the organisation. Due to training programmes, they get higher salaries, quick promotions and responsible positions. In certain sectors, workforce includes even diploma holders, engineers and software and hardware experts. Indian labor force is now better equipped to face the challenges of new technology, new production techniques and other challenges of globalisation. 5) Labor turnover among industrial workforce: This problem was serious in the olden days due to rural socioeconomic background, easy availability of jobs, wage payment difference and so on. However, turnover is now reducing among industrial workforce. This is due to non-availability of new jobs, training needs of new jobs and more or less uniform pay scales and working conditions in industrial townships. As a result, shifting of jobs is difficult and also not attractive. Mobility of labor is no more a serious problem in many organized industries. In brief, rapid changes are taking place in industrial workforce in India. This relates to magnitude, structure, sectoral composition and earnings. These changes indicate that the position of industrial workforce is much better today as compared to what it was previously. At present, industrial workforce is improving as
regards educational background, social status, earnings and urbanization. Workforce is now united in regard to various problems faced by them. In the near future, industrial workforce will increase in number and will make substantial contribution in raising industrial production and productivity. This workforce will also share fair benefits of industrial growth and prosperity. A NOTE ON PERSONNEL PHILOSOPHY: Personnel policies, procedures and actions in any company or organization are guided by the philosophy of personnel management which the company may agree for dealing with the people. Such philosophy exists for every company but may or may not be available in written form. Sometimes, documents of the company (e.g. M/A or A/A ), personnel manual or annual reports may refer to this personnel philosophy. However, the top management and top managers of the company are aware of the basic aspects of such philosophy and follow the same while framing personnel policies and while dealing with· various personnel problems. Personnel philosophy of a company has different sides and it covers different aspects of personnel management of a company. For example, employees working in the company may be viewed as a technical factor, which may passively or actively oppose managerial leadership. It is always a desirable policy to mould the attitude of employees and see that they offer willing co-operation for achieving the objectives of the company. Developing such co operative outlook among the employees is beneficial to employees and the organization. Company's personnel philosophy should be for treating employees with dignity and securing their willing cooperation. In short, management's attitude towards employees is one major area which relates to the personnel philosophy of the company. The attitude of progressive/professional managements is normally favorable to employees. They are not treated like other material resources or as a commodity of exchange. Employees are regarded as partners in the production or as a precious asset with constructive potentials. An enlightened management can utilize this manpower resource fully for the benefit of the organization through progressive personnel policies. Such policies relate to the personnel philosophy .accepted by the management. Such management gives fair
treatment to employees with liberal opportunities to grow, to develop and to reach to higher positions in the organization. In brief, the importance attached to labor force is based on the personnel philosophy of the management. The personnel philosophy of the management is reflected in its outlook as regards the manner in which work is to be completed. Management means getting the work done by and through others i.e. employees. Here, management may force people to work and see that results are achieved. Autocratic leadership will be introduced and the production activity will be completed as per target/ requirement but by using force. The other alternative is to achieve the organizational objectives with the support, co operation and involvement of the people. Here, democratic leadership will be introduced. There will be delegation of authority, motivation of employees through suitable measures and effective control within the organization. Out of the two, which alternative is to be used depends on the philosophy of personnel management accepted. In fact, the personnel philosophy of the management will be reflected in the personnel policies introduced by the management from time to time. FACTORS INFLUENCING PERSONNEL PHILOSOPHY: (1) Top management philosophy: The personnel philosophy of a business organization is reflected in the overall policy statements issued by the top level management of the company. Such policy statements are given in the annual reports, personnel manuals and so on. One example of TISCO may be quoted here. The personnel management philosophy of TISCO is based on the views of its founder Shri. J.N. Tata whose concerns for the man and his welfare have been prime. The personnel philosophy of TISCO is reflected in the following statement." (i) Realistic and. generous understanding and acceptance of their needs, rights and on enlightened awareness of the social responsibility of industry; (ii) Adequate wages, good working conditions, job security, an effective machinery for speedy redressal of grievances and suitable opportunity for promotion and self-development; (iii) Promoting feelings of trust and loyalty through a humane and purposeful awareness of their needs and aspirations; (iv) Creating a sense of belonging and team spirit through their closer association with management at various levels". (2) Motivation of employees: Managers have to motivate employees and get the expected results from them. Different methods of motivation are available and can be used. These
methods directly or philosophy.
indirectly influence the personnel
(3) Basic assumption about people (i.e. employees): The top management has certain well accepted assumptions about people i.e. employees working in the organization. The personnel philosophy of the management is based on the assumptions accepted. Even the personnel policies are adjusted accordingly. (4) Changes in the environment: The personnel management philosophy is influenced by the changes in the environment within which people/ employees are required to be treated by the management. Such environmental factors include changes in the labor laws, basic work values, requirements of new life styles accepted by the people, difficulties in the motivation of people and so on. The personnel philosophy of the company is adjusted by the top management as per such environmental changes. What is a personnel policy?? A personnel policy is a pre-determined course of action set in order to guide personnel to perform their work so as to meet the objectives of the organization. Personnel policies furnish general standards. Personnel Policy Manual: A personnel policy manual is a booklet, which contains a comprehended form of the organizations policies regarding personnel. These policies deal with different aspects like employee benefits, employee discipline, company policies regarding unions etc. These policies prove to be guidelines for the functioning of an employee as an individual and also the functioning of the organization in totality. These policies avoid any sort of confusion when they are in written form. A personnel manual acts a guide to employees, managers and supervisors. A personnel manual should be provided to all managerial employees as a reference book for their task performance. CONTENTS OF THE PERSONNEL MANUAL 1. Organization goals and objectives.
2. Personnel Policy. 3. The role of the Personnel Department. 4. Human Resource Planning. 5. Job Design, Job Analysis, Job Evaluation. 6. Recruitment and Selection. 7. Orientation, Induction and Placement. 8. Training and Development. 9. Performance Appraisal. 10. Remuneration, Rewards, Incentives. 11. Employee Benefits and Services. 12. Promotions, Transfers, Separations. 13. Employee Welfare/Employee Relations. 14. Safety and Health, Counseling. 15. Employees Participation. 16. Industrial Relations. BENEFITS OF PERSONNEL POLICY MANUAL 1) Clear explanation of existing policies: One major benefit is that a written manual of policy provides everyone in management with a clear explanation of all existing company policies and practices. This acts as an invaluable asset to communications. Policy manual acts as a self-explanatory document 2) Useful tool in supervisory training: Personnel policy manual provides excellent material that can be used in conducting supervisory training courses for new supervisors and for refreshing their understanding of past company policy. Results of supervisory training will be available if company develop a comprehensive and integrated company policy manual and use it as a basis for supervisory training programme, personnel policy manual acts as a cornerstone of supervisory training programmed in human relation case studies, role playing, and other problem solving techniques can be designed around the policy manual. Discussion among supervisors in the context of the company’s policy manual generates comment and criticism that are invaluable feedback for consideration of further modification. 3) Document to company’s faith on fair personnel polices: Personnel policy manual serves as written documentation of a company good faith in providing fair employment practices and equal employment opportunities for present employees and future job applicants of the company. 4) Readymade guide or personnel policies and procedures:
A company needs well-trained and properly qualified managers who are capable of administering company’s policy in fair and a consistent manner. For this managers should know how to interpret company policy effectively clearly and promptly personnel policy acts as a guide to supervisory staff in regard to personnel policies and procedures. 5) Training manual for supervisory staff: Personnel policy manual act as a training manual for all ranks of supervision and key personnel officers in clearly understanding the personnel policies firmly, fairly equally to all employees regardless of their race color religion. Members of management can support the personnel policies and practices towers providing equal employment opportunities only to the degree of understanding of such policies and practices. 6) Avoid indecision on personnel matters: Personnel policy manual avoids indecision in regard to personnel matters. This reduces the tension on the part of management. It is in a position to reach to decisions in relation to operating personnel policies and practices. 7) Avoids unfair employment practices: Supervisors are suppose to know how to interpret companies personnel policies effectively and correctly so that employees or trade union will not be able to charge management with unfair employment practices. This manual provides with necessary information explanation and guidance to managers and avoid misinterpretation of personnel policies and practices of the company by the managers and supervisors. This protects goodwill and reputation of the company. 8) Act as a communication tool: Personnel policy manual is useful as a tool of communication with the users it act as two-way communication tool in development stage and an authorized announcement method after policy has been approved. The view of supervisors can be collected and studied before changing the policies incorporated in the manual. The official announcing of the new policy is made through the manual. This provides the details that answers question before they are asked. In brief policy manual acts as a useful communication device within the organization.
CHAPTER 2 – PERSONNEL PLANNING, Importance of Human resource: Human resources are one of the most important features of many businesses - especially in an economy where there is an increasing shift towards service-based industries. Human resources account for a large proportion of many businesses' costs and it is the people that invariably drive a business. Management of these resources therefore is an integral part of business success. Background There is no doubt that a business which does not plan its human resource requirement for current and future will experience a number of problems and may not be able to achieve above mentioned performance standard. Personnel / Human Resource Planning: Like corporate and strategic management, human resource management has a role to play in the continuity and longevity of the organisation. It does this by ensuring that the company’s corporate functions (such as marketing, production, etc.) are staffed – and that these staff is able to contribute to corporate success. HRM facilitates this by systematic human resource planning. Human resource planning (HRP) has been defined as a technique to facilitate the acquisition, utilization, development and retention of a company’s human resources. These resources are considered by some to be the organization’s most valuable asset and, therefore, need to be deployed with the maximum efficiency and effectiveness. The term “Manpower planning” or “Human resource planning” are synonymous. HRP or MPP is the process by which a management determines how an organization should move from its current manpower position to its desired manpower position. Through planning, the organization strives to have the right number and the right kinds of people at the right places, at right time to do things which results in both the organization and the individual receiving the maximum long-range benefit. Why is Human Resource Planning Important? • It allows your business’ strategic plan to be carried out. • Reflects the emphasis on people in organization’s Mission Statement.
• Helps to identify critical HR Gaps and how the organization will address them. • Results in a more disciplined approach to the management of the organization’s most critical resource – its people across your management teams. DEFINITION OF HRP: According to Coleman, “The process of determining manpower requirements and the means for meeting those requirements in order to carry out the integrated plan of the organization.” According to Stainer, “Strategy for the acquisition, utilization, improvement and preservation of an enterprise’s human resources. It relates to establishing job specifications or the quantitative requirements of jobs determining the number of personnel required and developing sources of manpower." Thus, we can say that HRP is the process of forecasting a firm’s future demand for, and supply of, the right type of people in the right number. Area of HRP: FORECASTING
TRAINING & DEVELOPMENT
MAINTAINING Forecasting the manpower requirements of the organization Acquiring people from internal and external sources of recruitment Developing manpower thru education, training and development programs.
Maintaining stable manpower through attractive pay packages and other facilities. IMPORTANCE OF HRP: (should be understood keeping in light the broad areas mentioned above) The penalties for not being correctly staffed are costly. Understaffing loses the business economies of scale and specialization, orders, customers and profits. Overstaffing is wasteful and expensive, if sustained, and it is costly to eliminate because of modern legislation in respect of redundancy payments, consultation, minimum periods of notice, etc. Very importantly, overstaffing reduces the competitive efficiency of the business. Staffing level planning requires that an assessment of present and future needs of the organization be compared with present resources and future predicted resources. The following points outline the importance of human resource planning:
Solves problem of over / under staffing: Successful planning helps determining and satisfying future personnel needs. Surplus or deficiency in staff is the result of the absence of or defective planning. Many public sector enterprises have found themselves overstaffed and the main cause of this is poor / lack of planning by them. The outcome was that many organizations had to resort to the VRS i.e. “Voluntary retirement schemes”. In PSUs the hiring process went on without proper planning until late 1980 and then a ban came which was very late. Able to cope change: the external environment for any organization is never static. Changes taking place in competitive forces, markets, technology, products and government regulations. Successful planning enables organization to cope with such changing external environment. Creating a pool of talented employees: with the advent of globalization and 3 faced competitions, it has become almost challenging for companies to attract and retain qualified and skilled personnel. For e.g. L&T an engg company has MBAs, Engineers and technicians who collectively constitute 70% of the total employee strength. These people are also known for job hopping, thereby creating frequent shortages in the organization. The HR
manager must use his skills to attract & retain qualified and skilled people. It provides a base for Personnel Functions: Only properly done man power planning provides essential information for designing and implementing personnel functions such as recruitment, selection, transfer, promotion, training and development. Organization increases its assets: The organization makes an investment for an employee in terms of either training or job assignment and in turn it leads to the employee gradually developing in his skills and abilities. When such employee is retained in the organization he/she proves to be an asset to the organization. Leading to reduction in cost of production: Due to proper HRP, the organization gets best possible employees who are highly skilled, experienced (in some cases), and well trained. The proposed turnover rate of labor also reduces. Stability is one of the factors leading to reduction in the cost of production.
Thus, HRP is a double-edged weapon. If used properly then it leads to The maximum utilization of human resources Reduces the problem of over employment / under employment. Reduces excessive labor turnover and high absenteeism. Improves productivity and helps achieving organization objectives. FACTORS AFFECTING HRP HRP is influenced by several considerations. The important ones are as follows: 1. Type of Organization: The very important factor affecting the Human Resource Planning is what type of organization is it? Whether the organization has Manufacturing – cum – Marketing Unit? Or just Manufacturing Unit? Or just marketing Unit? The HR Planning structure of any organization having Manufacturing Unit is more complex than the other types. 2. Strategy of Organization: What strategy has the organization designed for itself? Is another important question pertaining to HRP. For e.g. if the organization has planned a strategy of Acquisition or Merger, then, it will need to plan for layoffs, since
mergers tend to create duplicate or overlapping positions that can be handled more efficiently with fewer employees. The other part of planning is, whether the organization wants to be proactive or reactive? The proactive strategy carefully anticipates the needs and systematically plans them to fill them far in advance. The reactive strategy may lead organization to react to needs as they arise. Some organizations may have a broad focus in planning. They select all aspects of Human Resource Management such as recruitment, selection, training, development, promotion, transfer etc. whereas, some organizations may adopt to narrow aspect such as just planning one or two areas such as recruitment, selection etc. and leave the rest for time to come. Whatever may be the focus of organization in the area of HRP, the most important part here, which every organization should take into consideration while planning the resources is that flexibility – the ability of the plan to deal with contingencies so as to reduce uncertainty. 3. Organization Cycle: Like every human being, the organization has life cycle, thru which it passes. The introduction (Birth) stage, growth stage, maturity stage and decline stage. Small organizations, during the introduction stage may not give due importance to planning. Need for planning is felt when the organization enters the growth stage. HR forecasting becomes essential. Internal development of people also begins to receive attention in order to keep up with the growth. During the maturity period of the organization, the growth slows down, the work force becomes old, and few young people are hired. Planning during this stage becomes more formalized. Issues like retirement and possible retrenchment dominate planning. Finally, in the declining stage, HRP takes a different focus. Planning is done for layoffs, retrenchment and Voluntary Retirement. 4. Environmental Uncertainties: In very rare cases, the organization has the privilege to operate under stable environment. Every organization is affected by external environmental factors such as change in the policy of government, technological changes, and socio-economic changes. The organization requires planning
very carefully its recruitment, selection, training & development, promotion and retirement policies. There are plans either for short term i.e. for upto 3 years or for longer term i.e. from 3 years to 20 years. Companies operating under uncertain environment should always plan for shorter period. Plans for others where environment is fairly stable, may be for a longer term. In short, the greater the uncertainty, the shorter the plan’s time horizon and vice versa. 5. Type of Vacancies: in an organization, job vacancies arise due to separations, promotions, and expansion strategies. It is easy to employ shop-floor workers, but a lot of sourcing is necessary for hiring managerial personnel. Therefore, the personnel department should always anticipate vacancies, as far as in advance, to provide sufficient lead time to ensure that suitable candidates are recruited. 6. Off-loading the work: Many organizations off-load part of their activities in the form of sub-contracting. If so, the HR planning should consider this aspect also. For e.g. company like HLL has given the subcontract for manufacturing of many of its products to local manufacturer. This saves cost on investment as well as employee recruitment. The following example explains how HR planning is done at Shopper’s Stop. In order to determine the number of personnel required for its new stores, the company takes the look at the operations of its previous stores. It considers the number of people, the quantum of sales activity. It also considers the size of the stores, which it plans to set up. Depending upon the size of the store, the number of Customer Care Associates (CCA) required is calculated. On an average, there should be 1 CCA for every 50 sq. ft. of store area. It takes into consideration, the number of counters for concessional brands. These are the brands offered by other companies such as Avon, maybeline etc. Shopper’s Stop does not have to plan its HR for concessional brands. Within the selling area of Shopper’s Stop brands there are some sales counters which do not require many sales assistance, e.g. readymade garment counters.
There are a few counters such as jewellery it requires at least 2-3 CCAs at all 11 hours that the store function. Apart from the CCAs every store that is set up will have following personnel: o Unit Head o HR Personnel o Person in-charge of maintenance o Electrician o Accountant o Cashier Features of MPP: 1. Facilitates the control of manpower cost: a. Manpower cost is very imp to organization b. Proper HRP avoids overstaffing c. Recruitment is done as per the requirement organization 2.
Enables proper placement to the right jobs a. Placement is made as per the qualities of the persons and the requirements of different jobs. Filling up of vacancies a. Due to retirement, turnover Facilitates growth of the employees a. Due to proper training and development
Objectives of HRP: 1. To ensure optimum use of human resource a. Current and future thru… i. Proper placement, training and development prog, Meeting future manpower needs Ensure availability of adequate manpower as per diff dept. Development of Manpower: Manpower development is possible through manpower planning.
2. 3. 4.
Needs of MPP: 1. 2. To meet the manpower needs of business enterprise To arrange for the replacement of existing manpower
4. 5. 6.
a. In the event of retirement, transfer, removal, turnover of employees. To meet growing manpower requirement of the orgn: a. In the event of modernization, expansion undertaken by orgn, additional manpower requirement has to be done. To meet challenges of changing technological env To place an employee at correct position. To avoid surplus/shortages of employees.
Advantages of MPP: 1. 2. 3. 4. 5. Enables proper recruitment and selection policy Ensures orderly working and growth of orgn Regulates cost factor Motivates existing employees Prevents sudden shortage of employees
Limitations of Personnel Planning: 1. 2. 3. Future manpower needs are uncertain Time-consuming and process Surplus manpower makes HRP redundant: HRP exercise is useful in countries where manpower available is less than requirement. In India, due to over-population, many management (conservative ones) do not give much importance to HRP. Shortage of skilled labor and labor turnover
Role of Human Resource Planning The prime role of HRP is to ensure that an organisation has the right quantity and quality of employees doing the right things in the right place at the right time and at the right cost to the organisation. In achieving this, HRP has a number of more specific roles, as follows: • To determine and facilitate the levels and types of recruitment that may be required • To assess current levels and attributes of staffing and determine whether reductions are • Necessary (redundancy) • To assess whether redeployment can be used as an alternative to downsizing • To identify the need for training and development
To assess current employment costs in relation to other organizational costs (wage costs account for over 60% of an organization’s expenses)
HRP plays a vital role in the formulation of strategy within the organisation. An organisation cannot function without people; thus the human resource planning activities become all the more important because they forecast how many employees are required to carry out the organization’s activities and help it to meet customer demand for its products or services. HR directors are usually members of the board and, as such, they have a specific role to play in the formulation of HR objectives, policies, procedures, plans and strategy. These highlight the type of plans that contribute to the overall corporate and strategic plan and, along with the finance plan, operational plan, marketing plan, etc, help in the formulation of the overall corporate and strategic plan.
What Does Human Resource Planning Involve? • A comprehensive look at Human Resources covering everything from: • Strategy - Outline how your organization’s HR strategy will integrate with your overall business strategies; • Organizational Design - Define the organizational design. • Recruitment and Orientation - Create objectives for the recruitment and orientation of your team that will address all of the details of recruiting sources, interviewing techniques, etc. • Retention Plan - Indicate how your organization will retain and motivate its employees; • Performance Management – Outline how your organization will manage the performance of its employees.
PROCESS OF HRP The process of HRP is one of the most crucial, complex and continuing managerial function. The process involves many steps mainly involving forecasting personnel needs (demand), assessing personnel supply and matching demand-supply factors through personnel related programmes. The HRP process is influenced by overall organizational objectives. The process has gained importance in India with the increase in the size of business enterprises, complex production technology, and the adoption of professional management technique. HRP Steps / Process / How organizations plan for their HR effectively:
Organization Objective & Policy
E N V
HR Needs(DD) Forecast
HR SS Forecast
Control & Evaluation of prog.
Surplus restricted hiring, reduced HRs, VRS layoff,etc.
Shortage Rec. Selection
Explanation of the above stated diagram: Environmental Scanning: It refers to the systematic monitoring of the external forces influencing the organization. These factors are: • • • • Economic Factor Technological changes Demographic changes Social concerns, including child care, educational facilities
By scanning the environment, for changes that will affect an organization, managers can anticipate their impact and make adjustments early. 1. Organizational objectives and Policies:
HR plans need to be based on organizational objectives. Objectives of HR plans must be derived from organizational objectives. Even, number and characteristics of employees should be derived from the organizational objectives. Organizational objectives are defined by the top management and the role of HRP is to subserve the overall objectives by ensuring availability and utilization of human resources. Once the organizational objectives are specified, the HR department must specify its objectives with regard to HR utilization in the organization. In developing these, specific issues as stated below must be addressed to: • Are vacancies to be filled by promotions from within or hiring from outside? • What union constraints are encountered in HRP and what policies are needed to handle these constraints? • How to enrich employee’s job? • How to downsize the organization to make it more competitive? • To what extent production and operations be automated? What can be done about those displaced? 2. HR needs (Demand) forecast: Needs forecasting is the process of estimating the future quantity and quality of people required. The basis of the forecast must be the annual budget and
long term corporate plan, translated into activity levels for each function and department. It is done by translating the corporate plan into activity levels for each function and department. • For e.g. in a manufacturing company, the sales budget would be translated into a production plan giving the number and type of products to be produced in each period. • From this information, the number of hours to be worked by each skilled & unskilled category to make the quota for each period would be calculated. • Once the hours are available, determining the quality and quantity of personnel will be logical step. Demand forecasting must consider several factors – both external as well as internal. External Internal a. Domestic and international a. budget constraints competition. b. New products and b. Laws services. c. Changes in technology c. Organizational d. Socio-economic factor structure (flat / tall)
Demand forecasting helps organizations • To qualify the jobs necessary for producing a given number of goods or offering services. • Determine what staff-mix is desirable in future; • Assess appropriate staffing levels in different parts of the organizations so as to avoid unnecessary costs; • Prevent shortages of people where and when they are needed the most; & • Monitor compliance with legal requirements with regard to reservation of jobs. 2.a. Forecasting techniques: Organizations generally follow more than one technique to forecast its HR requirements. These techniques vary from simple to sophisticated ones. Some of them are: 2.a.I. Managerial Judgement: This techniques being the simplest, here, the managers sit together, discuss and arrive at a figure which would be further demand for labor.
• The technique involves a “bottom-up” or a “top-down” approach. • In case of “bottom-up” approach line managers submit their departmental proposals to top managers who arrive at the company forecast. • In other case, top managers prepare company and departmental forecasts. • These forecasts are reviewed with dept heads and agreed upon. • In both techniques, while implementing the same, the dept heads are provided with broad guidelines. • With the help of guidelines and in consultation with the HRP section in the HRM dept, dept managers can prepare forecasts for their respective depts. • HR managers prepare the company forecasts and thus arrive at overall forecast. • A committee comprising dept managers and HR managers will review the two sets of forecasts; arrive at a unanimity, which is then presented to top managers fore their approval. • This technique is used in smaller organizations. 2.a.II. Ratio-trend analysis:
• This is the quickest forecasting technique. • The technique involves studying past ratios, and forecasting future ratios, making some allowance for changes in the organization or its methods. • The following table shows how an analysis of actual and forecast ratios, between the number of routine proposals to be processed by an insurance company’s underwriting department and the number of underwriters employed could be used to forecast future requirements.
No of employees No. of Underwrite Proposals r -3 1500 150 -2 1800 180 Last yr 2000 180 Next yr 2200 200 +2 2500 210 +3 2750 230
Ratio Underwriter:Proposal 1:10 1:10 1:11 1:11 1:12 1:12
2.a.III. Work-study Technique:
• • •
Work-study technique can be used when it is possible to apply work measurement to calculate the length of operations and the amount of labor required. For e.g. starting point of any manufacturing unit will of course be production unit. The production budget of the unit is prepared in terms of volumes of saleable products for the company as a whole, or volumes of output for individual departments. The budgets of productive hours are then compiled using standard hours for direct labor. The standard hour per unit of output are then multiplied by the planned volume of units to be produced to give the total number of planned hours for the period. This is then divided by the number of actual working hours for an individual operator to show the number of operators required. Following is an example in terms of numbers. 20,000 Units
Planned output for next year
b) Standard hours per unit 5 hours c) Planned hours for the year 1,00,000 (20,000 * 5) d) Productive hours per man/year (allowing 2000 absenteeism, normal overtime and idle time) e) Number of direct workers required (c/d) 50 Organizations follow more than one technique for forecasting their people’s needs. L&T, for e.g. follows “bottom-up” of management judgement and work-study technique for demand forecasting.
Forecasting process in L&T begins during November of every year. The department heads prepare their personnel estimates based on details of production budget supplied to them and submit the estimates to the respective personnel managers. (L&T has around 11 plants in the country). The personnel heads will review the estimates with the departmental heads and will send final reports to the Mumbai office where a centralized HR department is located. Estimates are reviewed by the HR department and final figures are made known to those personnel managers who initiate steps t hire the required number of people in the following year. The forecast is made for a period of 5years, nut is broken down to yearly requirement. 3. HR Supply forecast: • Personnel demand analysis provides the manager with the means of estimating the number and kind of employees that will be required. • The next logical step for the management is to determine whether it will be able to procure the required number of personnel and the sources for such procurement. • This information is provided by supply forecasting. As it measures the number of people likely to be available from within and outside an organization, after making allowance for absenteeism, internal movements and promotions, etc. HR Programming: Once an organization’s personnel demand and supply are forecast, the two must be reconciled or balanced in order that vacancies can be filled by the right employees at the right time. HR programming is a very important step and therefore assumes greater importance. HR Plan implementation: Implementation requires converting an HR plan into action. A series of action programmes are initiated as a part of HR plan implementation. Some such programmes are recruitment, selection and placement; training and development; retraining & succession plan. Control & Evaluation:
Control & Evaluation represents the fifth and final phase in the HRP process. The HR plan should clarify responsibilities for implementation and control, and establish reporting procedure which will enable achievements to be monitored against the plan. If there is surplus of employees, then strategies such as restricted hiring, VRS, Layoffs etc can be implemented. If there is shortage of employees, then recruitment and selection can be implemented. FACTORS AFFECTING HR PLANNING OR WHY HR PLANNING DOES NOT WORK? OR LIMITATIONS OF HR PLANNING Effective HR Planning is a pre-requisite for successful HRM practices. However, there are certain factors – internal as well as external which affect the effectiveness of HR planning adversely. 1. Improper linkage between HRP and corporate strategy. (HR strategies always follows corporate strategies) 2. Inadequate importance to HRP 3. Environmental uncertainty. 4. Rigidity in attitudes 5. Inappropriate HRIS 6. Conflict between long term and short term HRP PART – II HR PLANNING • • • • • • • • • • • • HRIS Downsizing VRS Outsourcing Demotion Separation Layoff Retrenchment Discharge / termination Pink slip Contracting & subcontracting Promotion
• Transfer Human Resource Information System (HRIS) Human Resource Information System (HRIS) is basically a software or online solution for managing the day-to-day needs of the human resource department, including payroll management, and accounting functions within a business. It is an integration of HRM and information technology and is managed by a group of technology professionals. Tannenbaum (1990) defines HRIS as “a technology-based system used to acquire, store, manipulate, analyze, retrieve, and distribute pertinent information regarding an organization's human resources.” Furthermore, HRIS merges the discipline of HRM and the basic HR policies and the activities with information technology. Thus, HRIS not only includes the system and software applications but also includes the people, policies, data and procedures required to manage the HR function. It is a new world of technology used to manage human resources in the organization. A typical HRIS can aid the companies in: • • • • • • • • • Management of all the information related to the employees Recruitment Tracking employee attendance Tracking employee pay increments, positions held Benefits administration Tracking improvement employees Tracking training received by the employees Talent management
An effective HRIS is one that provides all the information that a company needs to track and analyze the employees, former employees and applicants. This system should help the company to plan and manage the HR costs, increase the efficiency of the HR function and produce reports that are capable of improving decision-making. The HRIS so developed must be aligned with the business goals and the data available with the system should be accurate and must be integrated with all the other functions in the organizations. The HRIS must have an integrated database and must serve as a powerful reporting and analyzing power so that it serves the requirements of managers to manage the workforce. Peoplesoft is one of the well-known software on HRIS
SEPARATIONS Separation occurs when an employee leaves the organization. Reasons for separations may be voluntary or involuntary. In voluntary separation, initiation is taken by the employee himself/herself. Where the employer initiates separation for an employee, it becomes involuntary separation. Here, employee entertains the feeling of injustice and seeks legal protection to undo it.
Voluntary separation, as stated above, occurs when the employee decides to terminate the relationship with the organization. An employee decides to quit when he/she is at a level of dissatisfaction with the present job or a lucrative offer is awaiting.. During economic boom when jobs are available in plenty, quits becomes quite common. Involuntary Separation:
Organization often encourage quits through cash incentives. Popularly called VRS, these separations are resorted to when organizations experience losses. They resort to cost saving. VRS schemes were introduced in banks for downsizing the staff. This was necessary due to extensive use of computers. It may be noted that downsizing is one challenging job before HR personnel. This problem is complicated as management wants downsizing while employees oppose to such downsizing as it leads to retrenchment of staff. VRS is a popular form of downsizing. In India, downsizing strategy is normally implemented through VRS in which attractive compensation package is offered to employees opting for VRS. HR personnel should help the top management while preparing a compensation package which will be attractive and beneficial to both-organization and employees. VRS is also called Golden Hand Shake Plan. This practice of removing indirectly unwanted/surplus employees (officers and workers, etc.) is followed in the public sector as well as in the private sector organizations. Here, the organization announces the voluntary retirement scheme and interested employees are asked to submit applications for voluntary retirement from the organization. They are relieved from the job as per the terms and conditions mentioned in the scheme. VRS involves separation of employees from the organization on the basis of mutual agreement between the two. Many banks, state governments and private sector organizations have introduced such schemes in the recent period. Voluntary retirement is different from dismissal, removal and retrenchment of employees. Under VRS, handsome compensations are paid to those who opt to leave/retire. Thus, surplus employees are offered monetary incentives for early retirement. The incentives may be in the form of: (a) Pension and lump sum gratuity, (b) Loyalty bonus, (c) Employee Stock Ownership Plans (ESOPs), (d) Prizes and rewards for long service in the organization. VRS is advocated on the following grounds:
(a) To reduce financial burden on the organization. (b) To reduce surplus labor. (c) To ensure optimum utilization of operating manpower in an organization. (d) To introduce new technology in manufacturing process and also in corporate office management. (e) To introduce extensive use of computers and new techniques in information technology (IT).
Discharge: It takes place when the employer discovers that it is no more desirable to keep an employee any longer, discharge, also called as termination, and should be avoided as far as possible. Any termination is reflection on the company’s HR system. Also, it is expensive as the firm must seek replacement, hire and train the new hiree. Discharge is initiated by the employer. It is a drastic step and should be taken after careful thought. This step needs to be supported by just and sufficient reasons. The following reasons lead to the dismissal of an employee: • • • • Excessive absenteeism Serious misconduct False statement of qualification at the time of employement. Theft of company’s property.
Layoff is a temporary separation of an employee by the employer under specific circumstances. A lay-off may be for a definite period and on the expiry of the period, an employee will be called back and the separation comes to an end. Such lay-off may be due to various reasons such as shortage of raw materials, accumulation of stocks, and breakdown of machinery and so on. Retrenchment is a sort of permanent separation by an employer with due notice as per statutory provisions. The employee is also paid compensation. Retrenchment of an employee for economic reason is quite common in India at present. The Industrial Disputes Act 1947 defines retrenchment as the "termination by the employer of the services of workmen for any reason." It may be noted that termination of services as a punishment given or disciplinary action or retirement either voluntarily or on reaching the age of superannuation or continued ill-health or on the closure and winding up of a business, does not constitute retrenchment. The term is applied to continuing operations where a part of the work force is found to be superfluous (surplus). The principle in the procedure of retrenchment is that the last person employed in each category must be the first person to be retrenched i.e. "last come, first go." As and when vacancies arise after retrenchment, the employer given an opportunity to the retrenched worker to offer themselves for reemployment; and they are given preference. Such vacancies are generally notified at least 10 days before they are filled up. Retrenchment is unfortunate for concerned worker as he becomes unemployed till Securing new job. It creates hardships to him as well as to his family members. However, it is inevitable when the organization is facing serious problems. Downsizing: Organization Downsizing: In any business organization, there should be adequate staff (employees) as per the need. Excess employees or inadequate employees are undesirable as both the situations are harmful. The term downsizing is used to indicate reduction of excess manpower by suitable measures. Downsizing of an organization means reducing the number of employees and adjusting the manpower as per need of the organization so that the problem of excess manpower will be solved smoothly /peacefully. In order to overcome the problem of surplus staff, downsizing strategy is used extensively.
The objective of downsizing strategy is to achieve rightsizing. This means to adjust manpower as per the need of an organization. The excess manpower (over-staffing) in an organization may be due to: (1) Faulty human resource planning because of which assessment of manpower requirement proves faulty. (2) Change in the man-machine ratio due to technological advances. Use of computer technology creates the problem of surplus manpower in many service organizations including banks. Outsourcing of certain business functions leads to surplus manpower in an organization. Downsizing plan prepared will indicate: (I) Who is to be made redundant and where and when, (II) Steps to be taken to help redundant employees find new jobs, (III) Policy for declaring redundancies and making redundancy payments, and (IV) Programme for consulting unions or staff associations and informing those likely to be affected. For reducing surplus employees, some other methods can also be used. Such methods are: (1) To retain all existing employees but to reduce the work hour for reduction in the total salary payment. (2) To transfer or reassign employees in other units of the organization where there is need of additional employees. (3) To offer incentives for early retirement in the form of VRS. (4) To declare lay-off for dealing with surplus staff. Downsizing also becomes necessary when market demand reduces or when new technology is introduced (in banks, surplus staff is due to extensive use of computer technology) or when certain business activities are closed down. The term downsizing is normally used in the case of excess jobs/employees. However it is also used in regard to production activities. For example, recently, Century Textiles
and Industries (Worli, Mumbai) is planning to downsize its production capacity through downsizing of spinning and spindle capacity. Ultimately, this will lead to pruning of its workforce by almost 2,000 out of the present workforce of about 6,000 odd people. OUTSOURCING: The term outsourcing is used extensively in the present business world. Since 1980s, there is a clear trend towards vertical disintegration in the USA and other countries. Such outsourcing is done on large scale in the production as well as service sector. Outsourcing is very common in the IT sector. Many Indian IT companies get the benefit of such outsourcing from foreign companies. Similarly many automobile companies get components by others. Such components are assembled by the automobile company. Here, automotive manufacturers have out sourced component 'l1anufacturing that was previously conducted in house. Outsourcing is becoming popular in the present global business. The term outsourcing has been defined in different ways as mentioned below: Make or buy practice is quite old in business. Make means doing things internally. Buy means getting things done externally. The latter aspect is becoming more common in the present large scale business in the form of outsourcing. Outsourcing means sending work outside the organization to be done by individuals not employed full time with the organization. In various business activities, the practice of outsourcing is popular and used extensively. The concept of outsou rcing has entered in a big way in HRM in overseas companies. This trend has now entered in the Indian business. Right from recruitment, training profiling, compensation management and pay roll outsourcing also form a part of HR outsourcing. Outsourcing of HRM functions in India has big scope. It may be noted that all HRM functions cannot be outsourced as HR service outsourcing is not like the product outsourcing. This is because HRM functions require certain confidentiality. However, all HR functions are not of the same confidential nature. Those HR functions which are not confidential can be or may be outsourced. Similarly, functions with less criticality can also be outsourced. In brief, confidentiality and criticality are two factors which need careful consideration before going
for outsourcing. Every organisation has to decide what to outsource and what not to outsource because all HRM functions cannot be outsourced safely. For example, preliminary work relating to recruitment and selection, administrative work relating to employee benefits, employee welfare services, pay role and compensation management, staff training and the HRM functions which are not performed on regular basis such as human resource planning, preparation of appraisal forms, job design, job evaluation, installation of safety measures, etc can be outsourced easily, economically and without any adverse effect on confidentiality. BENEFITS OF OUTSOURCING: (1) By transferring or outsourcing non-critical HRM functions, the organisation can concentrate on critical HRM functions and perform them efficiently. HR professionals will not lose sight of critical HRM functions when routine and non-critical functions are outsourced. (2) Performing non-critical HRM functions internally is not cost effective as such functions prove costly. (3) BPO (HR) vendors with infrastructure and requisite skills can provide efficient services at much less cost. This gives benefit to companies in regard to outsourcing. (4) Outsourcing results into higher return on investment through significant savings on operational and capital costs. (5) It enables organisations to focus on "core" activities. They dm shift their policies from tactical control to strategic planning. (6) Outsourcing enables organisations to exploit more advance technologies available· with the supplies. This improves quality of production and creates market reputation. (7) It helps to undermine the power of trade unions. (8) Outsourcing simplifies organisation structures and makes them flatter and more agile.
