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Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does. According to Flippo, a prominent personality in the field of Human resources, “performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job." Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future. It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals. By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management’s interest in the progress of the employees. OBJECTIVES OF Performance appraisal: • To review the performance of the employees over a given period of time. • To judge the gap between the actual and the desired performance. • To help the management in exercising organizational control. • Helps to strengthen the relationship and communication between superior – subordinates and management – employees. • To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future. • To provide feedback to the employees regarding their past performance. • Provide information to assist in the other personal decisions in the organization. • Provide clarity of the expectations and responsibilities of the functions to be performed by the employees. • To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development. • To reduce the grievances of the employees.
Process of Performance Appraisal • ESTABLISHING PERFORMANCE STANDARDS: The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards.
• COMMUNICATING THE STANDARDS :Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained to the. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators. • MEASURING THE ACTUAL PERFORMANCE: The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work. • COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE: The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees’ performance. • DISCUSSING RESULTS: The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees’ future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better. • DECISION MAKING: The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers etc. Pre-requisites for Effective & Successful Performance Appraisa The essentials of an effective performance system are as follows: • Documentation – means continuous noting and documenting the performance. It also helps the evaluators to give a proof and the basis of their ratings. • Standards / Goals – the standards set should be clear, easy to understand, achievable, motivating, time bound and measurable. • Practical and simple format - The appraisal format should be simple, clear, fair and objective. Long and complicated formats are time consuming, difficult to understand, and do not elicit much useful information. • Evaluation technique – An appropriate evaluation technique should be selected; the appraisal system should be performance based and uniform. The criteria for evaluation should be based on observable and measurable characteristics of the behavior of the employee. • Communication – Communication is an indispensable part of the Performance appraisal process. The desired behavior or the expected results should be communicated to the employees as well as the evaluators. Communication also plays an important role in the review or feedback meeting. Open communication system motivates the employees to actively participate in the appraisal process.
• Feedback – The purpose of the feedback should be developmental rather than judgmental. To maintain its utility, timely feedback should be provided to the employees and the manner of giving feedback should be such that it should have a motivating effect on the employees’ future performance. • Personal Bias – Interpersonal relationships can influence the evaluation and the decisions in the performance appraisal process. Therefore, the evaluators should be trained to carry out the processes of appraisals without personal bias and effectively. Challenges Of Performance Appraisal In order to make a performance appraisal system effective and successful, an organization comes across various challenges and problems. The main challenges involved in the performance appraisal process are: • Determining the evaluation criteria: Identification of the appraisal criteria is one of the biggest problems faced by the top management. The performance data to be considered for evaluation should be carefully selected. For the purpose of evaluation, the criteria selected should be in quantifiable or measurable terms • Create a rating instrument: The purpose of the Performance appraisal process is to judge the performance of the employees rather than the employee. The focus of the system should be on the development of the employees of the organization. • Lack of competence: Top management should choose the raters or the evaluators carefully. They should have the required expertise and the knowledge to decide the criteria accurately. They should have the experience and the necessary training to carry out the appraisal process objectively. • Errors in rating and evaluation: Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait influencing the evaluator’s rating for all other traits) etc. may creep in the appraisal process. Therefore the rater should exercise objectivity and fairness in evaluating and rating the performance of the employees • Resistance: The appraisal process may face resistance from the employees and the trade unions for the fear of negative ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the process of appraisal. The standards should be clearly communicated and every employee should be made aware that what exactly is expected from him/her. Purpose of Performance Appraisal Performance Appraisal is being practiced in 90% of the organizations worldwide. Self-appraisal and potential appraisal also form a part of the performance appraisal processes. Typically, Performance Appraisal is aimed at: • • • • • • To review the performance of the employees over a given period of time. To judge the gap between the actual and the desired performance. To help the management in exercising organizational control. To diagnose the training and development needs of the future. Provide information to assist in the HR decisions like promotions, transfers etc. Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.
• To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development. • To reduce the grievances of the employees. • Helps to strengthen the relationship and communication between superior – subordinates and management – employees. • The most significant reasons of using Performance appraisal are: • Making payroll and compensation decisions – 80% • Training and development needs – 71% • Identifying the gaps in desired and actual performance and its cause – 76% • Deciding future goals and course of action – 42% • Promotions, demotions and transfers – 49% • Other purposes – 6% (including job analysis and providing superior support, assistance and counseling). The Balanced Scorecard To evaluate the organizational and employee performance in Performance appraisal management processes, the conventional approach measures the performance only on a few parameters like the action processes, results achieved or the financial measures etc. The Balanced scorecard –an approach given by Kaplan and Nortonprovides a framework of various measures to ensure the complete and balanced view of the performance of the employees. Balanced scorecard focuses on the measures that drive performance. The balanced scorecard provides a list of measures that balance the organizations internal and process measures with results, achievements and financial measures. • • The two basic features of the balanced scorecard are: A balanced set of measures based on. the four perspectives of balanced scorecard Linking the measures to Employee Performance
The four Perspectives recommended by Kaplan and Norton for the managers to collect information are: • The financial measures – The financial measures include the results like profits, increase in the market share, return on investments and other economic measures as a result of the actions taken. • The customers’ measures - These measures help to get on customer satisfaction, the customer’s perspective about the organisation, customer loyalty, acquiring new customers. The data can be collected from the frequency and number of customer complaints, the time taken to deliver the products and services, improvement in quality etc. • The internal business measures – These are the measures related to the organization’s internal processes which help to achieve the customer satisfaction. It includes the infrastructure, the long term and short term goals and objectives, organisational processes and procedures, systems and the human resources. • The innovation and learning perspective. The innovation and learning measures cover the organisation’s ability to learn, innovate and improve. They can be judged by employee skills matrix, key competencies, value added and the revenue per employee. BENEFITS OF BALANCED SCORECARD The benefits of the balanced scorecard approach in measuring performance are: • Gives the complete picture of the employee as well as the organisational performance. • It guides users in determining the critical success factors and performance indicators. • Strategic review or analysis of the organisational capabilities and performance.
Focusing the whole organisation on the few key things needed to create breakthrough performance. Integrating and directing the performance and efforts from the lowest levels in the organisation to achieve excellent overall performance.
Techniques Of Performance Appraisal
1. 360 DEGREE PERFORMANCE APPRAISALS 360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job. 360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the “on-the-job” performance of the employee.
It provides a "360-degree review" of the employees’ performance and is considered to be one of the most credible performance appraisal methods. goals that are: . leadership qualities etc. the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed. Some of the important features and advantages of MBO are: • Clarity of goals – With MBO. • Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses. 2. It can be defined as a process whereby the employees and the superiors come together to identify common goals.e. superior’s ability to delegate the work. This technique is being effectively used across the globe for performance appraisals. and Reliance Industries etc. when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them. Subordinate’s appraisal 4.360 degree appraisal has four integral components: 1. the employees set their goals to be achieved. the correct feedback given by peers can help to find employees’ abilities to work in a team. understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals. they are more likely to fulfill their responsibilities. came the concept of SMART goals i. The essence of MBO is participative goal setting. Superior’s appraisal forms the traditional part of the 360 degree appraisal where the employees’ responsibilities and actual performance is rated by the superior. and judge his own performance. Superior’s appraisal 3. UNIQUE FEATURES AND ADVANTAGES OF MBO The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them. Peer appraisal. co-operation and sensitivity towards others. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Infosys. choosing course of actions and decision making. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. • • 360 degree appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others’ perceptions about the employees. Also known as internal customers. MANAGEMENT BY OBJECTIVES The concept of ‘Management by Objectives’ (MBO) was first given by Peter Drucker in 1954. his achievements. Ideally. Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance appraisal have high employee involvement and also have the strongest impact on behavior and performance. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities. Self appraisal 2. Some of the organizations following it are Wipro.
Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period. employees are given an assignment similar to the job they would be expected to perform if promoted. their roles and responsibilities. motivating and there is a linkage between organizational goals and performance targets of the employees. . Assignments. An assessment centre for Performance appraisal of an employee typically includes: • • • Social/Informal Events – An assessment centre has a group of participants and also a few assessors which gives a chance to the employees to socialize with a variety of people and also to share information and know more about the organisation. psychometric tests. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics. Information Sessions – information sessions are also a part of the assessment centres. tests and exercises. all these assignments are focused at the target job. management games etc. Goals and standards are set for the performance for the future with periodic reviews and feedback. The goals thus set are clear. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment. • Each session lasts from 1 to 5 days. Assessment centers simulate the employee’s on-the-job environment and facilitate the assessment of their on-the-job performance.• • • • Specific Measurable Achievable Realistic. These include various interviews. Generally. assignments being given to a group of employees to assess their competencies and on-the-job behaviour and potential to take higher responsibilities in the future. The focus is on future rather than on past. 3. An assessment centre typically involves the use of methods like social/informal events. The following are the common features of all assessment centers: • The final results is based on the pass/fail criteria • All the activities are carried out to fill the targeted job. They provide information to the employees about the organisation. the activities and the procedures etc. Assessment Centres Assessment centre refers to a method to objectively observe and assess the people in action by experts or HR professionals with the help of various assessment tools and instruments. and Time bound.assignments in assessment centers include various tests and exercises which are specially designed to assess the competencies and the potential of the employees.
both TQM and Performance appraisals differ in their fundamental nature. actions and practices at all levels in the organisation. characteristics and requirements making it impossible to combine them. whereas TQM may or may not yield visible results. According to them. TQM focuses on customer satisfaction whereas performance appraisal focuses on the improving the performance of the employees. They both facilitate the systematic management of all the processes. “Total Quality Management (TQM) may be defined as creating an organisational culture committed to the continuous improvement of skills. Elements of TQM are: • Meeting customers requirements. the suitable practice should be chosen carefully by the top management and the leaders of the organisation. Both TQM and Performance appraisal/ evaluation are focused on increasing the productivity of the organisation through continuous improvement. Some of the benefits of both the performance appraisal and TQM are: • Improvement in the performance of the employees • Brings quality consciousness • Better utilization of resources • Commitment to higher quality. Performance appraisal generally results in some rewards like increased pay etc. processes. encourage an employee to focus on his personal goals (like his promotion) rather than the organisational goals. career orientation etc. TQM and Performance Appraisal According to Sashkin and Kiser. assessment centres are also an effective way to determine the training and development needs of the targeted employees. Therefore. The major competencies that are judged in assessment centres are interpersonal skills.• The results are based on the assessment of the assessors with less emphasis on self-assessment • Immediate review or feedbacks are not provided to the employees. . intellectual capability. motivation. • Continuous improvement • Empowerment of employees.e. But there also exists a few other schools of thought which refute the compatibility of the TQM and performance appraisal. Some fundamental differences between the two are as follows: • • • • TQM is team – based whereas performance appraisals are designed for individuals i. Performance appraisal can sometimes.” TQM refers to the continuous improvement in the quality of work of all employees with the focus on satisfaction of the customers. it undermines teamwork. • An organization’s human resources can be a vital competitive advantage and assessment centre helps in getting the right people in right places. product and service quality and customer satisfaction. planning and organizing capabilities. teamwork.
