This action might not be possible to undo. Are you sure you want to continue?
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
the correct feedback given by peers can help to find employees’ abilities to work in a team. 2. co-operation and sensitivity towards others. It can be defined as a process whereby the employees and the superiors come together to identify common goals. superior’s ability to delegate the work. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities. • • 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.provide valuable insights and information or feedback regarding the “on-the-job” performance of the employee. 360 degree appraisal has four integral components: 1. The essence of MBO is participative goal setting. they are more likely to fulfill their responsibilities. Subordinate’s appraisal 4. This technique is being effectively used across the globe for performance appraisals. Self appraisal 2. Peer appraisal. choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Some of the important features and advantages of MBO are: . his achievements. It provides a "360-degree review" of the employees’ performance and is considered to be one of the most credible performance appraisal methods. when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them. Ideally. and judge his own performance. understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals. 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. MANAGEMENT BY OBJECTIVES The concept of ‘Management by Objectives’ (MBO) was first given by Peter Drucker in 1954. Superior’s appraisal forms the traditional part of the 360 degree appraisal where the employees’ responsibilities and actual performance is rated by the superior. the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed. 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. Some of the organizations following it are Wipro. Also known as internal customers. leadership qualities etc. Infosys. and Reliance Industries etc. Superior’s appraisal 3. • Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses. the employees set their goals to be achieved. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles.
e. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment. 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. goals that are: Specific Measurable Achievable Realistic. Generally. Goals and standards are set for the performance for the future with periodic reviews and feedback. These include various interviews. Assignments. and Time bound. the activities and the procedures etc. tests and exercises. motivating and there is a linkage between organizational goals and performance targets of the employees.• • • • • Clarity of goals – With MBO. 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. 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. The following are the common features of all assessment centers: . came the concept of SMART goals i. An assessment centre typically involves the use of methods like social/informal events. employees are given an assignment similar to the job they would be expected to perform if promoted.assignments in assessment centers include various tests and exercises which are specially designed to assess the competencies and the potential of the employees. The goals thus set are clear. They provide information to the employees about the organisation. management games etc. all these assignments are focused at the target job. 3. The focus is on future rather than on past. Assessment centers simulate the employee’s on-the-job environment and facilitate the assessment of their on-the-job performance. Information Sessions – information sessions are also a part of the assessment centres. their roles and responsibilities. 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. psychometric tests. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics.
processes. According to them. actions and practices at all levels in the organisation. TQM focuses on customer satisfaction whereas performance appraisal focuses on the improving the performance of the employees. teamwork. Both TQM and Performance appraisal/ evaluation are focused on increasing the productivity of the organisation through continuous improvement. Some fundamental differences between the two are as follows: • • • TQM is team – based whereas performance appraisals are designed for individuals i. motivation. planning and organizing capabilities. assessment centres are also an effective way to determine the training and development needs of the targeted employees.• The final results is based on the pass/fail criteria • All the activities are carried out to fill the targeted job. it undermines teamwork. whereas TQM may or may not yield visible results. Elements of TQM are: • Meeting customers requirements. both TQM and Performance appraisals differ in their fundamental nature. characteristics and requirements making it impossible to combine them. 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. • Continuous improvement • Empowerment of employees. • 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.e. Performance appraisal generally results in some rewards like increased pay etc. • An organization’s human resources can be a vital competitive advantage and assessment centre helps in getting the right people in right places. But there also exists a few other schools of thought which refute the compatibility of the TQM and performance appraisal. The major competencies that are judged in assessment centres are interpersonal skills.” TQM refers to the continuous improvement in the quality of work of all employees with the focus on satisfaction of the customers. 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. . career orientation etc. • Each session lasts from 1 to 5 days. intellectual capability. product and service quality and customer satisfaction. TQM and Performance Appraisal According to Sashkin and Kiser.
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). • Performance appraisal: An opportunity for an organisational culture shift • Performance appraisal process focuses on the goal setting approach throughout the organisation. Industrial relations has become one of the most delicate and complex problems of modern industrial society.e. It facilitates the process of change in the organizational culture. • The performance appraisal processes have the potential positive effects on recruitment • It increases organisational effectiveness i. The interactive sessions between the management and the employees. encourage an employee to focus on his personal goals (like his promotion) rather than the organisational goals.” The term industrial relations explains the relationship between employees and management which stem directly or indirectly from union-employer relationship. the suitable practice should be chosen carefully by the top management and the leaders of the organisation. Concept of Industrial Relations: The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. Therefore. it is in the interest of all to create and maintain good relations between employees (labor) and employers (management). INDUSTRIAL RELATIONS. • Performance appraisal helps the clarity and understanding of the roles and responsibilities of the employees. By “relations” we mean “the relationships that exist within the industry between the employer and his workmen. what to do and how to do through a formal and structured approach. “Industry” refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”.• Performance appraisal can sometimes. Therefore. the mutual goal setting and the efforts towards the career development of the employees help the organization to become a learning organization. • Some evidence of the beneficial effects of team rewards Therefore. . 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 Process Change Management The performance appraisal process provides an opportunity for introducing organizational change. thus having an impact on the collective performance. Industrial progress is impossible without cooperation of labors and harmonious relationships. performance appraisal is also an important link in the process of change in organization culture.