DEMERITS OF OUTSOURCING: (1) Outsourcing leads to job loss in the organisation. Large scale outsourcing leads to unemployment to people within the country and outflow of funds from the country in the form of fees and service charges. (2) Outsourcing brings creeping privatization in the public sector organisations. (3) Difficulty in deciding what and how much to outsource. (4) Dependence on supplier for vital components is undesirable and may prove dangerous to the main organization where outsourcing is substantial. (5) Difficulties in managing new relationships with the outsource agencies. Due to recent recession in the USA and European countries, the general opinion was unfavorable to large scale outsourcing. The Obama Administration has imposed restrictions and financial pressure on companies which are outsourcing to countries like India. However, companies from many countries including USA continued the practice of outsourcing because it proved economical to them. India is favorable to outsourcing because our IT and other companies get business as well as high profit due to outsourcing practice. India has immense potential as more than 80 per cent of fortune 1,000 companies are discussing HR outsourcing as a way to cut costs and increase productivity. Demotion is the exact opposite of promotion wherein an employee is demoted to the post at a lower level. For example, a manager may be demoted as supervisor. Demotion is lowering of status, salary and responsibilities of an employee. It is a type of punishment for serious mistakes or irregularities on the part of an employee. It is a lesser punishment as compared to dismissal. Demotions are given in companies, banks and government departments. Promotions are very common but demotions are rare and used as a method of last resort. Moreover, demotion creates adverse psychological effects on the employee.
Pink Slip: It is an American term that refers to being fired or laid off from one's job. It is an official notice sent to an employee informing him that you have been fired from your job. Synonyms to pink slip are: dismissal or dismission. This means the person is removed from his job. It is as good as discharged, dismissed, dropped or terminated removed from the service. In the USA, companies used to dismiss employees by distributing notices printed on pink slips of paper. American workers from all walks of life fear of one day receiving "Pink Slips" from their employers. These are notices printed on pink paper (usually distributed with paychecks) informing employees that their services are no longer required. Pink slips have long since become symbolic rather than literal. Perhaps the "pinkslip" doesn't have anything to do with color at all. It only indicates a practice followed by companies since long while removing him from the service. CONTRACTING AND SUB-CONTRACTING: Along with outsourcing, contracting and sub-contracting are two methods / techniques used for transferring certain jobs to outside agencies on contract basis. The purpose is to reduce cost and to get the routine and simple type of work done from other agencies so that time of internal will not be used for such less important as well as repetitive type of work. The practice of contracting and sub-contracting are used in production sector as well as in services sector. In building construction work, such contracting is quite common when the construction project is very big and is required to be complete within specific time limit. For example, a builder may give contract of coloring or tiling work or plumbing work to a contractor. He has to complete the work as per specification and will be paid as per amount fixed. Supposed the contractor has taken a plumbing work contract of ten identical building. He may appoint a sub-contractor for plumbing work of five buildings. Here, sub-contractor will work as per the instructions of the main contractor and will be paid as per the amount decided between the contractor and sub-contractor. This briefly suggests how contracting and sub-contracting practice is followed in the building
construction activity. Large housing construction projects are completed quickly due to the practice of contracting and sub contracting. We observe plastering, tiling, plumbing, electrification work going on simultaneously in the housing complex due to this practice of contracting and subcontracting. This practice reduces the cost, brings division of work and specialization, speeds up the work and also gives relief and convenience to the builder who finds it difficult to give attention to each and every work relating to a housing complex. Contractors may operate as independent contractor, general contractor or sub-contractor. An independent contractor is a natural person, business or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when required. Independent contractors are usually paid on a freelance basis. Contractors often work through a limited company, which they themselves own, or may work through an umbrella company. A sub-contractor is an individual or in many cases a business that signs a contract to perform part 'or all of the obligations of another's contract. A sub-contractor is hired by a general contractor to perform a specific task as part of the overall project. Such subcontractors are most common in building works and civil engineering. A general contractor is a group or individual that contracts with another organization or individual (the owner) for the construction, renovation or demolition of a building, road or other structure. In addition to building construction work, contractors and sub contractors also operate in the field of industrial production and services. They are appointed for providing certain services or contract is given to them for supplying certain components or services. The following examples are worth noting in this regard. A manufacturing of automobiles may not manufacture each and every component required at its plants. It may decide to give contract to an outside agency or agencies for the supply of components as per its specification. A regular contract will
be made and the contractor will start supplying components as per the terms and conditions agreed in the contract. This is contracting for the supply of components. The automobile company makes such contract for its benefits and convenience. The contractor also gets new job work and also earns out of such contract. He may even appoint a subcontractor for some service, etc. This is an example of contracting for supply of products/ components. One more example of a service organization can be given. XYZ is one IT company doing good work. It may be engaged in outsourcing. The company may have more than 1,000 qualified employees. However, this manpower is inadequate due to increase in the volume of work. Here, the IT company may select some less important, simple and repetitive work and decide to get it done from other IT service providers. Regular contract will be made for providing the required services and the contractor will start supplying the services accordingly. In this case also sub contracting is possible. It may be noted that the concept of contracting, subcontracting and outsourcing are rather identical Human resource outsourcing (HRO) is gaining ground among Indian corporates who are looking at expanding the scope of their service. HR is getting outsourced to third party providers who can offer the benefit of their special skills. Contracting/ subcontracting offers benefits to both the parties. As a result, this practice is followed extensively in the business world including the construction activities of varied type. JOB TRANSFER A Job Transfer involves a change in the job accompanied by a change in the place of the job of an employee without a change in responsibilities or remuneration. A transfer differs from a promotion in that the latter involves a change in which a significant increase in responsibility, status and income occurs, but all these elements are stagnant in former. Reasons for transfer: The reasons for transfer vary from organization to organization. Following are the tentative reasons for Job Transfer. 1. Shortage of employees in one department and surplus in the other department.
Correction of faulty initial replacement of an employee. To break monotony of work.
4. Change of climate may be required for better health of an employee. 5. Family related issues such as marriage of female employee.
Principles of transfer: 1. The frequency of transfer & minimum period between 2 consecutive transfers. 2. The authority which would handle transfers is to be decided upon. The usual practice is that the person in charge of that department handles transfers in each department. The best course is to centralize the authority handling transfers, and make the HR department responsible for that. 3. The criteria for entertaining transfer need to be laid down and strictly adhere to. 4. The area of the organization over which transfers can be made need to be defined. 5. The effect of transfer on seniority of the transferred employee may be clearly evaluated. 6. It should be clearly defined as temporary or permanent.
7. The interests of the organization are not to be forgotten in framing a policy of transfer. TYPES of Transfer: 1. Production Transfer: (As mentioned earlier) a shortage or surplus of the labor force is common in different departments in a plant. Surplus employees in a dept have to be laid off, unless they are transferred to another department. Transfer affected to avoid such imminent lay-offs are called production transfers. 2. Replacement transfer: Replacement transfers are made for suitable adjustments of employees in different departments. A replacement transfer’s purpose is to give protection to senior employee (long service employee) as long as possible. Here, a junior employee may be replaced by a senior employee who is
excess/surplus in some other department. This also avoids lay-off of such senior employee. Replacement transfers are quite common during the period of recession. 3. Versatility Transfers: It is affected to make employee versatile and competent in more than one skill. Versatile operations are valuable assets during rush periods and periods when work is dull. It may be used as a preparation for production or replacement transfers. 4. Shift transfer: (industrial establishments operating under more than one shift) 5. Remedial Transfer: They are affected at the request of an employee therefore also known as personal transfer. It may also take place because initial placement of an employee may have been faulty. Some times a worker may not be getting comfortable with his / her colleague / boss. In other incident the worker may be getting too old to continue the regular job or the type of job or working condition may not be well adapted to the present health record. In all such circumstances remedial transfer is adopted as a transfer strategy. University Questions: 1. Transfer (2006) (Concept Question) 2. Job Rotation and Job Transfer (2003) (Short Notes) 3. Job Rotation (2002, 2006), (Concept Question)
Promotion Policy Promotion is defined as, “An improvement in pay, prestige, position and responsibilities of an employee within his/her organization.” • A mere shifting of an employee to a different job, which has better working hours, better location and more, pleasant working conditions does not lead to promotion. • The new job is a promotion to an employee only when it carries increased responsibilities and enhanced pay. Purpose: To motivate employee to higher productivity. To attract and retain the services of qualified and competent people. To recognize and to reward the efficiency of an employee. To increase the effectiveness of the employee and of the organization. To fill up higher vacancies from within the organization. To build loyalty, morale and a sense of belongingness in the employee. Principles of promotion Promotion is a double-edged weapon. If handled carefully, it contributes to employee satisfaction and motivation. If mishandled, it leads to discontentment, resentment, frustration, skepticism and bickering among the employees and culminates in a high rate of labor turnover. The HR department has to lay down promotion policy in a very clear manner. a. To make clear whether to fill up higher positions by internal promotions or recruit people from outside. Generally, positions at lower level are filled up thru internal recruitment and positions at higher level are filled up thru external recruitment. When higher position has to be filled up thru internal recruitment then, a further decision on determining the basis of promotion should be made by the management. The promotion basis may be seniority or merit or both.
Promotion by seniority: Here, promotion is given on seniority base i.e. the period/length of service of employee in the organization. The date of appointment serves as the base of promotion. Here, the merits (qualification, qualities etc) are not given any consideration as promotions are given exactly as per the seniority. This is a general practice in government departments, banks, and so on. Even workers and trade unions generally prefer this method. For promotion by seniority employees are arranged exactly as per the date of appointment and promotions are given exactly as per this fixed order. Easy to administer. Less scope for arbitrariness in fixing seniority. Labor unions welcome this. Seniority and experiences go hand to hand. Subordinates are more willing to work under an elder boss who has given many years to the service. Loyalty is rewarded. • Seniority is no indication of competence. • No encouragement to learning and growth • Affects morale of meritorious workers. • Management not favorable for this method • Leads to labor turnover. • Efficient and inefficient workers are treated at par.
ii) Promotion by merits: This is an alternative to the above given method. Here promotion is given as per the merits of workers such merits include educational background, experience and qualities such as honesty, sincerity and involvement in the work. Here seniority is not given importance. Management always prefers promotion by merits where as employees and their union demand promotions by seniority. In order to introduce promotion by merits, it is necessary to keep upto-date records of each employee, production records, special achievements, merit awards, late coming, leave records etc. whenever a promotion decision is challenged, these records can be produced to prove the objectivity an impartiality of the management and the decision taken. Although this system compared to above is difficulty to implement, as employee are convinced about the
objectivity of system of performance appraisal, much of their opposition to merit as a criterion for promotion would disappear Merits: Promotion given to capable to capable person Efficiency is encouraged, recognized and rewarded. Competent people are retained Productivity increases.
Demerits: Discontentment among senior employees. Scope for favoritism. Loyalty is not rewarded. Opposition from union leader.
C) To promote the employee against vacancies or non vacancies: In many organization employees are promoted on a non-vacancy basis after they complete a minimum period of service. Such promotions are time-bound and not based on vacancies or merit. The other practice is to link promotions to vacancies. d) When promotion is based on competence, opening for promotion should be displayed prominently at several places to enable people to reply. TYPES OF PROMOTION As noted above, a promotion involves an increase in status, pay and responsibilities. But in certain cases only the pay increases and other elements remain stagnant. In other cases, only the status increases without a corresponding increase in pay or responsibilities. Depending on which elements increase and which remain stagnant, promotions may be classified into the following types: a. Horizontal Promotion: This type of promotion involves an increase in responsibility and pay, and a change in designation. For e.g. a lower division clerk is promoted as an upper division clerk. this type of promotion is referred to as “upgrading” the position of an employee. b. Vertical Promotion: This type of promotion results in greater responsibility, prestige and pay, together with a change in the nature of the job. A promotion is vertical when a canteen employee is promoted to an unskilled job. c. Dry Promotion: Dry promotions are given as an alternative to increase in remuneration. Here, the promotee may be given one or two annual increments.
University Questions: Short Notes: 1. Promotion (2001, 2005) 2. Promotion Objectives (2007) 3. Seniority v/s Merit (2002) Chapter- 3 - Job Analysis, Design and Evaluation The chapter HRP has given as an appropriate idea on how to plan human resources effectively. Now, in order to achieve effective HRP, the duties involved and the skills required for performing all the jobs in an organization have to be taken care of. This knowledge is gained through the analysis of work, popularly called job analysis. JOB ANALYSIS An organization requires personnel of different types so that different jobs are performed effectively. In other words, there is an attempt to match the jobs and jobholders. For achieving this matching, detailed knowledge of the nature and the requirements of different jobs is essential. Job analysis provides this knowledge. Job analysis is essentially a process of collecting and analyzing relevant facts of a job with a view to identify its contents and the characteristics of the person who is likely to perform the job. US Labor Department has defined job analysis as follows: “Job analysis is the process of determining, by observation and study, and reporting pertinent information relating to the nature of a specific job… It is the determination of the tasks which comprise the job and of the skills, abilities and responsibilities required of the worker for a successful performance and which differentiates one job from all others.” Flippo has offered a more comprehensive definition of job analysis which is as follows: “Job analysis is the process of studying and collecting information relating to the operations and responsibilities of a specific job. The immediate products of this analysis of this analysis are job descriptions and job specification.” Thus, job analysis involves the process of identifying the nature of a job (job description) and the qualities of the likely job holder (job specification).
Importance / Uses of job Analysis Initially, the concept of job analysis was limited to operative jobs and it used to be undertaken for providing information to the recruitment of operatives. However, over the period of time, job analysis has extended to managerial analysis jobs. Therefore, in the present context, the uses of job analysis have extended beyond recruitment of personnel, which are as follows: a. Organizational Design:
Organizational design involves building a network of relationship among various functions and positions. The steps involved in organizational design are identification of various jobs to be performed, grouping these jobs together on the basis of similarity, and assigning these jobs to a position. Since assignments of jobs creates responsibility, commensurate authority is delegated so that the relevant information for completing the total steps of organizational design. It provides the bas4e for identifying the contents of different jobs, their interrelationship and interdependence, responsibility involved in a job, and interdependence, responsibility involved in a job, and authority that may be required to perform the job. b. Acquisition of Personnel:
Acquisition of personnel involves human resource planning, recruitment and selection, and orientation and placement. In each area, job analysis helps in the following ways: b.1. Human Resource planning: Human resource planning, as discussed earlier, involves determination of number and type of personnel required in future by the organization. The basis of this determination is the types of jobs that may be required to be performed in order to achieve organizational objectives. Job analysis provides information for forecasting human resource needs in terms of knowledge, skills and experience. It also provides help in planning for promotions and transfers by indicating lateral and vertical relationship among different jobs. b.2. Recruitment and Selection: Recruitment and selection, taken together, involve the identification of sources from where the personnel will be acquired, motivating them for making themselves available for selection and selecting those who meet the criteria as provided in job description and job specification. The total process of recruitment and selection is based on the principle of matching jobs and individuals. In this process, various job-related factors in the
form of tasks and responsibilities and individual- related factors in the form of knowledge, skills and experience are matched. Both types of information are provided by jobs analysis. b.3. Orientation and placement: Job analysis helps in orientation and placement of personnel by further matching between jobs and individuals. This further matching is required when personnel are selected for a group of jobs rather than for specific jobs. In many cases, individuals are selected for a group of jobs such as management trainees, consultants, etc. Their match with job requirements determines their placement in specific jobs. Job analysis helps in providing information about such job requirement. c. Human Resource Development: In the dynamic environment, human resource development (HRD) is undertaken as a continuous process to match individuals and job requirements. Such matching is indicated by the information provided by job analysis. Thus, job analysis helps in the following areas of human resource development: c.1. Career Planning: Career planning involves determination of path of upward movement of individuals in the organization. The individuals join the organization at a particular level and make upward progression at various levels in their career. Job analysis provides information about the opportunities in terms of career paths and jobs availability in the organization. In the light of this information, both individuals and organization make suitable efforts for career planning and development. c.2. Training and development: Career planning itself is not sufficient but it requires the efforts in the form of training and development so that the individuals are equipped to meet the requirements of their jobs to be performed at valuable information to identify training and development needs of various individuals. A clear idea of what is required on the job help in deciding what is learnt and developed in order to be effective. d. Job Evaluation and compensation: Job evaluation is the process of determining the relative worth of different jobs in an organization with a view to link compensation, both basic and supplementary, with the worth of the jobs. The worth of a job is determined on the basis of job analysis provides both in the forms of job description and job in the forms of job description and job specification. e. Performance Appraisal: Performance appraisal involves assessment of actual job performance by an employee in the light of
what is expected of him. Such an assessment is used for promotion, pay increase, and identification of training needs. Job analysis helps in determining performance standards against which the actual job performance is measured. f. Safety and Health: Job analysis helps in taking preventive measures for maintaining safety and health of employees at the workplace by providing information about unhealthy and hazardous environmental and operational conditions in various jobs. Heat, noise, fumes, etc. are examples of such conditions, which cause occupational diseases if proper preventive measures are not adopted. The process of the job analysis The following figures illustrate the process of job analysis. The figure also points out the use of information about jobs. As may be seen from the figure, job analysis is useful for several purposes, such as personnel planning, performance appraisal and the like. Each phase in the process of job analysis is as follows: -
Gather Informatio n
Process Informatio n Uses of Job Description & Job Specification Job Description o o o o o o o o o o Strategic Choices With regards to job analysis, an organization is required to make at least five choices • The extent of employee involvement in the job analysis • The level of details of the job analysis • Timing and frequency of analysis • future oriented job analysis Personnel Planning Performance Appraisal Hiring Training & Development Job Evaluation & Compensation Health & Safety Employee Discipline Work Scheduling Career Planning
Employee Involvement As was stated above, the job analysis involves collecting job related information duties, responsibilities, skills and knowledge required to perform their jobs. It may be stated that in job analysis, information about a job is collected and not about incumbent, however, the jobholder is consulted. Employees are often asked to supply vital information about the content of jobs given the familiarity of it. To what extent involvement is needed to be in is an important point. Too much involvement may result in biased Decision making, as the employee is likely to inflate the duties and responsibilities of his drops, just to make it appear more important than it actually is. On the other hand, if employees are not involved or only minimal involvement, they tend to become suspicious about the motive behind the talk analysis. Besides, lack of involvement from employees may eat to in at a rate and incomplete information. The extent to which employees are involved depends upon the needs of both the organization and the employees. The Level of Details The level of the details required in job analysis also depends upon the purpose for which job related details are being collected. For example, if the primary purpose for analyzing the job is of mass input for intensive training programmes or an input for assessing how much the job is worth, the level of the details required may be great. However, if the job analysis is being done to add clarification to the rules and responsibilities of the less detailed job analysis is need. When And How Often Under the strategic choice relates to the timing and frequency of conducting the job analysis is generally conducted when (1) The organization is newly established and that job analysis is initiated for the first time. (2) A new job is created in an established company. (3) A job is a changed significantly due to change in technology, methods, procedures or system. (4) The organization is considering a new remuneration plan. (5) The employees or managers feel that there exist certain inequities between job demands and the remuneration it carries.
Future Oriented If an organization is changing rapidly due to fast growth or technological change, a more future oriented approach to job analysis may be desired. Traditional job analysis information describes how the job has been done in the past and the manner in which it is being currently done. If necessary, a future orientation can be given to the job analysis and predictions may be made as to how the job will be done in the future and the way it should be done. This will allow organizations to begin hiring and training people for these jobs prior to the actual changes. For example, personal computers began to replace electronic typewriters, thus changing the characters of many typist jobs. Many companies anticipated these changes and began retraining their typist before changing over to PC's. (1) Gather Information:
Information Collection: After defining the uses of job analysis, relevant information is collected to ascertain the various characteristics of the job. Various aspects on which information is collected are activities involved in the job, responsibilities associated with the job, the type of environment in which in the person who will perform the job. The relevant information may be collected through a number of present employees performing similar job, critical incidents involved, checklist prepared for analyzing the job, and questionnaire. METHODS OF COLLECTING JOB DATA The methods of collecting job-related data are presented in the diagram given below:
Observation: In this method, the Job analyst carefully observes the job holder at work and records what she does, how she does and how much time is needed for completion of a given task. This method has both, positive and negative side. On the positive side, the method is simple, and the data collected are accurate because of direct observation. On the flip side, the method is time consuming and inapplicable to jobs which involve high proportion of unobservable mental activities and those which do not have complete and easily observable job cycles. The analyst needs to be trained to carefully observe and record the competence of a job incumbent (officer). Training also means additional cost, considering all these, the observation method may be used for analyzing repetitive, short-cycle, unskilled and semi-skilled jobs. Better results will be available when the observation method is used along with the other method/s of job analysis. Interview: In this, the analyst interviews the job holder and his supervisor to elicit information about the job. Usually, a structured interview form is used to record the information. During the interview, the analysts must make judgment about the information to be included and its degree of importance. The interview method is time consuming. The time problem will be compounded if the interviewer talks with two or more employees doing the same job. Also, professional and managerial jobs are more complicated to analyze and usually require a longer interview. There is also a problem of bias on the part of the analyst and the job holder may cloud the accuracy and objectivity of the data obtained. The positive feature of this method is, it involves talking to the job holders who are in a good position to describe what they do, as well as the
qualifications needed to perform their duties in a competent manner. Questionnaire: Job holders fill in the given structured questionnaires, which are then approved by their supervisors. The filled-in-questionnaires offer enough data on jobs. Standard questionnaires are available or they may be prepared for the purpose by the analysts. Standard or prepared questionnaires should contain the following information: a. The job title of the job holder; b. The job title of the job holder’s manager or supervisor; c. The job titles and numbers of the staff reporting to the job holder ; d. A brief description of the overall role and purpose of the job and; e. A list of the main task or duties that the job holder has to carry out. On positive side, • This method provides comprehensive information about the job which makes job analysis complete and satisfactory. • This method enables the analyst to cover large number of jobs within a short time. • This method gives opportunity to all job holders to participate in the method and express themselves freely. On negative side; • It is very costly and at times time consuming method. • There is no direct contact between the analyst and job holders. • Due to the above factor, the co-operation and response of the respondents tend to be low. Checklist method: This is similar to questionnaire method, but the response sheet contains fewer subjective judgements and tends to be either-yes-orno variety. It may cover as many as 100 activities and jobholder tick only those tasks those are included in their jobs. Preparation of checklist is a challenging job. The work should preferably be given to specialists. Well prepared checklist is sent to the job holder. He is asked to check all listed tasks and indicate the amount of time spent on each task as well as the training and experience required in order
to be proficient in each task. The holder may also be asked to write additional task which performs but is not mentioned in the checklist. On positive side: • It is useful in large organizations that have large number of people assigned to one particular job; On negative side: • It is lengthy and costly. Also, not suitable for small organization with limited manpower employed. Technical Conference Method: In this method, services of supervisors (who are experts) who possess extensive knowledge about a job are obtained. Here, a conference of supervisors is used. The analysts initiate discussion which provides details about jobs. Though a good method of data collection, it lacks accuracy as actual job holders are not involved in collecting information. Diary Method: this method requires the job holders to record in detail their activities each day. If done faithfully, this technique is accurate and eliminates errors caused by memory lapses, the job holder makes while answering questionnaires and checklists. This method is also time consuming because recording of tasks may have to be spread over a number of days. Diary method is not used much in practice. C. Information Processing: The last step in job analysis process is information processing which involves editing and classifying information in to different relevant categories. Based on this exercise, job description and specification are prepared which are used for various purposes as identified in the beginning of job analysis.
(d) JOB ANALYSIS A Process of obtaining all pertinent job facts. Job Description. A statement contains items Such as: Job Title Location Job Summary Duties Hazards Machines, Tools & Equipments o Materials & Forms used o Supervision given or Received. o o o o o o Job Specification. • A statement of human qualifications necessary to do the job. Usually contains such item as:• • • • • • • • • • • Education Experience Training Judgment Initiative Physical efforts Physical skills Responsibilities Communication skills Emotional characteristics Usually sensory demands such as sight, smell, hearing etc.
Chapter- 3 - Job Analysis, Design and Evaluation The chapter HRP has given as an appropriate idea on how to plan human resources effectively. Now, in order to achieve effective HRP, the duties involved and the skills required for performing all the jobs in an organization have to be taken care of. This knowledge is gained through the analysis of work, popularly called job analysis. JOB ANALYSIS An organization requires personnel of different types so that different jobs are performed effectively. In other words, there is an attempt to match the jobs and jobholders. For achieving this matching, detailed knowledge of the nature and the requirements of different jobs is essential. Job analysis provides this knowledge. Job analysis is essentially a process of collecting and analyzing relevant facts of a job with a view to identify its contents and the characteristics of the person who is likely to perform the job. US Labor Department has defined job analysis as follows: “Job analysis is the process of determining, by observation and study, and reporting pertinent information relating to the nature of a specific job… It is the determination of the tasks which comprise the job and of the skills, abilities and responsibilities required of the worker for a successful performance and which differentiates one job from all others.” Flippo has offered a more comprehensive definition of job analysis which is as follows: “Job analysis is the process of studying and collecting information relating to the operations and responsibilities of a specific job. The immediate products of this analysis of this analysis are job descriptions and job specification.” Thus, job analysis involves the process of identifying the nature of a job (job description) and the qualities of the likely job holder (job specification). Importance / Uses of job Analysis Initially, the concept of job analysis was limited to operative jobs and it used to be undertaken for providing information to the recruitment of operatives. However, over the period of time, job analysis has extended to managerial analysis jobs. Therefore, in the present context, the uses of job analysis have extended beyond recruitment of personnel, which are as follows:
Organizational design involves building a network of relationship among various functions and positions. The steps involved in organizational design are identification of various jobs to be performed, grouping these jobs together on the basis of similarity, and assigning these jobs to a position. Since assignments of jobs creates responsibility, commensurate authority is delegated so that the relevant information for completing the total steps of organizational design. It provides the bas4e for identifying the contents of different jobs, their interrelationship and interdependence, responsibility involved in a job, and interdependence, responsibility involved in a job, and authority that may be required to perform the job. b. Acquisition of Personnel:
Acquisition of personnel involves human resource planning, recruitment and selection, and orientation and placement. In each area, job analysis helps in the following ways: b.1. Human Resource planning: Human resource planning, as discussed earlier, involves determination of number and type of personnel required in future by the organization. The basis of this determination is the types of jobs that may be required to be performed in order to achieve organizational objectives. Job analysis provides information for forecasting human resource needs in terms of knowledge, skills and experience. It also provides help in planning for promotions and transfers by indicating lateral and vertical relationship among different jobs. b.2. Recruitment and Selection: Recruitment and selection, taken together, involve the identification of sources from where the personnel will be acquired, motivating them for making themselves available for selection and selecting those who meet the criteria as provided in job description and job specification. The total process of recruitment and selection is based on the principle of matching jobs and individuals. In this process, various job-related factors in the form of tasks and responsibilities and individual- related factors in the form of knowledge, skills and experience are matched. Both types of information are provided by jobs analysis. b.3. Orientation and placement: Job analysis helps in orientation and placement of personnel by further matching between jobs and individuals. This further matching is required when personnel are selected for a group of jobs rather than for specific jobs. In many
cases, individuals are selected for a group of jobs such as management trainees, consultants, etc. Their match with job requirements determines their placement in specific jobs. Job analysis helps in providing information about such job requirement. c. Human Resource Development: In the dynamic environment, human resource development (HRD) is undertaken as a continuous process to match individuals and job requirements. Such matching is indicated by the information provided by job analysis. Thus, job analysis helps in the following areas of human resource development: c.1. Career Planning: Career planning involves determination of path of upward movement of individuals in the organization. The individuals join the organization at a particular level and make upward progression at various levels in their career. Job analysis provides information about the opportunities in terms of career paths and jobs availability in the organization. In the light of this information, both individuals and organization make suitable efforts for career planning and development. c.2. Training and development: Career planning itself is not sufficient but it requires the efforts in the form of training and development so that the individuals are equipped to meet the requirements of their jobs to be performed at valuable information to identify training and development needs of various individuals. A clear idea of what is required on the job help in deciding what is learnt and developed in order to be effective. d. Job Evaluation and compensation: Job evaluation is the process of determining the relative worth of different jobs in an organization with a view to link compensation, both basic and supplementary, with the worth of the jobs. The worth of a job is determined on the basis of job analysis provides both in the forms of job description and job in the forms of job description and job specification. e. Performance Appraisal: Performance appraisal involves assessment of actual job performance by an employee in the light of what is expected of him. Such an assessment is used for promotion, pay increase, and identification of training needs. Job analysis helps in determining performance standards against which the actual job performance is measured. f. Safety and Health: Job analysis helps in taking preventive measures for maintaining safety and health of employees at the workplace by providing information about unhealthy and hazardous
environmental and operational conditions in various jobs. Heat, noise, fumes, etc. are examples of such conditions, which cause occupational diseases if proper preventive measures are not adopted. The process of the job analysis The following figures illustrate the process of job analysis. The figure also points out the use of information about jobs. As may be seen from the figure, job analysis is useful for several purposes, such as personnel planning, performance appraisal and the like. Each phase in the process of job analysis is as follows: -
Gather Informatio n
Process Informatio n Uses of Job Description & Job Specification Job Description o o o o o o o o o o Strategic Choices With regards to job analysis, an organization is required to make at least five choices • The extent of employee involvement in the job analysis • The level of details of the job analysis • Timing and frequency of analysis • future oriented job analysis Personnel Planning Performance Appraisal Hiring Training & Development Job Evaluation & Compensation Health & Safety Employee Discipline Work Scheduling Career Planning
Employee Involvement As was stated above, the job analysis involves collecting job related information duties, responsibilities, skills and knowledge required to perform their jobs. It may be stated that in job analysis, information about a job is collected and not about incumbent, however, the jobholder is consulted. Employees are often asked to supply vital information about the content of jobs given the familiarity of it. To what extent involvement is needed to be in is an important point. Too much involvement may result in biased Decision making, as the employee is likely to inflate the duties and responsibilities of his drops, just to make it appear more important than it actually is. On the other hand, if employees are not involved or only minimal involvement, they tend to become suspicious about the motive behind the talk analysis. Besides, lack of involvement from employees may eat to in at a rate and incomplete information. The extent to which employees are involved depends upon the needs of both the organization and the employees. The Level of Details The level of the details required in job analysis also depends upon the purpose for which job related details are being collected. For example, if the primary purpose for analyzing the job is of mass input for intensive training programmes or an input for assessing how much the job is worth, the level of the details required may be great. However, if the job analysis is being done to add clarification to the rules and responsibilities of the less detailed job analysis is need. When And How Often Under the strategic choice relates to the timing and frequency of conducting the job analysis is generally conducted when (6) The organization is newly established and that job analysis is initiated for the first time. (7) A new job is created in an established company. (8) A job is a changed significantly due to change in technology, methods, procedures or system. (9) The organization is considering a new remuneration plan.
(10) The employees or managers feel that there exist certain inequities between job demands and the remuneration it carries. Future Oriented If an organization is changing rapidly due to fast growth or technological change, a more future oriented approach to job analysis may be desired. Traditional job analysis information describes how the job has been done in the past and the manner in which it is being currently done. If necessary, a future orientation can be given to the job analysis and predictions may be made as to how the job will be done in the future and the way it should be done. This will allow organizations to begin hiring and training people for these jobs prior to the actual changes. For example, personal computers began to replace electronic typewriters, thus changing the characters of many typist jobs. Many companies anticipated these changes and began retraining their typist before changing over to PC's. (2) Gather Information:
Information Collection: After defining the uses of job analysis, relevant information is collected to ascertain the various characteristics of the job. Various aspects on which information is collected are activities involved in the job, responsibilities associated with the job, the type of environment in which in the person who will perform the job. The relevant information may be collected through a number of present employees performing similar job, critical incidents involved, checklist prepared for analyzing the job, and questionnaire. METHODS OF COLLECTING JOB DATA The methods of collecting job-related data are presented in the diagram given below:
Observation: In this method, the Job analyst carefully observes the job holder at work and records what she does, how she does and how much time is needed for completion of a given task. This method has both, positive and negative side. On the positive side, the method is simple, and the data collected are accurate because of direct observation. On the flip side, the method is time consuming and inapplicable to jobs which involve high proportion of unobservable mental activities and those which do not have complete and easily observable job cycles. The analyst needs to be trained to carefully observe and record the competence of a job incumbent (officer). Training also means additional cost, considering all these, the observation method may be used for analyzing repetitive, short-cycle, unskilled and semi-skilled jobs. Better results will be available when the observation method is used along with the other method/s of job analysis. Interview: In this, the analyst interviews the job holder and his supervisor to elicit information about the job. Usually, a structured interview form is used to record the information. During the interview, the analysts must make judgment about the information to be included and its degree of importance. The interview method is time consuming. The time problem will be compounded if the interviewer talks with two or more employees doing the same job. Also, professional and managerial jobs are more complicated to analyze and usually require a longer interview. There is also a problem of bias on the part of the analyst and the job holder may cloud the accuracy and objectivity of the data obtained. The positive feature of this method is, it involves talking to the job holders who are in a good position to describe what they do, as well as the
qualifications needed to perform their duties in a competent manner. Questionnaire: Job holders fill in the given structured questionnaires, which are then approved by their supervisors. The filled-in-questionnaires offer enough data on jobs. Standard questionnaires are available or they may be prepared for the purpose by the analysts. Standard or prepared questionnaires should contain the following information: f. The job title of the job holder; g. The job title of the job holder’s manager or supervisor; h. The job titles and numbers of the staff reporting to the job holder ; i. A brief description of the overall role and purpose of the job and; j. A list of the main task or duties that the job holder has to carry out. On positive side, • This method provides comprehensive information about the job which makes job analysis complete and satisfactory. • This method enables the analyst to cover large number of jobs within a short time. • This method gives opportunity to all job holders to participate in the method and express themselves freely. On negative side; • It is very costly and at times time consuming method. • There is no direct contact between the analyst and job holders. • Due to the above factor, the co-operation and response of the respondents tend to be low. Checklist method: This is similar to questionnaire method, but the response sheet contains fewer subjective judgements and tends to be either-yes-orno variety. It may cover as many as 100 activities and jobholder tick only those tasks those are included in their jobs. Preparation of checklist is a challenging job. The work should preferably be given to specialists. Well prepared checklist is sent to the job holder. He is asked to check all listed tasks and indicate the amount of time spent on each task as well as the training and experience required in order
to be proficient in each task. The holder may also be asked to write additional task which performs but is not mentioned in the checklist. On positive side: • It is useful in large organizations that have large number of people assigned to one particular job; On negative side: • It is lengthy and costly. Also, not suitable for small organization with limited manpower employed. Technical Conference Method: In this method, services of supervisors (who are experts) who possess extensive knowledge about a job are obtained. Here, a conference of supervisors is used. The analysts initiate discussion which provides details about jobs. Though a good method of data collection, it lacks accuracy as actual job holders are not involved in collecting information. Diary Method: this method requires the job holders to record in detail their activities each day. If done faithfully, this technique is accurate and eliminates errors caused by memory lapses, the job holder makes while answering questionnaires and checklists. This method is also time consuming because recording of tasks may have to be spread over a number of days. Diary method is not used much in practice. C. Information Processing: The last step in job analysis process is information processing which involves editing and classifying information in to different relevant categories. Based on this exercise, job description and specification are prepared which are used for various purposes as identified in the beginning of job analysis. Job Specification. (d) Job Description. • A statement of human qualifications necessary JOB ANALYSIS contains A statement to do the job. Usually items A Process - obtaining all pertinent contains such item as:job facts. Such as: of Job Title Location Job Summary Duties Hazards Machines, Tools & Equipments o Materials & Forms used o Supervision given or Received. o o o o o o • • • • • • • • • • • Education Experience Training Judgment Initiative Physical efforts Physical skills Responsibilities Communication skills Emotional characteristics Usually sensory demands such as sight, smell, hearing etc.