It facilitates the process of change in the organizational culture. Industrial relations has become one of the most delicate and complex problems of modern industrial society. Various studies in the field of human resources have already proved that performance appraisal process can affect the individual performance (in a negative or positive way). Industrial progress is impossible without cooperation of labors and harmonious relationships. The field of industrial relations looks at the relationship between management and workers. and the institutions and associations through which such interactions are mediated. • The performance appraisal processes have the potential positive effects on recruitment • It increases organisational effectiveness i. • Some evidence of the beneficial effects of team rewards Therefore. what to do and how to do through a formal and structured approach. Therefore. performance appraisal is also an important link in the process of change in organization culture. By “relations” we mean “the relationships that exist within the industry between the employer and his workmen. particularly groups of workers represented by a union. INDUSTRIAL RELATIONS. thus having an impact on the collective performance. Industrial relations are basically the interactions between employers.e.Performance Appraisal Process Change Management The performance appraisal process provides an opportunity for introducing organizational change. Concept of Industrial Relations: The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. the mutual goal setting and the efforts towards the career development of the employees help the organization to become a learning organization. it is in the interest of all to create and maintain good relations between employees (labor) and employers (management). • Performance appraisal helps the clarity and understanding of the roles and responsibilities of the employees. The interactive sessions between the management and the employees. Conducting performance appraisals on a regular basis helps it to become an ongoing part of everyday practice and helps employees to take the responsibility of their work and boosts their professional development. • Performance appraisal: An opportunity for an organisational culture shift • Performance appraisal process focuses on the goal setting approach throughout the organisation. “Industry” refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”. Industrial relations are the relationships between employees and employers within the organizational settings.” The term industrial relations explains the relationship between employees and management which stem directly or indirectly from union-employer relationship. employees and the government. .
It also includes third parties and labor and tribunal courts. From this perspective. They have the right to hire and fire them. industrial relations pertains to the study and practice of collective bargaining. industrial relations also includes the processes through which these relationships are expressed (such as. the relationships employers and workers have with the organizations formed to promote their respective interests. Industrial Relation System An industrial relations system consists of the whole gamut of relationships between employees and employees and employers which are managed by the means of conflict and cooperation. and grievance and dispute settlement). and the management of conflict between employers. are more harmonious and cooperative than conflictual and creates an environment conducive to economic efficiency and the motivation. largely distinct field that deals with nonunion employment relationships and the personnel practices and policies of employers. Management can also affect workers’ interests by exercising their right to relocate. employee relations. Originally. and between them and the State on the other. at all levels. workers’ participation in decision-making. industrial relations include the relationship between an employee and an employer in the course of the running of an industry and may . the relationships between workers and their employer. the relationships between employers. trade unionism. The relationships which arise at and out of the workplace generally include the relationships between individual workers. Government: The central and state government influences and regulates industrial relations through laws. workers and trade unions. In its wider sense. and labor-management relations. agreements. Employees: Workers seek to improve the terms and conditions of their employment. and union-management (or labor) relations. Workers generally unite to form unions against the management and get support from these unions. They exchange views with management and voice their grievances. industrial relations covers all aspects of the employment relationship. and the relations between those organizations. close or merge the factory or to introduce technological changes. including human resource management. They also want to share decision making powers of management. Now its meaning has become more specific and restricted. while human resource management is a separate. when it arises. collective bargaining. • SCOPE: The concept of industrial relations has a very wide meaning and connotation. rules. In the narrow sense. Accordingly. industrial relations was broadly defined to include the relationships and interactions between employers and employees. Actors in the IR system: Three main parties are directly involved in industrial relations: • • Employers: Employers possess certain rights vis-à-vis labors.The term industrial relations has a broad as well as a narrow outlook. productivity and development of the employee and generates employee loyalty and mutual trust. it means that the employer. A sound industrial relations system is one in which relationships between management and employees (and their representatives) on the one hand. employee relationship confines itself to the relationship that emerges out of the day to day association of the management and the labor. awards of court ad the like.
The resources are fully utilized. • Mental Revolution – The main object of industrial relation is a complete mental revolution of workers and employees. Every worker feels that he is a co-owner of the gains of industry. The main issues involved here include the following: • Collective bargaining • Machinery for settlement of industrial disputes • Standing orders • Workers participation in management • Unfair labor practices Importance of Industrial Relations: The healthy industrial relations are key to the progress and success. marketing. It increases the place of workers in the society and their ego is satisfied. • High morale – Good industrial relations improve the morale of the employees. to other industries if the products are intermediaries or inputs. gherao and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial peace. i. resulting in the maximum possible production. to consumers and workers. In other words. • Reduction in Industrial Disputes – Good industrial relations reduce the industrial disputes. price fixation and disposition of profits among others. which may transgress to the areas of quality control. It helps promoting co-operation and increasing production. Smooth running of an industry is of vital importance for several other industries. to exporters if these are export goods.e. It is the business of leadership in the ranks of workers. Their significance may be discussed as under – • Uninterrupted production – The most important benefit of industrial relations is that this ensures continuity of production. The industrial peace lies ultimately in a transformed outlook on the part of both. This means.project it to spheres. to increase production. if these are goods of mass consumption. The employer in his turn must realize that the gains of industry are not for him along but they should be shared equally and generously with his workers. employees and Government to work . lockouts. It naturally affects production because mighty co-operative efforts alone can produce great results. continuous employment for all from manager to workers. complete unity of thought and action is the main achievement of industrial peace. Disputes are reflections of the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully cured by good industrial relations. Strikes. There is uninterrupted flow of income for all. goslow tactics. Employees work with great zeal with the feeling in mind that the interest of employer and employees is one and the same. The scope or industrial relations are quite vast.
lockouts and gheraos by providing reasonable wages. try to pressurize each other. To raise productivity to a higher level in an era of full employment by lessening the tendency to high turnover and frequency absenteeism. usually a trade union. When an industrial dispute occurs. said fringe benefits. Objectives of Industrial Relations The main objectives of industrial relations system are:• • • • • • • • To safeguard the interest of labor and management by securing the highest level of mutual understanding and good-will among all those sections in the industry which participate in the process of production.• out a new relationship in consonance with a spirit of true democracy. Wastages of man. which are an essential factor in the productivity of workers and the industrial progress of a country. workers must recognize employer’s authority. To improve the economic conditions of workers in the existing state of industrial managements and political government. so that ban individuals personality may grow its full stature for the benefit of the industry and of the country as well. that is the management and the workmen. . To establish and promote the growth of an industrial democracy based on labor partnership in the sharing of profits and of managerial decisions. picketing or gheraos. both the parties. It also results in increased efficiency of workers. If the twin objectives of rapid national development and increased social justice are to be achieved. Thus. New and new projects may be introduced for the welfare of the workers and to promote the morale of the people at work. Both should think themselves as partners of the industry and the role of workers in such a partnership should be recognized. improved living and working conditions. It will naturally have impact on production because they recognize the interest of each other. over pay and other working conditions and can result in industrial actions. To eliminate or minimize the number of strikes. It will help increase production. Industrial Disputes An industrial dispute may be defined as a conflict or difference of opinion between management and workers on the terms of employment. To avoid industrial conflict or strife and develop harmonious relations. The management may resort to lockouts while the workers may resort to strikes. Reduced Wastage – Good industrial relations are maintained on the basis of cooperation and recognition of each other. Socialization of industries by making the state itself a major employer Vesting of a proprietary interest of the workers in the industries in which they. An economy organized for planned production and distribution. there must be harmonious relationship between management and labor. It is a disagreement between an employer and employees' representative. On the other hand. aiming at the realization of social justice and welfare of the massage can function effectively only in an atmosphere of industrial peace. material and machines are reduced to the minimum and thus national interest is protected. it is evident that good industrial relations is the basis of higher production with minimum cost and higher profits.
From the point of view of the employer. Causes of strikes: Strikes can occur because of the following reasons: . It generally involves quitting of work by a group of workers for the purpose of bringing the pressure on their employer so that their demands get accepted. This definition throws light on a few aspects of a strike. alienation of the labor force. In a strike. For the employee. Labors withhold their services in order to pressurize their employment or government to meet their demands. This definition includes all the aspects of a dispute. The regular income by way of wages and allowance ceases. Apart from the immediate economic effects. but also emphasizes the difference of opinion between worker and worker.1947. They cause wastage of national resources. Firstly. an industrial dispute entails loss of income. leading to a fall in profits. and great hardship may be caused to the worker and his family. or the threat of reprisal action by employers also exists. Prolonged stoppages of work have also an adverse effect on the national productivity. it also includes the refusal of a number of employees to continue work under their employer. national income. personal injury and physical intimidation or inconvenience also arises. or between workmen and which is connected with the employment or non-employment or the terms of employment or with the conditions of labor. According to Industrial Disputes Act 1947. a strike is “a cessation of work by a body of persons employed in an industry acting in combination. This results in increase in the average cost of production since fixed expenses continue to be incurred. and other non-economic. or a refusal under a common understanding of any number of such persons to continue to work or to accept employment”. Secondly. It. It also leads to a fall in sales and the rate of turnover. When workers collectively cease to work in a particular industry. Hatred may be generated resulting in political unrest and disrupting amicable social/industrial relations or community attitudes. The disputes generally arise on account of poor wage structure or poor working conditions. they are said to be on strike. Strikes sometimes occur so that employers listen more carefully to the workers and address their problems. and the psychological and physical consequences of forced idleness. psychological and social consequences may also arise. loss of prestige and credit. not only includes the disagreement between employees and employers. or a concerted refusal of any number of persons who are or have been so employed to continue to work or to accept employment. This disagreement or difference could be on any matter concerning the workers individually or collectively. The threat of loss of employment in case of failure to settle the dispute advantageously. Strikes A strike is a very powerful weapon used by trade unions and other labor associations to get their demands accepted.As per Section 2(k) of Industrial Disputes Act. It must be connected with employment or non-employment or with the conditions of labor. a strike is a referred to as stoppage of work by a group of workers employed in a particular industry. or between employers and workmen. Loss due to destruction of property. an industrial dispute resulting in stoppage of work means a stoppage of production. a group of workers agree to stop working to protest against something they think is unfair where they work. The employer may also be liable to compensate his customers with whom he may have contracted for regular supply. Demands made by strikers can range from asking for higher wages or better benefits to seeking changes in the workplace environment. Employees also suffer from personal injury if they indulge into strikes n picketing. of any person. an industrial dispute in defined as any dispute or difference between employers and employers.
They keep control over production facilities. workers ask for increase in wages. Such a strike is also known as 'pen down' or 'tool down' strike.• • • • • • • • • • Dissatisfaction with company policy Salary and incentive problems Increment not up to the mark Wrongful discharge or dismissal of workmen Withdrawal of any concession or privilege Hours of work and rest intervals Leaves with wages and holidays Bonus. They do not stop work. house rent allowance. Sympathetic Strike: When workers of one unit or industry go on strike in sympathy with workers of another unit or industry who are already on strike. In June 1998. They also refuse to leave. rather than on any one employer. profit sharing. However. In 2004. It may be a strike of all the workers in a particular region of industry to force demands common to all the workers. Sit down Strike: In this case. It may also be an extension of the sympathetic strike to express generalized protest by the workers. Workers show up to their place of employment. They adopt go-slow tactics to put pressure on the employers. These strikes are usually intended to create political pressure on the ruling government. allowances like traveling allowance. all or a significant number of union members call in sick on the same day. The workers of sugar industry may go on strike in sympathy with their fellow workers of the textile industry who may already be on strike. General Strike: It means a strike by members of all or most of the unions in a region or an industry. Provident fund and gratuity Retrenchment of workmen and closure of establishment Dispute connected with minimum wages TYPES OF STRIKE • • • • • • • Economic Strike: Under this type of strike. because they just use their sick leave that was allotted to them on the same day. but they refuse to work. all the Municipal Corporation employees in Punjab observed a pen down strike to protest against the non-acceptance of their demands by the state government Slow Down Strike: Employees remain on their jobs under this type of strike. Wild cat strikes: These strikes are conducted by workers or employees without the authority and consent of unions. They don’t break any rules. the sudden loss of so many employees all on one day can show the employer just what it would be like if they really went on strike. They were protesting against some remarks allegedly made against them by an Assistant Commissioner Lockouts . workers do not absent themselves from their place of work when they are on strike. which makes it very difficult for employer to defy the union and take the workers' places. But do not work. The members of other unions involve themselves in a strike to support or express their sympathy with the members of unions who are on strike in other undertakings. In these kinds of strikes. but restrict the rate of output in an organized manner. dearness allowance. labors stop their work to enforce their economic demands such as wages and bonus. bonus and other facilities such as increase in privilege leave and casual leave. Sick-out (or sick-in): In this strike. it is called a sympathetic strike. a significant number of advocated went on wildcat strike at the City Civil Court premises in Bangalore.