are more harmonious and cooperative than conflictual and creates an environment conducive to economic efficiency and the motivation. and the relations between those organizations. Accordingly. while human resource management is a separate. Government: The central and state government influences and regulates industrial relations through laws. productivity and development of the employee and generates employee loyalty and mutual trust. and between them and the State on the other. and grievance and dispute settlement). From this perspective. Workers generally unite to form unions against the management and get support from these unions. at all levels. Originally. the relationships between workers and their employer. and the institutions and associations through which such interactions are mediated. particularly groups of workers represented by a union. Now its meaning has become more specific and restricted. industrial relations also includes the processes through which these relationships are expressed (such as. when it arises. collective bargaining. including human resource management. employees and the government. 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. awards of court ad the like. employee relations. close or merge the factory or to introduce technological changes. and the management of conflict between employers. workers and trade unions. The term industrial relations has a broad as well as a narrow outlook. They exchange views with management and voice their grievances. agreements. It also includes third parties and labor and tribunal courts. • SCOPE: . and union-management (or labor) relations. They have the right to hire and fire them. and labor-management relations. largely distinct field that deals with nonunion employment relationships and the personnel practices and policies of employers. They also want to share decision making powers of management. Management can also affect workers’ interests by exercising their right to relocate. Industrial relations are basically the interactions between employers. Actors in the IR system: Three main parties are directly involved in industrial relations: • • Employers: Employers possess certain rights vis-à-vis labors. Employees: Workers seek to improve the terms and conditions of their employment.Industrial relations are the relationships between employees and employers within the organizational settings. industrial relations was broadly defined to include the relationships and interactions between employers and employees. industrial relations covers all aspects of the employment relationship. the relationships between employers. trade unionism. rules. A sound industrial relations system is one in which relationships between management and employees (and their representatives) on the one hand. The field of industrial relations looks at the relationship between management and workers. The relationships which arise at and out of the workplace generally include the relationships between individual workers. industrial relations pertains to the study and practice of collective bargaining. workers’ participation in decision-making.
marketing. it means that the employer. It helps promoting co-operation and increasing production. 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. to increase production. The scope or industrial relations are quite vast. 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. This means. There is uninterrupted flow of income for all. which may transgress to the areas of quality control. In other words. The resources are fully utilized. to consumers and workers. 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. resulting in the maximum possible production. Their significance may be discussed as under – • Uninterrupted production – The most important benefit of industrial relations is that this ensures continuity of production. lockouts. to other industries if the products are intermediaries or inputs. goslow tactics. In its wider sense. gherao and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial peace.e. Smooth running of an industry is of vital importance for several other industries. Strikes.The concept of industrial relations has a very wide meaning and connotation. In the narrow sense. if these are goods of mass consumption. Every worker feels that he is a co-owner of the gains of industry. employee relationship confines itself to the relationship that emerges out of the day to day association of the management and the labor. • Reduction in Industrial Disputes – Good industrial relations reduce the industrial disputes. Employees work with great zeal with the feeling in mind that the interest of employer and employees is one and the same. to exporters if these are export goods. continuous employment for all from manager to workers. complete unity of . • High morale – Good industrial relations improve the morale of the employees. price fixation and disposition of profits among others. i. industrial relations include the relationship between an employee and an employer in the course of the running of an industry and may project it to spheres.