JOB DESCRIPTION Job description is a written statement showing job title, tasks, duties and responsibilities involved in a job. It also prescribes the working conditions, hazards, stress that it can produce and the relationship with other jobs. Job description is necessary to do the job satisfactorily. Flippo has defined job description as follows: “A job description is an organized, factual statement of duties and responsibilities of a specific job. In brief, it should tell • what is to be done, • how it is done and • Why. It is a standard of function, in that it defines the appropriate and authorized content of a job.” Generally, a job description contains the following information: 1. Job title, code number, department / division. 2. Job contents in terms of activities or tasks performed. 3. Job responsibilities towards effective performance of the job. 4. Working conditions specifying specific hazards. 5. Social environment prevailing at the workplace. 6. Machine tools and equipments. 7. Extent of supervision given and received. 8. Relationship with other jobs-vertical, horizontal and diagonal. The following figure gives an example of a Job Description. Once the job description has been written and finalized with the line manager (who will be responsible for the post-holder), the next stage in the recruitment process is the drafting of the personnel specification. JOB DESCRIPTION Job Title: Human Resources Manager Reports to: Human Resources Director Immediate Subordinates: Human Resources Officer Safety Officer Training and Development Officer Occupational Health Nurse Purpose of the Job: Within the limits of human resources policies, to provide a full human resources service to line management and to provide a framework for maintaining good relationships between management and staff (including staff representatives).
Responsibilities: 1. Ensuring the efficient recruitment and selection of suitable and sufficient employees to meet vacancies identified by department managers. 2. Implementing the company’s remuneration policy in accordance with laid-down procedures. 3. Advising line managers on employee relations and legal matters during negotiations with trade union representatives, at branch and local level. 4. Establishing and maintaining a regular programme of joint consultation with employee representatives and senior management. 5. Providing adequate training programmes for the induction of new recruits and training and development for managers and employees. 6. Advising department managers on management development programmes. 7. Maintaining adequate records for employees. 8. Providing a routine health and welfare service for all employees including arrangements for giving first aid. Economic Conditions: Salary will be commensurate with the grade and scope of the post, as laid out in the contract of employment. 37 hours per week with five weeks’ holiday per year. Company car will be provided. Qualifications Required: Over 3 years’ experience in human resources management. Previous experience of negotiating with trade union representatives. Professional qualifications (including membership of the Institute of Personnel and Development) essential. Uses of Job Description: . 1. Job grading and job classification 2. Providing base for preparing job specification, leading to recruitment and selection. 3. Procurement and placement of employees. 4. Developing career path. 5. Training and development. 6. Setting performances standards and appraisal. 7. Promotion and transfer. 8. Developing work procedures and processes. 9. Taking preventive measures to minimizes the impact of hazardous conditions
10. Employee counseling and vocational guidance OBJECTIVES OF JOB DESCRIPTION Job descriptions help in getting the things done through people and it helps management to accomplish following objectives: 1. Efficient organization of jobs. 2. Proper recruitment or staffing in the organization. 3. Assigning jobs to people by communicating to them their duties and responsibilities and by setting job standards. 4. Reviewing performances of the people. 5. Improving performance through appraisal and training. 6. Rewarding employees. Therefore, job descriptions play a very crucial role in key management activities. JOB SPECIFICATION Job specification, also known as man or employee specification is a statement of minimum acceptable qualities required in a job incumbent for the effective performances of the job. In contrast to job description, which provides various features of the job, job specification specifies various features of the jobholder. Flippo has defined job specification as follows: “Job speficification is a statement of minimum acceptable human qualities necessary to perform a job properly. It is a standard of personnel and designates the qualities required for acceptable performance”. A job specification is prepared on the basis of job description. Its basic contents are as follows: 1. Personal characteristics such as age, sex, education, job experience and extra –and co-curricular activities. 2. Physical characteristics such as height, weight, chest, vision, hearing, health, voice, poise and hand and foot coordination. 3. Mental characteristics such as general intelligences, memory, judgment, foresight, ability to concentrate, etc. 4. Social and psychological characteristics such as emotional stability, flexibility, manners, initiative, drive, conversational ability, creativity, etc. Various contents of a job specification can be prescribed in three forms: (1) essential attributes which a person must possess, (2) desirable attributes which a person may possess, and (3) contraindicators which will become a handicap to successful job performance.
JOB DESIGN Definition Work arrangement (or rearrangement) aimed at reducing or overcoming job dissatisfaction and employee alienation arising from repetitive and mechanistic tasks. Through job design, organizations try to raise productivity levels by offering nonmonetary rewards such as greater satisfaction from a sense of personal achievement in meeting the increased challenge and responsibility of one's work. Job enlargement, job enrichment, job rotation, and job simplification are the various techniques used in a job design exercise. Job design has emerged as important area for work motivation because the traditional job design has produced job unfriendliness resulting into monotony, powerlessness, meaninglessness, employee absenteeism, and employee turnover. Any person who works for living speeds a significant amount of his time at the workplace executing the requirement, duties, and activities involved in jobs. The basic objective of a job design is to find fit between a job and job holder so that job is performed well and the job holder experiences satisfaction and puts his best effort for job
performance. Job design involves integration of tasks, duties, and responsibilities in to a unit of work to achieve certain objectives. Mathis and Jackson have defined job design as follows: “Job design integrates work content (tasks, functions, relationships), the rewards (extrinsic and intrinsic), and the qualifications required (skills, knowledge, abilities) for each job in a way that meets the needs of employees and the organization. FACTORS AFFECTING JOB DESIGN Job design is dependent upon the following factors: 1. Organizational Factors 2. Environmental Factors 3. Behavioral factors Organizational Factors: This includes characteristics of task, workflow, ergonomics and work practices. Characteristics of Tasks: Job design depends upon the task to be carried out. The designs may differ if one person carries various tasks or if the task is to be performed by together Work Flow: The flow of work in an organization strongly influenced by the nature of product or service. Jobs must be designed in such a way the flow of work is not obstructed and the employee movement is least. Ergonomics: Ergonomics is the study of people’s efficiency in the working environment. Ergonomics helps the employer to design jobs in such a way that the workers physical abilities and job demands are balanced. Work Practices: Work Practices are the set of ways of performing a task. Work practices develop over a period of time. Therefore all the jobs must be designed so as to confer to the existing practices. Environmental Factors Environmental factors include employee abilities and availability, social and cultural expectations. Employees’ Abilities and Availability: Efficiency consideration must be balanced against the abilities and availability of the people who are to do the work to be done efficiently.. Also the design depends upon the availability of persons
to do a particular job. For example an organization, which does not have employees with the knowledge to operate a computer, cannot design a job, which requires the employee to necessarily work on the computer and therefore in order to do the same amount of work in time it must employ additional employees. Another example can When Henry Ford made use of the assembly line, for e.g., he was aware that most potential workers lacked any automobile – making experience. So, jobs were designed simple and required little training. Social and Cultural Expectations: With the inflow of globalization the expectations of the employees with regards to their jobs has raised. Hence it is necessary to create or design jobs that fulfill their expectations. Hence it is necessary to create or design jobs that fulfill their expectations. Also the employees respect certain social needs like religious beliefs, sophistication in the work etc…such needs must keep in mind while designing jobs. Behavioral Factors Behavioral factors include feedback, autonomy, and use of abilities, variety. Feedback: Ideally a job must be designed such that a single person must be able to do it completely or at least a significant part of it. This helps him to get meaningful feedback, which in turn helps him to do the job better. Autonomy: Every job must be designed in such a way that the concerned person has a certain amount on autonomy to take his own decisions. This makes him feel responsible for the job thus increasing his self-esteem and his performance. Use of abilities: The job must be designed in such a way that the abilities of the employees are used to there fullest. This will not only improve the quality of the job but also give the employee self-satisfaction.
Variety: Monotony of work causes boredom, which is directly related to their performance and also employee turnover. Thus employees must be given an opportunity to try their abilities at different jobs depending upon skills. MAIN APPROACHES TO JOB DESIGN: 1. Job Rotation: Job Rotation is the movement between different jobs. One day a person may be working in one part of the factory and the next day they may work in a different part. This avoids the employee becoming bored as with Job Rotation they are doing different jobs all the time and learning new skills. Multi skilling is when people have many skills so they are able to carry out many different jobs. Multi skilling benefits the employer as if they are short of staff in one area, they can move people across. Job Rotation is closely related to Job Transfer. Transfer of employees from one job to the other or from one department to the other is quite common in all organizations. Management can transfer the services of employees as per the requirements of the organization. The effect of Job Transfer and rotation is similar. Both bring movement of worker from one job to the other but the background is different. Thus, Job Rotation implies systematic movement of employees from one job to the other. Job remains unchanged but employees performing them shift. With Job Rotation, an employee is given an opportunity to perform different jobs, which enriches his skills, experience and ability to perform different jobs. RENEWAL: Reduction of boredom, making new contacts, thinking about new options, change viewpoint EXPLORATION: Trying new things, developing new relationships, testing administrative skills. ADVANTAGES SPECIALIZATION: BALANCE: Re-education, in-depth exploration, using special skills, meeting a need that was underserved. Time allocation, taking time from regular assignment, balancing workload.
Lack of information needed to be successful, lack of clear plans and goals, Lack of structured instructions to special assignments, new skills not being taught properly, difficulties in learning new assignments,
2. Job Enlargement : It means expanding the number of tasks, or duties assigned to a given job. Adding more tasks or duties to a job does not necessarily mean that new skills and abilities are needed. There is only horizontal expansion. It is with same skills taking additional responsibilities like increasing the number of machines operators under a supervisor from 10 to 15. Job enlargement may involve breaking up of the existing work system and redesigning a new work system. For this employees also need to be trained to adjust to the new system. Job enlargement is said to contribute to employee motivation but the claim is not validated in practice. 3. Job Enrichment : Job enrichment is to add a few more motivators to a job to make it more rewarding. A job is enriched when the nature of the job is exciting, challenging, rewarding and creative or gives the job holder more decision-making, planning and controlling powers. An enriched job will have more authority, responsibility, autonomy (vertical enrichment), more variety of tasks (horizontal enrichment) and more growth opportunities. The employee does more planning and controlling with less supervision but more self-evaluation. For example: transferring some of the supervisor’s tasks to the employee and making his job enriched. As per Hertzberg, who was the father of this term, an enriched job has eight characteristics: (a) Direct Feedback: Employee should be able to get immediate knowledge of the results they are achieving as it acts as motivator. (b) Client Relationship: An employee who serves a client or customer directly has an enriched job. (c) New Learning: An enriched job allows its incumbent to feel that he is growing intellectually. (d) Scheduling Own Work: Freedom to schedule own work (autonomy) is job enrichment. Deciding when to tackle which assignment is an example of self-scheduling. Employees who perform creative work have more
opportunity to schedule their assignments than those who perform routine jobs. (e) Unique Experience: An enriched job has some unique qualities or features. (f) Control over Resources: One approach to Job enrichment is for the each employee to have control over his or her resources and expenses. For e.g. he/she must have authority to order supplies necessary for completing his job. (g) Direct Communication Authority: An enriched job allows worker to communicate directly with people who use his or her output. (h) Personal Accountability: An enriched job holds the incumbent responsible for the results. He or she receives praise for good work and blame for poor work. Problems with Job Enrichment (a) Job enrichment is not a substitute for good governance. If other environmental factors in the business are not right, mere job enrichment will not mean much. (b) Job enrichment may have short term negative effects till the worker gets used to the new responsibility. (c) Job enrichment itself might not be a great motivator since it is job-intrinsic factor. As per the two-factor motivation theory, job enrichment is not enough. It should be preceded by hygienic factors etc. (d) Job enrichment assumes that workers want more responsibilities and those workers who are motivated by less responsibility, job enrichment surely de-motivates them (e) Workers participation may affect the enrichment process itself. (f) Change is difficult to implement and is always resisted as job enrichment brings in a changes the responsibility. Autonomous or Self-Directed Teams : Empowerment results in self-directed work teams. A self-directed team is a group of employees responsible for a whole work segment. They work together, handle day-to-day problems, plan and control, and are highly effective team. There are some limitations of such empowered teams. For example, the union response to self directed teams may not be positive. Secondly, getting worker co-operation for work teams may not be encouraging, as there is psychological unwillingness to accept responsibilities. Even managers and supervisors doubt the role of empowered teams as they are losers in terms of status, authority and power. Implementation
of work team technique is difficult. Advantages of Teams: (a) Greater employee involvement and motivation. (b) Higher productivity. (c) Improved sense of responsibility among team members. (d) Wide learning opportunities to team members. (e) Management can meet new challenges through special teams. Disadvantages of Teams: (a) Compensating team members as per their contributions is difficult. (b) Decisions may be delayed. (c) Not suitable for individual-oriented employees. (d) Team performance is difficult to measure. This advocates of self-directed teams claim that such teams give better results as compared to benefits available from individual motivation through job rotation, job enlargement and job enrichment. EXAMPLE Job Design Around the World Many contemporary breakthroughs and innovations to job design were developed and pioneered abroad. As far back as 1951, for example, researchers at the London Tavistock Institute conducted important pioneering studies of jobs in the coal-mining industry in England. They examined a wide variety of work arrangements and found the fact that flexibility in the manner in which jobs were performed improved interpersonal relationships among employees could be a critical part of organizational effectiveness. Another research, conducted in textile units in India, focused on the relationship between people and technology. The findings led managers to better appreciate the importance of both technical systems and social systems in organizations. But, perhaps, the most ambitious experiment in job design took place in Sweden. In, the early 1970s, Volvo was planning to build a new assembly plant near the town of Kalmar. In designing the new factory, the firm's managers decided to see if they could change the traditional approach to jobs in the automobile industry to make up for many of the negative factors associated with traditional assembly-line work. They constructed the entire facility to promote a better job design and a more pleasant work environment for Volvo
employees. For example, each worker was assigned a space that felt like a small workshop rather than a large factory. Natural lighting was emphasized, and each area had a separate lounge and rest facilities for the workers assigned there. Instead of using a traditional assembly line, the firm installed computer-guided trolleys that rolled along the floor. The workers moved around the trolleys to perform their tasks rather than standing stationery, while the car moved past them. This gave them the flexibility to move the trolley off the line when a serious problem arose with the car on that particular trolley. Thus, the problem could be attended to without slowing down the entire line. While construction costs in the factory are about 10 per cent more than a traditional automobile plant, Volvo management believed that improvements in the quality of both work life and products that resulted, compensated for at least some of the additional costs. MECHANISM OF JOB DESIGN Every work undergoes constant modification because of the impact of mechanization and automation. Some jobs become redundant while others are created and still others are altered in content. This necessitates different types of education, experiences and other attributes. Also for effecting job design, the organization needs to respects the unions, who otherwise may stall the move on one ground or the other. While designing a job, management must also be concerned with the practical considerations of quantity and quality available personnel (both within the organization and in the labor market). Personality conflict and friction, problem of the human relations, boredom, obsessive thanking, etc, also needs to be taken care of. Mechanism of job design considers two aspects of a job-number of tasks in a job complexity of task, a job containing few specific tasks is a simple one; job containing many tasks becomes difficult. Task complexity is the factor associated with the performance of a job. A job is less complex when considering a limited number of factors can perform it; a more complex job requires the considerations of large number of factors. Considering these two factors taken together, the nature of a job is important because it determines the skill requirement in performing the job. A job with a few tasks of similar nature of a job is a routine one and requires fewer skills, for example, the job of a nurse. On the other hand, a job with a variety of tasks of different nature requires high skills, for example, the job of an executive at higher level in the organization. Each job offers variety, responsibility.
JOB EVALUATION Job evaluation is the process of determining the worth of one job in relation to that of another without regard to the personalities. It analyses and assesses the content of jobs, to place them in some standard rank order. The end result is used as the basis for a fair and logical remuneration system. A properly devised job evaluation scheme provides management with definite, systematic and reliable data for working out wage and salary scales. Thus, logical wage negotiation reduces wage grievances and dissatisfaction with wage differentials and ensures fair treatment for each employee. It also provides a logical basis for promotion. A survey of British institute of Management indicated the following reasons for its use: 1. To reduce layout turnover, 2. To increase output, 3. To improve morale, 4. To reduce loss of time due to wage negotiation and disputes, 5. To reduce the complaints regarding wages, 6. To reduce wage and salary anomalies. Steps in Job Evaluation 1. Thorough examination of the job (job assessment), 2. Preparation of job description (recording its characteristics to suit assessment of method). 3. Preparation of job analysis to set out the requirements of the job under various factor headings, 4. Comparison of one job with another, 5. Arrangement of jobs in a progression, 6. Relating the progression of jobs to a money scale. LIMITATIONS OF JOB EVALUATION Job evaluation alone cannot establish a wage scale. For wage fixation, we need to take into cognizance statutory requirements, like minimum wages Act, 1948. Similarly, other factors of wage fixation like capacity to pay, inter-industry wage variation, interregional wage variation, collective bargaining agreement, if any, also need to be given importance. Job evaluation is highly subjective (being based on judgmental estimate). Similarly, it cannot take into account the cyclical effect of market value of occupations. For example, finance jobs were highly priced in the market at one point of time (now IT and marketing has taken its place). Despite such limitations, job evaluation technique is considered very useful for reasons explained earlier.
Methods of job evaluation 1. Ranking Method This is one of the simplest methods of job evaluation, Each job is compared to every other job in the organization, Based on overall worth of the job to the organization, The ‘worth’ of a job is usually based on the judgments of skill, efforts, responsibility and working condition. 2. Classification method Jobs are categorized into existing grade/category structure of hierarchy Each level in the grade/category structure has a description and associated job title Each job is assigned to the category providing closest match to the job The classification of position is decided by comparing the whole job with the appropriate job grading standards To ensure equity in job grading and wage rates, a common set of job grading standards and instructions are used 3. Factor Comparison Method :This is the more scientific and systematic method of Job Evaluation. Here instead of ranking complete jobs, each job is ranked according to the series of factors such as skill, responsibilities, working conditions and efforts. Pay will be assigned by comparing the weights of the factors required for each job. 4. Point Method: Each organization identifies its “key factors” and points are assigned to each factor in order of importance. The points are summed up to determine the wage rate for the job. Jobs with similar point’s totals are placed in similar pay grades.
PROCEDURE OF JOB EVALUATION
Gaining acceptance and creating job evaluation committee
Finding jobs to be evaluated and analyzing and preparing job description
Selecting the method and classifying the jobs accordingly
Installing the program
acceptance from employees: Before undertaking job evaluation, top management of the company must explain the purpose and uses of the job evaluation programme to the employees and their unions. In order to bring clarity to the programme, oral presentations could be made. Letters, circulars and booklets could also be used to classify all relevant aspects of the job evaluation programme. This will avoid possible misunderstanding and confusion among employees about the job evaluation programme/ process which company desires to introduce. There will be overall acceptance to the programme by the employees and their unions. This will also avoid possible opposition from them in the near future. available in an organization need not be evaluated. Such exercise may prove too taxing, costly and time-consuming. Here, certain key jobs in each department may be identified. While selecting jobs for evaluation purpose, care needs to be taken to ensure that they (jobs selected) represent the type of work performed in that department.
(2) Finding / deciding the jobs to be evaluated: Every job
(3) Analyzing and preparing job description: In this stage of job evaluation process, the job selected for evaluation will be studied / analyzed in detailed. This is necessary for the preparation of a job description and also for an appropriate analysis of job needs for successful performance. (4) Selecting the method of evaluation: Here, the method of job evaluation will be selected. The most appropriate method of evaluating the jobs must be identified here, keeping the job factors as well as organizational demands in mind. This stage in the job evaluation process is important as the benefits of job evaluation will be available only when the method of job evaluation selected is appropriate. (5) Installing the programme: Once the job evaluation process is over and a plan of action is ready, the management must explain it to employees and put it into operation in the whole organization. This step is essential in order to clear the doubts, etc of the employees and union leaders. It is important to note that the job evaluation programme will be acceptable to employees when the prograrrune is explained to them properly.
(11) Periodical review: The \jobs in an organization need periodical review in the light of changes in environment conditions (technology, products, services, etc.) which may change from time to time. For example, the traditional clerical functions have undergone a rapid change in various sectors such as banking, insurance, railways and finance after computerization. New job descriptions need to be written and the skill requirements of new jobs need to be duly incorporated in the evaluation process. In the absence of such periodical review, employees may feel that all the relevant job factors have not been evaluated properly, based on which their pay scale has been determined. This suggests the importance of periodical review in the process of job evaluation.
CASE STUDY: 3 Global Services - BPO 3 Global (3G) is a subsidiary of Hutchison Essar group and operates back-office work of 3G mobile services in Australia. In India it is located in Mindspace, Malad. In this country this sector thrives on the availability of quality HR. Hence, this company is the best example for knowing about the application of techniques like job analysis, job evaluation, and job design. Job Analysis at 3G An operations manager heads each and every process in 3G. He analyses the process and then lists down his requirements with regards to manpower, both technical and non-technical. He then works with the HR department and selects the employees from their database of job applicants. The recruitment is then done for various designations like CCE, TL, QL, training personnel etc , but a major chunk i.e. about 90% of it is done for the position of CCE. The minimum requirements for the post of CCE as given out by the operations manager are as follows: 1. Should be above 18 yrs of age. 2. Should have at least completed HSC. 3. Knowledge of Excel and basic computing is preferred. 4. People with prior experience in this field are an added advantage. Once the job applicants are recruited, the HR department imparts the necessary training and within a span of two to three weeks the employees become ready to take calls. Job Design at 3G 3G mainly practices ‘job rotation’ as a part of job design. This is because many of their employees complain about the monotonous nature of work. Suppose the main job of an employee at 3G is taking customer calls; but for some days the operations manager shifts him to some other work like assisting the team leader. This kind of movement among jobs ensures that the morale of employees is always high and also
increases employee efficiency. Promotions are a part of job design, but this is done only after the employee has completed at least 2 yrs at 3G. Job Evaluation at 3G In any company remuneration has to be paid according to the work done by the employee. For this, evaluation of the work done becomes important. Here the employees are paid their basic salary according to their designations and add-ons and performance incentives and attendance incentives are also paid. The quality management department mainly does the job evaluation in this company and later it gives the report to the HR department and then the salaries are given according to the reports given to them. University Questions: 1. Define the term “Job Evaluation” Explain the process of JOB evaluation. (2007) 2. State Bank of India has lost a lot of customers in the last few years to multinational banks that adopt a modern operational style preferred by customers. As part of an organizational revamp, State Bank of India authorities have decided to study all existing jobs and redesign the work content, if necessary. Describe any three techniques that State Bank of India can use to collect information for analysing jobs. (2005) Short Notes: 1. Job Evaluation (2002, 2004) 2. Job Description (2006) 3. Objectives of Job Evaluation (2003) Pittance Concept Questions: 1. Job Analysis (2201, 2003, 2004) 2. Job Design (2001)
RECRUITMENT, SELECTION & INDUCTION HR Planning determine the number and type of people a firm needs. Job analysis and job design specify the tasks and duties of jobs and the qualifications expected from prospective job holders. After Job Analysis & HR planning, the next logical step is to hire the right number of people of the right type to fill the jobs. The procurement function in the human resource department of a company includes the following major sub-functions. 1. Recruitment: It means search of the prospective employee to suit the job requirements as represented by job specification – a technique of job analysis. 2. Selection: Out of the prospective applicants, right type of persons is selected to match the jobs. Recruitment involves attracting and obtaining as many applications as possible from eligible job seekers. Theoretically, recruitment process is said to end with the receipt of applications, in practice the activity extends to the screening of applications so as to eliminate those who are not qualified for the job. Need for recruitment: The need for recruitment reasons/situations: may be due to the following
(a) Vacancies due to promotions, transfers, retirement, termination, permanent disability, death and labor turnover. (b) Creation of new vacancies: due to growth, expansion, merger, diversification etc activities of business. Recruitment forms the first stage in the process, which continues with selection and ceases with the placement of the candidate. Meaning and Definition: “The process of attracting individuals on a timely basis, in sufficient numbers, and with appropriate qualifications, and encouraging them to apply for jobs with an organization.” “It is the process of finding and attracting capable applicants for employment. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applicants from which new employees are selected.”
Practically, recruitment process extends to the screening of applications so as to eliminate those who are not qualified for the job.
Purpose / Importance of Recruitment The method of recruitment that an organization uses directly affects the efficiency of its selection and placement programme in following ways. • It determines the present and future requirements of the organization in conjunction with its personnel planning and jobanalysis activities. • Increase the pool of job candidates • Helps increase the success rate of the selection process by reducing the number of visibly under qualified or overqualified job applicants. • Begins identifying and preparing potential job applicants who will be appropriate candidates. • Increases organizational and personal effectiveness in the short and long term. Something important about recruitment: • Recruitment represents the first contact that a company makes with potential employees. It is through recruitment that many individuals will come to know a company, and eventually decide whether they wish to work for it. • A well-planned and well-managed recruitment effort will result in high-quality applicants, whereas, a haphazard and piecemeal effort will result in mediocre ones. • High quality employees cannot be selected when better candidates do not know of job openings, are not interested in working for the company, and do not apply. • The recruitment procedure should inform qualified individual about employment opportunities, create a positive image of the company and provide enough information about the jobs so that applicants can make comparisons with their qualifications and interests. The failure to generate an adequate number of reasonably qualified applicants can prove costly in several ways.
• Poor quality of selection means extra cost on training and supervision. • When recruitment fails to meet organizational needs for talent, a typical response is to raise entry-level pay scale. FACTORS GOVERNING RECRUITMENT Recruitment is subject to influence several factors. These include external as well as internal forces. External Forces a. SS & DD of specific skills in the labor market: if the dd for a particular skill is high relative to the supply, an extraordinary recruiting effort may be needed. For e.g. the dd for programmers is likely to be higher than their supply as opposed to the dd-ss relationship for non-technical employees. b. Unemployment rate: when unemployment rate in a given area is high, the company’s recruitment process may be simpler. The number of unsolicited applicants is usually greater, and the increased size of the labor pool provides better opportunities for attracting qualified applicants. As the unemployment rates drops, recruiting efforts are increased and new sources are explored. c. Political and legal consideration: Reservations of job for SC, ST, minorities and other backward classes is a political decision. There is a strong case for giving preference to people hailing from lessadvantaged sections of the society. Reservation has been accepted as inevitable by all sections of the society. The Supreme Court has also agreed upon 50% reservation of seats and jobs. d. Company’s image: It also matters in attracting large number of job seekers. Blue Chip companies attract large number of applications. Often, it is not the money but the perception of the jobseekers about the company also matters in attracting qualified prospective employees. Internal Forces a. Recruitment Policy:
Organizations may have an internal recruitment policy (to recruit people from within the organization - its own employees) or external policy. Generally, internal policy is given more preference due to many advantages.
b. Temporary and Part-Time employees: An organization hiring temporary or part-time employees have less advantage in attracting sufficient applications. c. HRP: Whether company has implemented proper HRP or not is also another important factor. The positions cannot be filled up overnight; it takes time to examine the alternative regarding the appropriate sources of recruitment. If organization believes in HRP then, it can well in advance determine its requirement and implement recruitment process accordingly. d. Size of organization: Another internal factor having its influence on the recruitment process. An organization with one thousand employees will find it less problematic to recruit than an organization with lesser number of employees. e. Cost of recruiting: Yet another factor that has to be considered. Recruiting costs are calculated per new hire and the figure is considerable now a days. Recruiters must, therefore, operate within budgets. Careful HRP can minimize recruitment costs. The best solution is to use proactive personnel practice to reduce employee turnover, thus, minimizing the need for recruiting. Although it is not easy to control attrition rate or to ensure that a person who has appeared for an interview will be a happy employee later, certain strategy can help organization from avoiding appointment of candidates who will choose to leave organization in a very short span of time after being appointed. Genpact, the BPO pioneering uses a pre-hiring process to aid in arresting attrition. The organization brings people before they join and have them look at the workplace. If the people choose not to join, that reduces potential attrition. The company also offers education at the workplace as young recruits tend to leave the organization for higher education. The attrition levels are half now for those personnel who have made use of this opportunity. SOURCES / METHODS OF RECRUITMENT: DIAGRAM: SOURCES OF RECRUITMENT Internal Sources: • Promotion • Transfer • Internal notification • Retirement (renewal of the contract of the person retiring.)
• Former employees (rehiring or re-employment) There is no surity in the organizations that only non-performers leave the organization. Even the star performers may leave the organization for greener pasture. For organizations, holding on to their former employees (best ones) is one way. For eg. Quatrro BPO Solutions has nurtured a concept of keeping in touch with high performers who leave the organizations and give them an opportunity whenever they want to come back. External Sources: • • • • • • • • Press advertisement Employment exchange Walk-ins Consultants Contractors Mergers and acquisition Competitors E-recruiting
Former employees: WIPRO (SCIP), Holding on to employees Evaluation of Internal sources of recruitment Advantages • • • • • • Economical Develop loyalty towards firm Acts as a motivator Security and continuity of employment Reduce labor turnover People recruited internally, does not require induction.
Disadvantages: • A feeling of discontent among those who are not promoted. • Prevents entry of young blood in the organization • Promotion to key post may not turn possible due to nonavailability of competent persons. • May encourage favoritism and biasness. EXTERNAL SOURCES: Press Advertisements:
• Concept • Blind ads It is the one, in which there is no identification of the firm is mentioned in the ad. Respondents are asked to reply to a post box number or to a consulting firm that is retained by the organization. Large companies will seldom/maynot use blind ads to fill vacancies (generally at lower level). However, when organization doesnot wish to publicize the fact that it is seeking to fill an internal position, or when it seeks to recruit for a position in the place of a person likely to be displaced, a blind ad may be appropriate. Also, company need to respond to only those individuals the company wishes to see. Other applications are ignored as if they were never received. Getting low response for blind ad has many reasons to it including the goodwill of the organization.
Employment Exchanges: Employment exchanges have been set up all over the country in deference to provisions of the Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959. The Act applies to all industrial establishments having 25 workers or more each. The Act requires all the industrial -establishments to notify the vacancies before they are filled. The major functions of the exchanges are to increase the pool of possible applicants and to do preliminary screening. Thus, employment exchanges act as between the employers and the prospective employees. These offices are particularly useful in recruiting blue collar, white-collar and technical workers. As on today, there are 965 exchanges across the country with 46 million people registered seeking jobs. Till now, all these exchanges have found jobs for only 260,000, a success rate of 0.56%. Walk-ins: the most common and least expensive approach for candidates is direct application, in which job seekers submit unsolicited application letters or resumes. Direct applications can also provide a pool of potential employees to meet future needs. From employees' viewpoint, walk-ins are preferable as they are free from the hassles associated with other methods of recruitment. Direct applications are particularly effective in filling entry-level and unskilled vacancies.
Consultants: ABC Consultants, Ferguson Associates, Human Resource Consultants, Head Hunters, Batliboi Co, Analytic Consultancy Bureau, Aims Management Consultants and The Search House are some among numerous recruiting agencies. These and other agencies in the profession are retained by organizations for recruiting and selecting managerial and executive personnel. Consultants are useful in as much as they have nation-wide contacts and lend professionalism to the process. They also keep prospective employer and the employee anonymous. But, the cost can be a deterrent factor. Most consultants charge fees ranging from 20 to 50 per cent of the first year salaries of individuals placed. Contractors : Contractors are used to recruit casual workers. The names of the workers are not entered e company records and, to this extent, difficulties experienced in maintaining permanent workers are avoided. Acquisitions and Mergers: Another method of staffing firms is a result of the merger or acquisition process. When organizations combine into one, they have to handle a large pool of employees, some of who may no longer be necessary in the new organization. Consequently, the new company has, in effect, a pool of qualified job applicants (although they are current employees). As a result of the merger or acquisition, however, new jobs may be created as well. Both new and old jobs may be readily staffed by drawing the best-qualified applicants from this employee pool. In contrast to the other external methods, this one can facilitate the immediate implementation of an organization’s strategic plan. This ready pool may enable a firm to pursue a business plan, such as entering a new product line that would otherwise be unfeasible using standard recruiting methods. Competitors: Rival firms can be a source of recruitment. Popularly called poaching' or 'raiding', this method involves identifying the right people in rival companies, offering them better terms and luring them away. Firms poach on right people in rival companies by offering better terms and lure them away. Poaching has legal implication in as much as the employee needs to obtain clearance from his/her employer before hopping on to another. E-Recruiting This is one of the fastest growing methods of recruitment. Employer can electronically screen candidates’ attributes. Companies benefit immensely through cost savings, speed enhancement and extended world-wide candidate reach which the internet offers. From the job-
seekers perspective, the internet allows for searches over a broader array of geographic than was possible before. www.naukri.com www.monsterindia.com www.jobsahead.com www.timesjobs.com SELECTION After recruitment, selection is the next logical step in the HR process. Selection is the process of picking individuals (out of the pool of the job applicants) with requisite qualifications and competence to fill jobs in the organization. Thus, “Selection is the process of differentiating between applicants in order to identify and hire those with a greater likelihood of success in a job.” Selection of suitable candidates is a matter of special importance in personnel management. It is the starting point of the whole human resource management process. Inefficiency, low productivity, high wastages, industrial accidents, ineffective execution of training programmes, etc are due to faulty selection of candidates. Importance of Scientific selection process: Unsuitable candidate becomes a permanent problem as long as he is in the organization. This is because he has no liking to the job, no interest, no initiative in the job and finally, no capacity to handle the job independently. For progress and prosperity a company needs a team of efficient, loyal, capable and co-operative young workers and managers. Such team is available only when the selection is made systematically. Selection of unsuitable persons finally brings the future of a company in danger. Unsuitable employees become liability of a company. They create problems and remain as obstacles. This suggests the significance of scientific selection in personnel management.
IMPORTANCE OF “RIGHT” SELECTION Work performance depends on individuals. The best way to improve performance is to hire people who have the competence and the willingness to work. Cost incurred in recruiting and hiring personnel speaks volumes about the role of selection. Objective of right man for right job is achieved. Labor turnover is minimized. Expenditure on frequent selection of candidates is avoided. Training provided to properly selected candidates gives promising results. Example: Pepsi had gone on a crash recruitment drive. Six people from the company took over the entire Oberoi Business Centre in Mumbai for six days; 3000 applications in response to an advertisement issued earlier were scanned; applicants were asked to respond by fax within 100 hours; finally, the shortlisted persons were flown in and interviewed. In the US, it is much more expensive. The cost of searching for and training a top level executive may run into $ 2,50,000. As was pointed out above, consultants charge fees ranging from 20 to 50 per cent of the first year's salary of an employee selected. Assuming a manager is assured of a compensation of Rs 2 lakh the retainer's fee works out to be Rs 40,000 to Rs 1,00,000. Costs of wrong selection are much greater. Figure below shows four possible outcomes of a selection decision. DIAGRAM: OUTCOMES OF SELECTION DECISION
Succes s Failure
False Negative True Positive Error True Negative Failure Predicted False Positive Error Success Predicted
two of the above – “true positive” & “true negative” are right selection. The other two outcomes represent selection error. In “False negative error” an applicant who would have succeeded is rejected based on predictions of failure. Whereas, in case of “False positive error” a decision is made to hire an applicant based on predicted success. Most false negative error go unnoticed. Cost associated with this type of error is generally difficult to predict. A company with a false positive error incurs three types of costs. • Employment cost: production or profit losses, damaged company reputation, accidents due to negligence, absenteeism, and the like. • Training cost, transfer or termination cost. • Replacing cost (again hiring, training etc) A careful selection will help a firm avoid costs associated with both, false positive error and false negative error. Selection Process Selection being very long process commences from the preliminary interview of the applicants and ends with the contract of employment. In practice, the process differs among organizations and between two different jobs within the same company. Selection procedure for senior managers will be long-drawn and rigorous, but it is simple and short while hiring shop-floor workers. The following figure shows generalized selection process. In the practice, the process differs from organization to organization.