The workers may gherao the members of the management by blocking their exits and forcing them to stay inside their cabins.A lockout is a work stoppage in which an employer prevents employees from working. The agreement with such a union will hardly be honored by a large section of workforce. Therefore. if a group of the workers strike so that the work of the rest of the workers becomes impossible or less productive. there must be strong and stable unions in every enterprise to represent the majority of workers and negotiate with the management about the terms and conditions of service. Management should adopt a progressive outlook and • . a lockout is employers’ weapon while a strike is raised on part of employees. Occupation of factories has been the traditional method of response to lock-outs by the workers' movement. lock-out means the temporary closing of a place of employment or the suspension of work or the refusal by an employer to continue to employ any number of persons employed by him. The purpose of picketing is: • to stop or persuade workers not to go to work • to tell the public about the strike • to persuade workers to take their union's side GHERAO Gherao in Hindi means to surround. the purpose of a lockout is to put pressure on a union by reducing the number of members who are able to work. A lockout may happen for several reasons. Mutual Trust: Both management and labor should help in the development of an atmosphere of mutual cooperation. This is different from a strike. it is perfectly legal. in which employees refuse to work. If picketing does not involve any violence. Thus. When only part of a trade union votes to strike. It is basically a method of drawing public attention towards the fact that there is a dispute between the management and employees. The main object of gherao is to inflict physical and mental torture to the person being gheraoed and hence this weapon disturbs the industrial peace to a great extent. It is declared by employers to put pressure on their workers. Pickets are workers who are on strike that stand at the entrance to their workplace. Acc to Industrial Disputes Act 1947. Another case in which an employer may impose a lockout is to avoid slowdowns or intermittent workstoppages. the employer may declare a lockout until the workers end the strike. It denotes a collective action initiated by a group of workers under which members of the management are prohibited from leaving the industrial establishment premises by workers who block the exit gates by forming human barricades. Measures For Improving Industrial Relations The following measures should be taken to achieve good industrial relations: • Strong and Stable Union: A strong and stable union in each industrial enterprise is essential for good industrial relations. such a step is known as picketing. For example. PICKETING When workers are dissuaded from work by stationing certain men at the factory gates. The employers can easily ignore a weak union on the plea that it hardly represents the workers. confidence and respect.
• • • Sound Personnel Policies: The following points should be noted regarding the personnel policies. The management should sincerely implement the settlements reached with the trade unions.” The management should be willing to co-operate rather than blackmail the workers. An environment of uncertainty is created. cannot go on a strike without giving a notice of strike within the six weeks before striking. It should make law for the compulsory recognition of a representative union in each industrial unit. joint consultation and other methods. there must be a great emphasis on mutual accommodation rather than conflict or uncompromising attitude. • Government’s Role: The Government should play an active role for promoting industrial peace. Progressive Outlook: There should be progressive outlook of the management of each industrial enterprise. efforts should be made at both ends to ensure the follow up of the agreements. The management must recognize the rights of workers to organize unions to protect their economic and social interests. The same rule applies to the employers. the employees. This will improve communication between managers and workers. labor unions should persuade their members to work for the common objectives of the organization. Similarly. Clearly stated so that there is no confusion in the mind of anybody. They can not go on strike either within fourteen days of providing the strike notice or before the expiry of the date of strike specified in any such notice. it may foster union militancy as the union reacts by engaging in pressure tactics. The policies should be: Formulated in consultation with the workers and their representatives if they are to be implemented effectively. • Workers’ Participation in Management: The participation of workers in the management of the industrial unit should be encouraged by making effective use of works committees. This will restore industrial harmony. It should intervene to settle disputes if the management and the workers are unable to settle their disputes. Both the management and the unions should have faith in collective bargaining and other peaceful methods of settling disputes. Employees. increase productivity and lead to greater effectiveness. The approach must be of mutual “give and take rather than “take or leave. If the agreements are not implemented then both the union and management stop trusting each other. In any organization. the consumers and the nation. Prohibition of Strikes and Lock-Outs Employees are prohibited from striking according to the section 22 of Industrial Disputes Act 1947. To avoid this. The agreements between the management and the unions should be enforced both in letter and spirit. One must clearly understand that conflicting attitude does not lead to amicable labor relations. Sincere Implementation of Agreements. Mutual Accommodation. The employers must recognize the right of collective bargaining of the trade unions. who are working in a public utility service. It should be conscious of its obligations and responsibilities to the owners of the business.should recognize the rights of workers. Employers who are carrying on a public utility service can not lockout any • . Implementation of the policies should be uniform throughout the organization to ensure fair treatment to each worker.
Moreover. Moreover. Then this definition. or for imposing restrictive condition on the conduct of any trade or business. working hours. whether temporary or permanent. that is. no person should provide any sort of financial aid to any illegal strike or lock-out. This means it applies to temporary workers (or contractual employees) as well. etc. or with fine which may extend to one thousand rupees. formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen. They are the relationships between the: • workmen and workmen. using the collective power of its members. talks about three relationships. and • Employers and employers. If a strike or lockout has already taken place and is being referred to a Board. a union is there to represent the interests of its members. Trade unions are voluntary associations formed for the pursuit of . Penalty for Illegal Strikes and Lock-outs A workman who is involved in an illegal strike can be penalized with imprisonment for a term extendable to a month or with a fine or fifty rupees or both. In general. or with both. whose aim is to negotiate with employers over pay. if the notice period is not served or if the strike is held within the fourteen days of issuing the notice of strike. the notice of strike or lockout is to be given in a prescribed manner showing the number of persons involved in the strike/lockout. primarily. According to Section 25 of Industrial Disputes Act 1947. Any person who knowingly provides such a help in support of any illegal strike or lock-out is punishable with imprisonment for a term which may extend to six months. job security. The employer is supposed to report the number of notices of strikes received by him to the appropriate Government or the authority prescribed by the government within the five days of receiving such notices. • workmen and employers. Introduction Of Trade-Unions A trade union is an organization of employees formed on a continuous basis for the purpose of securing diverse range of benefits. This definition is very exhaustive as it includes associations of both the workers and employers and the federations of their associations. a trade union can be seen as a group of employees in a particular sector. The notice of strike or lockout is not necessary when there is already a strike or lockout going on in the company.of their employees without giving them a prior notice within six weeks before the lock out or within the fourteen days of giving such a notice. the continuance of such a strike or lock out is not illegal provided it is in compliance with the provisions of act. an employer who initiates and continues a lockout is punishable with imprisonment extendable to a month or with a fine of one thousand rupees or both. However. Illegal Strikes and Lock-Outs A strike or a lock-out is illegal if it is declared in noncompliance with the section 22 (as defined above) of Industrial Disputes Act 1947. Thus. the relationships that have been talked about are both temporary and permanent. or between employers and employers. The Trade Union Act 1926 defines a trade union as a combination. and includes any federation of two or more trade unions. and may even engage in political activity where legislation affects their members. It is a continuous association of wage earners for the purpose of maintaining and improving the conditions of their working lives. In similar way. a notice should be issued on the day on which the lockout is declared just to intimate the appropriate authorities about the lockout. Here. a lockout declared in consequence of an illegal strike or a strike declared in consequence of an illegal lock-out shall not be deemed to be illegal.
It is a permanent body and not a casual or temporary one. working hours. Trade unions negotiate with the employers to find out a solution to these differences. All India Teachers Association) • • • • It is formed on a continuous basis. unions are said to be recognized for collective bargaining purposes. • . holidays and changes to working practices are the sorts of issues that are negotiated. The evaluation criteria for such decisions may not be fair. the trade unions are also working towards raising the status of labors as a part of industry. In many workplaces there is a formal agreement between the union and the company which states that the union has the right to negotiate with the employer. In these organizations. the character of trade unions has also been changing. the intervention of unions in such decision making is a way through which workers can have their say in the decision making to safeguard their interests. the issues which affect people working in an organization. but also by the management’s personal policies which include selection of employees for lay offs. Voice in decisions affecting workers: The economic security of employees is determined not only by the level of wages and duration of their employment. Trade unions are formed to achieve the following objectives: • Representation: Trade unions represent individual workers when they have a problem at work. It achieves its objectives through collective action and group effort. There may be a difference of opinion between management and union members. • Negotiation: Negotiation is where union representatives. Features of trade unions: • It is an association either of employers or employees or of independent workers. The dominant interest with which a union is concerned is. he can ask the union representative to help sort out the difficulty with the manager or employer. Employer’s Federation of India. promotion and transfer. So.protecting the common interests of its members and also promote welfare. Their primary function is to protect the interests of workers against discrimination and unfair labor practices. Trade unions have shown remarkable progress since their inception. Objectives Of Trade Unions Trade unions are formed to protect and promote the interests of their members. however.. Indian paper mill association. Unions also offer their members legal representation. retrenchment. These policies directly affect workers. They may consist of :Employers’ association (eg. political and social interests of their members. Normally this is to help people get financial compensation for work-related injuries or to assist people who have to take their employer to court. If an employee feels he is being unfairly treated. Negotiations and collective bargaining are the tools for accomplishing objectives. They persist throughout the year. etc.) General labor unions Friendly societies Unions of intellectual labor (eg. It is formed to protect and promote all kinds of interests –economic. political and social-of its members. They protect the economic. Pay. discuss with management. In spite of only focusing on the economic benefits of workers. economic. moreover.
like housing. They provide the advice and support to ensure that the differences of opinion do not turn into major conflicts. Unions help them in such adjustment. Seeking a healthy and safe working environment is also prominent feature of union activity. Workers have to adjust themselves to the new working conditions. 4. Some of the older unions offer financial help to their members when they are sick or unemployed. 2. the new rules and policies. Trade unions are a part of society and as such. The central function of a trade union is to represent people at work. unsatisfied and frustrated. Workers coming from different backgrounds may become disorganized.One of the earliest functions of trade unions was to look after members who hit hard times. Some important social responsibilities of trade unions include: • promoting and maintaining national integration by reducing the number of industrial disputes • incorporating a sense of corporate social responsibility in workers • achieving industrial peace RECRUITMENT According to Edwin B. Recruitment is the activity that links the employers and the job seekers. Decisions taken through the process of collective bargaining and negotiations between employer and unions are more influential. trade unions have increased the range of services they offer their members. Flippo. 3. Some unions also help members who have left school with little education by offering courses on basic skills and courses leading to professional qualifications. Financial discounts . organizing courses for their members on a wide range of matters. some unions give help with personal matters. A few definitions of recruitment are: . wills and debt. have to take into consideration the national integration as well.People can get discounts on mortgages. Trade unions play an important role and are helpful in effective communication between the workers and the management. • by inculcating discipline among the workforce • by enabling settlement of industrial disputes in a rational manner by helping social adjustments.• 1. Legal assistance . Importance of Trade Unions The existence of a strong and recognized trade union is a pre-requisite to industrial peace. Trade unions help in accelerated pace of economic development in many ways as follows: • by helping in the recruitment and selection of workers. Welfare benefits .Most unions run training courses for their members on employment rights. These include: Education and training . They also play an important educational role. insurance and loans from unions. health and safety and other issues. Member services During the last few years.As well as offering legal advice on employment issues. But they also have a wider role in protecting their interests. “Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation”.