employees and Government to work out a new relationship in consonance with a spirit of true democracy. It increases the place of workers in the society and their ego is satisfied. It naturally affects production because mighty co-operative efforts alone can produce great results. It will help increase production. To raise productivity to a higher level in an era of full employment by lessening the tendency to high turnover and frequency absenteeism. Thus. which are an essential factor in the productivity of workers and the industrial progress of a country. so that ban individuals personality may grow its full stature for the benefit of the industry and of the country as well. it is evident that good industrial relations is the basis of higher production with minimum cost and higher profits. To improve the economic conditions of workers in the existing state of industrial managements and political government. Both should think themselves as partners of the industry and the role of workers in such a partnership should be recognized. The industrial peace lies ultimately in a transformed outlook on the part of both. said fringe benefits.• • thought and action is the main achievement of industrial peace. aiming at the realization of social justice and welfare of the massage can function effectively only in an atmosphere of industrial peace. workers must recognize employer’s authority. lockouts and gheraos by providing reasonable wages. 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. On the other hand. Wastages of man. material and machines are reduced to the minimum and thus national interest is protected. To eliminate or minimize the number of strikes. To avoid industrial conflict or strife and develop harmonious relations. Objectives of Industrial Relations The main objectives of industrial relations system are:• • • • • • • • To safeguard the interest of labor and management by securing the highest level of mutual understanding and good-will among all those sections in the industry which participate in the process of production. To establish and promote the growth of an industrial democracy based on labor partnership in the sharing of profits and of managerial decisions. there must be harmonious relationship between management and labor. It will naturally have impact on production because they recognize the interest of each other. An economy organized for planned production and distribution. Reduced Wastage – Good industrial relations are maintained on the basis of cooperation and recognition of each other. Mental Revolution – The main object of industrial relation is a complete mental revolution of workers and employees. If the twin objectives of rapid national development and increased social justice are to be achieved. It also results in increased efficiency of workers. It is the business of leadership in the ranks of workers. improved living and working conditions. Industrial Disputes . New and new projects may be introduced for the welfare of the workers and to promote the morale of the people at work.
and great hardship may be caused to the worker and his family. This definition throws light on a few aspects of a strike. over pay and other working conditions and can result in industrial actions. or a concerted refusal of any number of persons who are or have been so employed to continue to work or to accept employment. alienation of the labor force. In a strike. an industrial dispute entails loss of income. The management may resort to lockouts while the workers may resort to strikes. and other non-economic. but also emphasizes the difference of opinion between worker and worker. Employees also suffer from personal injury if they indulge into strikes n picketing. that is the management and the workmen. or between employers and workmen. The disputes generally arise on account of poor wage structure or poor working conditions. or a refusal under a common understanding of any number of such persons to continue to work or to accept employment”. According to Industrial Disputes Act 1947. This results in increase in the average cost of production since fixed expenses continue to be incurred. The regular income by way of wages and allowance ceases. and the psychological and physical consequences of forced idleness. For the employee. This definition includes all the aspects of a dispute.1947. psychological and social consequences may also arise. Strikes A strike is a very powerful weapon used by trade unions and other labor associations to get their demands accepted. It. personal injury and physical intimidation or inconvenience also arises. As per Section 2(k) of Industrial Disputes Act. Secondly. they are said to be on strike. Demands made by strikers can range from asking for higher wages or better benefits . a strike is a referred to as stoppage of work by a group of workers employed in a particular industry. Apart from the immediate economic effects. or between workmen and which is connected with the employment or non-employment or the terms of employment or with the conditions of labor. both the parties. From the point of view of the employer. It is a disagreement between an employer and employees' representative. Firstly. This disagreement or difference could be on any matter concerning the workers individually or collectively. Loss due to destruction of property. of any person. leading to a fall in profits. usually a trade union. It must be connected with employment or non-employment or with the conditions of labor. Hatred may be generated resulting in political unrest and disrupting amicable social/industrial relations or community attitudes. it also includes the refusal of a number of employees to continue work under their employer.An industrial dispute may be defined as a conflict or difference of opinion between management and workers on the terms of employment. It also leads to a fall in sales and the rate of turnover. not only includes the disagreement between employees and employers. 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. Prolonged stoppages of work have also an adverse effect on the national productivity. try to pressurize each other. When an industrial dispute occurs. They cause wastage of national resources. an industrial dispute resulting in stoppage of work means a stoppage of production. a strike is “a cessation of work by a body of persons employed in an industry acting in combination. Labors withhold their services in order to pressurize their employment or government to meet their demands. The threat of loss of employment in case of failure to settle the dispute advantageously. an industrial dispute in defined as any dispute or difference between employers and employers. When workers collectively cease to work in a particular industry. The employer may also be liable to compensate his customers with whom he may have contracted for regular supply. national income. picketing or gheraos. loss of prestige and credit. or the threat of reprisal action by employers also exists. a group of workers agree to stop working to protest against something they think is unfair where they work.