EXTERNAL INTERNAL ENVIRONMENT
R E J E C T E D A P P L I C A N T S PRELIMINARY INTERVIEW
REFERENCE & BACKGROUND ANALYSIS
EVALUATION OF SELECTION PROGRAM
Environmental Factors affecting selection Selection is influenced by several factors. Supply and demand of specific skills in labor market always influences this process. Other factors are unemployment rate, legal and political considerations, company’s policy, HRP and cost of hiring.
1. Preliminary Interview: The purpose of Preliminary Interview is
more or less the same as scrutiny of applications, that is, elimination of unqualified applications. Scrutiny enables the HR specialists to eliminate unqualified job seekers based on the information supplied in their application forms. PI helps reject misfits for reasons, which did not appear in the application forms. 2. Selection Tests: The applicants who pass the Preliminary Interview are called for tests. Different types of tests may be administered, depending upon the job and the company. Generally tests are used to determine the applicant’s ability, aptitude and personality. Ability Test helps in determining how well an individual can perform tasks related to the job. For e.g. An aptitude test is designed to measure the candidate’s capacity to perform a task in a particular way. Personality Test can be used to get a generalized overview of an individual's character, for example their anxieties, whether they are sociable, assertive, extroverted or introverted. Their suitability for the job can be judged from their responses. For example successful sales staff should be outgoing, financially motivated, confident and persuasive. Graphology Test: Graphology is a test that seeks to predict success or failure through one's handwriting. It is vastly used in the U.S. but is yet to make its presence felt in India. 3. Employment Interview: The next step in the selection process is employment interview. This interview is formal, in-depth conservation conducted to evaluate the applicant’s acceptability. Often the first interview is carried on telephone. This interview process gives a company to meet the applicants personally. Typically conducted in-person, this is an in-depth meeting to discuss the specific areas of expertise of a candidate. Based upon a two-way dialogue, this interview is designed to predict performance and is driven by a series of questions that validate the knowledge of each candidate in his/her specialty disciplines. E.g.
At Essar, the selection process depends on the level of the position a candidate is applying for. For entry-level positions, they assess the person through aptitude tests, group discussions and personal interviews. At the senior level, the selection process consists of discussions with the human resources head, functional experts within Essar and sometimes the promoter-directors.
Types of interviews: • Structured Interview • Unstructured Interview • Mixed (a blend of structured and unstructured) Group interview (Group Discussion) • Panel Interview • Behavioural (hypothetical situation) • Stress
4. Reference / Background check Many employers request names, addresses, and telephone numbers or references for the purpose of verifying information and, perhaps, gaining additional background information on an applicant. When the labor market is very tight, firms sometimes hire applicants before checking references. Previous employers, known public figures, university professors, neighbors or friends can act as references. Previous employers are preferable because they are already aware of the applicant's performance. But, the problem with this reference is the tendency on the part of the previous employers to over-rate the applicant's performance just to get rid of the person. Reference checks cover the following: • Criminal record checks • Previous employment check • Educational record checks • Credit record checks • Union affiliation checks • Character reference check Background checks and fraud detection have become easy as there are agencies which specialize in the task. KPMG India, for example, has a 130-strong team to detect frauds. Similarly, E&Y has a 40member team. Reference checks serve two important purposes. One purpose is to gain insight about the potential employee from the people who have had previous experience with him or her. This is a good practice considering the fact that between 20 to 25 per cent of job applicants there is at least one fraudster
The second purpose for reference checks is to assess the potential success of a prospect. Who else can give an objective assessment of an individual than his or her previous employer or a person known to him or her? But one should guard against the following while considering to employ a prospect: • The prospect is likely to approach those persons who would speak well about him or her. • People may write favorably about the candidate in order to get rid of him or her. • People may not divulge the truth about a candidate, lest it might damage or ruin his or her career. 5. Selection Decision: The final decision is to be made from pool of individuals who pass the tests, interviews, and reference checks. (our experience – Infosys-BLR - 2003 for 10,000 jobs – received 1 mn applications.) the opinion of Line manager is also considered here, while hiring the employees as he is going to be responsible for the performance of the new employee. 6. Physical Examination: • To detect if the individual carries any infectious diseases. • The test assists in determining whether an applicant is physically fit to perform the work. • The physical examination information may be used to determine if there are certain physical capabilities which differentiate successful and less successful employees. • Medical check-up protects applicants with health defects from undertaking work that could be detrimental to themselves. • Such examination will protect the employer from worker’s compensation claims that are not valid because the injuries or illness were present when the employee was hired. 7. Job Offer: The next step in the selection process is job offer to those applicants who have crossed all the previous hurdles. Job offer is made through a letter of appointment. Such a letter generally contains a date from which the appointee must report on duty. The appointee must be given reasonable time for reporting. This particularly necessary when he or she is already in employment, in which case the appointee is required to obtain a relieving certificate from the previous employer. Again, a new job may require movement to another city which means considerable
preparation. 8. Evaluation of Selection Program: It is very important to have evaluation of selection program. The selection program if done properly will ensure availability of proper employees. Periodic audit should be done to ensure evaluation of selection program. Audit must be done by people who work independent of the HR department. BARRIERS TO EFFECTIVE SELECTION Certain barriers defeat the purpose of selecting right kind of people. The obstacles which check effectiveness of selection are perception, fairness, reliability and pressure. Perception: The inability to understand others accurately is the most fundamental barrier to selecting the right candidate. Right kind of selection demands to assess and compare the respective competencies of others, with the aim of choosing the right persons for the jobs. But our views are highly personalized. We perceive the world differently. Our limited perceptual ability is obviously a stumbling block to the objective and rational selection process. Fairness: This requires that no individual should be discriminated against on the basis of religion, race or gender. But the low numbers of women and other less-privileged sections of the society in middle and senior management positions and open discrimination on the basis of age in job advertisements would suggest that all the efforts to minimize inequity have not been very effective. Reliability: A reliable method is one which will produce consistent results when repeated in similar situation. Even sometimes a reliable test may fail to predict job performance with precision. Pressure: Pressure is brought on the selectors by politicians, bureaucrats, relatives, friends and peers to select particular candidates. Candidates selected because of compulsions are obviously not the right ones. Appointments under public sector undertaking generally take place under such pressures. The Halo Effect This is where the interviewer or interviewers see the person in an “exalted” way because they have the same hobbies or interests, belong to the same golf club, went to a top school, are smartly dressed, etc. These perceptions often cloud the mind and judgement
of the interviewer and the candidate gains a halo whether they are good or bad at doing their job. The Horns Effect This is the opposite of the halo effect. The interviewer takes a dislike to the candidate, their personality, the way they dress, etc. This alters the interviewer’s perception of the candidate and, no matter how good that candidate may be at doing the job, s/he gains a set of “horns”! Once the interviewer adopts this perception of the candidate, it is very difficult to shake off. This is why it is often important to have more than one person interviewing; it helps to avoid scenarios such as the halo and horns effect happening. Stereotyping This is where the interviewer’s perception of a candidate alters because the individual is a woman, black, Asian or disabled, etc. Some common societal stereotypes or preconceptions about the above groups are: (i) That a woman’s place is in the home (ii) That it will be difficult to get a group of white workers to work under a black or Asian team leader/supervisor (iii) That disabled people are difficult to employ ORIENTATION After an applicant is hired, he/she must be oriented and placed on the chosen job. Orientation / Induction: It is designed to provide a new employee with the information he or she needs to function comfortably and effectively in the organization. “Orientation is planned introduction of employees to their jobs, their co-workers and the organization.” Orientation covers three types of information: • General information about the daily work routine; • A review of the organization’s history, founders, objectives, operations and products or services, contribution of employee’s job towards organization’s needs • A detailed presentation about company’s policies, work rules and employee benefits.
PURPOSE • Induction / orientation program is conducted to make the new employees feel ‘at home’ at the same time to introduce the new employee to the organization in a systematic way. • It is a process of welcoming of a new worker and creating a sense of understanding and confidence in his mind. • Effective induction program reduces the anxiety of new employees by providing them information on the job environment and on co-workers and supervisors. • It gives adequate information about the organization, rules and regulations at the work place and incentives for self development. • It helps the employee in gaining the confidence in his work, and organization he has joined.
Induction at TCS: After the employee has joined the organization, this is the time for the organization to carry out the alliance and build the real relationship. Induction is the time to set up expectations and capture critical potential indicators. Good induction program: A good induction program is about communication. Treat the new recruit with respect and as a mature and responsible individual. Welcome him and make sure that he is comfortable. Introduce him to all relevant people individually. Present the organization: The induction program is the time to manage the inductees’ expectations. Make the presentations as professional and business like as possible. The expectations you set here will come back to haunt you later. Lay down the organization’s expectations: This is also the time for you to lay down your expectations in terms of performance, professionalism and other values you want to espouse. Clarity on organization values and policies: Walk the inductee through every policy and rules manual, this will help him know the organization better and not feel lost once he goes to work. Lay down the PMS system: Clearly say your Performance Management System. It is very critical for an employee to know
what is expected out of him and what the performance parameters are. Also invest in soft skill programs (preferably in-house to get the right flavor). It shows an inductee the focus of your organization’s way of doing things. i.e. communication and team building. Buddy scheme: Design a Buddy or Mentoring scheme (they are two distinct approaches) to help understand the new inductee into your organization smoothly. Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is a business decision that is often made to focus on core competences. A subset of the term (offshoring) also implies transferring jobs to another country, either by hiring local subcontractors or building a facility in an area where labor is cheap. It became a popular buzzword in business and management in the 1990s. The areas that can be covered under induction program: • The basics involved in the functions / operations including a broad perspective of the technological aspects, if any; • The administrative and operational policies, practices and the business goals of the employing organization. • Coverage of organization’s products and clientele portfolio; • Codes of conduct and protocols adopted by employers & • Career path and advancement prospects.
Different Types of Orientation programs A firm needs to make four strategic choices before designing its orientation program. They are: 1. Formal or Informal: An orientation can be either formal or informal. In case of formal orientation, the management has structured program which is executed when new employee joins the organization. In contrast, in case of informal orientation, new employee is directly put on the jobs and he/she is expected to adjust him/her self with the work and the organization. The choice between formal and informal will depend upon the management’s goals. If the orientation is formal, then the new entrant is more likely to acquire a known set of standards and act like an executive, a trainee etc. but in case of informal program, it is desirable to maintain individual indifferences. 2. Individual or collective: Another choice to be made by the management is whether the new hires should be induced individually or in groups. Individual orientation is more likely to preserve individual differences and perspectives. Orienting each person separately is an expensive and time-consuming process. It also denies the new hire the opportunity of sharing anxieties with fellow appointees. Whereas, collective orientation of the new hires solves the problems stated above. Most large organizations tend to have collective orientation approach. But small firms which have fewer new appointees to socialize use the individual approach frequently. 3. Serial or Disjunctive: Orientation becomes serial when an experienced employee inducts the new entrant. When new hire do not have predecessor available to guide him the orientation becomes disjunctive. Serial orientation maintains traditions and customs. On the other side, disjunctive induction is likely to generate more inventive and creative employees as the new hire is not burdened by traditions. Both these options have its’ own advantage and disadvantage. Serial orientation maintains traditions and customs. Consistent use of this strategy will ensure a minimum amount of change within the firm over time. On the contrary, if the experienced employee is frustrated and apathetic towards work and organization, it is likely that he or she would pass on the same to the new hire.
If the organization follows disjunctive induction, it is very much possible that the individual is more likely to fail to understand how their job is to be done – due to an inadequate role model. REQUISITES OF AN EFFECTIVE ORIENTATION PROGRAM Orientation program, to be effective, must be based on serious consideration to attitudes, behaviour, and information that the new employee need. Following are some of the requisites of an effective system. 1. Prepare for new employees: New employees must, feel initially that they belong to the organization and are important. Therefore, the organization and the dept unit must be prepared to receive the new employee. In addition, co-workers must be ready and be aware of new employee. The management must take the present employees into confidence and convince them about the need for hiring the new employee. This is to be done generally when the arrival of new employee is likely to erode the position and status enjoyed by the current employees. 2. Determine following information: • What things would new employees need to know about their work environment that would make them more comfortable? • What impression and impact would the employer want to make on a new employee on the first day? • Which key policies and procedures must new employees be aware of on the first day? • What positive experiences can the employer provide for new employees, which they could discuss with their families? 3. Determine how to present information: Line managers and HR representatives should determine the most appropriate way to present the orientation information. Presentation could be in the form of policy manual, verbal or anything that could serve the purpose. 4. Completion of paper work: All paper work of new employee must be completed when he is in orientation status, so that he gets paid on time. Various tax and insurance forms as well as other items such as his Identity card should be done on time. There is nothing more agonizing for a new employee than to miss the first pay cheque or to be paid improperly because the correct forms were not completed accurately.
Benefits of induction program: • • • • • • Reduction in degrees of uncertainty in the employee’s mind. Increase in the level of employee’s mental comfort. Quicker adaptation of suitable behavior and attitude; Reduction in employee turnover / absenteeism. Increased productivity of the workforce. Creates a positive perception of the organization and an understanding of the corporate values and culture in the employees. • Increase the commitment level of the employees. • Improves communication within the employees. PLACEMENT Immediately after selection and appointment, a newly selected employee is sent to a particular department for actual work. This is called placement. It is a process of placing the right man on the right job. A worker should be placed on a position where he can use his knowledge, education, skills, etc. in the best possible manner. Wrong placement means not using the qualities of a newly appointed person for the benefit of the organization. A misplaced employee is a frustrated person and may leave the job as the job is not as per his education, skills and liking. His morale will be low. Proper placement reduces labor turnover, absenteeism and accidents to the lowest level. It also ensures full utilization of the capacity and ability of an employee. Placement is allocation of people to jobs. It is placement or assignment of an employee to a new job. Placement is necessary when • A new candidate is selected and appointed. • It is required after promotion, transfer or demotion of an existing employee. Placement should be always based on the qualifications and qualities of the candidate selected. It should also be based on the staff requirement of different departments. Placement is basically the responsibility of the Personnel Department. In other words, right man for the right job within an organization is possible through proper placement of selected/appointed candidates. DEFINITION OF PLACEMENT:
(1) According to Dale Yoder, placement means "The determination of the job to which an accepted candidate is to be assigned and his assignment to that job". The placement arrangement should be ready before the joining date of newly selected candidates. For this, all necessary details about selected candidates should be collected and employee's profile should be constructed for review and placement. Placement should be always scientific and fair. It should be beneficial to the organization as well as attractive and agreeable to selected candidates. It need not be done quickly and in a casual manner. Moreover, faulty placement may prove costly to the organization itself. The placement in the initial period may be temporary as changes are likely after the completion of training. IMPORTANCE OF PLACEMENT:
The capacity of an employee can be utilized fully if the candidate is placed in the most suitable department. Wrong placement affects the morale of an employee. He may even leave the job and the organization if he is given the work which is not as per his qualifications, qualities and liking. Proper placement ensures full utilization of capacity of every employee for the benefit of the company.
CHPT – 5 - TRAINING AND DEVELOPMENT After the selection of people for various jobs, the next function of management is to arrange for their training and development. This is because a person, however carefully selected is not molded to specifications and rarely meets the demands of his job adequately. Workers must be trained to operate machines, reduce scraps and avoid accidents. It is not that only workers need training. Supervisors, managers and executives also need to be developed in order to enable them acquire growth and maturity in thinking and actions. Formerly it was thought that the training of personnel was unnecessary on the ground that the new techniques of production are becoming more and more complicated, it is being increasingly realized that the formal training is important not only for new recruits but also for existing employees. Training function, in fact, has become the corner stone of sound management. Thus, training is an ongoing process. It is the act of increasing the knowledge and skills of an employee for doing a particular job. It is concerned with imparting specific skills for the particular purposes. Two terms: Training and Development Training is a process of learning a sequence of programmed behavior. It is application of knowledge. It gives people an awareness of the rules and procedures to guide their behavior. Development is a related process. It covers not only those activities, which improve job performance but also those, which bring about growth of the personality; help individuals in the progress towards maturity and actualization of their potential capacities so that they become not only good employees but also better men and women. Definition of Training: According to Edwin Flippo, “training is the act of increasing the knowledge and skills of an employee for doing a particular job.” Thus: Training is short-term process utilizing a systematic and organized procedure by which non-managerial personnel learn technical knowledge and skills for a definite purpose. Whereas development is a long-term educational process utilizing a systematic and organized procedure by which managerial personnel learn conceptual and theoretical knowledge for general purpose."
Training is not given only once to new employees. Every employee in the organization requires training throughout his or her stay in the organization. Thus we can say that a systematic training program:
• • • • •
Increases the productivity Improves quality of work Helps a company fulfill its future personnel needs. Improves safety by reducing accidents in organizations Obsolescence prevention: fostering the initiative and creativity of employees and help to prevent manpower obsolescence, which may be due to age, temperament or motivation or the inability of a person to adapt himself to technological changes."
Need for training programme I. II. An increased use of technology in production; Labor turnover arising from normal separations due to death or physical incapacity, for accidents, disease, voluntary retirement, promotion within the organization and change of job. Need for additional hands to cope with an increased production of goods and services; Employment of inexperienced labor requires detailed instruction for an effective performance of a job. Old employees need refresher training to enable them to keep abreast of the changing methods, techniques and use of sophisticated tools and equipment; Training enables employees to do the work in a more effective way, to reduce learning time, reduce supervision time, reduce waste and spoilage of raw material and produce quality goods and develop their potential.
III. IV. V. VI.
The need for training and development is determined by the employee’s performance deficiency, computed as follows:
Training and Development need = Standard performance – Actual performance.
We can make a distinction among training, education and development. Such distinction enables us to acquire a better perspective about the meaning of the terms. Training, as was started earlier, refers to the process of imparting specific skills. Education, on the other hand, is confined to theoretical learning in the classrooms.
EDUCATION DIFFERENTIATED: Education Theoretical oriented Classroom learning General concepts Broad perspective
Training Application oriented Job experience Specific tasks Narrow perspective
Development refers to those learning opportunities designed to help employees grow. Development is not primarily skill-oriented. Instead, it provides general knowledge and attitudes, which will be helpful to employees in higher positions. Efforts towards development often depend on personal drive and ambition. Development activities, such as those supplied by management development programmes, are generally voluntary. Management development as a process is usually considered to be something for senior management in the organization. Of course, the development of managers is part of the general training and development processes ensuring competence at all levels in the organization, but the development of senior management is generally a little different. Significantly, it is less about the development of managers than the development of “management”. This implies a strong corporate focus and a team approach as well as the concern for individual effectiveness. Thus, three dimensions may be seen: At the personal level – the ongoing acquisition of the skills and abilities necessary for the management of oneself and others, allied at this senior level with effective performance in respect of team working, high level communication skills (both within and outside the organization) and, importantly, working with boards and committees in both formal and informal structures in the interplay of policy and decision making; In respect of the management team – the need to build and consolidate strong, innovative working relationships which provide for mutual respect and allow for individual abilities and aptitudes to be recognized and brought to bear as appropriate in corporate decision making;
From the organizational perspective – the definition and development of the purposes and ethos of management itself within the organization, and the structures and processes through which these may be effected.
Training Training is skills focused
Development Development is creating learning abilities Training is presumed to have a Development is not education formal education dependent Training needs depend upon Development depends on lack or deficiency in skills personal drive and ambition Trainings are generally need Development is voluntary based Training is a narrower concept Development is a broader focused on job related skills concept focused on personality development Training may not include Development includes training development wherever necessary Training is aimed at improving Development aims at overall job related efficiency and personal effectiveness performance (including job efficiencies) Types of Employee Training: 1. Induction (Orientation) Training: Induction training is basically for introducing the organization to newly appointed employees. The purpose is to give them “birds eye view” of the organization. It is very short informative type of training. It creates a feeling of involvement in the minds of newly appointed employees. All MNCs and big Indian companies arrange of this training program for its employees. This training creates favorable impression on the newly appointed employees and this impression remains in their mind over a long period. It is a simple, economical and quick method, which introduces the company to newly, recruited employees in an orderly manner. 2. Job Training: Job training relates to specific job which worker has to handle. It gives information about machines, process of production, instructions to be followed, methods to be used and precautions to be taken while performing the job. This training develops skills and confidence among the workers and enables them to perform the job efficiently. 3. Training for promotion: Promotion means giving higher position. Training must be given for performing duties at a higher level efficiently. This facilitates easy and quick adjustment with the new job and also develops new insight into duties and
responsibilities assigned. For this, training is given after promotion and before actually joining the new assignment. 4. Refresher Training: The purpose of refresher training is to refresh professional skills, information and experience of persons occupying important executive positions. It gives information about new developments and techniques to trainees and enables them to use new methods, techniques and procedures for raising efficiency. This training is of short duration and is given by professionals/institutions. Advantages of employee training: a. Advantages to Employer / Management / Company: 1. Improves efficiency 2. Improves quality of production 3. Reduces industrial accidents 4. Lesser expenditure on supervision 5. Provide stable labor force 6. Provides skilled manpower 7. Creates cordial industrial relations 8. Reduces labor absenteeism 9. Facilitates the introduction of new management techniques 10. Creates a pool of capable employees b. Advantages to managers/employees: 1. Creates confidence among employees 2. Develops skills among employees 3. Quick promotion 4. Offers monetary benefits 5. Creates adaptability among employees 6. Facilitates self-management 7. Updates knowledge 8. Creates positive attitude 9. Creates a pool of trained personnel
THE TRAINING PROCESS
Organizational Objectives and
Assessment of Training Needs Establishment of Training Goals Devising Training Programme
Implementation of Training programme Evaluation of Results
(1) ORGANIZATIONAL OBJECTIVES AND STRATEGIES: The first step in the training process in an organization is the assessment of its objectives and strategies. What business are we in? At what level of quality do we wish to provide this product or service? Where do we want to be in the future? It is only after answering these and other related questions that the organization must assess the strengths and weaknesses of its human resources. (2) ASSESSMENT OF TRAINING NEEDS: Organizations spend vast sums of money on training and development. Before committing such huge resources, organizations would do well to assess the training needs of the employees. Organizations that implement training programmes without conducting needs assessment may be making errors.
Needs assessment occurs at two levels: a) Individual b) Group Individual: An individual obviously needs training when his or her training falls short of standards, that is, when there is performance deficiency. Inadequacy in performance may be due to lack of skill or knowledge or any other problem. The problem of performance deficiency is caused by absence of skills or knowledge can be remedied by training. Faulty selection, poor job design, uninspiring supervision or some personal problem may also result in poor performance. Transfer, job redesign, improving quality of supervision, or discharge will solve the problem. Individuals may also require new skills because of possible job transfers. Although job transfers are as common as organizational personal demands vary, they do not necessarily require elaborate training efforts. Employees commonly require an orientation to new facilities and jobs. Recently, however, economic forces have necessitated significant retraining efforts in order to assure continuous employment for many individuals. Group: Assessment of training needs occurs at group level too. Any change in the organization’s strategy necessitates training groups of employees. For example, when the organization decides to introduce a new line of products, sales personnel and production workers have to be trained to produce, sell and service the new products. Training can also be used when high scrap or accident rates, low morale and motivation, or other problems are diagnosed. (3) ESTABLISHMENT OF TRAINING GOALS: Once the training needs are assessed, training and developmental goals must be established. Without clearly set goals, it is not possible to design a training and development programme and, after it has been implemented, there will be no way of measuring its effectiveness. Goals must be tangible, verifiable, and measurable. This is easy where skill training is involved. For example, the successful trainee will be expected to type 55 words per minute with two or three errors per page. But behavioral objectives like attitudinal changes can be more difficult to state. Nevertheless, clear behavioral standards of expected results are necessary so that the programme can be effectively designed and results can be evaluated. (4) DEVISING
Every training and development programme must address the following vital issues:
Who are the trainees?
What should be the level of training?
Who are the trainers?
What principles of learning?
What methods & techniques?
Where to conduct the program?
Who are the trainees? Trainees are selected on the basis of: Self Nomination Recommendations of the Supervisor By the HR Department itself Whatever is the basis, it is advisable to have two or more target audiences. For example, rank-and-file employees and their supervisors may effectively learn together about a new process and their respective roles. It also helps facilitate group processes such as problem solving and decision – making. 1. Who are the trainers? Training and development may be done by: Immediate Supervisors Co – workers Personnel Staff Specialists in other parts of the company Outside Consultants Industry Associations Faculty Members at Universities Who among these are selected to teach, often depends on where the program is held and the skill that is being taught. What Methods and Techniques of Training should be used? A multitude of methods and techniques is used to train employees. Training techniques are the means employed in the training methods. Training methods are categorized into two groups – onthe-job methods and off-the-job methods. The most commonly used techniques are shown in the table given below.
METHODS & TECHNIQUES OF TRAINING
On-the-Job Method Orientation Counseling Understudy assignment Job Rotation Delegation Case Study Vestibule Role Play Simulation
• • • •
Lecture Films & Television Conference/Discussion Programmed Instruction
On-the-Job Method (OJT): Appointment as “Assistance to”
Majority of industrial training is on the job training type. OJT method is mainly adopted while orienting new employees, introducing innovations in products & services and in special skills training. OJT is conducted at the work site and in the context of the job. Often, it is informal, as when an experienced worker shows a trainee how to perform the job tasks. Off-the-Job Training Method: Off-the-job training is mainly adopted for orienting new employees, introducing innovations in products and services, special skills training, safety education, creative, technical & professional education and sales, administrative, supervisory and managerial education. The advantages and disadvantages of some of the important techniques of off-the-job methods are listed below: a) Lectures: Lecture is a verbal presentation of information by an instructor to a large audience. This method can be made effective when combined with other means of training. b) Audio-Visuals: These include television slides, overheads, video-types, films and LCD Projectors. c) Programmed Instruction (PI):
Training is offered without the intervention of the trainer. Information is provided to the trainee in blocks, either in a book form or through a teaching machine. PI involves: 1. Presenting questions, facts, or problems to the learner. 2. Allowing the person to respond. 3. Providing feedback on the accuracy of his or her answers. 4. If the answers are correct, the learner proceeds to the next block. d) Simulations: A simulator is any kind of equipment or technique that duplicates as nearly as possible the actual conditions encountered on the job. It is an attempt to create a realistic decision – making environment for the trainee. The advantage of simulation is the opportunity to ‘create an environment’ similar to real situations the managers incur, but without the high costs involved should the actions prove undesirable. The other techniques of training are: Leadership games: exercises to teach different styles of leadership. Skill Games: Tests to develop analytical skills. Communication Games: exercises to build bias – free listening and talking. Strategic Planners: Games to test ability to plan ahead. Team – building games: Exercises requiring collaborative efforts. Lateral Thinking: thinking randomly to come up with new ideas. Cross – cultural training: Programmes to teach specifics of varied cultures. 2. What should be the level of learning? The inputs passed on to trainees in training and development programmes can be taught at three basic levels. Level I The trainee must acquire fundamental knowledge. This means developing a basic understanding of a field and becoming acquainted with the language, concepts and relationships involved in it. E.g. Orientation Training Level II The goal is skill development, or acquiring the ability to perform in a particular skill area. Level Aims at increased operational proficiency. This involves III obtaining additional experience and improving skills that have already been developed. All the inputs of training can be offered at the three levels. How effectively they are learned depends upon several principles of learning.
3. Where to conduct the programme? A training and development programme can be conducted: i. At the job itself ii. On site but not the job – for example, in a training room in the company. iii. Off the site, such as in a university or college classroom, hotel, a resort, or a conference center. (5) IMPLEMENTATION OF THE PROGRAMME: Once the training programme has been designed, it needs to be implemented. Implementation is beset with certain problems: a) Most managers are action oriented and frequently say they are too busy to engage in training efforts. b) Availability of trainers is a problem. In addition to possessing communication skills, the trainers must know the company’s philosophy, its objectives, its formal and informal organizations, and the goals of the training programme. Training requires a higher degree of creativity than, perhaps, any other personnel specialty. c) Scheduling training around the present work is another problem. Programme implementation involves action on the following lines: a) Deciding the location and organizing training and other facilities b) Scheduling the training programme c) Conducting the programme d) Monitoring the progress of trainees (6) EVALUATION OF THE PROGRAMME: The last stage in the training and development process is the evaluation of results. Since huge sums of money are spent in training and development, how far the programme has been successful must be judged or determined. Evaluation helps determine the results of the training and development programme. In practice, however, organizations either overlook or lack facilities for evaluation. Objectives of Training and Development Staying ahead in today's business world is more challenging than ever. Building trust and promoting teamwork are just two expectations of any business leader. Training and development programs are designed to keep an organization at the front of its industry maximize performance and
energize every level of the organization. Training and Development is also seen to strengthen the tie between employee development and strategic operation objectives. The objectives of Training and Development are as follows: Efficiency: Employees become efficient after undergoing training. Efficient employees contribute to the growth of the organization. Fewer accidents: Accidents, scrap and damage to machinery and equipment can be avoided or minimized through training. Even dissatisfaction, complaints, absenteeism, and turnover can be reduced if employees are trained well. Meeting manpower needs: Future needs of employees will be met through training and development programmes. Training serves as an effective source of recruitment. Training is an investment in human resource with promise of better returns in future. Improves quality: Betterinformed workers are likely to make less operational mistakes. Quality of products or services will definitely increase. This can be well measured through the reduction in rejections. Personal growth: Training programmes also deal with personality development of the employees (through goal setting, motivation, leadership skills, etc.) thus they personally gain through exposure to training programmes. Obsolescence prevention: Training and development programs foster the initiative and the creativity of the employees and help to prevent the manpower obsolescence, which may be due to age, temperament, or the inability of the person to adapt himself to technological changes. • Versatility in operations: Training makes the employees versatile in operations. All rounder can be transferred to any job. Flexibility is therefore ensured. Growth indicates prosperity, which is reflected in profits every year. • Employee stability: Training contributes to employee stability in at least 2 ways. Employees become efficient after undergoing training. Efficient employees contribute to the growth of the organization. Growth renders stability to the work force. Further trained employees tend to stay with the organization.
Criteria for effective training program 1. Employee Motivation-motivation to learn is the basic requisite to make training and development programmes effective. Motivation comes from awareness that training fetches some rise in status and pay. Motivation alone is not enough; the individual must have the ability to learn. 2. Recognition of individual differences Regardless of individual differences, and whether a trainee is learning a new skill or acquiring knowledge of a given topic, the trainee should be given the opportunity to practice what he is taught. Practice is essential after individual is successfully trained. 3. Schedule of learning Duration of practice sessions, duration of rest sessions and positioning of rest pauses are the three schedules, which must be carefully planned and executed for an effective training programme. Besides, Training can be made effective, if action on the following lines is initiated: 1. It should be ensured that the management commits itself to allocate major resources and adequate time to training. This is what high performing organizations do. For example XEROX, invest 300 $ million annually or about 2.5% of its revenue on training. Similarly Hewlet Packard spends about 5% of its annual revenue to train 87000 workers. 2. It should be ensured that training contributes to competitive strategies of the firm. Different strategies need different HR skills for implementation. Let training help employees at all levels acquire the needed skills. 3. Ensure that a comprehensive and systematic approach to training exists, and training and retraining are done at all levels on a continuous and ongoing basis. 4. Training can be made effective by making learning as one of the fundamental values of the company. This philosophy should percolate down to all employees in the organization. 5. It should be ensured that there is proper linkage among organizational, operational and individual training needs.
6. And finally to make training effective a system to evaluate the effectiveness of training needs to be prepared so that the shortfalls can be easily looked at. Why Training Fails? The benefits of training are not clear to the top management. The top management hardly rewards the supervisors for carrying out effective training. The top management rarely plans and budgets systematically for training The middle management, without proper incentives from top management does not account for training in production scheduling Without proper scheduling from above, first line supervisors have difficulty in production norms if employees are attending training programmes. Trainers provide limited counseling and consulting services to the rest of the organization. Methods of training A. On-the-job training (OJT)
The most common, most widely used and accepted and m0st necessary method of training. Trainees earn as they learn under the watchful eyes of a master mechanic or crafts man, receive immediate feedback, practice in the actual work environment and associate with the same people they will work after training. Employees are coached and instructed by skilled co-workers, by supervisors etc. They learn the job by personal observation and practice as well as occasionally handling it. It is learning by doing and it is most useful for jobs that are either difficult to stimulate or can be learned quickly by watching and doing. Merits: Trainee learns on the actual equipment in use and in the true environment of his job. He gets a feel of actual working conditions and requirements. This method is highly economical since no additional personnel or facilities are required. Trainee learns the rules, regulations procedures by observing their day-to-day applications. Demerits:
• Instruction is often highly disorganized and haphazard and not properly supervised due to inability of experienced employee to impart skills to the trainee. • Learners are more often subjected to distractions of a noisy shop or office. • This further leads to low productivity, mainly when the employee is unable to fully develop his skills. • Most suitable for supervisors and executives. B. Vestibule training (Training Centre Training) It is a classroom training, which is often imparted with the help of the equipment and machines, which are identical with those in use in the place of work. This technique enables the trainee to concentrate on learning the new skill rather than on performing an actual job. Theoretical training is given in the classroom, while practical work is done on the production line. It is very efficient method of training semi-skilled personnel, particularly when many employees have to be trained for the same kind of work at the same time. It is often used to train machine operators, typists etc. Merits: as training is given in a separate room, distractions are minimized. A trained instructor, who knows how to teach, can be more effectively utilized. The correct method can be taught without interrupting production. It permits trainee to practice without fear of supervisor's observation. Demerits: Splitting of responsibilities leads to organizational problems. An additional investment in equipment is necessary. Training situation is somewhat artificial. However, when number of trainees is large, vestibule schools are generally utilized; but when the number is small, on-the-job training is preferred. C. Apprenticeship For training in crafts, trades, and in technical areas, apprenticeship training is the oldest and most commonly used method, especially when proficiency in a job is the result of a relatively long training period of 2 years to 3 years. In the fields of draughtsman, a mechanist, tool-maker, carpenters etc this type of training is given.
Advantages: a skilled workforce is maintained. The workmanship is good. It increases opportunities for growth very frequently. OFF-THE-JOB METHODS Under this method of training, the trainee is separated form the job situation and his attention is focused upon learning the material related to his future job performance. Since the trainee is not distracted by job requirements, he can place his entire concentration on learning the job rather than spending his time in performing it. There is an opportunity for freedom of expression for the trainees. Off-the-job training methods are as follows: a) VESTIBUTE TRAINING:In this method, actual work conditions are simulated in a class room. Material, files and equipments those are used in actual job performance are also used in training. This type of training is commonly used for training personnel for clerical and semi-skilled jobs. The duration of this training ranges from days to a few weeks. Theory can be related to practice in this method. b) ROLE PLAYING:It is defined as a method of human interaction that involves realistic behaviour in imaginary situations. This method of training involves action, doing and practice. The participants play the role of certain characters, such as the production manager, mechanical engineer, superintendents, maintenance engineers, quality control inspectors, foreman, workers and the like. This method is mostly used for developing interpersonal interactions and relations. © LECTURE METHOD:The lecture is a traditional and direct method of instruction. The instructor organizes the material and gives it to a group of trainees in the form of a talk. To be effective, the lecture must motivate and create interest among the trainees. An advantage of lecture method is that it is direct and can be used for a large group of trainees. Thus, costs and time involved are reduced. c) CONFERENCE OR DISCUSSION:It is a method in training the clerical, professional and supervisory personnel. This method involves a group of people who pose ideas, examine and share facts, ideas and data, test assumptions, and draw conclusions, all of which contribute to the improvement of the job performance. Discussion has the distinct advantage over the lecture method, in that the discussion involves two-way communication and hence feedback is provided. The participants feel free to speak in small groups. The success of this method depends on the leadership qualities of the person who leads the group.