deaths. The process begins when new recruits are sought and ends when their applications are submitted. Begin identifying and preparing potential job applicants who will be appropriate candidates. Purpose & Importance Of Recruitment • • • • • • • • • • Attract and encourage more and more candidates to apply in the organisation. illness give rise to unexpected needs. Meet the organizations legal and social obligations regarding the composition of its workforce. • . Create a talent pool of candidates to enable the selection of best candidates for the organisation. which an organization can predict by studying trends in internal and external environment. Determine present and future requirements of the organization in conjunction with its personnel planning and job analysis activities. Increase organization and individual effectiveness of various recruiting techniques and sources for all types of job applicants Recruitment Process The recruitment and selection is the major function of the human resource department and recruitment process is the first step towards creating the competitive strength and the strategic advantage for the organisations.• • A process of finding and attracting capable applicants for employment. The result is a pool of applications from which new employees are selected. These contain: • Posts to be filled • Number of persons • Duties to be performed • Qualifications required Preparing the job description and person specification. • ANTICIPATED Anticipated needs are those movements in personnel. Recruitment is the process which links the employers with the employees. Help increase the success rate of selection process by decreasing number of visibly under qualified or overqualified job applicants. Recruitment process involves a systematic procedure from sourcing the candidates to arranging and conducting the interviews and requires many resources and time. Increase the pool of job candidates at minimum cost. A general recruitment process is as follows: • Identifying the vacancy: The recruitment process begins with the human resource department receiving requisitions for recruitment from any department of the company. • UNEXPECTED Resignation. It is the process to discover sources of manpower to meet the requirement of staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of an efficient working force. accidents. Help reduce the probability that job applicants once recruited and selected will leave the organization only after a short period of time. RECRUITMENT NEEDS ARE OF THREE TYPES • PLANNED the needs arising from changes in organization and retirement policy.
promotions) to fill a position are known as the internal sources of recruitment. • The basic purpose of recruitments is to create a talent pool of candidates to enable the selection of best candidates for the organisation. The sources within the organisation itself (like transfer of employees from one department to other. Short-listing and identifying the prospective employee with required characteristics.• • • • Locating and developing the sources of required number and type of employees (Advertising etc). Recruitment candidates from all the other sources (like outsourcing agencies etc. Conducting the interview and decision making Sources Of Recruitment Recruitment Home » Sources Of Recruitment Every organisation has the option of choosing the candidates for its recruitment processes from two kinds of sources: internal and external sources.) are known as the external sources of recruitment. SOURCES OF RECRUITMENT Recruitment Vs Selection Both recruitment and selection are the two phases of the employment process. by attracting more and more employees to apply in the . The differences between the two are: • Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation WHEREAS selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts. Arranging the interviews with the selected candidates.
The internal forces or factors are the factors that can be controlled by the organisation. organizations try to employ that source of recruitment which will bear a lower cost of recruitment to the organization for each candidate. Recruitment is concerned with tapping the sources of human resources WHEREAS selection is concerned with selecting the most suitable candidate through various interviews and tests. The internal and external forces affecting recruitment function of an organisation are: Internal Factors Affecting Recruitment The internal forces i. RECRUITMENT POLICY The recruitment policy of an organisation specifies the objectives of recruitment and provides a framework for implementation of recruitment programme.e. FACTORS AFFECTING RECRUITMENT POLICY • Organizational objectives • Personnel policies of the organization and its competitors. 2. the factors which can be controlled by the organisation are: 1. which will handle its operations.SIZE OF THE FIRM The size of the firm is an important factor in recruitment process. It also helps in determining the number of employees to be recruited and what qualification they must possess.GROWTH AND EXPANSION . 4.• • • organisation WHEREAS the basic purpose of selection process is to choose the right candidate to fill the various positions in the organisation. There is no contract of recruitment established in recruitment WHEREAS selection results in a contract of service between the employer and the selected employee. • Recruitment costs and financial implications. It may involve organizational system to be developed for implementing recruitment programmes and procedures by filling up vacancies with best qualified people. 5. Factors Affecting Recruitment The recruitment function of the organisations is affected and governed by a mix of various internal and external forces. If the organization is planning to increase its operations and expand its business. encouraging more and more employees to apply WHEREAS selection is a negative process as it involves rejection of the unsuitable candidates. And the external factors are those factors which cannot be controlled by the organisation.e. it will think of hiring more personnel. • Preferred sources of recruitment. therefore. • Government policies on reservations. • Need of the organization.COST Recruitment incur cost to the employer. Recruitment is a positive process i.HUMAN RESOURCE PLANNING Effective human resource planning helps in determining the gaps present in the existing manpower of the organization. 3.
LEGAL ENVIRONMENT Various government regulations prohibiting discrimination in hiring and employment have direct impact on recruitment practices. If the candidate can’t meet criteria stipulated by the union but union regulations can restrict recruitment sources. External Factors Affecting Recruitment The external forces are the forces which cannot be controlled by the organisation. COMPETITORS The recruitment policies of the competitors also effect the recruitment function of the organisations. Also. 5. physically handicapped etc. Recent Trends in Recruitment The following trends are being seen in recruitment: OUTSOURCING In India. scheduled tribes. the HR processes are being outsourced from more than a decade now. then the company will have to depend upon internal sources by providing them special training and development programs. For example finance was taken up by fresher MBA’s when many finance companies were coming up. trade unions play important role in recruitment. Government of India has introduced legislation for reservation in employment for scheduled castes.POLITICAL-SOCIAL.UNEMPLOYMENT RATE One of the factors that influence the availability of applicants is the growth of the economy (whether economy is growing or not and its rate). 4. The major external forces are: 1. A company may draw required personnel from outsourcing firms. An organization with positive image and goodwill as an employer finds it easier to attract and retain employees than an organization with negative image. For example. If there is surplus of manpower at the time of recruitment. LABOUR MARKET Employment conditions in the community where the organization is located will influence the recruiting efforts of the organization. SUPPLY AND DEMAND The availability of manpower both within and outside the organization is an important determinant in the recruitment process. many a times the organisations have to change their recruitment policies according to the policies being followed by the competitors. 6. Outsourcing firms develop their human resource pool by . even informal attempts at the time of recruiting like notice boards display of the requisition or announcement in the meeting etc will attract more than enough applicants 3. Image of a company is based on what organization does and affected by industry.IMAGE / GOODWILL Image of the employer can work as a potential constraint for recruitment. When the company is not creating new jobs. The outsourcing firms help the organisation by the initial screening of the candidates according to the needs of the organisation and creating a suitable pool of talent for the final selection by the organisation.Organization will employ or think of employing more personnel if it is expanding its operations. To face the competition. there is often oversupply of qualified labour which in turn leads to unemployment. 2. This restricts management freedom to select those individuals who it believes would be the best performers. If the company has a demand for more professionals and there is limited supply in the market for the professionals demanded by the company.
Poaching means employing a competent and experienced person already working with another reputed company in the same or different industry. But it is seen as an unethical practice and not openly talked about. he may switch over to some other more suitable job. Advantages of recruitment are: • Low cost. Employees stay and leave organizations for some reasons. Corporate is facing a lot of problems in employee retention these days. which can be drawn by prospective employees depending upon their requirements. Alternatively job seekers place their CV’s in worldwide web.e. If a person is not satisfied by the job he’s doing. In today’s environment it becomes very important for organizations to retain their employees. . • No intermediaries • Reduction in time for recruitment. CV through e mail using the Internet. weeding the unsuitable resumes/candidates. They advertise job vacancies through worldwide web. The reason may be personal or professional. RETENTION Employee Retention involves taking measures to encourage employees to remain in the organization for the maximum period of time. better than the current employer of the candidate. as it weakens the competitive strength of the firm. the outsourcing firms or the intermediaries charge the organisations for their services.employing people for them and make available personnel to various companies as per their needs. Advantages of outsourcing are: • Company need not plan for human resources much in advance. • Value creation.recruitment is the use of technology to assist the recruitment process. operational flexibility and competitive advantage • turning the management's focus to strategic level processes of HRM • Company is free from salary negotiations. E-RECRUITMENT Many big organizations use Internet as a source of recruitment. There is no dearth of opportunities for a talented person. The job seekers send their applications or curriculum vitae i. There are many organizations which are looking for such employees. • Company can save a lot of its resources and time POACHING/RAIDING “Buying talent” (rather than developing it) is the latest mantra being followed by the organisations today. These reasons should be understood by the employer and should be taken care of. A company can attract talent from another firm by offering attractive pay packages and other terms and conditions. But retention is even more important than hiring. It has become a challenge for human resource managers to face and tackle poaching. In turn. the organisation might be a competitor in the industry. Hiring knowledgeable people for the job is essential for an employer. The organizations are becoming aware of these reasons and adopting many strategies for employee retention. The top organizations are on the top because they value their employees and they know how to keep them glued to the organization. Indian software and the retail sector are the sectors facing the most severe brunt of poaching today. E.
If they don’t.What is Employee Retention? Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project. Miscellaneous compensation: It may include employee assistance programs (like psychological counseling. . It also shows the employee that the organization cares about the employee and its family. A good employer should know how to attract and retain its employees. So an attractive compensation package plays a critical role in retaining the employees. they would be left with no good employees. Employees today are different. 1. use of a company cars. While setting up the packages. benefits. It is the responsibility of the employer to retain their best employees. And this increase should be based on the employee’s performance and his contribution to the organization. etc. • • • • • • Bonus: Bonuses are usually given to the employees at the end of the year or on a festival. Health insurance: Health insurance is a great benefit to the employees. These incentives help retain employees in the organization's startup stage. It is also the most common factor of comparison among employees. Compensation includes salary and wages. They are not the ones who don’t have good opportunities in hand. they switch over to the next job. stock options. legal assistance etc). bonuses. bonuses. The employees always have high expectations regarding their compensation packages. prerequisites. etc. energy. It saves employees money as well as gives them a peace of mind that they have somebody to take care of them in bad times. As soon as they feel dissatisfied with the current employer or the job. Compensation packages vary from industry to industry. etc. Economic benefits: It includes paid holidays. discounts on company products. Time to time increase in the salaries and wages of employees should be done. Long-term incentives: Long term incentives include stock options or stock grants. the following components should be kept in mind: • Salary and monthly wage: It is the biggest component of the compensation package. After retirement: It includes payments that an Employee gets after he retires like EPF (Employee Provident Fund) etc. Compensation Compensation constitutes the largest part of the employee retention process. Employee retention is beneficial for the organization as well as the employee. Retention involves five major things: • Compensation • Environment • Growth • Relationship • Support Employee retention would require a lot of efforts. and resources but the results are worth it. leave travel concession. vacations. It includes Basic wage House rent allowance Dearness allowance City compensatory allowance Salary and wages represent the level of skill and experience an individual has.
employee assistance programs. The feedback from supervisor helps the employee to feel more responsible. Support Lack of support from management can sometimes serve as a reason for employee retention. et al. Management can support employees by providing them recognition and appreciation. The important factors in employee growth that an employee looks for himself are: • Work profile: The work profile on which the employee is working should be in sync with his capabilities. If an employee can not foresee his path of career development in his current organization. Growth and Career Growth and development are the integral part of every individual’s career. individual meetings. Many employers fear that if the employees are well rained. These trainings can be given to improve many skills like: Communications skills Technical skills In-house processes and procedures improvement related skills C or customer satisfaction related skills Special project related skills Need for such trainings can be recognized from individual performance reviews. Organization should not limit the resources on which organization’s success depends. • Personal growth and dreams: Employees responsibilities in the organization should help him achieve his personal goals also. Supervisor should support his subordinates in a way so that each one of them is a success. counseling services. Top management can also support its employees in their personal crisis by providing personal loans during emergencies. Management should try to focus on its employees and support them not only in their difficult times at work but also through the times of personal crisis. childcare services. he’ll not be able to contribute in organization growth. The profile should not be too low or too high. Organizations can not keep aside the individual goals of employees and foster organizations goals. • Training and development: Employees should be trained and given chance to improve and enhance their skills. Employers can also provide valuable feedback to employees and make them feel valued to the organization. Employers can also support their employees by creating an environment of trust and inculcating the organizational values into employees. they’ll leave the organization for better jobs. confident and empowered. If he’s not satisfied with his growth. Employees’ priority is to work for themselves and later on comes the organization. there are chances that he’ll leave the organization as soon as he gets an opportunity.2. Thus employers can support their employees in a number of ways as follows: • By providing feedback • By giving recognition and rewards • By counseling them • By providing emotional support . employee satisfaction surveys and by being in constant touch with the employees 3.