It may also be an extension of the sympathetic strike to express generalized protest by the workers. These strikes are usually intended to create political pressure on the ruling government. They also refuse to leave. General Strike: It means a strike by members of all or most of the unions in a region or an industry.to seeking changes in the workplace environment. profit sharing. In these kinds of strikes. They don’t break any rules. because they just use their sick leave that was allotted to • • • • • . Causes of strikes: Strikes can occur because of the following reasons: • • • • • • • • • • Dissatisfaction with company policy Salary and incentive problems Increment not up to the mark Wrongful discharge or dismissal of workmen Withdrawal of any concession or privilege Hours of work and rest intervals Leaves with wages and holidays Bonus. allowances like traveling allowance. which makes it very difficult for employer to defy the union and take the workers' places. all or a significant number of union members call in sick on the same day. 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. They do not stop work. workers ask for increase in wages. dearness allowance. workers do not absent themselves from their place of work when they are on strike. Such a strike is also known as 'pen down' or 'tool down' strike. Strikes sometimes occur so that employers listen more carefully to the workers and address their problems. it is called a sympathetic strike. bonus and other facilities such as increase in privilege leave and casual leave. Sympathetic Strike: When workers of one unit or industry go on strike in sympathy with workers of another unit or industry who are already on strike. They adopt go-slow tactics to put pressure on the employers. It may be a strike of all the workers in a particular region of industry to force demands common to all the workers. rather than on any one employer. 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. 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. but restrict the rate of output in an organized manner. Sit down Strike: In this case. but they refuse to work. 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. Sick-out (or sick-in): In this strike. Workers show up to their place of employment. But do not work. house rent allowance. labors stop their work to enforce their economic demands such as wages and bonus. In June 1998. They keep control over production facilities.
The workers may gherao the members of the management by blocking their exits and forcing them to stay inside their cabins. The main object of gherao is to inflict physical and mental torture to the person being gheraoed and hence this weapon disturbs the industrial peace to a great extent.• them on the same day. It is declared by employers to put pressure on their workers. 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 employer may declare a lockout until the workers end the strike. a lockout is employers’ weapon while a strike is raised on part of employees. They were protesting against some remarks allegedly made against them by an Assistant Commissioner Lockouts A lockout is a work stoppage in which an employer prevents employees from working. If picketing does not involve any violence. in which employees refuse to work. it is perfectly legal. such a step is known as picketing. However. 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. Pickets are workers who are on strike that stand at the entrance to their workplace. In 2004. A lockout may happen for several reasons. Acc to Industrial Disputes Act 1947. Thus. It is basically a method of drawing public attention towards the fact that there is a dispute between the management and employees. For example. When only part of a trade union votes to strike. This is different from a strike. Measures For Improving Industrial Relations The following measures should be taken to achieve good industrial relations: . Another case in which an employer may impose a lockout is to avoid slowdowns or intermittent workstoppages. 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. a significant number of advocated went on wildcat strike at the City Civil Court premises in Bangalore. 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 a lockout is to put pressure on a union by reducing the number of members who are able to work. Occupation of factories has been the traditional method of response to lock-outs by the workers' movement. Wild cat strikes: These strikes are conducted by workers or employees without the authority and consent of unions. if a group of the workers strike so that the work of the rest of the workers becomes impossible or less productive. PICKETING When workers are dissuaded from work by stationing certain men at the factory gates.
• • • • • Sound Personnel Policies: The following points should be noted regarding the personnel policies. The agreement with such a union will hardly be honored by a large section of workforce. there must be a great emphasis on mutual accommodation rather than conflict or uncompromising attitude. The approach must be of mutual “give and take rather than “take or leave. 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. The employers must recognize the right of collective bargaining of the trade unions. To avoid this. efforts should be made at both ends to ensure the follow up of the agreements. Therefore. Both the management and the unions should have faith in collective bargaining and other peaceful methods of settling disputes. increase productivity and lead to greater effectiveness. This will improve communication between managers and workers. Mutual Accommodation. The management must recognize the rights of workers to organize unions to protect their economic and social interests. Sincere Implementation of Agreements. 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. Clearly stated so that there is no confusion in the mind of anybody. confidence and respect. The agreements between the management and the unions should be enforced both in letter and spirit. it may foster union militancy as the union reacts by engaging in pressure tactics. One must clearly understand that conflicting attitude does not lead to amicable labor relations. labor unions should persuade their members to work for the common objectives of the organization. This will restore industrial harmony. 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. It should intervene to settle disputes if the management and the workers are unable to settle their disputes. It should make law for the compulsory recognition of a representative union in each industrial unit. It should be conscious of its obligations and responsibilities to the owners of the business. In any organization. Similarly. Management should adopt a progressive outlook and should recognize the rights of workers. the employees. The employers can easily ignore a weak union on the plea that it hardly represents the workers. Mutual Trust: Both management and labor should help in the development of an atmosphere of mutual cooperation. The policies should be: Formulated in consultation with the workers and their representatives if they are to be implemented effectively. An environment of uncertainty is created. • 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. Implementation of the policies should be uniform throughout the organization to ensure fair treatment to each worker. the consumers and the nation. If the agreements are not implemented then both the union and management stop trusting each other.• Strong and Stable Union: A strong and stable union in each industrial enterprise is essential for good industrial relations. joint consultation and other methods.