Evaluation of training programme is necessary in order to find out the extent to which training objectives are achieved. Even the cost effectiveness can be estimated through evaluation. Finally, evaluation of training is needed in order to raise the effectiveness of training. Remedial measures can be adopted in regard to weak points in the training process. Credibility of training is considerably enhanced when it is proved that the organization got good dividend out of its training and development programme. The evaluation of training programme should be based on objective methods and standards. Evaluation should be specific and also continuous. Such evaluation should be made immediately after the training programme is over. Evaluation of training need not be treated as routine activity. Scientific evaluation requires the services of experts and their services should be used. Suitable data need to be collected for such evaluation. Such data may be related to behavior change, organizational results and reactions of trainees. The data collected are useful for assessing the results of training on the work group or the entire company. One simple method/technique of evaluation is to send a questionnaire to the trainees after the completion of training programme and to collect their opinions about different aspects of the programme. Their interviews can also be arranged for data collection (for evaluation). Analysis of such data gives broad conclusions about the effectiveness of training. Follow-up action is required to ensure implementation of evaluation report at every stage of training. HR manager of any organization (manufacturing company, airways, insurance company, hospital or any other service organization) can design training programme for its employees as per the guidelines noted above. Training will be effective only when it is planned, implemented and evaluated in a systematic manner. Attention needs to be given to these three aspects while designing a training programme / package for employees of an airways or staff of the hospital. Initially, the training needs need to be
examined properly. For this, organizational analysis and manpower analysis will be necessary. Thereafter, training objectives need to be decided. The objectives decided may be innovative, problem solving or regular. This will be followed by selecting the methods suitable for training purpose. The methods selected will be used for giving actual training to employees. Finally, evaluation of training programme will be undertaken. Here, the contribution of training in achieving training objectives will be analyzed for the introduction of remedial measures, if required. University Questions: 1. What is training? Explain its importance. (2001) 2. Explain the training process in brief. (2001) 3. What is training? How would you conduct a training programme? (2003) 4. Suggest some of the on-the-job training and off-the-job training methods and their features. (2003) 5. How does one evaluate a Training Programme? (2004) 6. As an HR Manager of Hinduja Hospital design a Training programme for hospital staff. (2007) 7. Define management development. Explain any 5 methods of Management Development programme. (2004) Short Notes: 1. Principles of Training (2005) 2. Employee Training (2006)
CHAPTER – 6 - PERFORMANCE APPRAISAL Once the employee has been selected, trained and motivated he is then appraised for his performance. P.A. is the step where the management finds out how effective it has been at hiring and placing employees. If any problems are identified, steps are taken to communicate with the employee and to remedy them. A “P.A. is the process of evaluating an employee’s performance of a job in terms of its requirements.” A Performance Appraisal is an objective assessment of an individual’s performance against well defined benchmark. Relationship of Performance Appraisal & Job Analysis
Needs / Importance and purposes: P.A. has been considered as a most significant and indispensable tool for an organization, for the information it provides is highly useful in making decisions regarding various personal aspects such as promotions and merit increases. Formal P.A. plans are designed to meet three needs, one of the organization and the other two of the individual, namely: a. b. They provide systematic judgments to back up salary increases, transfers, demotions or terminations. They are means of telling a subordinate how he is doing, and suggesting needed changes in his behavior attitudes, skills or
job knowledge. They let him know “where he stands” with the boss. They are used as a base for coaching and counseling the individual by the superior.
Main objectives of employee performance appraisal are: a. b. c. d. e. To enable an organization to maintain an inventory of the number and quality of all managers and to identify and meet their training needs and aspirations; To determine increments rewards, and provide a reliable index for promotions and transfers to positions of greater responsibility. To maintain individual and group development by informing the employee of his performance standard; To suggest ways of improving the employee’s performance when he is not found to be up to the mark during the review period. To identify training and development needs.
What should be rated? The criteria for assessing performance are: 1. Quality: the degree to which the process or result of carrying out an activity approaches perfection. 2. Quantity: the amount produced, expresses in monetary terms, number of units. 3. Timeliness: 4. Need for supervision 5. Interpersonal impact: the degree to which a performer promotes feelings of self-esteem, goodwill and co-operation among co-workers and subordinates. 6. Training: need for training for improving his skills knowledge (whether he requires any training further) The above criteria relate to past performance and behavior of an employee. There is also the need for assessing the potential of an employee for future performance, particularly when the employee is likely to be promoted. Who should evaluate the performance?
Who should evaluate employee’s performance???
In the principles mentioned below, it is clearly suggested that atlest two raters should ideally carry out the performance of an employee. The individuals who are given the responsibility of performance appraisal are known as raters. Following are the ideal suggested raters. Individual supervisor: supposed to be most appropriate candidate to appraise the performance of his subordinates. Since he is closely associated with his subordinates and is familiar with the subordinate’s performance, he can give correct picture of his subordinate’s performance. The supervisor is not also useful for correct PA but also can decide correctly the immediate requirement for training and development just after the PA. Subordinates: Can assess the performance of their superiors. This method may be useful in assessing an employee’s ability to communicate, delegate work, allocate resources, disseminate information, resolve conflicts and deal with employees on a fair basis. Peers: are in a better position to evaluate certain facts of job performance, which the superiors and subordinates cannot do. Such facts include contribution to workgroups, projects, interpersonal skills, reliability, and initiative and communication skills. They are in better position to act as raters due to their closeness of working relationship and amount of personal contact with the ratee.
Clients: are seldom used for rating employee performance. Clients may be members within the organization who have close and direct contact with the ratee and make use of an output this employee provides. Service providers such as Hutch make use of client for rating employee performance. Principles of Effective P.A. Systematic P.A. should be accurate and reliable one. Following are the principles of a good or effective P.A. 1. 2. 3. 4. 5. Single employee should be rated by two raters. Then comparison should be made to get accurate rating. Continuous and personal observation of an employee is essential to make effective P.A. The rating should be done by immediate superior of any subordinate in an organization. A separate dept may be created for effective P.A. The rating should be conveyed to the concerned employee as it helps him to understand his position where he stands and where he should go. The plus points of employees should be recognized and minus points should not be too highlighted but they should be told to the employees by taking him into confidence.
MULTIPLE PURPOSES OF PERFORMANCE ASSESSMENT General Applications Developmental Uses Specific Purpose • Identification of individual needs • Performance feedback • Determining transfers and job assignments • Identification of individual strengths & developmental needs / • Salary • Promotion • Retention or termination • Recognition of individual
Organizational maintenance / Objectives
• • • • •
performance Lay-offs Identification of poor performers HR Planning Determining organization training needs Evaluation of organizational goal achievement Information for goal identification Helping to meet legal requirements
Performance Appraisal Process
(1) Establishing Performance Standards: The first step in the performance appraisal process is to set performance standards for appraising the performance of an employee. This step is finalized with the help of job analysis which reveals the contents of a job. The standards decided should be clear, objective and noted in writing also it should be discussed with the supervisors to ensure that all the relevant factors have been properly included. Performance criteria will be clear when it is in the form of output which can be measured in precise terms. If work performance cannot be measured in quantitative form, the personal characteristics such as work quality, honesty, reliability, cooperation and team work, job knowledge, leadership, initiative, safety consciousness, etc. which contribute to employee performance must be determined. These standards should be indicated on the Performance Appraisal Form. (2) Communicating the standards to employees: In this second step in the performance appraisal process, the
performance standards specified in the first step are communicated and explained to the employees so that they will know precisely what is expected of them. In the absence of such communication, the employees will find it difficult to guess what is expected of them. The reactions of employees to the standards decided should be obtained. If necessary, the standards decided should be revised/modified in the light of feedback obtained from the employees. This is necessary for avoiding possible sharp reactions from the employees in due course. (3) Measuring actual performance: In this third step in the performance appraisal process, actual performance of employees is measured in the light of the standards decided and communicated to employees. Such measurement requires selecting the right technique of measurement, identifying the internal and external factors influencing performance and collecting information on results achieved. Data on performance of employees are collected through different means such as personal observations, written reports and face to face communication. The performance of different employees should be recorded in such a way that the data collected will be easily comparable. Here, what is measured is as important as how it is measured for appraisal purpose. (4) Comparing actual performance with the standards decided: In this fourth step of performance appraisal process, actual performance of the worker is compared with the pre determined performance standards. This type of comparison between actual performance with standard performance will clearly reveal the deviations which may be negative or even positive. Positive deviations occur when actual performance exceeds the standards fixed. Negative deviations occur when actual performance is below the standards fixed. Positive and negative deviations are exactly opposite. Positive deviations are good and favorable to workers while negative deviations are bad/undesirable and also unfavorable to workers. Through comparison, the employee is appraised and judged of his potential for growth and advancement. (5) Discussing actual performance: In this fifth step of performance appraisal, the results of appraisal are communicated to and discussed with the employees.
deviations and the reasons behind such deviations are analyzed in full and discussed. Such discussion is important as it enables an employee to know his weaknesses and strengths (weak and strong points). This will motivate him to improve his performance in future. The impression which the subordinate worker received about his performance has a positive impact on his subsequent performance. In fact, the information which the subordinate receives about his performance assessment has a great impact on his selfesteem and on his subsequent performance. The impact should be position. However, actual impact (positive or negative) depends on how the appraisal feedback is presented and discussed with the employee. Here, the role of rater/superior is important and crucial 'Conveying good news about performance is considerably less difficult for both the manager and the subordinate than when performance has been below expectations. ..\VIDEOCLIP\Performance Appraisals - Be Prepared-GOOD.flv (6) Offering guidance/taking corrective actions: In this sixth and the last step of performance appraisal process, the corrective steps required to be taken (remedial measures) for improving performance are identified and initiated. For this or prior to this, mutual discussion with concerned employee is essential as remedial measures will give positive results only when they are introduced after full and fair discussion with the employee. For this, appraisal interview is necessary and should be conducted properly by the rater. Follow-up measures for self development will be taken properly by the ratee if this interview is conducted properly. It should be a problem-solving interview. Employee will take initiative and interest in the corrective measures if he has noted the importance and positive benefits of appraisal interview. Corrective measures may be in the form of special training, counseling, coaching and offering guidance in the work assigned. This will improve the performance of worker before next round of performance appraisal Improvement in the performance will give good dividend to worker as well as to the organization in due course. HOW PERFORMANCE APPRAISAL CAN CONTRIBUTE TO FIRM’S COMPETITIVE ADVANTAGE (SELF STUDY)
Strategy & behaviour
Minimizing job dissatisfaction & turnover
Marking correct decisions
Ensuring legal Compliance
Ensuring legal compliance: promotions made on factors other than performance might land up a firm in a legal battle, thus diverting its focus on non-productive areas. Companies can minimize costly performance-related litigation by using appraisal systems that give fair and accurate ratings. Procedure of Employee Performance Appraisal a. Supervisory Responsibilities
1. Clear Performance Standards: Each supervisor is responsible for setting and communicating clear performance standards for his/her employees at the beginning of, and throughout, the review period. b. In evaluating employees, supervisors shall consider factors such as the experience and training of the employee, the job description, and the employee’s attainment of previously set goals and objectives. 2. Informal Appraisals Each supervisor is also responsible for observing and discussing with his/her employees both positive and negative aspects of the employee’s performance throughout the review period. Written records of each significant incident requiring supervisory input shall be kept by all supervisors.
3. Formal Appraisals On a regular basis and as described in this policy, each supervisor is responsible for conducting formal performance appraisals on each subordinate employee. Performance appraisals shall include a summary of all past discussions related to performance during the review period and future performance goals. 4. Accountability Supervisors will be held accountable for the performance of their employees and for the negligent retention of an employee that consistently performs below City standards. B. Timing: 1. Frequency Employee Performance Appraisals: Regular employees will receive a mid-point review and an annual appraisal each calendar year. Midpoint reviews will be conducted halfway through the calendar year and annual appraisals will be conducted at the end of the calendar year. All forms must be completed, approved, and submitted to the Human Resources Department following the performance appraisal discussion. 2. Timely Processing The Human Resources Department will maintain a system to assist supervisors to complete performance appraisals on time. The timely processing of performance appraisals is one of the most important leadership responsibilities for those in supervisory positions. C. Self Evaluations In addition to regular and periodic review by supervisors, each employee is asked to perform an annual evaluation of their own performance during the proceeding year. In this regard: 1. Employees are asked to submit to their supervisors a signed selfevaluation form. 2. A copy of the self-evaluation form can be obtained from the Human Resources Department. D. Approvals Performance appraisals shall be reviewed with the next level of management before a supervisor may discuss and review the performance appraisal with the employee.
E Performance Appraisal Discussion 1. Supervisors will hold a discussion with the employee regarding the performance appraisal. The purpose of the discussion is to review past performance, address any questions about the performance review, and to set goals and objectives for the period ahead. 2. The discussion should be held at a prearranged time in a private location free from interruptions. F. Employee Signature 1. The employee will be asked to comment on the appraisal and acknowledge it by signing and dating the form. G Information derived from the performance review may be considered when making decisions affecting training, pay, promotion, transfer, or continued employment. Methods (Types / Kinds) of P.A. Traditional methods 1. Ranking method: This is the oldest and simplest method. An employee is ranked is ranked one against the other in the working group under this method. For e.g. If there are 10 workers in the working group, the most efficient worker is ranked as number 1 and least efficient is ranked as number 10. A small organization can get maximum benefits through this method. 2. Grading method: Under this system, the rater considers certain features and marks them accordingly to a scale. Categories are established earlier and carefully defined. An organization can select features such as ability to get the work done, friendliness, co-operativeness, and dependability, self-expression, job knowledge, leadership etc. The grading may be a – outstanding, b- very good, c- good, d – average, e-poor etc.
The actual performance of an employee is then compared with these grade definitions. 3. Check list method The appraisal of the ability of an employee thru getting answers for a number of questions is called C.L. Method. A person (s) is / are appointed as rater who indicates the answers of an employee against each question by putting a tick mark. There are two columns provided to each question as yes or no. Following is the model. Checklist A. Is the employee satisfied with job? B. Does he finish the job accurately? C. Is his attitude friendly with other Staff members? D. Is he ready to accept responsibility? 4. Forced choice method A series of statements are prepared positively or negatively, both statements describes characteristics of employee. The rater is forced to tick any one of the statements either out of positive statements or of negative statements: Few statements: a) Completes target on time. b) Willingly accepts additional responsibility. c) Is dishonest and disloyal. d) Is overbearing and disinterested in work. The favorable terms earn a plus credit while unfavorable terms get no credit. This method is not very favorable, trained technicians are required to prepare sets of series for each occupational group. 5. Free essay method. Under this method, the supervisor makes a free form, openended appraisal of an employee in his own words and puts down his impressions about the employee. Following factors are considered: Relationship with fellow members and seniors. General ability. Job knowledge and potential; Employee attitudes; Yes no
Understanding and implementing company procedures; Production, quality and cost control etc 6.
Critical incident method: The essence of this system is that it attempts to measure workers’ performance in terms of certain “events” The basis of this method is on the principal that “there are certain significant acts in each employee’s behavior and performance which make all the difference between success and failure on the job.” The supervisor keeps a written record of the events (good or bad) that can be recalled and used in the course of a periodical or formal appraisal.
Sample items from an incident checklist a) Refused to take an important & risky decision in his own name. b) Refused to work on Sundays in Aug ‘05 although it was highly required. c) Convinced a buyer to keep our stock in large quantity. d) Failed to reply an important call, which led the organization to a loss of a particular Amount. e) Gave his valuable suggestion in changing the design of one of the products, which helped in improving the business. 6. Group appraisal method: Under this method, employees are rated by an appraisal group, consisting of their supervisor and three or four other supervisors who have some knowledge of their performance. The supervisor explains to the group the nature of his subordinate’s duties. The group then discusses the standards of performance for that job, the actual performance of the jobholder, and the causes of their particular level of performance, and offer suggestions for future improvements, if any.
Newer or modern methods of appraisal 360 - degree appraisals Briefly put, the performance by everybody else: assessment from 360-degree method evaluates an employee's assembling it with the feedback sought from peers, managers, direct reports as well as customers. This, along with the employee's self-
evaluation forms the final appraisal. The method has been successfully employed by over 90% fortune 1000 companies over the past decade. The fact, that in India also several well-known companies like Hughes software systems, ITC, Escotel, etc., have adopted this technique validates its popularity as an hr tool. It has been used in making decisions relating to promotions, terminations, pay hikes, etc, in identifying training and developmental needs of the employees or validating ongoing training programme. It's effective... The concept, by and large, is most democratic as it takes into account the perception of not only your supervisors, but also of several others. The employee also perceives an element of impartiality here. However, its greatest strength lies in designing future development programme for employees. "Our 360-degree programme is just one year old, but we have begun to notice significant changes in employee-personalities and their way of functioning," reveals Rajan Dutta, chief, hr & quality, Escotel mobile communications. "It’s a powerful tool for employee growth and building a positive work culture," he adds. Adesh Goyal, VP (H.R.), Hughes software systems, agrees. "The concept has been very successful in providing developmental inputs to managers in our organization," he says. But... The implementation is not so easy. "Organizations need a minimum level of maturity to adopt this concept," says T. Sridhar, executive director - TMI network, whose company embraced 360-appraisal a year ago. There is also the culture factor. "Indian society does not encourage criticism of authority figures. Therefore, the feedback to the boss is also not always unbiased," says Kris Lakshmikanth, CEO Prizedjobs.com. The biggest stumbling block, however, lies somewhere else - in the unwillingness of the top management to accept feedback from the rank. "it takes courage and extreme candidness to accept that," says Dutta. The pros definitely outweigh the cons. While traditional feedback processes have failed miserably, the 360-degree feedback has proved to be magical. As opposed to the conventional appraisal system, wherein the immediate supervisor provides the employee with unidirectional comments, the 360-degree relies on a multidimensional feedback. How does it work?
The most popular model used, namely the skill model, lists the skills and behavior necessary for effective job performance. The employee recommends eight to twelve people, for his 360-degree review. They can be direct reports, peers, bosses, internal customers or any individual who could provide relevant performance feedback on the employee. Some companies also ask external customers to rate the individual’s performance. The supervisor then selects six to ten participants from the list for appraisal. The employee is also required to assess himself. The employee is rated in each of the requisite skill areas and the survey responses are compiled accordingly. The individual receives a report summarizing others’ perceptions of his performance, highlighting his strengths and development needs. How to implement 360 degree? Firstly, human resource personnel and senior management need to determine the usefulness of this feedback. Then they have to
• • • • • • •
Define the skill model to be used. Explain the purpose of the process, the use of the data collected, and the steps involved to everyone concerned. Distribute questionnaires. Complete questionnaires. Process questionnaires. Meet with employee to discuss results and plan future development. Provide feedback.
Warning For the absolute success of this system care need to be taken, as to who rates the employee? Also, caution is advised during compilation of the data. Design and development of the model must also dependent on several factors such as in-house technology, confidentiality safeguards, and time frame required to complete the feedback and the applicability. Outcome The 360-degree feedback allows better understanding of others’ perspectives of the employee’s strengths and weaknesses. Employee development efforts are more focused and effective. Feedback being anonymous is more honest. Thus a better
communication between supervisor and employees is a substantial result of this system.
2. Assessment Centre methods: Assessm ent CentresMainly used for executive hiring, assessment : centres are now being used for evaluating executive or supervisory potential. An assessment centre is a central location where managers may come together to have their participation in jobrelated exercises evaluated by trained observers. The principal idea is to evaluate managers over a period of time, say one to three days, by observing (and later evaluating) their behaviour across a series of select exercises or work samples. Assessees are requested to participate in in-basket exercises, work groups (without leaders), computer simulations, role paying, and other similar activities which require the same attributes for successful performance, as in the actual job. Raters, after recording their observations, meet to discuss these observations. The decision regarding the performance of each assessee is based upon this discussion of observations. Selfappraisal and peer evaluation are also thrown in for final rating. The characteristics assessed in a typical assessment centre include assertiveness, persuasive ability, communicating ability, planning and organizational ability, self-confidence, resistance to stress, energy level, decision-making, sensitivity to the feelings of others, administrative ability, creativity, and mental alertness. It is quite difficult to measure these activities accurately over three days, though there would be sizeable number of trained observers and psychologists. First developed in the US and the UK in 1943, the assessment centre is gaining popularity in our country. Crompton Greaves, Eicher, HUL and Modi Xerox are using the technique with results being highly positive. The problem with the assessment centres is their cost. Not only are the assessees away from their jobs while the company pays for their travel and lodging, but the evaluators are often company managers who are assigned to the assessment centre for short durations. These managers are often supplemented by psychologists and HR specialists who run the centre and also make evaluations. Hence this approach is cost-effective only in large organizations. • Employees who receive a poor report from the centre may react in negative ways. Ideally, a rejected employee would return to his / her former job, satisfied that he / she would not
be promoted to a job he / she could not handle. However, a good performer at one level may leave the organization in order to remove the bad assessment report from his / her work record.
Assessment centre: a practical look: • Ranbaxy retained the services of a team of psychologists from the UK-based Kelly & King to take executives (of Ranbaxy) through an assessment center. 20 star managers went through the exercise. • Santrupt Misra, Director- Birla Management Corporation had plans for a similar exercise to be held at Gyanodaya, the Aditya Birla learning centre. Misra first used the assessment centre concept 4 yrs ago on 150 middle and senior level managers. • Tatas have created their own assessment centers, and so have the talent centric companies like Wipro and Cognizant. • SHL, a HR consulting firm has worked with over 100 companies conducting close to 1,000 assessment centres. • ICICI bank uses assessment centre as a recruitment and selection tool to find the best talent, while GE India subsidiary GECIS has used it on 20% of its middle managers. Management by Objective: (MBO) Management By Objectives term was first popularized by Peter Drucker in 1954 in his book 'The Practice of Management'. How MBO works can be described in four steps: The first step is to establish the goals each subordinate is to attain. In some organizations, superiors and subordinates work together to establish goals. In others, superiors establish goals for subordinates. The goals typically refer to the desired outcome to be achieved. These goals can then be used to evaluate employee performance. The second step involves setting the performance standard for the subordinates in a previously arranged time period. As subordinates perform, they know fairly well what there is to do, what has been done, and what remains to be done. In the third step, the actual level of goal attainment is compared with the goals agreed upon. The evaluator explores reasons for the goals that were not met and for the goals that were exceeded. This step helps determine possible training needs. It also alerts the superior to conditions in the organization that may affect a subordinate but over which the subordinate has no control. The final step involves establishing new goals and, possibly, new strategies for goals not previously attained. At this point, subordinate and superior involvement in goal-setting may change. Subordinates who successfully reach the established goals may be allowed to participate more in the goal-setting process the next time. The process is repeated.
Psychological Appraisals: Large organizations employ full-time industrial psychologists. When psychologists are used for evaluations, they assess an individual’s future potentials and not past performance. The appraisal normally consists of in-depth interviews, psychological tests, discussions with supervisors and a review of other evaluations. The psychologists then writes an evaluation of the employee’s intellectual, emotional, motivational and other-related characteristics that suggest individual potential and may predict future performance. The evaluation by the psychologists may be for a specific job opening for which the person is being considered, or for an assessment of his future potential. From these evaluations, placement and development decision may be made to shape the person’s career. Limitations or problems of P.A. The ideal approach to performance evaluation is that in, which the evaluator is free from personal biases, prejudices. However, a single foolproof evaluation method is not available. Inequalities in evaluation often destroy the usefulness of the performance system – resulting in inaccurate, invalid appraisals, which are unfair too. The halo effect or error: when employee’s performance is appraised on the basis of halo effect the evaluation is generally not free from error. Leniency or strictness in evaluation: some supervisors are very free where as some may be very strict in evaluating the same person. When an evaluator is positively lenient in his appraisal, an individual’s performance becomes overstated, i.e. rated higher than it actually should. Similarly, under the negative tendency, performance is understated than what it should be. The central tendency problem: the most commonly found error. It assigns “average ratings” to all the employees with a view to avoiding commitment or involvement or when rater is in doubt or has inadequate information or lack of time at his disposal. Such tendency seriously distorts the evaluations, making them most useless for promotions, salary etc Similarity error: this error occurs when the evaluator rates other people in the same way he perceives himself. For e.g. If the evaluator perceives himself as aggressive may evaluate others by looking for aggressiveness. Those who show this characteristic may be benefited while others may suffer. Miscellaneous biases: bias against employees on the ground of sex, race, and religion etc.
Why appraisal techniques prove failure? The dual and conflicting role of supervisor. Too many objectives often cause confusion. The supervisor feels that subordinate appraisal is not rewarding. A considerable time gap exists between two-appraisal programmes. Poor communication keeps employees in the dark about what is expected of them. Feedback on appraisal is generally unpleasant for both supervisor and subordinate. Unwillingness on the part of supervisors to tell employees plainly how to improve their performance. University Questions: 1. What are some of the commonly used techniques of performance appraisal system? Write about their merits and demerits. (2003) 2. “Assessment centers are more accurate than supervisionary judgment in predicting the potentiality.” Explain the statement with emphasis on the aim and process of Assessment Center. (2004) 3. (a) “Regular feedback improves the performance of employees”. Explain the importance of performance appraisal. (b) Discuss any one-performance appraisal technique used at managerial level. (2005) 4. Describe in detail performance appraisal. (2006) 1. “Participative management results in improved Performance”. Explain (2007) Concept Questions: 1. 360 degree PA (2001, 2007) 2. Assessment Centre (2005)
CHAPTER 8 COMPENSATION MANAGEMENT MEANING OF WAGE / COMPENSATION PAYMENT / COMPENSATION PACKAGE: Wage is a monetary payment/compensation made by the employer to his employee for the work done or services rendered. A worker may be paid Rs. 100 per day or 6,500 per month. This is wage payment. It is like give and take. The workers give services and takes payment called wage payment. Industrial workers are paid remuneration for their services in terms of money called wage payment. Wages are usually paid in cash at the end of one day, one week or one month. Money wage is the monetary compensation or price paid by the employer to his employee for the services rendered. Such compensation is also called wage or salary or reward given by organization to a person in return to a work done. Normally, compensation payable to an employee includes the following components: (a) Basic compensation for the job (wage/salary); (b) Incentive compensation for the employee on job (D.A., profit sharing, bonus, etc; (c) Supplementary compensation paid to employees (fringe benefits and employee services). IMPORTANCE OF WAGE PAYMENT TO EMPLOYEES/WORKERS: Wages payment is important to all categories of workers. It is the income earned by hard work. It provides bread (if not butter) to the worker and his family members. Wage is a matter of life and death to workers/ employees. Their life, welfare and even social status depend on wage payment. It is the only source of income to large majority of workers. They and their unions always demand higher wages and other monetary benefits. This rule is applicable to factory workers and also to other categories of workers including bank employees, government servants, teachers, and so on. Majority of labor problems and disputes are directly related to wage payment. The efficiency of workers and their interest and involvement in the work depend on wage payment. Even their attitude towards employer/management depends on the wage payment. In brief, wage payment is a matter of greatest importance to workers. Wage problem is the most pressing and persistent problem before the entire labor force.
Minimum Wage: Providing for sustenance of life plus for preservation of the efficiency of worker. Fair Wage: Equal to the rate prevailing in the same trade and in the neighborhood or equal to the predominant rate for similar work throughout the country. Living Wage: Higher than fair wage. Provides for bare essentials plus frugal comforts.
IMPORTANCE OF WAGE PAYMENT TO EMPLOYER: Wage payment is equally important to employers as their profit depends on the total wage bill. An employer, in general, is interested in paying low wages and thereby controls the cost of production. However, low wages are not necessarily economical. In fact, they may prove to be too costly to the employer in the long run. An employer has social responsibility to pay fair wages to his workers as they are equal partners in the production process. He should introduce fair wage payment system which will give benefits to both the parties. Employees will offer full co-operation to the management when they are paid attractive wages. On the other hand, strikes and disputes are likely to develop when workers are paid low wages or when they are dissatisfied and angry due to low wage rates. It is possible to earn more profit by paying attractive wages to workers. IMPORTANCE OF WAGE PAYMENT TO GOVERNMENT: Government also gives special importance and attention to wages paid to industrial workers as industrial development, productivity, industrial peace and cordial labor - management relations largely depend on the wage payment to workers. Government desires to give protection to the working class and for this Minimum Wages Act and Other Acts are made. In India, wages are now linked with the cost of living. This is for the protection of workers. Government is the biggest employer in India and the wage rates of government servants and employees of public sector organizations are decided by the government only. Revision of pay scale of government employees is made for adjusting their wages as per the cost of living. For this "Pay Commission" is appointed. And pay scales are adjusted as per the recommendations made. In India, wage payment is a very critical, controversial and delicate issue for all categories of work force. This is due to poverty, rising prices, mass unemployment and rising population. In India, all categories of workers (a factory worker drawing Rs. 4,000 salary and a bank manager drawing Rs. 15,000or more as total salary) demand higher wages. Due to rising prices and new life styles, such demand is unavoidable. Majority of industrial disputes move around the wage payment. Wage payment is indeed a problem and needs to be tackled from economic, social and humanistic angles. It is a human problem and certainly not a simple arithmetic exercise. FACTORS INFLUENCING/DETERMINING WAGE RATES: (1) Demand and supply position in the employment/labor market: If the demand for labor is more, wages paid are higher and when the demand for labor is less, the rates of wage payment are also low. In Western countries, wage rates are high, while in India, they are comparatively low due to demand supply similarly, wage rates are high during the period of inflation and prosperity and they
are low during the period of depression. In brief, demand for and supply of labor influence wage and salary fixation. . (2) Nature and features of the job (Job Requirement): The wage rate depends on the qualities and qualifications required for performing the job. When the nature of job is hard, higher wages are paid. Similarly, wage rate is high in the case of jobs where special qualifications and experience are required. For example, an engineer is paid more than a typist/clerk. Jobs are graded according to the skills required for performing them and accordingly, wage rates are fixed. (3) Cost of living: Wage rates are raised when the price level increases. This is necessary for adjusting wages as per the cost of living. At present, wages of central government employees or of factory workers are raised when the cost of living index goes up. The rate of D. A. increases or decreases as per the movement of the consumer price index (PI). Linking of wages with the cost of living is necessary for the protection of life and welfare of the workers. The living wage criterion is quite suitable for determining wage rate as living wage enables an employee to maintain himself and his family at a reasonable level of existence. (4) Bargaining power of workers:. When the trade union is strong, the workers get the benefit of higher wages. This is because of the bargaining power of the trade union leadership. Strong trade unions organize strikes, etc. for raising the wage rate. Unorganized workers are even paid less than the minimum wage as they are not united and do not have bargaining power. (5) Efficiency and productivity of work force: Efficient workers are paid more as they give more production. The wage payment increases along with the increase in the productivity of work force. (6) State regulations: Wage rate depends on the law regarding wage payment i.e. Minimum Wages Act and linking of wages with the cost of living. Wages must be paid as per the legal provisions made by the government from time to time. This is applicable to organized workers as well as to workers from the unorganized sector. (e.g. agricultural workers, etc.) In brief, labor laws have their positive influence on wage rates. Such laws are for the benefit and protection of working class. (7) Ability of the employer to pay: Wage rage depends on the ability of the employer to pay. Such ability depends on the profits earned, financial position of the company and so on. This is one important factor that determines the wage rate. Wage rate depends on the ability of the employer to pay. Workers are paid attractive wages when company gets huge profit (e.g. Software Company). An organization will not be able to pay more than its ability to pay. (8) Wage rates in other enterprises in the same locality: Prevailing wage rate in the locality is the most widely used criterion
for determining the wage rate at the organization’s levels. In India, wage rates are related to region-cum-industry base. Normally, wage rates in a specific area or locality are identical. The wage rates in two or more textile mills are rather identical. (9)The present stage of economy: The wage rates are related to the position of national economy. High wage rates are not possible when there is recession. There will be increase in the labor supply in a depressed economy. This, in turn, should serve to lower the going wage rates. Wage rates are normally high during the period of prosperity. Inflation leads to increase in wage payment. (10) Internal factors determining wage rates: Such factors include business strategy of the company, job evaluation and performance appraisal and employee related factors such as individual performance, seniority, experience and potential. When the strategy of the enterprise is to achieve rapid growth, remuneration should be higher than what competitors pay. When the strategy is to maintain and protect current earnings, the remuneration level needs to be average or even below average. COMPONENTS OF EMPLOYEE REMUNERATION/ COMPENSATION PACKAGE:
Total Compensation Payable (Wage / salary & Incentives Direct, Perquisites & Fringe benefits indirect)
FINANCIAL BENEFITS 1. Wage/Salary: Wage is the payment as per the pay scale decided by the employer. Wage represents hourly-rate of day while salary refers to the monthly rate of pay, irrespective of the number of hours put in by an employer. Salary payment includes dearness and other approved allowances payable to employees. There is a provision of annual increment in the pay scale given to employees. Salary payment is made regularly on the specific day decided by the management. Salary payment is not uniform to all employees as it depends on the nature of the job, responsibilities assigned, merits available, status of the post, and seniority of the employee and so on. Salary payment is now made attractive to all categories of workers. It constitutes major source of regular income to large majority of industrial and other categories of employees. Wages are
now linked with the cost of living. The term 'Take Home Pay' is also used to indicate the quantum of money available to an employee after statutory deductions (income tax, P.F., etc.) are made. 2. Incentives: Also called “payment by results”, incentives are paid in addition to wages and salaries. Incentives depend upon productivity, sales, profit or cost reduction efforts. There are: • Individual incentive schemes & • Group incentive schemes Individual incentives are applicable to specific employee performance. Where a given task demands group effort for completion, incentives are paid to the group as a whole. 3. Fringe Benefits: these include employee benefits such as provident fund, gratuity, medical care, hospitalization, accident relief, health and group insurance, canteen, uniform, recreation and the like. 4. Perquisites: These are allowed to executives and include company car, club membership, paid holidays, furnished house, stock option program and the like. They are offered to retain competent executives. Non-monetary benefits (related to job content): These include challenging job responsibilities, recognition of merit, growth prospects (career development), competent supervision, comfortable working conditions (job design), job sharing and flexitiming.
A NOTE ON SALARY SLIP: An employee is given full details of compensation payment on a printed small slip called salary slip. The Salary slip is given to every worker along with salary. This slip gives full details of salary payment. This includes basic pay, allowances, incentive payments, house rent and so on. The slip indicates the total salary payable (gross amount) to an employee. In addition, the deductions made from salary payment an account of P.F., loan repayment, tax deducted, if any, etc. are also shown. The net amount payable is also shown in the slip and accordingly. The payment is made. This slip is one useful document and useful to workers for information, record and reference. The primary part of pay package is basic pay. Along with basic salary, allowances are given to employees. Allowances include the following: (a) Dearness Allowance (DA): It is as per the cost of living.
It is paid as a percentage of basic pay. (b) House Rent Allowance (HRA): It is paid to employees to whom living accommodation is not provided. It is calculated as a percentage of basic pay. (c) City Compensatory Allowance (CCA): It is paid to employees in metros and big cities. (d) Transport Allowance (TA): Some employers pay such allowance. It is a fixed amount payable every month. Salary payment is not uniform to all employees as it depends on the nature of the job, responsibilities assigned, merits available, status of the post, and seniority of the employee and so on. Salary payment is now made attractive to all categories of workers. It constitutes major source of regular income to large majority of industrial and other categories of employees. Wages are now linked with the cost of living. The term 'Take Home Pay' is also used to indicate the quantum of money available to an employee after statutory deductions (income tax, P.F., etc.) are made. The details of salary payment are given in pay slip which is given to every employee along with salary payment.
FRINGE BENEFITS According to William B. Werther and Keith Davis, "fringes embrace a broad range of benefits and services that employees receive as part of their total compensation package ... pay or direct compensation is ... based on critical job factors and performance. Benefits and services, however, are indirect compensation because they are usually extended as a condition of employment and are not directly related to performance". In addition to regular wages, allowances and bonus payment, industrial workers are given other benefits and services called fringe benefits. They are called so because they are offered by the employer as a fringe. This means such benefits are supplementary to regular wages and allowances. They also support regular wage payment to employees. The purpose of fringe benefits is to retain efficient & capable people in the organization. They foster loyalty and act as a security base for the employees. Such benefits include benefits such as provident fund, gratuity, medical care, hospitalization, paid vacation, pension, accident relief, health and group insurance, canteen, uniform, recreation, and the like. Such benefits are based on critical job factors and performance. They
constitute indirect compensation they are usually extended as as a condition of employment and not directly related to performance of concerned employee. Characteristics of Fringe Benefits:
IMPORTANCE / RELEVANCE OF OFFERING FB:
TYPES OF FRINGES
OTHER USEFUL SERVICES (AT NO COST OR MINIMUM COST)
INCENTIVES / PERFORMANCE BASED INCENTIVES: (PLI) Incentives are variable rewards granted to employees according to variations in their performance. The other name for incentives is
“payment by results”. But the word incentive is most appropriate due to its motivational content. Incentives are monetary benefits paid to workmen in recognition of their outstanding performance. Popularly called variable pay, incentives are defined as, “variable rewards granted according to variation in the achievement of special results.” Unlike salaries and wages which are relatively fixed, incentives generally vary from person to person and from time to time for the same person.