Deliver what is promised. If an organization manages people well. There are times when an employee starts feeling bitterness towards the management or peers. Create opportunities for their career growth by providing mentorship programs. • Relationship with the immediate manager: A manger plays the role of a mentor and a coach. • Respect for the individual: Respect for the individual is the must in the organization. • Relationship with colleagues: Promote team work. He designs ands plans work for each employee. An employee based culture may include decision making authority. not only among teams but in different departments as well. • • 5. People want to work for an organization which provides • Appreciation for the work done • Ample opportunities to grow • A friendly and cooperative environment • A feeling that the organization is second home to the employee Organization environment includes : • Culture . • Promote an employee based culture: The employee should know that the organization is there to support him at the time of need. This will induce competition as well as improve the relationships among colleagues. Otherwise he’ll feel useless and will be dissatisfied. availability of resources. Organizations should focus on managing the work environment to make better use of the available human assets. To enhance good professional relationships at work. Try to make the current employees stay instead of recruiting new ones. employee retention will take care of itself. Show them that the organization cares and he’ll show the same for the organization. The management is sometimes not able to provide an employee a supportive work culture and environment in terms of personal or professional relationships. This bitterness could be due to many reasons.Organization Environment It is not about managing retention. etc. educational courses. It leads to less satisfaction and eventually attrition. Individual development: Taking proper care of employees includes acknowledgement to the employee’s dreams and personal goals. • Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for him to perform. This decreases employee’s interest and he becomes de-motivated. Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the employees too.4. A supportive work culture helps grow employee professionally and boosts employee satisfaction. Employees should know what the organization expects from them and what their expectation from the organization is. So an organization should hire managers who can make and maintain good relations with their subordinates. It is about managing people. etc. It is his duty to involve the employee in the processes of the organization. certifications.Importance of Relationship in Employee Retention Program Sometimes the relationship with the management and the peers becomes the reason for an employee to leave the organization. the management should keep the following points in mind. open door policy.
Often much time and money has been spent on the employee in expectation of a future return. • • . Dependent care • Work environment: It includes efficient managers.Vacations 5. Co-workers are often required to pick up the slack. Relationships are developed that encourage continued sponsorship of the business. Wellness 4. Work life balance includes: 1. current projects and past history (sometimes to competitors). Flexible hours 2. The unspoken negativity often intensifies for the remaining staff. When the employee leaves. etc. Lack or absence of such environment pushes employees to look for new opportunities.• • • • • • • Values Company reputation Quality of people in the organization Employee development and career growth Risk taking Leading technologies Trust Types of environment the employee needs in an organization • Learning environment: It includes continuous learning and improvement of the individual. • Support environment: Organization can provide support in the form of work-life balance. Alternate work schedules 3. industry experts often quote 25% of the average employee salary as a conservative estimate. and recognition. involvement in decision-making. • Loss of Company Knowledge: When an employee leaves. While it is difficult to fully calculate the cost of turnover (including hiring costs. challenging work. certifications and provision for higher studies. he takes with him valuable knowledge about the company. supportive co-workers. why is retention so important? Is it just to reduce the turnover costs? Well. clarity of work and responsibilities. Importance Of Employee Retention Now that so much is being done by organizations to retain its employees. training costs and productivity loss). the relationships that employee built for the company are severed. Turnover leads to more turnovers: When an employee terminates. When an employee leaves. the answer is a definite no. which could lead to potential customer loss. the investment is not realized. It’s not only the cost incurred by a company that emphasizes the need of retaining employees but also the need to retain talented employees from getting poached. Interruption of Customer Service: Customers and clients do business with a company in part because of the people. Telecommuting 6. customers. the effect is felt throughout the organization. The environment should be such that the employee feels connected to the organization in every respect. The process of employee retention will benefit an organization in the following ways: • The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of money to a company's expenses.
compensation. And even after this you cannot assure us of the same efficiency from the new employee. 4. Empower the employees: Give the employees the authority to get things done. growth and learning etc. Lack of trust and support in coworkers. Employee Retention Strategies The basic practices which should be kept in mind in the employee retention strategies are: 1. . If he is given a job which mismatches his personality. trust them and respect them. Hire the right people in the first place. What Makes Employee Leave? Employees do not leave an organization without any significant reason.• • Goodwill of the company: The goodwill of a company is maintained when the attrition rates are low. • • • • • • No growth opportunities: No or less learning and growth opportunities in the current job will make candidate’s job and career stagnant. Lack of appreciation: If the work is not appreciated by the supervisor. the employee feels demotivated and loses interest in job. seniors and management: Trust is the most important factor that is required for an individual to stay in the job. Stress from overwork and work life imbalance: Job stress can lead to work life imbalance which ultimately many times lead to employee leaving the organization. can lead an employee to leave the organization. • Job and person mismatch: A candidate may be fit to do a certain type of job which matches his personality. There are certain circumstances that lead to their leaving the organization. seniors and management can make office environment unfriendly and difficult to work in. Regaining efficiency: If an employee resigns. Higher retention rates motivate potential employees to join the organization. then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. 2. then he won’t be able to perform it well and will try to find out reasons to leave the job. New job offer: An attractive job offer which an employee thinks is good for him with respect to job responsibility. Make employees realize that they are the most valuable asset of the organization. Unexpected job responsibilities lead to job dissatisfaction. Non-supportive coworkers. Compensation: Better compensation packages being offered by other companies may attract employees towards themselves. The most common reasons can be: • Job is not what the employee expected to be: Sometimes the job responsibilities don’t come out to be same as expected by the candidates. 3. Have faith in them.
Create an environment where the employees want to work and have fun. 8.5. Provide them information and knowledge. Recognize and appreciate their achievements. medium and high level. 6. 7. Keep providing them feedback on their performance. These practices can be categorized in 3 levels: Low. . 9. Keep their morale high.
Calculating attrition rate: . In some cases. Moreover.500 (average for the year). If the number of employees who left is 300. attrition of poor performers may also not be treated as attrition. No common formula can be used by all the organizations. It also has to take into account the root of the problem by going back to the hiring stage. then the attrition figure could be 15 percent or 20 percent depending on what base you take. then they may take their base as 2. This is because of certain factors as: The employee base changes each month.000 employees in April 2004 and 2.000 or as 1.Attrition Rate The attrition rate has always been a sensitive issue for all organizations. Calculating employee turnover rate is not that simple as it seems to be. calculating attrition rate is not only about devising a mathematical formula. A formula had to be devised keeping in view the nature of the business and different job functions. Attrition rate: There is no standard formula to calculate the attrition rate of a company. So if a company has 1. Many firms may not include attrition of freshers who leave because of higher studies or within three months of joining.000 in March 2005.
Administration cost They include: Set up communication systems Add employees to the HR system Set up the new hire’s workspace Set up ID-cards. there are various other types of attrition that should be taken into account. Recruitment cost The cost to the business when hiring new employees includes the following six factors plus 10 percent for incidentals such as background screening: • Time spent on sourcing replacement • Time spent on recruitment and selection • Travel expenses.Attrition rates can be calculated using a simple formula: Attrition =(No. This indicates the ease with which people adapt to the company. then the average employee strength is 1.000 in March 2005. These expenses are: 1. of employees who left in the year / average employees in the year) x 100 Thus. Critical resource attrition which tell the attrition in terms of key personnel like senior executives leaving the organization. if the company had 1. Attrition Costs One of the best methods for calculating the cost of turnover takes into account expenses involved to replace an employee leaving an organization. if any n Training/ramp-up time • Background/reference screening 2.500 and attrition is 100 x (300/1500) = 20 percent.000 employees in April 2004. if any • Re-location costs. and can be largely classified under the following heads: • Training materials • Technology • Employee benefits • Trainers’ Time 2. Training and development cost To estimate the cost of training and developing new employees. Besides this. It tells how many are using the company as a springboard or a launch pad. 2. access cards. cost of new hires must be taken into consideration. These are: • • • • Fresher attrition that tells the number of freshers who left the organization within one year. Infant mortality that is the percentage of people who left the organization within one year. This will mean direct and indirect costs. and 300 quit in the year. etc. • • • • . Low performance attrition: It tells the attrition of those who left due to poor performance.
train and develops. Human Resource Management is a management function that helps an organization select. such as Personnel Administration or Personnel Management. HUMAN RESOURCE MANAGEMENT . recruit. a relatively new term. the trend is changing. Many people used to refer it before by its traditional titles. But now.Training And Development Human Resource Management (HRM). that emerged during the 1930s. It is now termed as Human Resource Management (HRM).
which in turn. There were also some views that training is a very costly affair and not worth. developing. and compensating the employees in organization. Organizational. etc. Training and Development. The modern approach of training and development is that Indian Organizations have realized the importance of corporate training. Functional Objectives – maintain the department’s contribution at a level suitable to the organization’s needs. healthcare. such as education. It is also applicable to non-business organizations. Training is now considered as more of retention tool than a cost. Organizations used to believe more in executive pinching. It comprises of the functions and principles that are applied to retaining. enhances the individual contribution to an organization. Out of all these divisions. and functions that are designed to maximize both organizational as well as employee effectiveness…………… …………………… Scope of HRM without a doubt is vast. Payroll. • • • • Individual Objectives – help employees in achieving their personal goals. Introduction Of Training • . training. and Societal. The training system in Indian Industry has been changed to create a smarter workforce and yield the best results TRAINING AND DEVELOPMENT OBJECTIVES The principal objective of training and development division is to make sure the availability of a skilled and willing workforce to an organization. Performance Management. Industrial Relation. there are four other objectives: Individual. Functional. TRAINING AND DEVELOPMENT is a subsystem of an organization. come under the horizon of HRM. etc Human Resource Management is defined as the set of activities. Retention. It ensures that randomness is reduced and learning or behavioral change takes place in structured format. All the activities of employee. But now the scenario seems to be changing. In addition to that. They were holding the traditional view that managers are born and not made. from the time of his entry into an organization until he leaves.Human Resource Management is defined as the people who staff and manage organization. TRADITIONAL AND MODERN APPROACH OF TRAINING AND DEVLOPMENT • Traditional Approach – Most of the organizations before never used to believe in training. programs. one such important division is training and development. The divisions included in HRM are Recruitment. Societal Objectives – ensure that an organization is ethically and socially responsible to the needs and challenges of the society. Organizational Objectives – assist the organization with its primary objective by bringing individual effectiveness.