Moreover. 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. 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. a notice should be issued on the day on which the lockout is declared just to intimate the appropriate authorities about the lockout. the continuance of such a strike or lock out is not illegal provided it is in compliance with the provisions of act. no person should provide any sort of financial aid to any illegal strike or lock-out. In similar way. formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen. Moreover. whether temporary or permanent.Prohibition of Strikes and Lock-Outs Employees are prohibited from striking according to the section 22 of Industrial Disputes Act 1947. This definition is very exhaustive as it includes associations of both the workers and employers and the federations of their associations. that is. the relationships that have been talked about are both temporary . Any person who knowingly provides such a help in support of any illegal strike or lock-out is punishable with imprisonment for a term which may extend to six months. or between employers and employers. The Trade Union Act 1926 defines a trade union as a combination. It is a continuous association of wage earners for the purpose of maintaining and improving the conditions of their working lives. the notice of strike or lockout is to be given in a prescribed manner showing the number of persons involved in the strike/lockout. 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. 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. and includes any federation of two or more trade unions. or for imposing restrictive condition on the conduct of any trade or business. 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. The notice of strike or lockout is not necessary when there is already a strike or lockout going on in the company. or with fine which may extend to one thousand rupees. Employees. If a strike or lockout has already taken place and is being referred to a Board. 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. Employers who are carrying on a public utility service can not lockout any of their employees without giving them a prior notice within six weeks before the lock out or within the fourteen days of giving such a notice. Here. The same rule applies to the employers. According to Section 25 of Industrial Disputes Act 1947. or with both. 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. if the notice period is not served or if the strike is held within the fourteen days of issuing the notice of strike. cannot go on a strike without giving a notice of strike within the six weeks before striking. who are working in a public utility service. However.
Indian paper mill association. It achieves its objectives through collective action and group effort. In many workplaces there is a formal agreement between the union and . Trade unions negotiate with the employers to find out a solution to these differences. working hours. There may be a difference of opinion between management and union members. If an employee feels he is being unfairly treated. the trade unions are also working towards raising the status of labors as a part of industry. Trade unions are formed to achieve the following objectives: • Representation: Trade unions represent individual workers when they have a problem at work. whose aim is to negotiate with employers over pay. Trade unions have shown remarkable progress since their inception. holidays and changes to working practices are the sorts of issues that are negotiated. Negotiations and collective bargaining are the tools for accomplishing objectives. a union is there to represent the interests of its members. In general.. Pay. the character of trade unions has also been changing. It is a permanent body and not a casual or temporary one. working hours.and permanent. political and social interests of their members. he can ask the union representative to help sort out the difficulty with the manager or employer. economic. Then this definition. a trade union can be seen as a group of employees in a particular sector. etc. discuss with management. Thus. however. political and social-of its members. This means it applies to temporary workers (or contractual employees) as well. Features of trade unions: • It is an association either of employers or employees or of independent workers.) General labor unions Friendly societies Unions of intellectual labor (eg. It is formed to protect and promote all kinds of interests –economic. All India Teachers Association) • • • • It is formed on a continuous basis. and • Employers and employers. moreover. 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. Objectives Of Trade Unions Trade unions are formed to protect and promote the interests of their members. They are the relationships between the: • workmen and workmen. They may consist of :Employers’ association (eg. Employer’s Federation of India. talks about three relationships. primarily. Unions also offer their members legal representation. the issues which affect people working in an organization. Their primary function is to protect the interests of workers against discrimination and unfair labor practices. using the collective power of its members. • workmen and employers. The dominant interest with which a union is concerned is. etc. In spite of only focusing on the economic benefits of workers. • Negotiation: Negotiation is where union representatives. Trade unions are voluntary associations formed for the pursuit of protecting the common interests of its members and also promote welfare. They persist throughout the year. job security. and may even engage in political activity where legislation affects their members. They protect the economic.