TYPES OF INCENTIVE PLANS
Individual incentive plan
Halsey Premium Rowan Plan Taylor’s Differential Piece rate system Emerson’s efficiency bonus plan Bedeaux point premium plan Gnatt task & bonus plan
Group incentive plan
HALSEY PREMIUM PLAN: Under Halsey plan, standard time is fixed for the completion of a job and the rate per hour is then determined. If the worker takes the standard time or more to complete the job, he gets paid at the standard time rate. In other words, time wages are guaranteed even if the output of the worker is below standard. Where the work is done in less than the standard time, he gets paid for the actual time, at the time-rate plus a bonus which is calculated at a specified percentage of the saved time. The percentage varies from 30-70 %. The usual rate is 50%. e.g.
standard time: Rate per hour: Case (i) Time taken: Earnings: Case (ii) Time taken: Earnings: Case (iii) Time taken: Earnings: Time wages: Bonus:
10 hrs Re 1 10 hrs 10 * 1 = Rs. 10.00 12 hrs 12 * 1 = Rs. 12.00 8 hrs 8*1= Rs. 8.00 ½ * 2 * 1 =Rs. 1.00 ======== Rs. 9.00
Advantages of PLI • Motivating • Improve standard of living • Improves productivity of workers • Increase quantity of production/employee performance • It is attractive and profitable. • Due to above advantages, o Limited supervision of employees o Reduction in wastages o Reduction in labor turnover / absenteeism o Cordial labor relationship o Increased output FEATURES/REQUISITES OF A GOOD INCENTIVE PLAN: (1) Simplicity: A good incentive plan is one which is easy to understand and simple to operate. An average worker must be able to know the incentive offered and what is expected to do. The monetary as well as non-monetary benefits offered must be made clear to all workers. 2) Encourages Initiative: A good incentive plan should create initiative among workers to work more and to earn more. It must offer more income to workers and more profit/production to the firm or company. 3) Definiteness and flexibility: A good incentive plan should be definite. This means frequent changes should not be made as regards rates, etc. as such changes create confusion and doubts in the minds of workers. Such plan must give clear benefits to workers. In addition, an ideal incentive plan should be flexible. It should take care of technological and other changes taking place from time-to-
time. There should be suitable provision for such adjustment. Flexibility makes incentive plan adaptable. 4) Prompt payment: Incentive payment must be made in cash and also regularly and promptly. Extra payment for extra effort should be made soon after the work is completed. Employees are always in need of money (cash). Naturally, the promptness in payment raises the popularity of an incentive plan. . 5) Properly communicated to employees: A good incentive plan needs effective publicity. It should be communicated properly to all employees. This will lead to their effective participation. A good incentive plan may not get popular support unless it is communicated properly to employees. The wider, the exposure, the better will be the support from the employees. 6) Wide coverage and equitable: A good incentive plan should not be for employees in certain sections/ departments only. It should have wide coverage and almost all employees should be covered in such plan. Such wide coverage makes the plan popular at all levels and among all categories of workers. An incentive plan should be equitable. This means it should provide equal opportunity to all employees to show efficiency and earn more. This avoids dissatisfaction among employees and makes the plan just and fair to all employees. (7) Guarantee of minimum wage payment: An incentive wage plan should include certain minimum wage payment to every worker per month. This should be irrespective of the production he gives. Such provision of guarantee payment creates a sense of security and confidence among workers. (8) Scientific fixation of standard workload: Under the incentive plan, extra payment is given for the extra work i.e. work which is over and above certain standard quality. Such standard work-load must be clear, specific and fixed with scientific time studies so that majority of the employees will be able to give extra production for extra payment. Incentive wage plan will be meaningless if majority of workers remain away from its benefits. (9) Justice to employer and employees: A good incentive plan should do justice to both parties. The employer must get additional production along with extra profit and the workers must get extra payment for extra production given. (10) Direct efforts-reward relationship: In a good incentive wage plan, direct efforts reward relationship should be established. Every worker must get extra payment in proportion to extra efforts made by him, Such payment must be recorded correctly and paid promptly. This is necessary as workers will not take interest in the work if the benefit (in terms of money) is made available after a long period.
(11) Acceptable to workers: A good incentive plan is one which is prepared after consultation with workers and their representatives. The benefits of incentive will be available only when workers accept and support it. (12) Grievance procedure: In a good incentive plan, records regarding extra production and payment should be maintained properly. In addition, suitable grievance procedure should be introduced so as to enable every worker to place his complain as regards wage payment and get it solved to his full satisfaction. This creates sense of confidence among workers.
CHPT – 8 - CAREER PLANNING INTRODUCTION:The term career planning is frequently used in relation young boys and girls studying at the college level. College students are expected to consider their qualities (physical and mental), psychological make-up, likes and dislikes, inclinations, etc. and decide what they want to be in their life. In other words, they should decide what they want to achieve in their life and adjust their education and other activities accordingly. This means they have to plan their career. In such career planning, parents, family members and college teachers offer helping hand and guide young boys and girls in selecting the most suitable career. Lot of literature, psychological tests etc. are also available on career planning. Even lectures, workshops and TV programmes are arranged for guiding students on career selection (particularly after the declaration of HSC results). Career planning enables them to use their abilities/qualities fully and make their life happy, prosperous and rich in quality. At present, even experts are available to help youth in their career planning. IQ and other tests are also conducted for this purpose. The term career planning and development is used extensively in relation to business organizations. It is argued that if the organizations want to get the best out of their employees, they must plan the career development programmes in their organization effectively. Such programmes offer benefits to employees and also to the organizations. The employees will develop new skills will be available to the organization. This type of career planning can be described as organizational career planning. MEANING OF CAREER (WHAT IS CAREER?):A career is a progress or general course of action of a person in some profession or in an organization. Further, career includes the specific jobs that a person performs, the kinds of responsibilities that comprise those jobs, movements and transitions between jobs and an individual’s overall assessment of and feeling of satisfaction with these companies of his / her career. According to Edwin B. Flippo “a career is a sequence of separate but related work activities that provide continuity, order and meaning to a person’s life”. Career of an employee represents various jobs performed by him during the course of his working life. This is described as career path. In the case of an ordinary worker, the career path includes the following job positions:
Unskilled worker – Semi-skilled worker – Skilled worker – Highly skilled worker – Assistant foreman – Foreman. Employees (of all categories) want to grow in their careers as this provides more salary, higher status and opportunity to use knowledge, education and skills effectively. An individual with potentials joins a firm not for job but for career development. An organization has to provide better opportunities to its employees in their career development and also use their efficient services for the benefit of the organization. MEANING OF CAREER PLANNING (WHAT IS CAREER PLANNING?):Career planning is a process whereby an individual sets career goals and identifies the means to achieve them. Where the organization intervenes in planning, it becomes organizational career planning. In other words, organizational career planning is the planned succession of jobs worked out by a firm to develop its employees. Career planning is one important aspect of human resource planning and development. Every individual who joins an organization desires to make a good career for himself within the organization. He joins the organization with a desire to have a bright career in terms of status, compensation payment and future promotions. From the point of view of an organization, career planning and development have become crucial in management process. An organization has to provide facilities/opportunities for the career development of individual employees. If the organizations want to get the best out of their employees, they must plan regularly the career development programmes in their organizations. In brief, career planning refers to the formal programmes that organizations implement to increase the effectiveness and efficiency of the human resources available. Career planning and development is the responsibility of the HR department of the organization. As already noted, every person joining an organization has a desire to make career as per his potentiality, ability, skills and so on. NEED/PURPOSE/OBJECTIVES OF CAREER PLANNING:1) To map out careers of employees as per their ability and willingness and to train and develop them for higher positions. 2) To attract and retain the right type of persons in the organization.
3) To utilize available managerial talent within the organization fully. 4) To achieve higher productivity and organizational development. 5) To provide guidance and assistance to employees to develop their potentials to the highest level. 6) To improve employee morale and motivation by providing training and opportunities for promotion. SCOPE OF ORGANISATIONAL CAREER PLANNING:The following activities/areas are covered within the scope of organizational career planning: a) HUMAN RESOURCE FORECASTING AND PLANNING:Here, efforts will be made to identify the number of employees required in future. In addition, the selection procedure will be adjusted with the overall strategic goals of the organization. Here, information relating to career opportunities (promotions, training for self development, etc) will be supplied to employees. Supplying career information/opportunities has special significance as this motivates employees to grow and reach to higher position. Such counseling is next to supplying career information. Career counseling is possible by senior executives through periodic discussions with their subordinates. Such career guidance encourages subordinate employees to take interest in certain areas where suitable opportunities of career development are available. It is a type of internal guidance and motivation of employees for the selection of possible career paths. Such counseling is needed when employees have to plan their own careers and develop themselves for career progress.
d) CAREER PATHING:Management now plans job sequences for transfers and promotions of their employees. This makes transfers and promotions systematically with advance information to employees. Career path creates suitable mental makeup of employees for selfdevelopment. e) SKILL ASSESSMENT TRAINING:c) CAREER COUNSELLING:b) CAREER INFORMATION:-
Training is essential for career planning and also for manpower development. Along with job analysis, organizational and job manpower requirement analysis should be undertaken by the management. This prepares proper background for the introduction of career planning programmes for employees.
ADVANTAGES OF CAREER PLANNING:A properly designed system of career planning can provide the following benefits: i. Career planning helps an employee to know the career opportunities available in an organization. ii. Career planning encourages him to avail of the training and development facilities in the organization so as to improve his ability to handle new and higher assignments. iii. Career planning involves a survey of employee abilities and attitudes. It becomes possible, therefore to group together people talking on a similar wavelength and place them under supervisors who are responsive to that wavelength. iv. Career planning anticipates the future vacancies that may arise due to retirement, resignation, death, etc. at managerial level. Therefore, it provides a fairly reliable guide for manpower forecasting. v. Career planning facilitates expansion and growth of the enterprise. The employees required to fill job vacancies in future can be identified and developed in time. DISADVANTAGES/LIMITATIONS OF CAREER PLANNING:The main problems in career planning are as follows: i. Career planning can become a reality when opportunities for vertical ability are available. Therefore, it is not suitable for a very small organization. ii. In a developing country like India, environmental factors such as government policy, public sector development, growth of backward areas, etc. influence business and industry. Therefore, career plans for a period exceeding a decade may not be effective. Career planning is not an effective technique for a large number of employees who work on the shop floor, particularly for illiterate and unskilled workers. In family business houses in India, members of the family expect to progress faster in their career than their professional colleagues. This upset the career planning process. Systematically career planning becomes difficult due to favoritism and nepotism in promotions, political intervention in appointments and reservations of seats for scheduled castes/tribes and backward classes.
HOW TO INTRODUCE CAREER-PLANNING (PROCESS OF CAREER PLANNING)
It is not easy to introduce career development programme at the level of an organization. Moreover, such career development planning is a continuous activity. What is happening in most of the organizations is that this concept is given only lip service and theoretical importance. If the organization wants to get the best out of their employees, it must plan the career developments programmes continuously and effectively in its organization. DIAGRAM: STEPS IN CAREER PLANNING
PROCESS OF / STEP IN CAREER PLANNING:1) ANALYSIS OF PERSONEL SITUATION:This is the first step, which needs to be completed before the introduction of career planning programme. This relates to a time from which career planning is to be introduced. Here, the base line will be prepared to help the planners to make projections for the planning period and to help in the evaluation of plans. In order to analyze the present career situation, the following information will be required: i. Total number of employees – their age distribution, qualifications, positions, specializations, etc. ii. Structure – broad as well as detailed and the qualifications required for each grade. iii. Personnel need of the organization. (Category wise) iv. Span of control available within the organization. v. Field staff at head office with necessary details, and vi. Facilitates available for training and development within and outside the organization. The information collected on these aspects serves as the base for the preparation of career development plan for the future period.
2) PROJECTION OF PERSONNEL SITUATION:In this second step, an attempt is being made to find out the situation likely to develop after the completion of career development plan. This can be done on the basis of assumption, which can predict what is likely to happen at the close of the career development plan. 3) IDENTIFYING OF CAREER NEEDS:In this third step of career development plan, efforts are made to find out precisely the career development needs of the future period. It is possible to identify the scope and limitations of career development needs on the basis of the data collected (through personnel inventory of the organization, employee potentials, and appraisal of employees).
4) SELECTION OF PRIORITIES:It is rather difficult to meet all the needs of the employees and the organization for career development immediately i.e. through one career development plan. Naturally, there is a need to select the pressing and urgent problems of employees and organization. In addition, other factors such as technical, financial and administrative must be taken into consideration while finalizing the priorities.
5. DEVELOPMENT OF CAREER PLAN:This is the most important step in the whole process of career developing plan. Such plan must describe the following in concrete form/forms: a. The employees involved, b. The department in which the proposed plan will operate; c. The length of time required the achieving the goals. In order to execute the career development plan, the organization should: a) Introduce systematic policies and programmes of staff training and career development for all categories of employees so as to enable them to: I. Improve their level of skill and knowledge; II. Gain wider experiences; and III. Assume higher responsibilities. b) Establish and effectively implement a system of study leave; c) Develop the experience of the employees by encouraging their rotation from one region to another; d) Take positive steps to encourage career development, such as: I. Providing within the organization; II. Giving priorities in the filling of vacancies in the following order for: 1. promotion within the organization; 2. Transfer within the organization; 3. Outside recruitment. III. Removing artificial barriers to promotion; IV. Establishing a register of employees for promotion on merit-cum-seniority basis; 6) WRITE-UP OF FORMULATED PLAN:After deciding the priorities of career development plan, the next major step is to prepare a write up (brief report) of the career plan. This writ-up should contain all necessary details such as schedule (time sequence of plan), procedures and other details so that the evaluation of the plan will be easy and meaningful.
7) MONITORING PLANNING i.e. MONITORING OF CAREER
DEVELOPMENT PLAN:Monitoring of the plan is essential for its effective execution. Expected results/benefits will be available only when the plan is implemented properly. Planned (expected) targets and targets actually achieved can be compared through suitable monitoring of the plan. The gap between the two (i.e. short falls) can be located
quickly. In addition, suitable remedial measures can be taken to rectify the shortfalls. 8) IMPLEMENTATION (OF CAREER DEVELOPMENT PLAN):Implementation/execution of the plan is an integral aspect of planning process itself. For effective implementation, co-operation and co-ordination at all levels is necessary. The implementation needs proper monitoring so as to avoid possible shortfalls. 9) REVIEW AND EVALUATION OF CAREER PLANS:A plan needs periodical review. Such evaluation avoids mistakes, deficiencies, etc during the implementation stage. It is built-in device to measure the effectiveness of the plan. Actual benefits available will be known only through such review and evaluation. Such evaluation should be done by experts. It should be conducted systematically and also impartially. 10) FUTURE NEEDS:This is the last step/stage of the current career development plan and the first step/stage of the next plan. Here, on the basis of the achievements of the current plan, the career needs of the future period (of employees and also of the organization) are estimated. The new priorities are decided and the details of the new career development plan are prepared. Planning is a continuous process/activity. This rule is applicable to career development plans of an organization. CAREER STAGES:Education is thought of in terms of employment. People go for school and college education and prepare for their occupation. Very few people stick to the same job throughout their life. Most of them switch job either within the organization or in some other organization. Chances are they change jobs, depending on available opportunity, several times before retirement. Where opportunity is restricted they continue with the same job. They go through the following stages:
Almost all candidates who start working after college education start around mid-twenties. Many a time they are not sure about future prospects but take up a job in anticipation of rising higher up in the career graph later. From the point of view of organization, this stage is of no relevance because it happens prior to the employment. Some candidates who come from better economic background can wait and select a career of their choice under expert guidance from parents and well-wishers. 2) ESTABLISHMENT:This career stage begins with the candidate getting the first job getting hold of the right job is not an easy task. Candidates are likely to commit mistakes and learn from their mistakes. Slowly and gradually they become responsible towards the job. Ambitious candidates will keep looking for more lucrative and challenging jobs elsewhere. This may either result in migration to another job or he will remain with the same job because of lack of opportunity. 3) MID-CAREER STAGE:This career stage represents fastest and gainful leap for competent employees who are commonly called “climbers”. There is continuous improvement in performance. On the other hand, employees who are unhappy and frustrated with the job, there is marked deterioration in their performance. In other to show their utility to the organization, employees must remain productive at this stage. “climbers” must go on improving their own performance. Authority, responsibility, rewards and incentives are highest at this
stage. Employees tend to settle down inn their jobs and “job hopping” is not common. 4) LATE CAREER:This career stage is pleasant for the senior employees who like to survive on the past glory. There is no desire to improve performance and improve past records. Such employees enjoy playing the role of elder statesperson. They are expected to train younger employees and earn respect from them. 5) DECLINE STAGE:This career stage represents the completion of one’s career usually culminating into retirement. After decades of hard work, such employees have to retire. Employees who were climbers and achievers will find it hard to compromise with the reality. Others may think of “life after retirement”.
CONCEPT/INTRODUCTION TO CAREER DEVELOPMENT:Career development consists of the personal actions one undertakes to achieve a career plan. The terms ‘career development’ and ‘employee development’ need to be differentiated at this stage. Career development looks at the long-term career effectiveness of employees where as employee development focuses of effectiveness of an employee in the immediate future. The actions for career development may be initiated by the individual himself or by the organization. a. INDIVIDUAL CAREER DEVELOPMENT:Career progress and development is largely the outcome of actions on the part of an individual. Some of the important steps that could help an individual cross the hurdles on the way ‘up’ may include:
I. PERFORMANCE:- Career progress rests largely on
performance. If the performance is sub-standard, even modest career goals can’t be achieved.
Performance Appraisal is an important part of a career development system, since it identifies how well employee’s performance. The information can be used to plan that employee’s career path. II. EXPOSURE:-
Career development comes through exposure, which implies becoming known by those who decide promotions, transfers and other career opportunities. You must undertake actions that would
attract the attention of those who matter most in an organization. NETWORKING: Networking implies professional and personal contacts that would help inn striking good deals outside (e.g., lucrative job offers, business deals, etc.). for years men have used private clubs, professional associations, old-boy networks to gain exposure and achieve their career ambitions. LEVERAGING:- Resigning to further one’s career with another employer is known as leveraging. When the opportunity is irresistible, the only option left is to resign from the current position and take up the new job (opportunity in terms of better pay, new title, a new learning experience, etc.). However, jumping the jobs frequently (job-hopping) may not be a good career strategy in the long-run. LOYALTY TO CAREER:- Professionals and recent college graduates generally jump jobs frequently when they start their career. They do not think that careerlong dedication to the same organization may help them further their career ambitions. To overcome this problem, companies such as Infosys, NIIT, WIPRO (all information technology companies where the turnover ratios are generally high) have come out with lucrative, innovative compensation packages in addition to employee stock option plans for those who remain with the company for a specified period. MENTORS AND SPONSORS:- A mentor is, generally speaking, an older person in a managerial role offering informal career advice to a junior employee. Mentors take junior employees under their charge and offer advice and guidance on how to survive and get ahead in the organization. They act as role models. A sponsor, on the other hand, is someone in the organization who can create career development opportunities.
ORGANISATIONAL CAREER DEVELOPMENT:The assistance from managers and HR department is equally important in achieving individual career goals and meeting organizational needs. A variety of tools and activities are employees for this purpose.
i. SELF-ASSESSMENT TOOLS:- Here the employees
go through a process in which they think through their life roles, interests, skills and work attitudes
and preferences. They identify career goals, develop suitable action plans and point out obstacles that come in the way. Two selfassessment tools are quite commonly used in the organizations. The first one is called the careerplanning workshop. After individuals complete their self-assessment, they share their findings with others in career workshops. These workshops throw light on how to prepare and follow through individual career strategies. The second tool, called as a career workbook, consists of a form of career guide in the question-answer format outlining steps for realizing career goals. Individuals use this company specific, tailor-made guide to learn about their career chances. This guide generally throws light on organization’s structure, career paths, qualifications for jobs and career ladders.
COUNSELLING:Employee counseling is a process whereby employees are guided in overcoming performance problems. It is usually done through face-to-face meetings between the employee and the counselor or coach. Here discussions of employees’ interest goals, current job activities and performance and career objectives take place. Counseling is generally offered by the HR department. Sometimes outside experts are also be called in. if supervisors act as coaches they should be given clearly defined roles and training. This is, however, a costly and timeconsuming process. DEVELOPMENT PROGRAMMES:These consist of skill assessment and training efforts that organizations use to groom their employees for future vacancies. Seminars, workshops, job rotations and mentoring programmes are used to develop a broad base of skills as a part of such developmental activities. In recent years, there is growing evidence regarding dual career families developing tensions and frictions owing to their inability to reconcile the differences between the family roles and work demands. When we talk of dual career couples (a
iv. CAREER PROGRAMMES FOR SPECIAL GROUPS:-
situation where both husband and wife have distinct careers outside the home) certain puzzling questions arise naturally: whose career is important; who takes care of children; what if the wife gets a tempting promotion in another location; who buys groceries and cleans the house if both are busy, etc. realizing these problems, organizations are providing a place and a procedure for discussing such role conflicts and coping strategies. They are coming out with schemes such as part-time work, long parental leave, childcare centers, flexible working hours and promotions and transfers in tune with the demands of dual career conflicts. CAREER COUNSELING : Career counseling means guiding and advising people on their possible career paths and what they must do to achieve promotions/ career goals. Career counseling is one important socio-economic need of the younger generation of every country including India. Schools, colleges and social organizations have to provide such counseling facilities for suitable career development of the younger generation. Even newspapers and magazines undertake career planning and counseling activity. At the business level, business organization has to provide career guidance and career counseling facilities to their employees. Such career counseling has wider social significance. Career planning needs advising and guiding employees in their possible career paths and the direction in which they ought to be heading. Such advising and guiding is called career counseling. The need of counseling arises when employees have to plan their own careers. Career counseling is possible by senior executives through periodic discussions with their subordinates. Even experts may be appointed for providing career guidance to individual employees. Such counseling helps them to understand their strengths and weaknesses in the context of career opportunities available in the organization. Such career guidance encourages subordinate employees to take interest in certain areas where suitable opportunities of career development are available. Role of Organization in Career Counseling:
Organizations/managements play positive role in career development of their employees. They help their employees through career information, career counseling and motivation of employees. Career counseling is one major method by which organization can help an employee in his career. Employees need guidance in their career paths and the direction in which they ought to be heading. This is described as career counseling. Such counseling is required when employees have to plan their own careers and develop themselves for career progression in the organization. This enables a worker to understand himself more clearly and develop his own thinking and outlook which is necessary in career planning. Career counseling is possible by HR managers and also by departmental managers. The employee can select the career most suitable to his potential and aptitude due to such career counseling. An employee is encouraged to avail of the training and development facilities available within the organization through career counseling. In brief, career counseling is one important method by which the organization can help an employee in his career development. Professionally run organizations ask their managers to identify the internal employees having potentialities and develop them in order to occupy their positions as and when they fell vacant. This is the manner in which organization helps an employee in his career development. EMPLOYEE RETENTION TECHNIQUES: An organization prefers to have efficient and stable manpower. Such manpower provides different benefits to the organization in the form of efficient production, cordial industrial relations, low labor turnover, team spirit among workers, limited accidents and market reputation. In order to bring stability to labor force, organizations should chalk out retention strategy and implement it. Employee retention strategy involves taking actions for retaining employee over a long period. Research studies indicate that both high and low achievers have higher quit rates than average performers. Quitting by high performers is a matter of serious concern for the organization. Here, the organization has to introduce strategy to retain high
performers. This is known as selective retention strategy This means retaining those who are needed and letting to go those who are not needed. DIAGRAM: Measures retention strategy to retain employees under
(1) Provision of retention bonus: Retention bonus is a kind of ad hoc payment to best performers to retain them in the organization. Such retention bonus is offered to mid-level and rank-and-file employees along with top executives. This technique is· used when any change like merger and acquisition or organizational restructuring takes place and employees tend to leave the organization because of the possible effect of such change. Here, retention bonus payment acts as an incentive attraction to employees. Here, the details of retention bonus need to be decided as per the needs / expectations of employees as well as those of organization. (2) Package of incentives for long-term stay: Here, the organization designs a. suitable long term package for employees which will discourage employees from leaving the organization for some short term benefit. The employee leaves the organization mainly because he feels that his market value is more than what his organization is giving at present. For avoiding this situation, a package of measures
should be introduced. It should include stock options with provision of higher benefits for longer duration of stay in the organization. In addition, provision may be included for cancelling certain incentives/benefits, if the employee leaves the organization earlier than stipulated time. (3) Matching jobs and employees: One important reason of labor turnover is mismatch between employees and their jobs. This problem develops because of wrong placement, faulty career path decided for an employee, transfer to the department or work disliked by an employee, promotion to a position not liked by an employee. Retention of such unsatisfied and disturbed employees is possible by introducing suitable strategy under which proper matching of an employee and his job will be achieved. In many companies, employees are given choice to switch from one line function to staff function and vice-versa or from fast track project to slow-track project. This type of flexibility reduces monotony and job stress and increases job satisfaction, job interest and job liking. As a result, turnover due to mismatch is minimized. Retention of employees affected by mis-match is also possible. (4) Provision of Intangible benefits to employees: Organizations offer intangible benefits for the retention of employees. Such benefits (intangibles) include overseas training opportunity, employment in foreign branches of the organization, holiday trips for employees and their families, dinner meetings in five star hotels, meetings' in posh hotels with employees and their families, etc. Some MNCs use overseas training and employment abroad as carrots for retaining their best performers. (5) Encouraging employee relationship management: Employee relationship management (ERM) acts as one employee retention strategy. This facilitates purposeful communication between employer and employees and avoids labor turnover. Research studies show that changing job is painful to an employee as it affects his life as well as family's stability, children's education, social network and employment. An employee feels strongly about morale, relation with immediate superior and opportunities outside. As a result, he decides to leave the present job. Here, employing organization should take adequate care and developed employee relationship. This reduces employee dissatisfaction level and
facilitates employee retention. (6) By persuasion of employees: Organizations can use persuasion as one method for the retention of key employees. If key employees can be brought in the organization from outside through persuasion, they can also be retained through effective persuasion. Here, the persuasive skills of the chief executive or HR personnel play an important role. He can offer certain incentives and convince the person that it is in his interest to continue in the same organization rather than joining some other organization. Many progressive organizations rely on this technique to retain key employees. (7) Conducting stay interviews: Companies conduct stay interviews in order to retain their workforce by making them feel appreciated and motivated. Contrary to exit interviews, stay interviews are conducted to understand the reasons why employees wish to continue working for the same organization. It is all about their work, the environment, the practices and the people that appeal to them and motivate them to stay on. Stay interviews are also held to understand the issues an employee may be facing. Such interviews focus on what is going right in the organization, rather than what went wrong. Stay interviews are an employee sensing exercise. Such interviews defect early warning signals as regards expectations of employees. This enables management to take suitable remedial measures in time and retain the employees for long. This approach of stay interviews is very positive and helps management/HRD professionals by providing useful information which can be used for introducing new techniques for the retention of employees. Stay interviews are conducted periodically by the immediate supervisor. Here, the HRD professionals are also involved as key partners and facilitators in the process. (8) In addition to the measures noted above, some more measures/techniques can be used for the retention of key personnel including top executives, middle level managers and key operatives functioning at lower levels. Such measures are as noted below: (a) Introduction of scientific recruitment and selection so as to avoid the tragedy of misfits. (b) Providing scientific training facilities and career development opportunities to employees so that they will
prefer to continue in the same organization over a long period for their benefit. (c) Providing job security and job satisfaction to employees which bring stability to workforce. (d) Providing attractive pay scales and incentives, decent working conditions, liberal welfare facilities, fair treatment to workers and finally impartial promotions and transfers. (e) Cordial/intimate relations with employees through effective labor management communication. This avoids possible confusion and misunderstanding among employees. 111ey also feel that they are important to the organization. This leads to intimate ties with the organization and facilitates retention of employees. Even conflict resolution and team building techniques are useful for the retention of employees.
SUCCESSION PLANNING Meaning of Succession Planning Succession planning is the process or activities connected with the filling of key positions in the organization hierarchy as vacancies arise. Succession planning focuses on identification of future vacancies and locating the probable successor. For example in succession planning the key concern can be who will be next CEO or what will happen if the Marketing Manager retires in coming March. Grooming a person to fill an important position may take years. Succession planning involves identification of key positions in the company and then scouting for people who can effectively fill those positions at short notice. Career planning, manpower planning and succession planning are complementary and interdependent. All the three are essential for effective utilization of organization's human resource development (HRD). Succession refers to position fallen vacant or likely to fall vacant in the near future. A succession of persons to fill up key positions over time is essential for the survival and success of an organization. The basic purpose of succession planning is to identify and develop people (human resource development) to replace current incumbents in key positions in cases of resignation, retirement, promotions, expansion and creation of new positions in an organization. Succession by people from within the organization is desirable as this provides
opportunities to employees for progress in their careers. Complete dependence on outside talent may cause stagnation in the career prospects of present employees which in turn may lead to frustration and high turnover. Career planning and succession planning are similar but not synonymous. A succession plan involves identification of vacancies that are likely to occur in the higher levels and locate the probable successors. Succession planning motivates employees and facilitates continuity of the organization. Advantages / Importance of Succession Planning 1. Succession planning helps when there is a sudden need due to job hopping/death of serious injury to a key employee. 2. There is little or no set back due to absence of key employee. 3. Acts as a motivator for the individual employee who comes to know of the impending promotion in advance. 4. Succession planning helps create loyalty towards the organization and improved motivation and morale of individual employees. 5. Organization gains stable workforce and low employee turnover. 6. Ultimately organization becomes successful in accomplishing its goals effectively. CHAPTER – 9 - PARTICIPATIVE MANAGEMENT Opening examples : Participative management • Many organizations have achieved substantial value creation due to their employees sharing wonderful ideas. Toyota is a great example. Toyota's suggestions scheme, operational for decades now, nets almost 2,000,000 suggestions per year that is 33 suggestions per employee every year. What's more, 95 per cent of these are implemented. That makes about 5,000 improvements per day. Employee suggestions helped cut British Airways cost by 4.5 million pounds. HSBC managed to save up to Rs 50 lakh per annum just by adopting a single useful suggestion made by an employee. And British Gas received over 11,000 suggestions, of which 1,100 were implemented and resulted in cost savings of over 10 million pounds. In India, Gujarat Narmada Fertilizer Corporation grossed 5,000 suggestions over five years, with savings of Rs. 6.5 million per annum.
• At TVS Motors, Hosur, two workers: Prasad and Kanaka Raj each
offered 6000 suggestions over a period of time. All these suggestions being highly useful to the company, the automobile giant rewarded these two workers handsomely. Each got a reward of Rs. 22 lakh. • Satyam started its company-wide suggestion scheme, the Idea Junction, in June 2001: The proposition behind this initiative was to enable greater value creation by Sat yam employees (or associates, as they are called) through ideas, suggestions and complaints, for new opportunities and definite improvements in all facets. A key aspect was that the company's overall approach, policies and practices should result in creating a healthy environment for associate involvement. A real-time intelligent web-based portal is present in Intranet, which is available to all Satyam associates across the globe to support the entire life cycle of an idea, suggestion or complaint. Satyam associates are able to log in and provide ideas, suggestions and complaints, track progress made against the same; participate in various forums and surveys and obtain information on suggestions that have been implemented or rewarded. A comprehensive reward policy is also in place, wherein rewards are envisaged not only for implemented ideas but also for accepted ideas when these exceed a certain number. As on March 31, 2003, over 5,814 ideas have been contributed, more than 1,000 ideas have been accepted and implemented and over 1,100 reward points have been awarded to associates. To ensure that ideas, suggestions and complaints submitted to each circle are acknowledged, evaluated and taken to a logical conclusion, a responsible person is identified in each circle to act as the Circle Idea leader (ClL). The CILs are tracking and evaluating ideas in addition to facilitating implementation of accepted ideas in the respective circles and interact with the Idea Junction Team at the corporate strategy group for company-wide issues. SCOPE AND WAYS OF PARTICIPATION Employee participation in management is nothing new. It is as old as the institution of owners and workers. But its importance has
increased and has been brought into sharp focus with the Industrial Revolution and the advent of large enterprises. In its narrow sense, participative management refers to the constitution of consultative councils and committees, comprising representatives of employees and employers, to recommend steps for improving productivity, machine utilization, job loading; for effecting savings in power, light; for identifying lazy workers, safety, so on and so forth. In its real sense participative management exists when employees are involved in decision making process, not in mere job related activities, but at all levels of management. Workers' participation in management is synonymous with codetermination-a term popularly used in former East Germany to describe this participation. Participative management is also called employee empowerment. There are three groups of managerial decisions which have a direct impact on the workers of any industrial establishment. They are social, personnel and economic decisions.
Economic decisions include financial aspects-the methods of manufacturing, automation, shut-down, lay-offs, mergers and similar other functions. • Personnel decisions refer to recruitment and selection, promotions, demotions, transfers, grievance settlement, work distribution, and so on. • Social decisions relate to hours of work, welfare measures, questions affecting work rules and the conduct of individual worker's safety, health, sanitation and noise control. The workers must have a say in the decisions on the issues mentioned above. But there is a difference of opinion about the scope and the extent to which workers can participate in social, personnel and economic decisions. One school of thought is of the opinion that the workers or the trade unions should, on parity basis, sit with the management as 'equal partners and make joint managerial decisions on all
matters. The other school propounds the view that the workers should only be given an opportunity, through their representatives, to influence managerial decisions at various levels. The first view could lead to the workers' actual participation in the decisionmaking process of the management, while the second aspect will work out to be consultation of workers in managerial decisions. A more easy way of understanding the scope of employee participation is to describe the levels of participation. Participation can vary from non-existence of employee involvement in decision making to the absence of managers themselves in making decisions.
Wh en are subord in dec invo lved ates isio n-m in a resu ll leve aking at ltan ls, t par t conc he ma ticipat ept is na g i em ve ent
Definition: In the words of DAVIS, “It is a mental and emotional involvement of a person in a group situation which encourages him to contribute to goals and share responsibilities with them.” IMPORTANCE OF PARTICIPATIVE MANAGEMENT The importance of participative management is universally accepted and efforts are being made for introducing such participation through suitable agencies and methods.
management has wider socio-economic importance as it gives various advantages to workers, employers and the society at large. Such participation gives higher status to workers and enables them to think and express their views on the working of their company. established through participative management. In addition, workers’ participation brings industrial democracy in reality.
2. Industrial peace and cordial industrial relations are also
3. Participative management is important as it satisfies the
psychological need of self - expression of workers. Even the process of decision-making is made democratic through workers’ participation.
4. It brings human element or humanitarian approach in
5. Participative management introduces a new set of values for
the workers and employers in which power is to be replaced by persuasion and compulsion by co-operation.
6. Employee’s participation is also useful for raising industrial
production and productivity. It helps consumers in an indirect manner. industrial peace and harmony exist over a long period. In brief, the concept of participative management is important because of economic, social and human values connected with it.
7. The national economy also gets certain benefits when
The ILO [International Labor Organization] has given moral support to employee’s participation and has advocated its adoption in all countries. Efforts are being made in all countries in this regard. In the countries of the West, this experiment is reasonably successful, while in developing countries including India; the process is not satisfactory even when consultative machinery exists in many countries.
PM results in improved performance. Improved performance is the outcome of three variables; removal of conditions of powerlessness, enhancement of self-efficacy(selfworth) and employee perception of empowerment.
PRE-REQUISITES OF PARTICIPATIVE MANAGEMENT 1. The participants, namely, the management and the operatives, must have clearly defined and complementary objectives. And the objectives of one party should not work at cross-purposes with the objectives of the other party. 2. There must be a free flow of information and communication between the management and the workers. In this way, distrust and suspicion are avoided, and workers become responsible and mature when they discuss their demands with the management.