Training is about the acquisition of knowledge. • It’s not what you want in life. skills. but it’s more like a vision • It’s not the goal you set. rules. and abilities (KSA) through professional development. but it’s what you need to achieve it Training is about knowing where you stand (no matter how good or bad the current situation looks) at present. but it’s knowing how to get there • It’s not how high you want to rise. ROLE OF TRAINING . and where you will be after some point of time. Training is activity leading to skilled behavior. concepts.TRAINING DEFINED It is a learning process that involves the acquisition of knowledge. or changing of attitudes and behaviours to enhance the performance of employees. but it’s having the knowledge to do it • It's not a set of goals. but it will be an outcome • It’s not what you dream of doing. sharpening of skills. but it’s knowing how to reach it • It’s not where you want to go. but it’s knowing how to take off • It may not be quite the outcome you were aiming for.
• Team spirit – Training and Development helps in inculcating the sense of team work. . • Development of Human Resources – Training and Development helps to provide an opportunity and broad structure for the development of human resources’ technical and behavioral skills in an organization. It helps in creating the learning culture within the organization. • Development of skills of employees – Training and Development helps in increasing the job knowledge and skills of employees at each level. • Productivity – Training and Development helps in increasing the productivity of the employees that helps the organization further to achieve its long-term goal. team spirit. • Organization Culture – Training and Development helps to develop and improve the organizational health culture and effectiveness. and inter-team collaborations. It also helps the employees in attaining personal growth. It helps to expand the horizons of human intellect and an overall personality of the employees. It helps in inculcating the zeal to learn within the employees.Importance Of Training and Development • Optimum Utilization of Human Resources – Training and Development helps in optimizing the utilization of human resource that further helps the employee to achieve the organizational goals as well as their individual goals.
It helps to build good employee. The various methods that come under Cognitive approach are: • LECTURES • DEMONSTRATIONS • DISCUSSIONS • • • • COMPUTER BASED TRAINING (CBT) INTELLEGENT TUTORIAL SYSTEM(ITS) PROGRAMMED INSTRUCTION (PI) VIRTUAL REALITY . • Training and Development aids in organizational development i. motivation. • Health and Safety – Training and Development helps in improving the health and safety of the organization thus preventing obsolescence. subordinates. also its impact on trainees keeping their background and skills in mind before giving training.• Organization Climate – Training and Development helps building the positive perception and feeling about the organization. It helps in understanding and carrying out organisational policies • Training and Development helps in developing leadership skills. • Profitability – Training and Development leads to improved profitability and more positive attitudes towards profit orientation. and other aspects that successful workers and managers usually display. written or verbal information.e. • Image – Training and Development helps in creating a better corporate image. better attitudes. Trainers need to understand the pros and cons of each method. • Morale – Training and Development helps in improving the morale of the work force. The various methods under Cognitive approach provide the rules for how to do something. relationship so that individual goals aligns with organizational goal. • Healthy work-environment – Training and Development helps in creating the healthy working environment. Cognitive methods are more of giving theoretical training to the trainees. Organization gets more effective decision making and problem solving. and peers. demonstrate relationships among concepts. • Quality – Training and Development helps in improving upon the quality of work and work-life. Methods of Training There are various methods of training. which can be divided in to cognitive and behavioral methods. etc. loyalty. The employees get these feelings from leaders. These methods are associated with changes in knowledge and attitude by stimulating learning.
To become a better performer by education implies that management development activities attempt to instill sound reasoning processes. Management development method is further divided into two parts: • ON THE JOB TRAINING – The development of a manager’s abilities can take place on the job. etc depends on training for its survival. STRAIGHT LECTURES/ LECTURES 4. . Training is a transforming process that requires some input and in turn it produces output in the form of knowledge. TRANSACTIONAL ANALYSIS 3. SENSITIVITY TRAINING 2. skills. and attitudes (KSAs). The various methods that come under Behavioral approach are: • GAMES AND SIMULATIONS • BEHAVIOR-MODELING • BUSINESS GAMES • CASE STUDIES • EQUIPMENT STIMULATORS • IN-BASKET TECHNIQUE • ROLE PLAYS Both the methods can be used effectively to change attitudes.Behavioral methods are more of giving practical training to the trainees. These methods are best used for skill development. SIMULATION EXERCISES 5. The few popular methods are: 1. marketing & sales. finance. The four techniques for on-the job development are: 1. but through different means. COACHING 2. CASE STUDY Models of Training Training is a sub-system of the organization because the departments such as. HR. JOB ROTATION 4. MENTORING 3. Another Method is MANAGEMENT DEVELOPMENT METHOD – MANAGEMENT DEVELOPMENT – The more future oriented method and more concerned with education of the employees. JOB INSTRUCTION TECHNIQUE (JIT) • OFF THE JOB TRAINING – There are many management development techniques that an employee can take in off the job. The various methods under Behavioral approach allow the trainee to behavior in a real fashion. production.
therefore. estimating training cost. and conduct of the training efforts. there are some internal and external forces.This phase requires listing the activities in the training program that will assist the participants to learn. Under systematic approach. This approach uses step-by-step procedures to solve the problems. Develop. 2. what do they need to learn. 4. technology. There are 4 necessary inputs i. . Implementing is the hardest part of the system because one wrong step can lead to the failure of whole training program. It establishes a logical relationship between the sequential stages in the process of training need analysis (TNA). 3. time required in every system to produce products or services. The System Approach views training as a sub system of an organization. sequencing and structuring the contents. to analyze the department. delivering. Out of this planned effort. selecting delivery method. functions.e. need to be up to date with the latest technologies. material. The training should achieve the purpose of helping employee to perform their work to required standards. that poses threats and opportunities. Instructional System Development Model 3. A system approach to training is planned creation of training program. formulating. 5.e. Analyze and identify the training needs i. The three model of training are: 1. job. The steps involved in System Model of training are as follows: 1. Design and provide training to meet identified needs. examining the training material. An organization is a system and training is a sub system of the organization. and aim. The internal forces are the various demands of the organization for a better learning environment. form. System Approach can be used to examine broad issues like objectives. etc The next step is to develop a performance measure on the basis of which actual performance would be evaluated. This step requires developing objectives of training. man. The output can be tangible or intangible depending upon the organization’s requirement. trainers need to be aware of these forces which may impact on the content. training is undertaken on planned basis.e. one such basic model of five steps is system model that is explained below.THE TRAINING SYSTEM A System is a combination of things or parts that must work together to perform a particular function. and evaluating. identifying the learning steps. Evaluating each phase so as to make sure it has achieved its aim in terms of subsequent work performance. employees requirement. Making necessary amendments to any of the previous stage in order to remedy or improve failure practices. validating information to be imparted to make sure it accomplishes all the goals & objectives. And every system must have some output from these inputs in order to survive. Transitional model System Model Training The system model consists of five phases and should be repeated on a regular basis to make further improvements. System Model 2. who needs training. Organization are working in open environment i.
etc. or may be promising to meet some other deadlines. • Mission – explain the reason of organizational existence. The outer loop describes the vision. This model is widely used now-a-days in the organization because it is concerned with the training need on the job performance. employees. inspire. For example. A vision statement tells that where the organization sees itself few years down the line. values may include social responsibility. mission and values of the organization on the basis of which training model i.Transitional Model Transitional model focuses on the organization as a whole. The reason of developing a mission statement is to motivate. and all other stakeholders. This model also helps in . Training objectives are defined on the basis of job responsibilities and job description and on the basis of the defined objectives individual progress is measured. • Values – is the translation of vision and mission into communicable ideals. or bringing some internal transformation. and inform the employees regarding the organization. A vision may include setting a role mode. excellent customer service.The mission statement tells about the identity that how the organization would like to be viewed by the customers. • Vision – focuses on the milestones that the organization would like to achieve after the defined point of time.e. It reflects the deeply held values of the organization and is independent of current industry environment. inner loop is executed. It identifies the position in the community. Instructional System Development Model(ISD)Model Instructional System Development model was made to answer the training problems.
instructional objectives that measures behavior of a participant after the training. The Instructional System Development model comprises of five stages: 1. lighting. the output of one phase is an input to the next phase. EVALUATION – The purpose of this phase is to make sure that the training program has achieved its aim in terms of subsequent work performance. etc. and target audience analysis. 3.e. The ISD model is a continuous process that lasts throughout the training program. demonstration props. ANALYSIS – This phase consist of training need assessment. It also highlights that feedback is an important phase throughout the entire training program. benches. Training Need Analysis(TNA) . job analysis. and other training accessories. sequencing the content. methods of evaluating the trainee. sequencing of content. This phase consists of identifying strengths and weaknesses and making necessary amendments to any of the previous stage in order to remedy or improve failure practices. In this model. strategies to impart knowledge i. food facilities. podium. workbooks. trainer and the training program. cooling. 4. 5. types of training material. and delivering media for the types of training objectives to be achieved. equipments. PLANNING – This phase consist of setting goal of the learning outcome. media selection. etc. parking. 2. course material for the trainee including handouts of summary. EXECUTION – This phase focuses on logistical arrangements. visual aids. DEVELOPMENT – This phase translates design decisions into training material.determining and developing the favorable strategies. It consists of developing course material for the trainer including handouts. such as arranging speakers. selection of content.
policies. the HR department of the company requires to be involved in strategic planning. It helps to plan the budget of the company. opportunities can be exploited by balancing it against costs. then certainly there is a need of training. and goals. HR develops strategies to be sure that the employees in the organization have the required Knowledge. Threats can be reduced by identifying the areas where training is required. He gathers this information through technical interview. and Attributes (KSAs) based on the future KSAs requirements at each level. observation. procedures. In this planning. jobs are dynamic and keep changing over the time. weaknesses can be dealt with the training interventions. etc. areas where training is required. • Individual Level – Training need analysis at individual level focuses on each and every individual in the organization. At this level. For this approach to be successful. Training Need arises at three levels: Corporate need and training need are interdependent because the organization performance ultimately depends on the performance of its individual employee and its sub group. individual competence can also be linked to individual need. and also highlights the occasions where training might not be appropriate but requires alternate action. However.An analysis of training need is an essential requirement to the design of effective training. It starts with the assessment of internal environment of the organization such as. Employees need to prepare . Today. And. The methods that are used to analyze the individual need are: • Appraisal and performance review • Peer appraisal • Competency assessments • Subordinate appraisal • Client feedback • Customer feedback • Self-assessment or self-appraisal • Operational Level – Training Need analysis at operational level focuses on the work that is being assigned to the employees. business need. Skills. Why training need analysis? Training need analysis is conducted to determine whether resources required are available or not. questionnaires asking the closed ended as well as open ended questions. The purpose of training need analysis is to determine whether there is a gap between what is required for effective performance and present level of performance. the organization checks whether an employee is performing at desired level or the performance is below expectation. structures. • Organizational Level – Training need analysis at organizational level focuses on strategic planning. If the difference between the expected performance and actual performance comes out to be positive. and weaknesses and external environment such as opportunities and threats. psychological test. while strengths can further be strengthened with continued training. strengths. The job analyst gathers the information on whether the job is clearly understood by an employee or not. After doing the SWOT analysis.