As well as offering legal advice on employment issues. the new rules and policies. Trade unions are a part of society and as such. 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. wills and debt. Workers coming from different backgrounds may become disorganized. • by inculcating discipline among the workforce • by enabling settlement of industrial disputes in a rational manner by helping social adjustments. have to take into consideration the national integration as well. like housing. promotion and transfer. . health and safety and other issues. organizing courses for their members on a wide range of matters. Some of the older unions offer financial help to their members when they are sick or unemployed. Importance of Trade Unions The existence of a strong and recognized trade union is a pre-requisite to industrial peace.Most unions run training courses for their members on employment rights.People can get discounts on mortgages. 2. trade unions have increased the range of services they offer their members. Legal assistance . 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 company which states that the union has the right to negotiate with the employer. Trade unions play an important role and are helpful in effective communication between the workers and the management. 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 • 1. Member services During the last few years. In these organizations.One of the earliest functions of trade unions was to look after members who hit hard times. Trade unions help in accelerated pace of economic development in many ways as follows: • by helping in the recruitment and selection of workers. but also by the management’s personal policies which include selection of employees for lay offs. unions are said to be recognized for collective bargaining purposes. insurance and loans from unions. So. They also play an important educational role. some unions give help with personal matters. These policies directly affect workers. retrenchment. Seeking a healthy and safe working environment is also prominent feature of union activity. Welfare benefits . Decisions taken through the process of collective bargaining and negotiations between employer and unions are more influential. Some unions also help members who have left school with little education by offering courses on basic skills and courses leading to professional qualifications. But they also have a wider role in protecting their interests. The evaluation criteria for such decisions may not be fair. Financial discounts . unsatisfied and frustrated. The central function of a trade union is to represent people at work. Workers have to adjust themselves to the new working conditions. These include: Education and training . 3. • Voice in decisions affecting workers: The economic security of employees is determined not only by the level of wages and duration of their employment. 4.
Help increase the success rate of selection process by decreasing number of visibly under qualified or overqualified job applicants. accidents. Create a talent pool of candidates to enable the selection of best candidates for the organisation. • ANTICIPATED Anticipated needs are those movements in personnel. Recruitment is the process which links the employers with the employees. 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 . which an organization can predict by studying trends in internal and external environment. The result is a pool of applications from which new employees are selected. Help reduce the probability that job applicants once recruited and selected will leave the organization only after a short period of time. A few definitions of recruitment are: • A process of finding and attracting capable applicants for employment. • It is the process to discover sources of manpower to meet the requirement of staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of an efficient working force. Recruitment is the activity that links the employers and the job seekers. Flippo. RECRUITMENT NEEDS ARE OF THREE TYPES • PLANNED the needs arising from changes in organization and retirement policy. • UNEXPECTED Resignation. Determine present and future requirements of the organization in conjunction with its personnel planning and job analysis activities. The process begins when new recruits are sought and ends when their applications are submitted. Purpose & Importance Of Recruitment • • • • • • • • • • Attract and encourage more and more candidates to apply in the organisation. deaths.• achieving industrial peace RECRUITMENT According to Edwin B. Increase the pool of job candidates at minimum cost. illness give rise to unexpected needs. “Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation”. Begin identifying and preparing potential job applicants who will be appropriate candidates. Meet the organizations legal and social obligations regarding the composition of its workforce.
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.organisations. Locating and developing the sources of required number and type of employees (Advertising etc). The sources within the organisation itself (like transfer of employees from one department to other. promotions) to fill a position are known as the internal sources of recruitment. Recruitment process involves a systematic procedure from sourcing the candidates to arranging and conducting the interviews and requires many resources and time. SOURCES OF RECRUITMENT .) are known as the external sources of recruitment. Recruitment candidates from all the other sources (like outsourcing agencies etc. Short-listing and identifying the prospective employee with required characteristics. 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. Arranging the interviews with the selected candidates. These contain: • Posts to be filled • Number of persons • Duties to be performed • Qualifications required Preparing the job description and person specification.
2.Recruitment Vs Selection Both recruitment and selection are the two phases of the employment process.e. The differences between the two are: • Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation WHEREAS selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts. • The basic purpose of recruitments is to create a talent pool of candidates to enable the selection of best candidates for the organisation. by attracting more and more employees to apply in the organisation WHEREAS the basic purpose of selection process is to choose the right candidate to fill the various positions in the organisation. • Recruitment is 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 forces or factors are the factors that can be controlled by the organisation. . • Recruitment is a positive process i. The internal and external forces affecting recruitment function of an organisation are: Internal Factors Affecting Recruitment The internal forces i. • Preferred sources of recruitment. Factors Affecting Recruitment The recruitment function of the organisations is affected and governed by a mix of various internal and external forces. • 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 also helps in determining the number of employees to be recruited and what qualification they must possess. FACTORS AFFECTING RECRUITMENT POLICY • Organizational objectives • Personnel policies of the organization and its competitors. RECRUITMENT POLICY The recruitment policy of an organisation specifies the objectives of recruitment and provides a framework for implementation of recruitment programme. 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.HUMAN RESOURCE PLANNING Effective human resource planning helps in determining the gaps present in the existing manpower of the organization. the factors which can be controlled by the organisation are: 1. It may involve organizational system to be developed for implementing recruitment programmes and procedures by filling up vacancies with best qualified people. • Need of the organization. • Government policies on reservations.e.