3. The representatives of workers must be drawn from the workers themselves. The participation of the outside trade union leaders should be discouraged. This is necessary because the problems and difficulties of the workers are better understood by the workers themselves than by others. The workers, therefore, can put across their points of view to the management with confidence. 4. Strong and effective trade unionism is necessary for the success of participative management politicization and multiplicity of trade unions defeat the purpose of participation and management. 5. Education and training of workers make a significant contribution to the purposive working of participative management. Trade unions and the government can play a major and meaningful role in organizing and conducting training programmes. 6. Neither party should feel that its position is threatened by participation. If workers think that their status will be adversely affected, they will not participate. If the managers feel that their authority is threatened, they will refuse participation or will be on the defensive. 7. Consultative bodies, collective bargaining and suggestion schemes make a mockery of participative management. To make worker’s participation meaningful and purposeful, workers should be associated at all levels of decision-making. 8. The success of participation depends on a suitable participative structure and a change of heart on the part of employers and employees, which may take a long time to develop. To expedite this development, some sort of legislative action is necessary. 9. There could be the danger of a major portion of the resources of the enterprises being diverted to workers without much consideration for further investments. It may be desirable to reserve a certain percentage of the resources for reinvestment, either through mutual agreement or legislation. 10. The financial cost of participation should not exceed the values, economic and otherwise, that come from it. Employees cannot spend all their time in participation, to the exclusion of other work. FORMS / METHODS AND TECHNIQUES OF PARTICIPATIVE MANAGEMENT:
Participative management is possible by creating suitable agencies, forum or platform through which effective communication between workers and management will be possible and joint decision will be arrived at. The following methods/technique are normally used in India for the introduction of participative management: The methods of participative management noted above are the different alternatives and employers and workers can select anyone method which is suitable and convenient. They have to make the selected method popular and also purposeful. This is natural as the method selected/used is not important but the result-oriented participations are important. The method used is a means while effective participation is end.
1. WORKS COMMITTEE The Industrial Dispute act, 1947 provided for the setting up of a works committee consisting of representative of management and employees in every undertaking employing 100 or more employees. The committees are for removing the causes of friction between employer and workers in the day-to-day working of the factory. They also provides forum for negotiation between employers and workers at factory level. This joint consultative committee meets frequently for decision on common problem before workers and the management. After discussion, joint decisions are taken and such decisions are binding on both the parties. Matters like wage payment, bonus, training, discipline, welfare facilities, working condition, etc. This committee are extremely popular and effective in France and England whereas in India it is not popular an effective. 2. JOINT MANAGEMENT COUNCIL
representation to employees. Workers express their views, problem and difficulties through their representative on such councils. Various problems such as welfare facilities, discipline, training, removal of workers, common grievances, etc. are discussed in the meeting. Such joint consultative committees exist in UK and Sweden. In India, participative management is mainly through joint management council but not effectively operated.
3. CO-PARTNERSHIP (PARTICIPATION THROUGH OWNERSHIP) In co-partnership, workers are converted into shareholders of the company and are allowed to participate in the management like others shareholders. The company may give financial assistance to workers to purchase equity shares. They can elect their
representative on the board of directors. Workers are also allowed to attend meeting of the company and participate in the discussion. Voting rights are also given to employees. This makes them to participate in the decision-making and policy framing of the company at their highest level. They work in two different capacities- as workers and as co-workers.
Many companies in India offers theirs shares to the employees but workers don’t give positive response and hence not encouraging.
This suggests that co-partnership, as a method of participative management is not effective/popular in India. 61% shares of Otto India, Kolkatta are held by its employees. In
Rajasthan spinning and weaving mills 40% of the shares have been held by its employees
4. EMPLOYEE DIRECTORS/PARTICIPATION AT BOARD LEVEL: Here, two or three representative of workers are taken on board of directors of the company. The employee directors/ workers directors are elected by workers and they express their view of workers in the meeting of the board. Here, employee’s directors act as a link between top management and the workers. Such participation ensures cordial industrial relation. The representative of workers can put the view of workers before the directors and can also safeguard the interests of workers. As a result, the personnel policies will be fair and favorable to workers. Unfavorable decision to workers will be avoided and better treatment will be ensures to them. This mechanism of participation is now used extensively in public sector undertaking in India as per the initiative taken by the government. The GOI took the initiative and introduced a scheme for the appointment of worker’s representatives on the Boards of Management of public sector undertaking. As a result, the worker’s representatives were appointed to the boards of Hindustan Automobiles, Pimpri; Hindustan Machine Tools (Bangalore). Worker’s representatives have also been appointed to the Boards of nationalized bank. In the private sector, Tata, DCM have worker’s directors on their boards. 5. SUGGESTION SCHEMES / PROGRAMMES: Under suggestion programme/scheme, workers are asked to give suggestion to the management on various administrative and other matters such as machines utilization, waste management, energy conservation and safety measures. Their suggestions are considered by a joint committee representing workers, heads of departments and technical experts. Such suggestions are for improvement in the
existing organizational setup. Suitable suggestions relating to production activities, cost control, quality improvement, working condition, etc. are promptly accepted an executed. In addition, rewards are also given to those who make constructive suggestion. For collecting suggestion, suggestion boxes are kept in the organization. Suggestion scheme of participative management encourages workers to think (individually or collectively) and participate in raising the efficiency of the organization. In India companies like TATA, DCM, etc. adopt this method. This idea of participative management is now put into operations through quality circles, which are popular in Japan and now function in many Indians companies. 6. WORKERS CO-OPERATIVES (AUTO MANAGEMENT): In this extreme form of labors participation, workers take over the industrial unit and manage it completely on co-operative basis. Naturally, the entirely management is by the workers themselves. This method is also called as auto management. The basic purpose of above noted scheme of participative
management is to associates workers with the decision making process. The methods used for workers participation are not important but the purposeful participation is important.
7. PARTICIPATION THROUGH COLLECTIVE BARGAINING: The principle of collective bargaining confers on the management and the workers the right, through collective arguments, to lay down certain rules for formulation and termination of the contract of employment, as well as the conditions of service in an establishment. Such agreements are binding on parties and have the force of law. Collective bargaining can really work well if the bargaining parties, namely, the employers and the workers’ representatives, make use of the opportunity for bargaining in the right spirit and for a positive purpose. Collective bargaining is nosubstitute for workers’ participation in management. Participation
brings both the parties together and develops appropriate mutual understanding, and brings about a mature and responsible relationship. Collective bargaining, on the contrary, is based on the crude concept of power and its exercise for sectional bargaining, which may end up in mistrust, withholding of information and use of pressure tactics. 8. PARTICIPATION THROUGH JOB ENLARGEMENT AND JOB ENRICHMENT: Job enlargement means expanding the job content – adding task elements horizontally. Job enrichment means that additional motivators are added to the job so that it’s more rewarding. The purpose of job enlargement and job enrichment is to relieve boredom of the workers, which flow from excessive specialization in mass-production industries so that the job itself may be a source of self-satisfaction. Job enlargement and job enrichment do provide for workers participation because they offer freedom and scope to them to use their judgment. However this form of participation provides only limited freedom to a worker concerning the method of performing his/her job. It will not give him or her any say in some of the vital questions he or she may be interested in, such as job and income security, welfare scheme and other policy decisions of the company which affect him/her directly. 9. PARTICIPATION THROUGH QUALITY CIRCLES:
A quality circle consists of seven to ten people from the same work area who meet regularly to define, analyze, and solve quality and related problems in their area. Membership is strictly voluntary, and meetings are usually held once a week for an hour. During the groups initial meetings, members are trained in problem solving techniques borrowed from group dynamics, industrial engineering and quality control. These techniques include brainstorming, Pareto analysis, cause-effect analysis, histograms, control charts, stratification and scatter diagrams. Quality circles are credited with producing quick and impressive results when correctly implemented. Their advantages include the following: 1. Employees are involved in decision-making. This privilege makes them acquire communication and analytical skills and improve their efficiency at the workplace.
2. Savings-to-costs ratios generally are higher than those achieved with other productivity improvement programmes. 3. Because the programme is voluntary, employees and unions do not view them as another cost control effort. 4. Circle members enhance their chances of promotion to supervisory positions. LEVELS OF PARTICIPATION: Under participative management, workers are associated with the management i.e. decision-making process at different levels. The nature of association and the coverage 6f decisions are different at different levels. Such participation is through the representatives of workers. Normally, the levels of participation are three. These are as noted below:
(a) Participation of Shop floor Level: Actual production activity is conducted by workers at the shop floor. Here, participative management is possible through works committees in which workers elect their representatives. In such matters committee meetings relating to day-to-day working/functioning at the shop floor level are discussed and joint decisions are taken. Such committees are concerned with following matters: Conditions of work (lighting, ventilation, sanitation, etc) and amenities such as drinking water, canteens, medical and
health services, etc; Safety and accident prevention Adjustment of festivals and national holidays; Administration of welfare fund, recreational activities, Promotion of thrift and savings, and educational and
Review of decisions arrived in the meetings of works committees. Regular meetings of works committees enable workers to get their day-to-day problems solved promptly. For this, meetings of committees should be arranged regularly and constructive decisions should be taken. In India, such committees are not functioning properly and this affects participative management at the shop floor level. (b) Participation at Plant Level: Joint Management Councils (JMCs) function as consultative agency at the plant level. JMCs are concerned with the activities at the plant level. In the JMC, equal representation is given to management and workers. The maximum membership of JMC is 12. JMC is necessary where five hundred or more workers are employed. JMC performs functions on the following matters:
To deal with matters such as accident prevention at plant
level, management of canteens, water, meals, issue and revision of work rules, indiscipline, training, absenteeism and soon. To receive information, to discuss and to give suggestions on production and marketing programmes, methods of production, general economic situation, state of the market and so on. To have consultations with JMC before introducing changes in the modes of production, production schedule, general administration problems and so on. Wages, bonus, individual grievances of workers, personal problems of workers and matters
of collective bargaining are outside the scope of JMCs. The performance of JMCs is not satisfactory in India due to the attitude of workers' representatives, trade union leadership and negative attitude of managers. In 1975, another scheme of participative management was introduced in India. Under this new scheme, at the shop floor levels, Shop Councils were to be set-up and at the plant level, Joint Councils were to be set up. In 1977, the scheme was extended to public sector units employing 100 or more persons. (c) Participation at the Corporate Level: This is participative management at the highest level. Here, the Board of Directors is the apex body in the administration and decision-making at the corporate level. The representative of workers is taken on the Board of Directors. He looks after the protection of interest of workers. This also improves employer-employee relations and ensures higher productivity. The workers' representative can play a useful role in safeguarding the interests of workers. He can guide the management on personnel and social functions. He can even suggest to the management not to take certain policy decisions and measures that would be unpopular with the employees. Representative of workers can also suggest to the Board, certain schemes which will motivate workers to take more interest in the work and will also prove useful for cordial labor management relations over a longer period. Participation through workers' representative on the Board of Directors is, now, introduced in many public sector enterprises and banks. It may also be noted that participative management at the corporate level is not effective in India. This is because of various reasons. The Board, for example, deals with variety of subjects and personnel matters do not receive much attention at the Board level. The workers' representatives on the Board are in minority whereas decisions taken in the Board are by majority. The representative of workers on the Board has many limitations due to educational background, etc. Such director may not be
able to play a constructive role. CURRENT TRENDS IN PARTICIPATIVE MANAGEMENT:
1. SUBGROUP ORGANISATION AND MANAGEMENT: Each subgroup should elect a discussion leader and a recorder. The responsibility of the discussion leader is to focus group meetings, and the responsibility of the recorder is to present an accurate record of the group's activities. Subgroups should meet regularly for a limited amount of time. An agenda for each meeting is a necessity; agenda items may be referred by the group or by members of the management team. It is important for the subgroup to present a consensus within a set of previously established time constraints. In other words, with each topic comes a time frame for ultimate decision. If necessary, the group may issue a majority and a minority opinion, but only when a group cannot reach a consensus opinion regarding a single issue. Participation in each subgroup should be limited to 15 members or fewer, to facilitate effective decision-making. An odd number of members in each group will assist in establishing majority versus minority opinions.
2. MANAGEMENT PARTICIPATION IN GROUP ACTIVITIES: Members of the existing management team act as facilitators within the groups. Each group should include a minimum of one staff member (a middle or upper manager) with a particular interest or expertise in the group's topic. This management person should provide the group with pertinent information and resources necessary to accomplish the group's task. The staff member is not necessarily the group leader unless elected by a majority of the group members. Frequently, the group is better served by electing a rank-and-file member as group leader, rather than a management team member. However, the assigned manager is responsible for assisting the discussion leader in maintaining decorum and maintaining a focus on the group's assigned activities. Additionally, the discussion leader, recorder, and management advisor are jointly responsible for preparing and presenting the
group's decisions and opinions to the Chief Executive Officer (CEO) or Chief Administrator of the organization. 3. ANNUAL GOAL- SETTING MEETINGS: The traditional annual goal-setting meeting has value, particularly to identify training needed to fulfill specific work tasks. An area, which requires constant attention, is staff development. For leaders to trust staff with greater autonomy or decision-making power, they must be confident that staffs have adequate skill levels. Similarly, most staff are reluctant to take the initiative and accept responsibility if they are not confident of their ability to succeed. Use goal-setting meetings to consider career goals and skills and knowledge needed for future effectiveness. Laying a foundation of common goals and competent staff is vital for participative management to succeed. Also absolutely crucial is promoting an environment of trust where staff can speak out and take initiative without fear of punishment INDUSTRIAL DEMOCRACY AND PARTICIPATIVE MANAGEMENT: Both the concepts are supplementary and complementary in character and not conflicting and clashing with each other. In fact, industrial democracy can be introduced through various forums of participative management. Thus, participative management is an essential ingredient of industrial democracy. Works committees, joint management councils, etc are the different methods useful for the introduction of industrial democracy in concrete form. Participative management is the basic requirement of industrial democracy. It is through such participation that industrial democracy is put into practice. Labor participation in industry is rightly viewed as industrial democracy in action. This is how the workers participation in any suitable form serves as an essential ingredient of industrial democracy. In industrial democracy, an effective system of communication and consultation in between the employer and workers is required and labor participation in management creates such system/ machinery. Industrial democracy is not merely an economic concept but an attitude of mind and hits attitude can be given clear and concrete shape through workers participation scheme. Thus, participative management prepares sound and solid base for industrial democracy. There is absolutely no conflict between the two concepts. Attention to both is needed
for industrial peace, cordial industrial relations and rapid industrial growth. PARTICIPATIVE MANAGEMENT AT TATA SERVICES Mr. Narayan Sr. Engineer at Tata Consultancy Services CONSULTANCY
According to Mr. Narayan, Participative management is very useful to any organization. It helps boost the morale of the employee by making him aware of his responsibility towards the organization. However, the type of organization plays an important role to the success of participative management. In the case of TCS it is rather beneficial as the employees are highly educated. It becomes easier as there is a level of understanding and maturity they possess. Basically the concepts they all share are similar. METHODS OF PARTICIPATIVE MANAGEMENT FOLLOWED AT TATA CONSULTANCY SERVICES: 1) GOAL SETTING: The employees are divided into groups; each group consists of a senior executive. The goals set here are job related as well as Policy related. When a new policy is implemented, each group is introduced to the policy. The group that manages to adopt the new policy most effectively is rewarded. The same method is followed if a new policy is needed. Here the groups are entrusted the task of formulating an effective policy. The group to formulate the most effective policy is rewarded. This is usually used at times when deadlines are needed to be met or when there is a need for more productivity. It has been noticed that employees work best when their views are taken into consideration. 2) OPEN DISCUSSIONS: All the employees are allowed to voice their opinions and suggestions. In this way there is no need to go to the person in charge to voice your opinions. Red tape is greatly avoided and in this way there is no filtration of any information.
3) FLOOR MEETINGS: These meeting differ from open discussions only because they are related to a particular floor (project/ function) of employees. Here immediate problems are discussed and suggestions are given, the numbers of employees are less as compared to open discussions. Because only concerned members participate. They are held weekly, monthly, quarterly or when ever the need arises. 4) CONFERENCES: Held every week or when a new project begins. 5. DIRECT APPRAISAL MEETINGS: Just the same as open discussion, the only difference is that any effective suggestion is given immediate rewards. The employees are evaluated. Their performance is judged and rewarded. This increases the morale of the employees, as they know that their effort is being recognized and duly rewarded. This encourages them to work harder. Short Notes: 1. Participative Management (2001, 2004, 2006) 2. Latest trend of Employee Participative Management (2003)
Concept Questions: 1. 2. Quality Circles (2002) VRS (2002)
CHAPTER – 10 INDUSTRIAL RELATIONS Introduction: Competition is one issue which makes a manager spends sleepless nights. It is heating up day by day and industrialists find new strategies to face it. The direct outcome of facing competition is improved productivity. Improved productivity is the outcome of cordial industrial relations. Industrial relations has traditionally been a fire-fighting function in our country. The IR comes into full play only after the crisis erupts. IR is concerned with the relationship between management and workers and the role of regulatory mechanism in resolving any industrial dispute. • Specifically IR covers the following areas: • Collective Bargaining • Role of management, unions and government. • Machinery for resolution of industrial disputes. • Individual grievance and disciplinary policy and practice. • Labor legislation HR has moral dimensions too. It is unethical on the part of any management to take advantage of the helplessness of workers and exploit them. Unemployment compels workers – particularly illiterate and unskilled – to accept jobs, inhuman working conditions and meager wages The term industrial relations is a wide one and includes relations between various groups connected with the working of an industrial unit i.e. employer, employees, trade unions and even consumers. In a narrow sense, industrial relations mean relations between employer and employees. Such relations should be always cordial. Moreover, absence of cordial relations leads to disputes, strikes and stoppage of work. Maintaining cordial relations is the joint responsibility of employers and workers. DEFINITION OF INDUSTRIAL RELATIONS: (1) According to the ILO, industrial relations comprise relationships between the State on the one hand and the employers’ and employees’ organizations on the other hand and the relationship among the occupational organizations themselves. (2) Dale Yoder defines industrial relations as "relationships between management and employees or among employees and their
organizations that characterize or grow out of employment. FEATURES OF INDUSTRIAL RELATIONS: (1) Industrial relations are the relations between two parties connected with industrial/manufacturing activity, namely employer and employees. Such relations are the outcome of the employment relationship in Industry. Employer and employees are two parties to such relationship. Such relations should be cordial i.e. away from tensions as both parties are inter-related and inter-dependent. Both have to work together and live together. Even future prosperity of both parties is linked together. Industrial relations include individual relations as well as collective relations. (2) The concept of industrial relations is complex and multidimensional. It is also a dynamic and developing concept. (3) In the olden days, industrial relations were cordial and peaceful. However, at present, they are not 0 due to increase in the number of industrial workers, growth of trade unions, growing demands of workers, political leadership to unions, rapid industrial growth and exploitation of workers by employers. (4) Industrial relations do not function in a vacuum. The attitude and approaches of employers, employees and trade unions are directly related to industrial relations. In addition, economic and social factors have their influence on industrial relations. Industrial relations are an integral part of social relations. (5) Industrial relations lead to "industrial peace" or "industrial unrest". Both terms are used in relation to industrial relations. Cordial industrial relations bring industrial peace i.e. a period when industrial disputes, strikes, lock-outs, etc. are absent and production activity is being conducted in a regular and continuous manner. On the other hand, industrial unrest is a period when industrial relations in many industrial units are not cordial leading to large number of disputes and strikes. This also suggests that industrial unrest is undesirable and should be replaced by industrial peace which is an ideal situation for industrial growth. (6) Cordial industrial relations are always beneficial to all concerned
parties whereas absence of such relations is harmful to all parties and even to the national economy. (7) Shri V.V.Giri has rightly noted the importance of industrial peace and suggested that such peace is possible if employers and workers adopt more liberal, democratic and peaceful outlook. He suggested that mutual settlement of disputes is the best method for solving the demands, grievances and problems of workers. This approach (Shri V.V.Giri's approach) is the best method which can promote cordial labor-management relations at all levels. IMPORTANCE/BENEFITS OF INDUSTRIAL RELATIONS: (1) More production: Due to cordial· industrial relations employees take keen interest in their production activities and work efficiently. As a result, high production is available. Cordial industrial relations create favorable atmosphere for rapid industrial growth and large scale production. (2) Industrial peace: Cordial industrial relations bring harmony and remove causes of disputes. This leads to industrial peace which is an ideal situation on the industrial front. (3) Encouragement to collective bargaining and labor participation in management: Cordial industrial relations are extremely helpful for long-term agreement as regards various issues between labor and management. Such collective bargaining agreement and association of employees with decision-making process are easily possible due to cordial industrial relations. (4) Better treatment to workers: Due to cordial industrial relations, workers take interest in the work and bring more production and profit. As a result, the management usually acts in a liberal manner and offers various facilities and monetary benefits to workers. Thus, employees get more benefits from cordial labormanagement relations rather than through disputes and strikes. (5) Prosperity to employer and employees: Cordial industrial relations lead to regular and continuous production to the full capacity. This raises the productivity and profitability of a business unit. In the long run, such unit moves towards prosperity. Similarly, the employees get monetary and nonmonetary benefits. They get the share in the profits of their company. As a result, they secure higher standard of living and
move towards prosperity. In brief, cordial industrial relations are necessary and useful t employers and employees and even to the national economy and the society at large. It is an ideal situation. Rapid industrial growth and high industrial productivity are possible only when smooth industrial relations exist. Along with this, workers get higher wages and other monetary benefits and the employers get high profits in their business. The benefits of smooth industrial relations are available even to consumers as they secure regular and continuous -supply of goods at fair prices. In brief, smooth industrial relations are important in the case of every country, particularly in the case of a developing country like India. All possible efforts should be made in order to maintain smooth and cordial industrial relations. India's industrial relations policy has two basic objectives. These are: (a) prevention and peaceful settlement of disputes/ conflicts, and (b) promotion of good industrial relations. Approaches to Industrial Relations:
(1) Unitary Approach: Under this unitary approach, industrial relations is grounded on mutual co-operation, individual treatment of employees, team-work and shared goals. Work place conflict is regarded as a temporary deviation due to poor management or from employees who do not mix well within the organization’s culture. Unions co-operate with the management and the management's right to manage is accepted because there is no “we
they" feeling. Here, the basic assumption is that everyone benefits when the focus is on common interest and promotion of harmony. Conflict in the form of strike is not only treated as unnecessary but also destructive. This approach to industrial relations appears to be good in its orientation as it emphasises on employees in an organisation. Advocates of unitary approach emphasise on a reactive industrial relations strategy. They advocate direct negotiations with employees. Participation of government, tribunals and unions is not sought or regarded as being necessary for achieving harmonious employee relations. This unitary approach is being criticised as a tool for seducing employees away from unionism and socialism. This approach is also criticised as manipulative and exploitative from the point of view of workers. The approach has failed to consider different variables affecting IR within individual organisations and industrial sector as a whole. (2) Pluralistic Approach: This approach is totally different from the unitary approach. The pluralistic approach perceives: (a) Organizations as coalitions of competing interests, where the management's role is to mediate amongst the different interest groups. . (b) Trade unions as legitimate representatives of employee interest. (c) Stability in industrial relations (IR) as the result of concessions and compromises between management and unions. In this approach, authority of management is not automatically accepted. Conflict between management and employees is regarded as inevitable and is viewed as conducive for innovation and growth. Employees join unions in order to protect their interests and influence decision making by the management. Unions, thus, balance the power between the management and employees. In the pluralistic approach, a strong and stable union is not only desirable but is absolutely necessary. Similarly, the interests of the society are protected by State intervention through legislation and industrial tribunals which provide orderly process for regulation and resolution of conflict.
It may be noted that theories on pluralism were evolved in the midsixties and early seventies when England witnessed a revival of industrial conflicts. According to pluralistic approach, industrial conflict is inevitable and it needs to be contained within the social mechanism of collective bargaining, conciliation and arbitration. The basic assumption in the approach does not hold good. (3) Marxist Approach: Marxists, like pluralists, regard conflict between employers and employees as inevitable. For Marxist, it is a product of the capitalist society. Adverse relations in the workplace are simply one aspect of class conflict. Marxist approach focuses on the type of society in which an organization functions. Conflict arises not merely because of competing interests within the organization, but because of the division within society between those who own or manage the means of production and those who have only their labor to offer. In short, industrial conflict is seen/regarded as being synonymous with political and social unrest. Trade unions, under Marxist approach, are seen both as labor reaction to exploitation by capital, as well as a weapon to bring about a revolutionary social change. Concerns with wage-related disputes are secondary. Trade unions focus on improving the position of workers within the capitalist system and not to overthrow. For the Marxists, all strikes are political. The Marxist approach treat state intervention via legislation and industrial tribunals as supporting management's interest rather than ensuring a balance between the competing groups. This view is in contrast to the belief of the pluralists, who argue that state intervention is necessary to protect, the overall interest of society. According to Marxists, the pluralistic approach is supportive of capitalism. Consequently, enterprise bargaining, employee participation, co-operative work culture, etc are not acceptable to Marxists. 'Such initiatives are regarded as nothing more than sophisticated management techniques designed to reinforce management control and the continuation of the capitalist system. The Marxist approach has some merits but has limited scope in countries not based on socialism. (4) V. V. Girl Approach: We have studied three different approaches to industrial relations. In addition, some more approaches to industrial relations are available. They include Psychological Approach, Sociological Approach, Human Relations Approach, V.V. Giri Approach and lastly Gandhian Approach. Giri Approach and
Gandhian Approach are essentially Indian approaches developed by Shri V. V. Giri, the late President of India and known labor leader and Gandhiji. Both are based on their vast experience of labor movement. Brief details of these approaches are as given below: Giri Approach: According to Late President of India, Shri V. Giri, collective bargaining and mutual negotiations between management and labor are two methods useful for maintaining cordial industrial relations and industrial peace. Late Shri V. V. Giri was a strong supporter of collective bargaining agreement (Giri Approach). He supported collective bargaining due to its in-built capacity to solve the problems and demands of .workers and also to make trad unionism strong and popular in India. According to him, it is the best method for industrial peace. This "Giri Approach" on collective bargaining has relevance even in the present day industrial situation. Shri V. V. Girl wanted compulsory adjudication in India to be replaced by collective bargaining. This approach based on the spirit of self-government is popularly known as "Giri Approach". Giri Approach to industrial relations seeks to encourage mutual settlement of disputes through the process of collective bargaining aided by voluntary arbitration when necessary. In 1950, this concept was introduced in industrial relations machinery in India. Such agreements are now made in banks, ports, docks and in public sector undertakings. However, the progress of collective bargaining is not satisfactory in India. It is not a popular and extensively used technique in India. Shri Giri suggested that there should be bipartite (involve two set) machinery in every industry and every unit of the industry to settle labor management differences with active encouragement of the government. Outside interference should not be encouraged. Giri's stress was on voluntary efforts of the management and trade union to solve differences and disputes and maintain cordial industrial relations. He was also favorable to voluntary arbitration but against compulsory adjudication which is harmful to healthy growth of trade union movement. He was favorable to mutual settlement of disputes, collective bargaining and voluntary arbitration. He was favorable to peaceful settlement of disputes by concerned parties directly. The philosophy advocated by him has capacity to maintain cordial industrial relations on long term basis. Unfortunately collective bargaining is popular in European countries but not in India. In UK, such agreements are compulsory in the case of nationalized industries. In Canada, the two parties (management
and union) are required to bargain collectively by law. In France, the government tries to influence the process of collective bargaining. However, the progress of collective bargaining in India is not satisfactory even when government supports collective bargaining on voluntary basis. (5) Gandhian Approach: Gandhian approach to industrial relations is based on the basic principles of truth, nonviolence and nonpossession. He advocated the principle of trusteeship. Employers should act as the trustees and not the owners of their organizations. As a result, there will be no scope for conflict of interests between employer and employees. Workers can use non-eo-operation as a means to have their grievances redressed. Gandhiji accepted workers' right to go on strike but they have to use this right in a nonviolent and peaceful manner. Workers should resort to strike only for fair and just cause and only when the employer fails to respond to their moral appeals. According to Gandhiji, workers should avoid strikes as far as possible in industries of essential service. They should use strike as a weapon of last resort i.e. after all other legitimate measures have failed. When a trade union wants to organise strike, it should seek authority from all workers to do so through ballot. When direct settlement of dispute fails, workers should, as far as possible, take recourse to voluntary arbitration. Gandhiji wanted employers to follow the principle of trusteeship. This will ensure cordial industrial relations and disputes will be avoided. The principle of trusteeship is applicable to production and also other aspects of business. Gandhian approach is based on ancient Indian philosophy and thoughts. PARTIES TO INDUSTRIAL RELATIONS: In general, major parties (also called variables or participants) to industrial relations are the employees, employee representatives, employer, associations of employers, government and courts and tribunals. The following figure shows major parties to industrial relations: (a) Employees: Employees constitute main party to industrial relations. They are large in number working in the organized industrial sector. Employees get employment and regular income from the employment. Their approach should be positive and, favorable. They have a right to make fair and reasonable demands. However,
making unreasonable demands is undesirable as such demands lead to disputes and strikes or lockouts. Employees have to offer cooperation for cordial industrial relations. They can also spoil industrial relations by making demands which the employer will not be able to accept. This suggests that along with employers, employees have to share major responsibility for maintaining good industrial relations. Employees consider industrial relations in terms of opportunity to voice their grievances (individual and collective), improve their conditions of employment, participation in management or decisionmaking particularly on matters relating to employees and exchange views, ideas and suggestions with the management. In this regard, adequate opportunities should be given to them. This ensures cordial industrial relations. (b) Employee Associations: Such associations are called trade unions which operate at plant level or at industry level. They play a crucial role in maintaining cordial industrial relations. Trade unions function at two levels - at the industry level and at the plant level. At the· industry level, the unions establish joint consultations and joint regulation of wages, working conditions, incentives and facilities to workers with the employer's association. At the plant level, the union exercises joint control with managers and supervisory staff in regard to working conditions, disciplinary actions, code of conduct and so on. Unions participate actively for 'national, local and plant level agreements for meeting the demands of workers and also for maintaining cordial industrial relations. For this, unions need constructive and nonpolitical leadership. The unions should try to settle the demands of workers through peaceful negotiations and not by organising strikes Or work stoppages. Unions with enlightened leadership can play a positive role in maintaining cordial industrial relations over a long period. In the absence of such unions at all levels, the industrial relations will be adversely affected by the activities of unions. Interunion rivalry affects industrial relations in an organization. (c) Government: Government is not directly involved in industrial relations but has a moral and social responsibility to maintain cordial industrial relations through suitable preventive measures. This is possible through official intervention, assistance and regulation of working conditions. This is necessary for industrial growth, promotion of employment and also for raising national income and large scale exports. Government has to take suitable measures for promoting industrial peace and harmony. It has to give protection to the working class by
avoiding the possible causes responsible for disturbing industrial relations. Government has to support peaceful negotiations for solving disputes between management and workers so that the industrial relations are not affected adversely. Here, the role of government is indirect but equally important. The approach of the government should be impartial and fair to both the parties. The government has to support agencies useful for promoting cordial industrial relations. In the olden days, governments everywhere followed the laissez1air policy in this regard and industrial relations were left to managers and workers who were required to solve the problems themselves. However, at present, the state/government regulates the relationship between the management and labor and seeks to protect the interest of both parties. The government has set up wage boards, labor courts and tribunals for solving problems of workers. It has enacted suitable labor laws to lay down norms and to enforce their compliance. In short, the government is now alert in regard to industrial relations. It has taken preventive and positive measures for avoiding industrial disputes and also for maintaining cordial industrial relations. (d) Employers: Employers constitute the main party relating to industrial relations. They are directly involved in disputes between them and the employees. Employers appoint large number of workers for orderly conduct 'of production activity. They pay regular wages to employees for services rendered. At the same time, they are endowed with certain rights in relation to workers employed. Such rights and powers can be used by employers for exploitation of workers. This leads to conflicts. They can introduced many unfair practices for cheating· the workers or for breaking their unions or strikes. On many occasions, the employees are not happy or satisfied due to low wages paid, bad working conductions in factories, absence of welfare facilities, bad treatment to workers and so on. This leads to quarrels between employer and workers. Workers make different demands and when demands are not granted, industrial relations are adversely affected. This leads to demonstrations, go slow an even strike by workers for short or long period. This leads to work stoppage and production activity comes to standstill. As a result, both employer and workers suffer. For maintaining cordial industrial relations, employers have to accept major responsibility. They have to pay attractive wages, provide healthy working conditions, liberal welfare facilities and other incentives to workers so that they will be satisfied. In addition, employers should give attention to the demands and grievances of workers and solve them promptly. As a result, industrial relations will be cordial at the factory level. Employers should avoid
exploitation of workers and should be sympathetic towards their employees. Such attitude will lead to favourable industrial relations. The employers play a useful role in maintaining cordial industrial relations. Employers can introduce many measures for cordial industrial relations. Such measures include creating and maintaining employee motivation, sharing decisions with employees, negotiating terms and conditions of employment with employee representatives, and achieving high levels of efficiency. (e) Employers' Associations: Such associations are started by the employers at local, industry and all India levels. They are voluntary in character. The Confederation of Indian Industries (Cll) is a powerful body which operates at the national level and is playing a positive role in protecting and promoting the legitimate interests of industries. In addition to Cll, there are other all India employers' associations such as ASSOCHAM, FlCCI, AIMO, FlEO and so on. Such associations are for the protection of interests of employers and are also favourable to cordial industrial relations at industry level. They also offer cooperation to government and trade unions in this regard. The objectives of employers' associations are: (i) To represent employers in collective bargaining, (ii) To develop appropriate machinery for avoiding/limiting industrial disputes, (iii) To represent members on national issues, and (iv) To provide information on employee relations and to give advice. Employers' associations offer co-operation to the government and trade unions in creating cordial industrial relations by avoiding industrial disputes. The role of such associations is indirect in nature. (f) Courts and Tribunals: Courts (i.e. Legal machinery for dealing with industrial disputes) act as authority to settle legal disputes and thereby facilitate cordial industrial relations. Laws are made for preventing industrial disputes. Even positive measures are provided in the legal machinery. Courts use this machinery for solving the disputes. The powers of judiciary are useful to settle disputes. This improves industrial relations considerably. In India, government has made laws dealing with industrial relations. In addition, government has set legal machinery (labor courts and tribunals) for resolving
industrial conflicts. CHAPTER – 11 TRADE UNIONS Introduction: Employee associations constitute one of the stakeholders in IR. These associations are popularly known as trade unions. Trade unions are not confined to mere striking and negotiation on behalf of workers. Their role is much wider. They: • May make their presence felt in recruiting and selection. • They also decide who is to be hired conditions. and under what
• Also play important role in who is to be promoted, given a new job assignment, sent for training, terminated or laid off. • Decide wage and salary structure and negotiate revisions once in 3 or 5 years. • Major unions have political affiliations too. The role of union in IR is too well-known. It is therefore, essential that trade unions have to be understood well. Thus, Trade union is a voluntary association of workers established to protect and promote their economic interests through collective actions and activities. As per the Trade Unions Act of 1926, a trade union "must work to protect and promote the interests of the workers and the conditions of their employment." Individually workers are weak and are at the mercy of their employers, but collectively they can be a strong force with capacity to fight for their rights and demands. "Strength lies in unity" (or unity is strength) is the basic philosophy behind trade unionism. England is the birth place of trade unionism. Trade unions are formal organizations of wage earners. They bring unity and understanding among workers. They are not against employers or the society at large. They are essentially for avoiding the exploitation of workers and also for promoting their welfare. The benefits of trade unions to workers depend on the activities undertaken by them. Along with this, trade unions have to accept certain wider social
responsibilities. They have to protect the interests of workers but not at the cost of national economy or the society at large. DEFINITIONS OF A TRADE UNION: 1. According to Edwin B. Flippo, "a labor union or trade union is an organization of workers formed to promote, protect and improve, through collective action, the social, economic and political interests of its members". 2. According to V. V. Giri, “trade unions are voluntary organizations of workers formed to promote and protect their 3 interests by collective action". NATURE / FEATURES OF TRADE UNIONS: (1) Trade unions are voluntary associations of workers (A combination of workers) in one or more occupations. Seven or more workers can form a trade union. A worker can join or have any trade union as per his wish/ desire. However, it is relatively permanent combination of workers and is not a temporary or casual combination. It has to be a long term combination for achieving its objectives. Membership is voluntary. Large numbers of workers are away from any trade union. (2) Trade unions are for the pursuit of common interests of members. They protect the interests of members and promote their welfare. Why do workers join a trade union? • Dissatisfaction for security, wages, hours of work, type of work etc. • For power. (3) Trade unions act collectively i.e. through united actions of members. Community of interest motivates them to unite and act collectively. (4) Trade unions are concerned with economic, cultural, political and social life of members. A union covers all aspects of life of its members but it is mainly for protecting economic interests of members.