needs and expectations of the trainees are some of the important factors that affect training design. 2. The trainees – A good training design requires close scrutiny of the trainees and their profiles. Trainees’ learning style – the learning style. Trainers break the content into headings. Based on the information collected. trainer comes in the position to select most appropriate tactics or methods or techniques. 5. judgmental skills in order to deliver quality content to trainers. ad modules. experience. when the climate is favorable nothing goes wrong but when the climate is unfavorable. These topics and modules are then classified into information. topics. 7. age. interpersonal. Therefore. 3. the trainer translates it into specific training areas and modules. what could be included. The trainer prepares the priority list of about what must be included. Training tactics – Once the objectives and the strategy of the training program becomes clear. The training objective clears what goal has to be achieved by the end of training program i. Age. Training objectives assist trainers to design the training program. 1. Training-Design The design of the training program can be undertaken only when a clear training objective has been produced. 6.e. knowledge. Training climate – A good training climate comprises of ambience.for these changes. The method selection depends on the following factors: • Trainees’ background • Time allocated • Style preference of trainer • Level of competence of trainer . and attitudes. experience. Training topics – After formulating a strategy. positive perception for training program. Sequence the contents – Contents are then sequenced in a following manner: • From simple to complex • Topics are arranged in terms of their relative importance • From known to unknown • From specific to general • Dependent relationship 8. feelings. almost everything goes wrong. etc. what the trainees are expected to be able to do at the end of their training. a trainer analyzes his technical. skills. tone. The job analyst also gathers information on the tasks needs to be done plus the tasks that will be required in the future. Training strategies – Once the training objective has been identified. trainer decides upon the content to be delivered. The trainer – Before starting a training program. training Need analysis (TNA) is done. 4. educational background of trainees must be kept in mind in order to get the right pitch to the design of the program.
the training is implemented. Training implementation is the hardest part of the system because one wrong step can lead to the failure of whole training program. topics are ready. facilities and their availability • Furnishings and equipments • Budget • Design of the training. Therefore. 10. The various requirements in a training program are white boards. Physical set-up – Good physical set up is pre-requisite for effective and successful training program because it makes the first impression on participants. etc. Preparation is the most important factor to taste the success. etc 9. Trainer prepares materials and activities well in advance. Establishing rapport with participants – There are various ways by which a trainer can establish good rapport with trainees by: • Greeting participants – simple way to ease those initial tense moments • Encouraging informal conversation • Remembering their first name • Pairing up the learners and have them familiarized with one another • Listening carefully to trainees’ comments and opinions • • . markers. Classrooms should not be very small or big but as nearly square as possible. right amount of space should be allocated to every participant. and refining. following are the factors that are kept in mind while implementing training program: • The trainer – The trainer need to be prepared mentally before the delivery of content.• Availability of facilities and resources. Also. Support facilities – It can be segregated into printed and audio visual. The trainer also set grounds before meeting with participants by making sure that he is comfortable with course content and is flexible in his approach. Completing training design does not mean that the work is done because implementation phase requires continual adjusting. Training implementation can be segregated into: • Practical administrative arrangements • Carrying out of the training Implementing Training Once the staff. etc Training Implementation To put training program into effect according to definite plan or procedure is called training implementation. equipments. course. content. flip charts. Constraints – The various constraints that lay in the trainers mind are: • Time • Accommodation. This will bring people together both physically and psychologically. redesigning. Even the best training program will fail due to one wrong action.
Purposes of Training Evaluation The five main purposes of training evaluation are: Feedback: It helps in giving feedback to the candidates by defining the objectives and linking it to learning outcomes. • • Telling the learners by what name the trainer wants to be addressed • Getting to class before the arrival of learners • Starting the class promptly at the scheduled time • Using familiar examples • Varying his instructional techniques • Using the alternate approach if one seems to bog down Reviewing the agenda – At the beginning of the training program it is very important to review the program objective. The trainer must tell the participants the goal of the program. or to the regular work routines. and how the program will run. Training evaluation ensures that whether candidates are able to implement their learning in their respective workplaces. Training evaluation checks whether training has had the desired effect. Research: It helps in ascertaining the relationship between acquired knowledge. The following information needs to be included: • Kinds of training activities • Schedule • Setting group norms • Housekeeping arrangements • Flow of the program • Handling problematic situations Training Evaluation The process of examining a training program is called training evaluation. and training. . transfer of knowledge at the work place. what is expected out of trainers to do at the end of the program.
During Training: It is the phase at which instruction is started. Control: It helps in controlling the training program because if the training is not effective. This phase is designed to determine whether training has had the desired effect at individual department and organizational levels. Process of Training Evaluation Before Training: The learner’s skills and knowledge are assessed before the training program. The demand for the training in the organization increases when the organization wants: • To hire new people – training as a means of training new recruits • To Expand – When the company wants to increase its headcount • To increase certain number of staff (in position) by a certain date • To enhance the performance of employees • Organization’s name to be a part of training unit . This phase usually consist of short tests at regular intervals After Training: It is the phase when learner’s skills and knowledge are assessed again to measure the effectiveness of the training. Techniques of Evaluation The various methods of training evaluation are: • Observation • Questionnaire • Interview • Self diaries • Self recording of specific incidents Role of Organization in Training and Development An organization has a very close relationship with the trainee and the trainer because it is the first contact for both. During the start of training. Once aware. they are asked to give their opinions on the methods used and whether those methods confirm to the candidates preferences and learning style. Power games: At times. the top management (higher authoritative employee) uses the evaluative data to manipulate it for their own benefits. Intervention: It helps in determining that whether the actual outcomes are aligned with the expected outcomes. candidates generally perceive it as a waste of resources because at most of the times candidates are unaware of the objectives and learning outcomes of the program. then it can be dealt with accordingly. There are various evaluation techniques for this phase.
Finance. This leads to failure of the program. change in taste of consumer. In this situation the organization assumes that the trainer must be aware of the type of training need s of the participants and their organization and their content will meet those needs. such as Marketing. etc. change in methods of product development. But the problem arises when the organization outsource the training process. and instant information Old software systems do not meet the need of companies SAP is a affordable and no special software is required to access SAP supports all the fields. and has an experience of windows based applications SAP can be used worldwide It is easy to process user transactions with SAP SAP increases liability SAP improves the effectiveness and efficiency of the employees SAP improves upon the business process efficiencies SAP gives reliable. etc. responsibilities of organization. climate. it’s a foremost duty of the organization to make the trainer and their organization aware of their culture. Human Resource. . Why SAP ? SAP is becoming increasingly popular these days as: SAP allows customizing the software to specific needs of the company SAP is user-friendly. . accurate.Demand for training also increases when there is change in the nature of job. The organization goes through the following steps for the transfer of training to the field. etc. which results in collusion. Operations. familiar looking. Therefore. Logistics.
• Salary is just a part of the compensation system. the employees have other psychological and selfactualization needs to fulfill. compensation serves the purpose. Compensation is the remuneration received by an employee in return for his/her contribution to the organization. Compensation does not include only salary but it is the sum total of all rewards and allowances provided to the employees in return for their services. etc. The lucrative compensation will also serve the need for attracting and retaining the best employees.Payroll & Compensation Management Human Resource is the most vital resource for any organization. Thus. • Unless compensation is provided no one will come and work for the organization. Components of a compensation system are as follows: Types of Compensation Compensation provided to employees can direct in the form of monetary benefits and/or indirect in the form of non-monetary benefits known as perks. If the compensation offered is effectively managed. . time off. • Direct Compensation • Indirect Compensation \ Need of Compensation Management • A good compensation package is important to motivate the employees to increase the organizational productivity. Thus. it contributes to high organizational productivity. compensation helps in running an organization effectively and accomplishing its goals. Employees should be managed properly and motivated by providing best remuneration and compensation as per the industry standards. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. each and every work done and each and every result. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness. Components of Compensation System Compensation systems are designed keeping in minds the strategic goals and business objectives. It is responsible for each and every decision taken. Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities.
From the bureaucratic organizations to the participative organizations. In return they were provided with job security. The business goals and objectives are aligned with the HR strategies. Then the compensation committee or the concerned authority formulates the compensation strategy. In today’s competitive scenario organizations have to take special measures regarding compensation of the employees so that the organizations retain the valuable employees. Change in Compensation Systems With the behavioral science theories and evolution of labour and trade unions. It depends on both internal and external factors as well as the life cycle of an organization. The compensation systems have changed from traditional ones to strategic compensation systems. employees were expected to work hard and obey the bosses’ orders. He stated that employees do not work only for money but there are other needs too which they want to satisfy from there . employees started asking for their rights.• The most competitive compensation will help the organization to attract and sustain the best talent. Evolution of Strategic Compensation In the traditional organizational structures. Some of the organizations provided for retirement benefits such as. The compensation package should be as per industry standards. pension plans. It was assumed that humans work for money. employees have started asking for their rights and appropriate compensations. Evolution Of Compensation Today’s compensation systems have come from a long way. With the changing organizational structures workers’ need and compensation systems have also been changing. there was no space for other psychological and social needs of workers. Maslow brought in the need hierarchy for the rights of the employees. Strategic Compensation Strategic compensation is determining and providing the compensation packages to the employees that are aligned with the business goals and objectives. Compensation strategy is derived from the business strategy. salary increments and promotions annually. The higher education standards and higher skills required for the jobs have made the organizations provide competitive compensations to their employees. for the employees. The salary was determined on the basis of the job work and the years of experience the employee is holding.
Material. Now the employees were being treated as human resource. Therefore a fair compensation system is a must for every business organization. It expects return from the business process such as rent is the return expected by the landlord. etc. The fair compensation system will help in the following: • An ideal compensation system will have positive impact on the efficiency and results produced by employees. Some of the benefits are special allowances like mobile.e. Competition among employees existed. capitalist expects interest and organizer i.e. House rent allowances. it is impossible to imagine a business process without Men. Authority is being delegated. company’s vehicle. . self-actualization. i. Similarly the labour expects wages from the process. ambitions and egos. It will encourage the employees to perform better and achieve the standards fixed. entrepreneur expects profits. emotions. i. among four Ms. Employees were expected to work hard to have the job security. Men has been most important factor. The employees are expected to work and take their own decisions. Every factor contributes to the process of production/business.job. social needs. safety needs. The compensation system was designed on the basis of job work and related proficiency of the employee. Labour therefore expects to have fair share in the business/production process. etc. Since. Their performance was being measured and appraised based on the organizational and individual performance.e. Organizations offer monetary and non-monetary benefits to attract and retain the best talents in the competitive environment. Employees feel secured and valued in the organization. has expectations. Men. Maslow’s Need Hierarchy Today’s Modern Compensation Systems Today the compensation systems are designed aligned to the business goals and strategies. Machine and Money. statutory leaves. The other factors being human. IMPORTANCE OF COMPENSATION Compensation and Reward system plays vital role in a business organization. Labour plays vital role in bringing about the process of production/business in motion. psychological needs.