then the company will have to depend upon internal sources by providing them special training and development programs. SUPPLY AND DEMAND The availability of manpower both within and outside the organization is an important determinant in the recruitment process. This restricts management freedom to select those individuals who it believes would be the best performers. For example. Government of India has introduced legislation for reservation in employment for scheduled castes. 4. 6. When the company is not creating new jobs. 5. it will think of hiring more personnel.POLITICAL-SOCIAL. 2.3.SIZE OF THE FIRM The size of the firm is an important factor in recruitment process.GROWTH AND EXPANSION Organization will employ or think of employing more personnel if it is expanding its operations. Also. physically handicapped etc. there is often oversupply of qualified labour which in turn leads to unemployment. The major external forces are: 1. If there is surplus of manpower at the time of recruitment.LEGAL ENVIRONMENT Various government regulations prohibiting discrimination in hiring and employment have direct impact on recruitment practices. 5. An organization with positive image and goodwill as an employer finds it easier to attract and retain employees than an organization with negative image. scheduled tribes.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). 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.COST Recruitment incur cost to the employer. therefore. LABOUR MARKET Employment conditions in the community where the organization is located will influence the recruiting efforts of the organization. External Factors Affecting Recruitment The external forces are the forces which cannot be controlled by the organisation. If the organization is planning to increase its operations and expand its business. trade unions play important role in recruitment. organizations try to employ that source of recruitment which will bear a lower cost of recruitment to the organization for each candidate. COMPETITORS . If the candidate can’t meet criteria stipulated by the union but union regulations can restrict recruitment sources. 4. If the company has a demand for more professionals and there is limited supply in the market for the professionals demanded by the company. For example finance was taken up by fresher MBA’s when many finance companies were coming up. 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. which will handle its operations.
• Value creation. Alternatively job seekers place their CV’s in worldwide web. A company may draw required personnel from outsourcing firms. Indian software and the retail sector are the sectors facing the most severe brunt of poaching today.recruitment is the use of technology to assist the recruitment process. the outsourcing firms or the intermediaries charge the organisations for their services. To face the competition. operational flexibility and competitive advantage • turning the management's focus to strategic level processes of HRM • Company is free from salary negotiations. Poaching means employing a competent and experienced person already working with another reputed company in the same or different industry. A company can attract talent from another firm by offering attractive pay packages and other terms and conditions. as it weakens the competitive strength of the firm. E-RECRUITMENT Many big organizations use Internet as a source of recruitment. 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. In turn. It has become a challenge for human resource managers to face and tackle poaching. E. the HR processes are being outsourced from more than a decade now. the organisation might be a competitor in the industry. They advertise job vacancies through worldwide web. • 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. Outsourcing firms develop their human resource pool by employing people for them and make available personnel to various companies as per their needs. weeding the unsuitable resumes/candidates. . which can be drawn by prospective employees depending upon their requirements. • No intermediaries • Reduction in time for recruitment.e. Recent Trends in Recruitment The following trends are being seen in recruitment: OUTSOURCING In India. Advantages of outsourcing are: • Company need not plan for human resources much in advance. better than the current employer of the candidate. CV through e mail using the Internet.The recruitment policies of the competitors also effect the recruitment function of the organisations. Corporate is facing a lot of problems in employee retention these days. RETENTION Employee Retention involves taking measures to encourage employees to remain in the organization for the maximum period of time. Advantages of recruitment are: • Low cost. But it is seen as an unethical practice and not openly talked about. many a times the organisations have to change their recruitment policies according to the policies being followed by the competitors. The job seekers send their applications or curriculum vitae i.