(5) In India, trade unions include unions of workers and unions of employers as employers can register their unions under the Trade Unions Act, 1926. A trade union can be formed by owners of industry as' per the legal provisions. However, employers' unions are very small in number as compared to the unions of workers. Naturally, by trade union, we generally mean the union of workers or wage earners. (6) Trade unions function on democratic principles. Their objective is to protect the interests of workers and avoid their exploitation in any possible form and by any agency. Trade unions have democratic setup. Office bearers are elected by members and major decisions are taken in the union meetings after discussion and voting. (7) A trade union acts as a collective bargaining agent for its members. It acts as an instrument of defense against injustice and exploitation. (8) Trade unions are basically concerned with the problems of workers. They are for the protection of workers. Workers collectively protect their interests and also avoid their exploitation. A trade union is. rightly described as an organised expression of the needs, aspirations and attitudes of the working class. These are not political associations and are not concerned with party politics even when they need the support of political parties for the protection of interests of the working class. In India, in the olden days, the trade unions have supported freedom movement of the country. Even at present, we have trade unions sponsored by or supported by political parties. Some political leaders also act as trade union leaders. (9) Trade unions are given legal recognition. Unions can be registered under the Indian Trade Unions Act, 1926. Workers are given right to form unions for their protection and selfhelp. (10) The basic principles of trade unionism are: (a) Unity is strength. (b) Equal pay for equal work. (c) Security of employment/ service. Trade unions function on the basis of these cardinal
principles. The unions fight back, if anyone of these principles is threatened. (11) The character of trade union has been constantly changing due to economic, social and other factors. In addition, its origin and growth has been influenced by a number of ideologies. FUNCTIONS/ACTIVITIES/OBJECTIVES OF TRADE UNION: The functions of trade unions are normally classified into those functions which are militant or protective (i.e. obtaining
better wages and working conditions, etc) and those functions which are fraternal, ministrant or positive (provision of benefits such as sickness and accident payments). Major functions/ activities/ objectives of trade unions are as noted below: (1) To make constant efforts for higher wages and other monetary benefits in the form of bonus and profit-sharing to members. (2) To fight for securing better working conditions, security of employment, monetary benefits and various welfare facilities like transport, housing and sports facilities to members. (3) To undertake strike, go slow and other aggressive activities if injustice cannot be removed through peaceful means like direct negotiations and collective bargaining. Trade unions should use strike as a weapon of last resort. It is to be used only when all other efforts failed to solve the problems and grievances of workers. Strike should not be organized frequently and for minor problems of workers which can be solved easily by negotiating with the management. The unsuccessful strike of textile workers (organized by Mr. Datta Samant) in Mumbai city in 1982 has affected the textile workers severely. Thousands of workers and their families returned to their villages as alternative employment was not available to them in Mumbai city. Large majority of textile mills in Mumbai city were dosed down and Mumbai is no more a town of textile mills. Big hotels and malls are, now, constructed in the premises of textile mills. This unsuccessful strike of longest period of 18 months finally brought tragic end of textile workers in Mumbai city. (4) To conduct direct negotiations with the employer as regards various difficulties, demands and grievances of workers and also for peaceful settlement of disputes. In addition, to make collective bargaining agreement with the employer. Here, the union acts as a representative body of workers. Unions act as representatives of working class. Trade unions need not restrict their functions to mere striking and negotiating on behalf of workers. They can make their presence felt in other areas such
as recruitment and selection, promotions and job assignments, etc… (5) To protect the economic interests of workers through certain economic activities like opening of co-operative store or bank, etc. (6) To undertake educational, cultural, social and other activities for the benefit of workers and thereby to raise their welfare. Such activities include provision of reading rooms and library, facilities providing scholarships to children of workers, arranging cultural competitions etc. (7) To oppose any political move which is likely to affect the working class and the trade union movement adversely. (8) To join hands with other unions for common benefits of working class and to support other unions if the need arises. (9) To protect the rights of workers and to see the labor law: are implemented properly and also for the benefit of the working class. (11) To represent the grievances of members, to provide legal advice to members as regards compensation under different labor laws. (12) To oppose to rationalization, automation and other programmes if they are against the workers and the security of their employment. (13) To undertake any other activity which is legal and also beneficial to the members i.e., workers. TRADE UNION MOVEMENT IN India Trade union movement in our country has a century-long history. The first quarter of the last century saw the birth of the trade union movement, but the seeds of the movement were sown much earlier. In the twenties, soon after the First World War, working class in our country realized the effectiveness of strike as means of obtaining concessions, higher wages and better working conditions. Many strikes were declared consequently and most of them were successful. This success led to the formation of several unions. The All India Trade Union Congress (AITUC) was set up in 1920 with the
objectives of representing workers' interests, to co-ordinate the activities of all labor organizations in the country, and to spread the message about the need for union movement. Hundreds of unions came into being in big and small industries. Their number, as well as membership, increased considerably. A landmark in the history of labor movement was the enactment of the Trade Unions Act, 1926. The Act gave a legal status to the registered trade unions and conferred on them and their members a measure of immunity from civil suits and criminal prosecution. Registration of unions gave them respectability before employers and the general public. Towards the end of 1920s, there was a split in the union movement, the split being caused by the leaders' ideological differences. The AITUC was captured by the communists. The moderates formed a new organization, called the All India Trade Union Federation. Ideological differences and splits had their effect on strikes too. Majority of the strikes failed. Unlike 1920s, the 1930s were not favorable to the trade union movement. The prosecution of the communists involved in the Meerut conspiracy case and the failure of the Bombay textile strike of 1929 brought a lull in trade union activities. Economic depression of the period also added to the dull phase of union movement. Retrenchments and strikes were common, the latter being mostly ineffective. There were further splits in the movement, but just before the Second World War some unity was achieved. The unity was shattered during the Second World War because of ideological differences and mounting cost of living. Industrial unrest increased and the government banned strikes and lockouts invoking the Defence of India Rules. Luckily, workers realized the need for an organized movement to secure relief. This realization led to an increase in the number of unions. The aftermath of Independence was not good for unions. The hopes of workers to secure better facilities and wages from the national government were not realized. There was large-scale unrest and strikes and lockouts multiplied. The disunity in the trade union ranks was aggravated by the starting of three central labor organization namely, the Indian National Trade Union Congress (INTUC) in 1947; the Hind Mazdoor Sabha (HMS) in 1948, and the United Trade Union Congress (UTUC) in 1949. As years went by, more unions and central organisations came into being. The movement became well-established.
As of today, there are more than 66,000 registered unions and most of them are affiliated to one or the other central trade union. Table 23.1 gives details about the central trade unions, their affiliates, political affiliation, date of establishment and membership claimed. YEAR 1990 1991 1992 1993 1994 1995 1996 1997 NO. OF UNIONS REGISTERED 52016 53535 55680 55784 56872 57952 58805 59968 MEMBERSHI P (‘000) 7019 6100 5746 3134 4094 6538 5613 7408
The above table shows that there has been a steady increase in the number of registered unions, but their membership fluctuated from year to year. WEAKNESSES/DEFECTS OF INDIAN TRADE UNIONS: Trade unions in India suffer from various weaknesses/short comings. Their role or actual contribution in protecting the workers in limited due to such weaknesses. The major weaknesses of Indian trade unions are as explained below: (1) Predominance of small-sized unions: In India, the unions are many but their membership is limited. Nearly threefourths of the unions have a membership of less than 500. The average membership of unions in India is less than 1000, (979 in 1998 and 835 in 1997) whereas in UK the average membership is nearly 17,600 and in the USA 9,500. Due to limited membership, the unions are financially weak and fail to undertake different economic and other activities for the benefit of members. (2) Existence of rival unions: In India, rival unions exist at all levels. It is like a house divided against itself. Practically, in every industrial unit, two or more unions controlled by different political parties/leaders exist. Such small unions waste their time, energy and resources while fighting among themselves rather than fighting for the protection of workers. -
There is no unity among unions. In fact, inter-union competition/rivalry leads to many industrial disputes. Leaders of rival unions are stabbed or even murdered. The employers/managements take undue advantage of such rival unions. The policy of divided and rule is used. The very purpose of trade unionism is defeated due to multiplicity of unions. 3) Inadequate coverage: In India, trade union movement exists throughout the country. But it is restricted to organized sector only. The progress of the movement is rapid only in certain States like West Bengal, Kerala, Maharashtra, and Tamil Nadu. Trade unions are not popular among the working class in general. Many workers join the union only when the strike is organized: About 40 per cent of factory workers join the unions and the rest are away from it. This means unions do not have popular support base. After liberalization, the attraction of industrial workers towards trade unionism is fast decreasing. (4) Weak financial position: Due to limited membership, small size of unions, poverty of workers and limited interest of workers, majority of Indian trade unions are financially weak and unstable. Naturally, they are not in a position to undertake various economic, social and cultural activities for the benefit of members. The contribution of unions in providing welfare facilities is limited due to financial difficulties. The total income of the 7,231 trade unions (submitting returns) with a membership of 54.21akhs was Rs. 7,464 lakhs in 2000. The per member expenditure of the union works out to only Rs. 110 which is too low. As a result of very small subscription, the trade unions cannot undertake labor welfare activities on a large scale. (5) Political leadership: Most of the trade unions in India have outside leadership i.e. leadership of professional politicians. This means the leadership is not from the working class itself but from political parties. The present leadership of politicians is interested in exploiting workers for political purposes. The interest of the working class is not well protected by the political and professional leaders. Moreover, unions are used to promote the interests of the political parties. The political leadership trade unions are actually harmful to
the cause of working class. Strikes are prolonged by political leader for personal prestige. Very often, negotiations with employer fail due to uncompromising outlook of political leadership. Thus, outside leadership is one major weakness of Indian trade unions. (6) Absence of full-time paid office-bearers: Majority of unions do not have whole-time paid office-bears. Many union leaders work on honorary basis. They devote limited time and energy to union activities. The office-bearers are also not trained properly. They lack the knowledge of trade unionism and labour laws in India. Unions undertake limited activities due to absence of full time paid office bearers. (7) Limited stress on welfare activities: Majority of trade unions in India undertake limited welfare activities. They feel that their only activity is to fight with the employer for higher wages and other demands. Other activities like opening a co operative bank or store, provision of educational and medical facilities, provision of welfare facilities, etc. are not undertaken by large majority of unions. As a result, workers are not attracted towards the unions and the contribution of unions in raising labour welfare is also limited. (8) More reliance on strikes and litigations: Trade unions in India concentrate attention on strikes and other activities like go-slow and demonstrations. Trade unions have a right to strike but strike should be used as a weapon of the last resort. Unfortunately, strikes are organized very often. Thus, undue stress on strikes and litigations (in place of direct and peaceful negotiations) is one basic defect of Indian trade unionism. Many unions organized strike first and then start the negotiations. However, the process should be just opposite. In the recent years, one major change witnessed in the case of trade unions is the change in the attitude of unions towards management, industry, government and the economy. The unions are becoming increasingly matured, practical and responsive in their thinking and actions. The union leaders have, now, become more mature in their approach. Unions have accepted the realities of economic reforms and globalization. Their opposition to automation, retrenchment, voluntary retirement, etc is fast reducing. (9) Absence of loyalty of workers to unions: In India, workers
migrate from one union to another frequently. Such migration suggests the absence of loyalty of workers to their unions. This also indicates absence of confidence in the unions. Migration of workers affects the financial position of unions and also their bargaining power. Large majority of unions have not made honest efforts to improve and secure the loyalty of workers. Unions take undue interest in organising strikes at the cost of other useful activities for the benefit of workers. The unions ignored useful activities like provision of medical relief, help to dependents of deceased members, educational and cultural activities and so on. In brief, Indian trade unions failed to provide continuous and substantial support to all the activities of workers. (10) Lack of public sympathy: Indian trade unions are interested in disputes, strikes and demonstrations. They give limited attention to peaceful methods for the settlement of disputes. The general public gets information about the unions only when strikes are organized. People feel that unions are only for strikes and disputes. As a result, public support or sympathy is not available to trade unions. (11) Unfavorable attitude of employers/managements: In India, employers/managements are not favorable for rapid growth of healthy trade unionism. They do not provide adequate support and facilities to unions. They also take interest in the formation of rival unions for their benefit (divide and rule policy). Trade union leaders are victimized. Efforts are made to break the union operating in a satisfactory manner. This conservative attitude of management harms the growth of healthy trade unionism in India. SUGGESTIONS FOR HEALTHY GROWTH OF INDIAN TRADE UNIONS: The following suggestions are worth noting for removing the deficiencies of Indian trade unions and also for healthy growth of trade unions in India: (1) Unity among unions: The present weaknesses like small unions, limited membership, multiplicity of unions, weak financial position of unions and inter-union rivalries can be removed if unity is established among the unions. It is
desirable to have a few strong unions with huge membership rather than large number of weak unions with limited membership. "One union in one industry" is a golden rule for Indian trade unions. (2) Removal "of inter-union rivalries: Inter-union rivalries affect all unions and also the healthy growth of trade unionism. Such rivalries are due to multiplicity of unions and political leadership to unions. The movement lack solidarity due to inter-union rivalries. It is, therefore, necessary to bring unity among unions. (3) Elimination of unhealthy political influence: The present linking of unions with political parties and politicians is highly dangerous for the healthy growth of trade unionism in India. The leadership of "outsiders" is harmful to healthy growth of trade unions. Trade unions need leadership from working class itself. Fortunately, depolitication of unions is a favourable trend witnessed in recent years. For example, some leading companies such as Telco, Voltas, Siemens and Blue Star have unions but are not affected by political parties. Trade unions need working class leadership and not political leadership. Efforts should be made to develop new leadership from amongst the working class. Thus, the present political leadership should .be replaced by responsible trade union leadership. (4) Expansion of union activities: Indian trade unions do not undertake economic, social and cultural activities which are equally important for raising the welfare of the working class. Many unions are more or less like strike committees. This situation is undesirable. Expansion/ Diversification in the activities of trade unions is essential for raising the utility and popularity of trade unions. Trade unions should, therefore, undertake various activities for the benefit of workers. (5)· Providing financial stability: Most of the trade unions in India are financially weak. The financial problems of the unions can be solved by raising the membership and by collecting more contributions from members. In addition, special donations should be collected from the members at the time of bonus payment. Unions can even arrange cultural programmes for raising funds. Financial stability enables unions to undertake welfare and other activities.
(6) More stress on peaceful means: Trade unions in India should replace their aggressive approach in the form of strikes, gherao, go slow, etc. by peaceful and constructive approach in the form of direct negotiations and collective bargaining. The unions can protect the interests of the working class through peaceful and democratic means. (7) Promotion of responsible trade union leadership: Trade union leaders need full knowledge of the constitutional and legal rights available to unions. They have to use these rights to secure and promote workers' interests. Personal integrity, patience, understanding and courage are some of the qualities required by trade union leaders. Such leaders can make positive contribution in building healthy trade union movement in India. (8) Change in the outlook of Employers: Employers in India should adopt more liberal and progressive outlook towards trade unionism. Attempts to discourage the information of unions, encouragement for the formation of rival unions, bribing the union leaders and creating difficulties in the smooth working of unions are undesirable practices and even dangerous to employers. Such policy of divide-and-rule will not be profitable to them in the long run. (9) Education and training of workers: Working class should be provided suitable education and training. Workers should be made conscious about their right to form a union. Progress of the movement will be rapid when adequate awareness is created among the workers as regards unions and their positive contribution. (10) Making workers conscious of their responsibilities: Unions should make every worker understand fully first his duties and responsibilities and then his rights and privileges. Responsible working class is essential for the healthy growth of trade union movement. Workers interested in their demands only are not useful for creating strong and stable trade unions. (11) Wider coverage: In India, large majority of workers remain away from the unions. Limited membership makes the unions weak with limited bargaining power. For healthy
growth of trade unionism, wide coverage of unions is positive contribution in building healthy trade union movement in India. (12) Miscellaneous suggestions for healthy growth of Trade Unions: (a) There is a need to eradicate illiteracy among workers and to enlarge the membership of unions. (b) There is an urgent need of reforming the structure of trade unions. (c) It is necessary to cover unorganized sector within the scope of trade unionism. The workers from this sector are large and need protection through unity of actions. (d) There is a need for widening the philosophical basis of trade unionism in India. It may be pointed out that the measures noted above are useful for making Indian trade union movement strong, healthy, democratic, peaceful and purposeful to employees and the national economy. The above noted suggestions are actually the pre-conditions for the healthy growth of trade unions in India. For example, unity among the unions, elimination of inter-union rivalries, elimination of political domination, stress on constructive activities, financial stability, wide coverage, more stress on peaceful and democratic means are some important conditions for the healthy growth of trade unionism in India. PROBLEMS BEFORE INDIAN TRADE UNIONS: The weaknesses of trade unions are actually the problems before Indian trade unions. Such problems/ challenges are: (1) How to remove the present multiplicity of trade unions and how to bring about unity among rival unions. (2) How to reduce the present domination of politicians and political parties on the trade unions at all levels and how to develop new leadership from the working class itself. (3) How to develop popular support of working class to the unions and how to achieve wide coverage for the unions. In other words, how to develop loyalty of workers towards the trade unions. (4) How to expand the activities of the unions with stress on welfare activities so as to provide better welfare
to the working class. (5) How to replace the present aggressive and strikeoriented approach of union leaders by compromising, constructive and peaceful outlook for solving the problems of workers. (6) How to make trade unions financially strong and stable organisations for undertaking variety of activities for the benefit of working class. (7) How to secure sympathy from employer, government and also from the public. (8) How to introduce unity among all India trade unions for introducing common policies and ideologies for the benefit of working class as a whole. (9) How to remove present weaknesses of trade unions so as to make them strong, stable and utility-oriented. (10) How to maintain stable and purposeful existence in the light of current globalization process? ======================================= ================== CASE STUDY ORIENTATION PROGRAMME IN BHARAT FOUNDRY: BHARAT FOUNDRY is a big company manufacturing and marketing many engineering products. It has 24 different departments and a workforce of 450 employees (lower level) and 76 supervisors, officers and managers. Every month 20-25 new employees were appointed as the rate of labor turnover was rather high. Upto 1999 the induction/orientation programme in the company was as noted below: On the day of appointment, the newly appointed employee was escorted from the employment office to one of the foundry departments by an office messenger. The departmental head/supervisor was not given prior intimation. The new worker was taken to the superintendent's office. The messenger used to give a slip with few details of new employee and move away. The superintendent used to call the new employee as per the time available and used to give very brief details of rules, job details and the supervisor under whom he has to work. The whole process was over within a period of ten minutes. Thereafter, the new worker is
sent to the supervisor who normally asks few routine questions and asks him to join a specific group from the department. Suitable introduction, proper information and guidance, job timing, etc. were absent. As a result, the new employee becomes shy and nervous after joining the company. He used to feel insecure and uneasy. He fails to develop good opinion about the company, his superiors and co-workers. As a result, the rate of labor turnover and absenteeism was exceptionally high. The matter attracted the attention of top level management. The situation was treated as insulting to the company. High labor turnover was treated as disgrace to the company. Moreover, the company had to' face many problems (in the normal working/production activities) due to high labor turnover, low morale and absence of motivation. Series of meetings of senior managers/departmental heads were arranged to study the problem of high labor turnover. It was concluded that this situation was mainly due to ineffective/defective/inhuman induction/orientation programme of the company. The orientation was not giving any benefit to the company but it operates against the company. As a result, stable labor force is not available to the company. Mr. Anil Sen, the newly appointed but competent personnel manager was asked to study the problem in depth and introduce new, attractive, agreeable, scientific and employee friendly induction/orientation programme. Personnel Manager Mr. Sen gave immediate attention to the issue and decided to introduce new orientation plan/programme in consultation with the top management. The features of new orientation programme/plan/ procedure are as noted below: (1) Each new employee is to be presented a small information booklet containing general information of the company, organizational details, rules, regulations and procedures followed in the company, facilities provided to employees and the rules of discipline, etc. The booklet is to be given on the first day with a request to study the same within the first few days after joining the company. (2) A 30 minute film will be shown to newly appointed employees in the auditorium of the company. This film is informative and shall give all broad features of the company. It is an easy introduction to the company - its products, directors, top officers and so on. The film will create a feeling of affinity and oneness with the company. (3) The pay scale, promotion possibilities, career opportunities, code of conduct, concessions available, etc. are to be discussed in detail, in a joint meeting with personnel manager and a few other managers. Two or more such meetings are to be arranged by the personnel department for the benefit of newly appointed employees.
(4) All facilities available in the plant/production unit are to be explained and actually shown to new employees. For this, a small trip to departments, administrative offices, canteen etc. is to be arranged as a part of orientation programme. (5) Each employee is to be welcomed properly on the first day of his joining duties. Prior intimation about his appointment is to be sent in advance to concerned department with a request to concerned officer to give personal attention to newly appointed employees for the first two weeks. (6) At the conclusion of the orientation, each employee is invited to come back to the personnel department to discuss and talk over any problem pertaining to work or personnel matters. (7) The personnel manager or his assistant will personally escort each new employee to the department of his work and make proper introduction. Every possible efforts will be made to create a feeling of confidence among new employees. Efforts are made to reduce tension and to create positive impression on their minds as regards company, its officers and co-workers. The new orientation programme introduced in Jan, 2001 proved successful. It gave promising results. Questions: (1) Why labor turnover was high under the old orientation programme? (2) Do you feel that new orientation is positive and employee friendly? (3) What, according to you, will be the promising results of new orientation programme? (4) What are the advantages of scientific orientation? (5) Do you feel that induction/orientation is a neglected' aspect of personnel management in India? UNIVERSITY CASE STUDIES November – 2001 Analysis the following case and answer the questions given at the end. 'Raka' is a reputed Marketing Research organisation having about 150 operative employees and 70 executives all over the country. The operative staff is mostly involved in data collection, while the
executives at different levels usually do the research design, analysis and presentation. . The company has a performance rating system, which has been in existence for about 10 years and was designed at that time, by the head of administration, a clerk who had been promoted into that position over the years without any formal training. All employees are rated by their immediate superiors, by means of a rating scale. Then, the form is evaluated by a superior at the next level, which the employees are informed of his performance rating. The employee then signs a form indicating that he/she has been so informed. The employee's signature does not necessary mean that he/she agrees with the rating given. The parameters considered are Quality of Work, Quantity of Work, Reliability, co-operativeness and Community Service. The employee is rated on a 5 point rating scale. Rating of each year is maintained in the employee's file in the HR Development. Ratings are supposed to be used as a basis for promotions and increments. In practice however, little use is made of the ratings for anything. A small informal survey conducted a year ago showed that the superior spent on an average about 3 minutes filling up a form and less than 10 minutes discussing it with the subordinate. Employee feelings about the system range from indifferent to hostility. Most feel that community service is not a part of their job and should not influence their rating, while important criteria like leadership potential which indeed should be a 'part of the form are left out. The system seems to be causing much dissatisfaction and hostility among the employees of the firm. The managing Director, Mr. Gandhi feels that it is becoming a dangerous source of friction and should be done away with all together. (a) List the important facts of the case and explain the main problems of the existing Performance Appraisal System. (5) (b) Do you agree with the Managing Director that the System of Performance Appraisal should be discontinued altogether in this organisation? Justify your view. (5) (c) Keeping the executives in mind suggest some improvements in the Performance Appraisal System. Also suggest some additional techniques of Appraisal that could be used. (5) (d) Keeping the operative employees in mind suggest some improvements in the Performance Appraisal System. Also suggest
some additional techniques of Appraisal that could be used. (5)
NOVEMBER 2002 Evaluation of Executive Development Programme: The Indian Cooking Gas Ltd., was established as a public sector company in 1963. It had its plants in six areas in the. country. The company provided both in-company and out-company executive development programmes. In company programmes included orientation programme for Apprentice Assistant Executive Engineers. It had a staff college at Bangalore. Programmes were conducted at staff college for all types personnel. In company programmes included quality management, participative management, time management etc. The best faculty was drawn from Indian Institute of Management, Universities, Professional Bodies etc., apart from the four permanent and Internal faculty. At present all the four permanent faculty positions are vacant. Evaluation of management development programmes is done as a ritual rather than to make is a part of development process. Evaluation of in-company programme is done at staff college with the objective of knowing the participants learning and to know how far the participants have found the programme useful. The staff college sends no formal feedback to the functional heads of the departments and to the corporate personnel and administrative department. There appears to be no formal system that provides for the feedback from the participants and out-company programmes to their respective functional heads. There exists no evaluation model with pre-training and post-training evaluation and no efforts are made to develop evaluation techniques. Analysis 10 mks Questions: (1) Find out the reasons for the unsatisfactory conditions of evaluation of management development programmes? (5) (2) How do you improve the conditions of evaluation of management development programmes? (5) November - 2003 Analyse the case given under and answer the questions in your own words analytically: Magnum Industries Ltd. has been a Rs. 200 crore consumer durable manufacturing company located in downtown Mumbai. It employed
about 900 employees and the manufacturing process involved discharge of toxic chemical effluents and water. However, due to the persistent pressure from the surrounding community the company had to shift its plant manufacturing activities to one of the MIDC areas in the outskirts of Mumbai. It may be given that most of the employees were largely unqualified and in the age range between their late thirties and early fifties. Inspite of providing bus transport facilities from the various town areas of Mumbai to the new plant location in MIDC 30% of the employees sought severance. The employees have been from different parts of India hence cosmopolitan in nature. At the new location the plant had been upgraded by new technology from a foreign country and new machineries and plants had been brought to increase the productivity and improve the product quality to the world class manufacturing standard. In order to replenish the manpower the company at the new location recruited approximately 150 new young persons who were IT! trained with HSC pass background. These young people have been from the surrounding areas, talukas of the concerned district. Majority of these young men, though qualified have had no industrial background. They have been from agricultural and other types of rural backgrounds. Hence they have no perception about industrial organization, manufacturing processes and set up, discipline and every other aspect of the industry. The new employees were unruly and had no respect for the old employees. The problems faced by the organization hence, have been that there was a perceptual and cultural gap between the new and the old employees. On the one hand the old employees were demotivated to work in a distant location having to travel 2 hours by bus. They were voicing about separation through V.R.S. On the other hand, though the new young employees were good at their work, they were unruly and highly demanding in every matter. Also they wanted to assert themselves by capturing. executive positions in the recognized Trade Union. Whereas the company had the challenge to integrate the new technology to upgrade production processes, improve product quality, reduce cost, increase production and .productivity, and thereby increase rnarket share. Questions: (a) What are the HR challenges you see in this case as the HRD Manager yourself of the company? (7) (b) What kind of training programmes would you plan· for the newly recruited employees to tame them and change their attitudes as true manpower assets of the company? (6)
(c) What motivational strategies would you initiate for the old employees of the organization to continue working as well as for the new employees to build them up? Please suggest. November – 2004 Case Study PROMOTING THE PROTEGE The die was cast. Prem Nath Divan, executive chairman of Vertigo, the country's largest engineering project organisation, decided to switch tracks for a career in academics. Divan was still six years short of the company's retirement age of 65. His premature exit was bound to create a flutter at the Vertigo board. Having joined Vertigo as a management trainee soon after college, he had gradually risen through the hierarchy to take a board position as the marketing director of the firm at 32. He had become the President five years later and the youngest chairman of the company at 45. But, by the time he was 50, the whiz kid had acquired a larger than life image of a role model for younger managers and a statesman who symbolised the best and brightest face of Indian management. On his wife's suggestion that it would be wise to discuss the move with one of his trusted colleagues before making a formal announcement of his intention to seek premature retirement. Divan called on Ramcharan Saxena, a solicitor who has been on the Vertigo board for over a decade. Saxena was surprised at Divan's plan. But he was unfazed. "If that is what you want to do for the rest of your life, we can only wish you well", he told him. "The board will miss you. But the business should go on. We should get down to the task of choosing successor. The sooner it is done, the better." "I think the choice is quite obvious," said Divan, "Ranjan Warrior. He is good and ... " Divan was taken aback to see Saxena grimace. "You don't have anything against him, do you?" he asked him. "No, no," said Saxena, "He is good. A financial strategist and a visionary. His conceptual skills have served the company well. But he has always had staff role with no line experience. What we need is someone from operations. Like Richard Crasta." "Richard knows things inside out alright", said Divan, "But he is just a doer. Not fire in the belly. Vertigo needs someone who understands the value of power and knows how to use it. Like me. Like Ranjan." "That is just the problem." said Saxena. "Prem, let me tell you something: Ranjan is a man in your own image. Everyone knows that hoe is your protege. And proteges are never popular. He has generated a lot of resentment among senior Vertigo executives and there would be a revolt if he were to succeed you. An exodus is something we can't afford to have on our hands. We should think of someone else in the interest of stability of top management."
Divan could not believe what he heard. He had always prided himself on his hands-on style and thought he had his ear to the ground. "How-could I lose touch?" he wondered, somewhat shaken. "When you are the-boss, people accept your authority without question," continued Saxena. "In any case, you have been successful at Vertigo and it is difficult to argue with success. But the moment you announce your intention to leave, the aura begins to fade away. And in deciding on your successor, the board will seek your opinion, with due regard to your judgement. The board members must do what in their view is right for the company. Having said that, may I also mention that if there is a showdown in the boardroom, you could always choose to stay on? We would like it. Or we could bring in an outsider." "I have finalised my career plans and there is no question of staying on beyond six months from now," said Divan. "The board is scheduled to meet next month. Let us shelve the matter till then. In the meantime, I rely on you, Ram, to keep this discussion between the two of us." "Of course yes," said Saxena. On his way home, Divan thought about the matter in detail. Bringing an outsider would undo all his life's work at Vertigo. There were considerations like culture and compatibility, which were paramount. The chairman had to be an inside man. "Richard lacks stature," Divan said to himself. "Ranjan is the one I have been grooming, but heavens, the flip side of it all had missed me completely. There is no way I can allow a split at the top just before I quit. I must leave on a high note in my own interest. I must find a way out of the imminent mess." What should Divan do? November - 2005 Analyse the case given below and answer the questions in your own words analytically. SAS Pvt. Ltd. is probably the least-well-known major software company, in India. The company makes statistical analysis software (hence the acronym SAS). And the company is growing very rapidly from 1900 employees five years ago, it now has 5400 employees. But SAS is not your typical software company. It is not your typical 'anything' company. At its headquarters, just outside Bangalore, there is a 36,000 square-foot gym for employees. There is a fulllength basketball court, pool tables, a private sky-lighted yoga room and workout areas. Outside, there are soccer and cricket fields. Massages are available several times a week and classes are offered
in dance and tennis. The company also operates the largest daycare facility in India. To encourage families to eat lunch together, the SAS cafeteria supplies baby seats and high chairs. To encourage families to eat dinner together, the company has a seven-hour work day, five days a week. Unlike many work-obsessive software firms, most SAS employees leave the office by 5 p. m. Management likes to call its work place culture "relaxed". The list of employee amenities at SAS goes on and on. Unlimited tea, coffee and juice, One week paid vacation during Diwali. An onsite health clinic staffed with six nurses and two doctors. Zero cost to employees for health insurance. Casual dress every day. Is this any way to run a business? Management thinks so. SAS's strategy is to make it impossible for people not to do their work. Even though the company provides no stock option plans and salaries no better than the competition, the company has built an unbelievably loyal work force. Whereas competitors typically have turnover rates above 30 percent, SAS's rate has never been higher than 5 percent. Management claims that it saves Rs. 75 lakhs a year just in employee replacement-related costs such as recruitment, interviews, moving costs for new hires and lost work time. Just in case anyone wonders if the company makes any money, we'll add the following. SAS is owned by just two people – Rahul Sharma and Deepak Ahuja. They were recently_listed as being in the top 100richest people in India. Questions: (a) List the important facts in the case. (5) (b) Are progressive HR practices like those at SAS, a cause or a result of high profits? Discuss. (5) (c) What possible problems could the management at SAS face (from employees) due to the benefits offered? (5) (d) If you are appointed as the HR manager at SAS, what changes would you recommend in the compensation structure? (5) November – 2006 Mr. Anthony is the Chief Executive of a medium sized Chemical Co. in Hyderabad. He holds a Ph.D. in Chemistry. However, he has not been involved in research and development of new products for two decades. Though turnover is not a problem for the company, Mr.
Anthony and his senior colleagues noticed that the workers on hourly basis are not working up to their full potential. It is a well known fact that they filled their days with unnecessary and unproductive activities. Mr. Anthony knew that workers can be motivated for giving maximum performance through various incentive plans. One day Mr. Anthony contacted Personnel Manager and enquired: "Why our workers are not motivated? We pay them highest in the industry". The Personnel Manager replied. "I have already informed you a number of times, that money, working conditions and benefits are not enough? Hard work and efficiency go unnoticed and unrewarded in our organization. Our promotions and benefit plans are tied to length of service. Even the lazy workers, accordingly, enjoy all the benefits in the organization, which infact, according to the workers, should go only to those who work hard". Mr. Anthony then wanted the Personnel Manager to look into the problem more closely and find out a solution to the problems of workers on hourly basis. Questions: (a) List the important facts in the case. (6) (b) Explain the motivational problem in this case. (6) (c) If you were the Manager, how would you motivate employees so that they work better? (8) November – 2007 (20) Case Study:
Rise and Fall Jagannath (Jaggu to his friends) is'an over ambitious young man. For him ends justify means. With a diploma in Engineering, Jaggu joined in 1977; a Bangalore-based company as a Technical Assistant. He got himself enrolled as a student in an evening college and obtained his degree in Engineering in 1982. Recognizing his improved qualification, Jaggu was promoted as Engineer - Sales in 1984. Jaggu excelled himself in the new role and became the blue - eyed boy of the management. Promotions carne to him in quick successions. He was made Manager - Sales in 1986 and Senior Manager - Marketing in 1988. Jaggu did not forget his academic pursuits. After being promoted as Engineer - Sales, he joined an MBA (Part-time) programme. After completing MBA Jaggu became a Ph. D. scholar and obtained his doctoral degree in 1989. Functioning as Senior Manager - Marketing Jaggu eyed on things beyond his jurisdiction.
He started complaining against Suresh the Section Head and Prahalad the Unit Chief (both production) with Ravi, the EVP (Executive - Vice President). The complaints included delay in executive orders, poor quality and customer rejections. Most of the complaints were concocted. Ravi was convinced and requested Jaggu to head the production Section so that things could be straightened up there. Jaggu became the Section Head and Suresh was shifted to sales. Jaggu started spreading his wings. He prevailed upon Ravi and got sales and quality under his control, in addition to production. Suresh an equal in status, was now subordinated to Jaggu. Success had gone to Jaggu's head. He had everything going in his favour position, power, money and qualification. He divided workers and used them as pawns. He ignored Prahalad and established direct link with Ravi. Unable to bear the humiliation, Prahalad quit the company. Jaggu was promoted as General Manager. He became a megalomaniac. Things had to end to some point. It happened in Jaggu's life too. There were complaints against him. He had inducted his brother-in-law, Ganesh, as an engineer. Ganesh was by nature corrupt. He stole copper worth Rs. 5 lakh and was suspended. Jaggu tried to defend Ganesh but failed in his effort corruption charges were also leveled against Jaggu who was reported to have made nearly Rs. 20 lakh for himself. On the New Year day of 1993Jaggu was reverted back to his old position - sales Suresh was promoted and was asked to head production. Roles got revered. Suresh became boss to Jaggu. Unable to swallow the insult, Jaggu put in his papers. Back home, Jaggu started his own consultancy claiming himself as an authority in quality management. He poached on his previous company and picked up two best brains in quality. From 1977 to 1993, Jaggu's career graph had a steep rise and a sudden fall. Whether there would be another hump in the cure is a big question. Questions: (a) Bring out the principles of promotion that were employed in promoting Jaggu. (10) (b) What would you do if you were Ravi? (5) (c) Bring out the ethical issues involved in Jaggu's behaviour. (5)