This minimizes the labour turnover. It should be easy to implement. It. knowledge. responsibilities. The perfect compensation system provides platform for happy and satisfied workforce. The organization enjoys the stability. Thus. The system should be simple and flexible so that every employee would be able to compute his own compensation receivable. should not result in exploitation of workers. It also depicts the job worth i. Such a system should be well defined and uniform.e.• • • • • • • • • • • • • • • • It will enhance the process of job evaluation. recruitments. It forms the basis for demand-supply analysis. efficiency and cooperation among the workers. talented and happy workforce. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable. It aims at creating a healthy competition among them and encourages employees to work hard and efficiently. and training need assessment and performance appraisal. It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel. skills. it effectively contributes to setting up the compensation package for the job position. evaluation. measurable effectiveness of the job and contribution of job to the organization. It will raise the morale. training. • Job Position Job position refers to the designation of the job and employee in the organization. The system should follow the management principle of equal pay. The business organization can think of expansion and growth if it has the support of skillful. Such system would help management in complying with the various labor acts. etc. It helps in finding out required level of education. etc for the job position. It will be apply to all the levels of the organization as a general system. The nonmonetary benefits offered to two different levels in the organization also vary. Job position forms an important part of the compensation strategy as it determines the level of the job in the organization. being just and fair would provide satisfaction to the workers. The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job. The system provides growth and advancement opportunities to the deserving employees. • Job Description . For example management level employees receive greater pay scale than non-managerial employees. Importance of Job Analysis Job analysis helps in analyzing the resources and establishing the strategies to accomplish the business goals and strategic objectives. Sound Compensation/Reward System brings peace in the relationship of employer and employees. requirements. Components of Job Analysis Job analysis is a systematic procedure to analyze the requirements for the job role and job profile. description. compensation management. The success and stability of organization is measured with pay-package it provides to its employees. Job Analysis Job analysis is a systematic approach to defining the job role. The sound compensation system is hallmark of organization’s success and prosperity. Such system should also solve disputes between the employee union and management. Job analysis can be further categorized into following sub components.
education. determining the training needs for employees who are lacking certain skills. how much the job contributes to the organization. It is also known as job evaluation. Pay structures are the strong determinant of employee’s value in the organization. level of education required. it becomes easy to define the compensation strategy for the position. Organizations should conduct the job analysis in a systematic at regular intervals. Pay structures also include the estimation of incentives. Once it is determined that how much the job is worth. the level of experience needed. Therefore. External equity and Individual equity are the most popular pay structures. The process deals with internal and external analysis to estimate the compensation package for a job profile. Internal equity. Roles and responsibilities helps in determining the outcome from the job profile. job analysis forms an integral part in the formulation of compensation strategy of an organization. etc required for the job. Pay structure refers to the process of setting up the pay for a job in an organization. The roles and responsibilities are key determinant factor in estimating the level of experience. It provides for fair treatment to all employees. for reviewing employees’ performance with the standard level of performance.e. Job analysis can be used for setting up the compensation packages. • Job Worth Job Worth refers to estimating the job worthiness i. etc. Pay-Structures Once job analysis has been done organizations need to decide upon the pay structures. It also helps in benchmarking the performance standards.Job description refers the requirements an organization looks for a particular job position. It is also known as job evaluation. It helps in analyzing the employee’s role and status in the organization. It states the key skill requirements. Job description is used to analyze the job worthiness. It also describes the roles and responsibilities attached with the job position. skill. . Job description provides the in depth knowledge about the job profile and its worth.
The process aims at balancing the compensation provided to a job profile in comparison to the compensation provided to its senior and junior level in the hierarchy. The fairness is ensured using job ranking. Salary-Surveys Organizations have to bridge the gap between the industry standards and their salary packages. level of status and factor comparison. The analysis is done on the basis of certain factors defined in the objectives of the research. The Salary survey is the research done to analyze the industry standards to set up the compensation strategy for the organization. They cannot provide compensation packages that are either less than the industry standards or are very higher then the market rates. Organizations can either conduct the survey themselves or they can purchase the survey reports from a reputed research organization. Objectives of Salary Survey • To gather information regarding the industry standards . .The level of incentives also depends on the level of job position in the organizational hierarchy. For the purpose they undertake the salary survey. This entails for fair treatment to the employees. job classification. At times organizations offer higher compensation packages to attract and retain the best talent in their organizations. These reports constitute the last 2-5 years or more compensation figures for the various positions held by the organizations. Organizations set the compensation packages of their employees aligned with the prevailing compensation packages in the market. Organizations formulate their compensation strategies by assessing the competitors’ or industry standards. level of management. • Internal Equity The internal equity method undertakes the job position in the organizational hierarchy. • External Equity Here the market pricing analysis is done.
etc. a month. house rent allowance. leave travel allowance. Few organizations also provide vehicles and petrol allowances to their employees to motivate them. These surveys are conducted annually based on the organizational objectives. The reports also include the data. They are undertaken as the need arises. • Custom Surveys At times. • Leave Travel Allowance .e. The organizations either higher research organizations to conduct theses surveys for them or they themselves conduct the survey by sampling few of the competitors on their own. These surveys do not have any time interval. They focus on important issues usually one or two. • House Rent Allowance Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. • Conveyance Organizations provide for cab facilities to their employees. a week. a few organizations need to know some specific information. The reports are published annually by the research organizations. • Basic Salary Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day. These surveys attempt to cover the same companies every year and provide the same time of analysis.• • • • To know more about the market rate i. Survey Reports The survey reports consist of the analysis and conclusion drawn from the evaluative data based on the objectives of the study. • Standard Surveys Standard surveys are undertaken by organizations on a regular basis. bonus. facts and figures to support the analysis and conclusion. The monetary benefits include basic salary. Pf/Gratuity. compensation offered by the competitors To design a fair compensation system To design and implement most competitive reward strategies To benchmark the compensation strategies Types of Compensation Surveys There are two types of compensation surveys undertaken by the organizations. They are given at a regular interval at a definite time. special allowances. The surveys which cater this need are known as custom surveys. It is the money an employee receives from his/her employer by rendering his/her services. conveyance. etc. medical reimbursements. This is done to provide them social security and motivate them to work. The organizations willing to formulate their compensations strategies based on the surveys purchase the reports from the research organization. The supportive data and annexure provided in the report form the basis for the un-biased conclusion and validation of the analysis Direct Compensation Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization.
reduced interest loans. The organizations provide for paid leaves such as. Overtime Policy. say at an interval of one year. • Bonus Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. This gives them the emotional security and they feel themselves valued in the organization. Insurance. These medi-claims include health-insurances and treatment bills reimbursements. commissions.These allowances are provided to retain the best talent in the organization. • Hospitalization The employees should be provided allowances to get their regular check-ups. The allowances are scaled as per the position of employee in the organization. Leave travel Assistance Limits. • Leave Policy It is the right of employee to get adequate number of leave while working with the organization. Retirement Benefits. overtime pay. Car policy. This is usually done to make the employees stress free. • Retirement Benefits Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age • Holiday Homes Organizations provide for holiday homes and guest house for their employees at different locations. These holiday homes are usually located in hill station and other most wanted holiday spots. The bonus amount usually amounts to one month’s salary of the employee. The employees are given allowances to visit any place they wish with their families. • Special Allowance Special allowance such as overtime. mobile allowances. etc. meals. club memberships. travel expenses. Some organizations arrange for a tour for the employees of the organization. Hospitalization. Holiday Homes. medical leaves (sick leave). etc. • Overtime Policy Employees should be provided with the adequate allowances and facilities during their overtime. statutory pay. • Leave Travel The employees are provided with leaves and travel allowances to go for holiday with their families. The employees are provided with medi-claims for them and their family members. The . • Medical Reimbursement Organizations also look after the health conditions of their employees. such as transport facilities. etc are provided to employees to provide them social security and motivate them which improve the organizational INDIRECT COMPENSATION Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. Even their dependents should be eligible for the medi-claims that provide them emotional and social security • Insurance Organizations also provide for accidental insurance and life insurance for employees. They include Leave Policy. casual leaves. insurance. if they happened to do so. and maternity leaves.
Payroll Management Payroll is defined as a method of administrating employees’ salaries in the organizations.e. It also undertakes the activities such as preparation of tax returns. etc. • Payroll Accounting Payroll accounting involves calculations of employees’ salaries and tax deductions. payroll management can be further subdivided into two sub processes. the HR comes into picture which maintains the daily record if employees attendance. the HR and accounts department work together to calculate and disburse the salary to the employees.organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house. i. Here. maintaining the payroll records. The process consists of calculation of salaries and tax deductions of the employees. referring employment laws. It can also be called as an accounts activity which undertakes the salary administration of employees in the organization. • Flexible Timings Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons. Thus. . Administrating the employees’ salaries is not an easy task. administrating the retirement benefits and disbursements of salaries to employees. Payroll accounting and payroll administration. • Payroll Administration Payroll Administration involves managerial activities such as maintaining employees’ records.
Employee’s details such as name. basic salary. While administrating the monthly payroll basic salary. annual bonuses. There are some deductions such as PF. Payroll is administered on monthly basis and annual basis. commissions. overtime pay. Net salary is calculated by deducting the tax and other calculated deductions (loan installments. Annual payroll consists of leave travel allowances. Components Of Payroll Payroll refers to the administration of employees' salaries. and deductions. allowances. bonus. HRA. and medical reimbursements. daily attendance. wages. value of meals and lodging etc. net pay. taxes. daily attendance record. incentives. Provident fund is deducted from the gross salary of employee on the monthly basis as per the employment law. basic salary. pay for holidays. vouchers/reimbursements. date of joining. which is provided later to the employee. conveyance. Organizations also contribute the same amount to the provident fund of the employee. vacations and sickness. bonuses. Deductions such as tax and loan/advances taken by the employee from organizations are deducted only where applicable. There are some deductions which are provident fund (12%) of the salary. etc are considered. and other special allowances such mobile. loan installments or advances taken by employee. meal .Database of employees is maintained. employee ID. Dearness Allowance and House rent allowance is provided at a fixed rate stated by the employment law. employee name. Gross Salary is calculated after adding the allowances and incentives to the basic salary of the employee. etc are recorded. etc). taxes and other deductions. incentives. It consist of the employee ID.
The financial control regarding salary goes in the hand of accountant. It involves paying someone who is responsible for calculating the salaries of others. Sometimes the construction industry and manufacturing industry also use the manual payroll systems for the contractual labour. Accountant Accountant is a professional having a degree/diploma course in finance/accountancy. The process was very popular when there were no computerized means for payroll processing. Automated calculations result in no errors. bonuses and reimbursements are based on organizational policies. time consuming and risky as it is more prone to errors. software and other computerized aids. 2. He/she is responsible for all the activities related to payroll accounting. adding machine. spreadsheet. 4. Payroll Software In today’s computerized environment. Payroll Management Processes Calculation of gross salaries and deductible amounts is a tedious task which involves risk. 3. It helps in calculating the payable amounts and deductions very easily. Payroll Outsourcing . as theses contracts are on daily/weekly basis. It needs professionals to make use of the software for its efficient working. Now-a-days it is only few small scale organizations in the remote areas that use the manual payroll. Some of the organizations use the traditional manual method of payroll processing and some go for the advanced payroll processing software. Manual System Manual payroll system is the traditional payroll system which involves pen and ink. Some organizations go for performance based incentives. Some organizations provided the allowances on a fixed rate say 10% or 12% of the basic salary. An organization opts for any of the following payroll processing methods available:: 1. There is full control in the hands of owner. The process adds costs to the organization. But the process is tedious. He/she has the sound knowledge of accounting principles and globally accepted standards. etc instead of computers. Data is validated automatically by the software. incentives. payroll system has also developed itself into automated software that performs every action needed by the payroll process.Allowances. It also helps in generating the pay slips in lesser time.
It saves time and cost for the organization. The outsourcing organization is responsible for all the activities of the payroll accounting.Payroll outsourcing involves a third party (an outsourcing company) in the calculations of salaries and deductions. payroll outsourcing would be very much beneficial. The data is provided to the consultants/outsourcing firms. The various payroll functions undertaken by the outsourcing organizations are as follows: • Analysis of Payroll records. If there is more number of employees (say more than 9001000) in the organization. payroll taxes • Medical claim processing • Employee Insurance & Provident fund processing • Quality Audit procedures & planning .
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