Compensation includes salary and wages. . They are not the ones who don’t have good opportunities in hand. Compensation Compensation constitutes the largest part of the employee retention process. Compensation packages vary from industry to industry. they switch over to the next job. It is the responsibility of the employer to retain their best employees. There are many organizations which are looking for such employees. 1. Time to time increase in the salaries and wages of employees should be done. If a person is not satisfied by the job he’s doing. The top organizations are on the top because they value their employees and they know how to keep them glued to the organization. energy. There is no dearth of opportunities for a talented person. bonuses. he may switch over to some other more suitable job. The organizations are becoming aware of these reasons and adopting many strategies for employee retention. And this increase should be based on the employee’s performance and his contribution to the organization.Hiring knowledgeable people for the job is essential for an employer. the following components should be kept in mind: • Salary and monthly wage: It is the biggest component of the compensation package. bonuses. If they don’t. 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. In today’s environment it becomes very important for organizations to retain their employees. These reasons should be understood by the employer and should be taken care of. they would be left with no good employees. Employees stay and leave organizations for some reasons. vacations. Retention involves five major things: • Compensation • Environment • Growth • Relationship • Support Employee retention would require a lot of efforts. But retention is even more important than hiring. 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. Employees today are different. The employees always have high expectations regarding their compensation packages. and resources but the results are worth it. Employee retention is beneficial for the organization as well as the employee. • Bonus: Bonuses are usually given to the employees at the end of the year or on a festival. stock options. A good employer should know how to attract and retain its employees. While setting up the packages. The reason may be personal or professional. So an attractive compensation package plays a critical role in retaining the employees. etc. It is also the most common factor of comparison among employees. As soon as they feel dissatisfied with the current employer or the job. prerequisites. benefits.
discounts on company products. Management can support employees by providing them recognition and appreciation. there are chances that he’ll leave the organization as soon as he gets an opportunity. he’ll not be able to contribute in organization growth. employee satisfaction surveys and by being in constant touch with the employees 3. 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. legal assistance etc). Organizations can not keep aside the individual goals of employees and foster organizations goals. 2.• • • • • Economic benefits: It includes paid holidays. Growth and Career Growth and development are the integral part of every individual’s career. Support Lack of support from management can sometimes serve as a reason for employee retention. Many employers fear that if the employees are well rained. It also shows the employee that the organization cares about the employee and its family. etc. • 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. • Personal growth and dreams: Employees responsibilities in the organization should help him achieve his personal goals also. Health insurance: Health insurance is a great benefit to the employees. leave travel concession. use of a company cars. . 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. These incentives help retain employees in the organization's startup stage. The profile should not be too low or too high. Long-term incentives: Long term incentives include stock options or stock grants. Organization should not limit the resources on which organization’s success depends. 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. individual meetings. If he’s not satisfied with his growth. If an employee can not foresee his path of career development in his current organization. they’ll leave the organization for better jobs. etc. Supervisor should support his subordinates in a way so that each one of them is a success. After retirement: It includes payments that an Employee gets after he retires like EPF (Employee Provident Fund) etc. Miscellaneous compensation: It may include employee assistance programs (like psychological counseling. 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. Employees’ priority is to work for themselves and later on comes the organization.
Employers can also support their employees by creating an environment of trust and inculcating the organizational values into employees.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. etc. childcare services. This will induce competition as well as improve the relationships among colleagues. Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the employees too. This bitterness could be due to many reasons. • • 5. • Promote an employee based culture: The employee should know that the organization is there to support him at the time of need.Organization Environment . It leads to less satisfaction and eventually attrition. • Relationship with colleagues: Promote team work. A supportive work culture helps grow employee professionally and boosts employee satisfaction. Otherwise he’ll feel useless and will be dissatisfied. etc. Show them that the organization cares and he’ll show the same for the organization. counseling services. open door policy.The feedback from supervisor helps the employee to feel more responsible. not only among teams but in different departments as well. • Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for him to perform. Deliver what is promised. educational courses. Top management can also support its employees in their personal crisis by providing personal loans during emergencies. So an organization should hire managers who can make and maintain good relations with their subordinates. It is his duty to involve the employee in the processes of the organization. • Respect for the individual: Respect for the individual is the must in the organization. the management should keep the following points in mind. The management is sometimes not able to provide an employee a supportive work culture and environment in terms of personal or professional relationships. availability of resources. confident and empowered. There are times when an employee starts feeling bitterness towards the management or peers. Create opportunities for their career growth by providing mentorship programs. employee assistance programs. To enhance good professional relationships at work. • Relationship with the immediate manager: A manger plays the role of a mentor and a coach. He designs ands plans work for each employee. Individual development: Taking proper care of employees includes acknowledgement to the employee’s dreams and personal goals. Employees should know what the organization expects from them and what their expectation from the organization is. An employee based culture may include decision making authority. This decreases employee’s interest and he becomes de-motivated. et al. Thus employers can support their employees in a number of ways as follows: • By providing feedback • By giving recognition and rewards • By counseling them • By providing emotional support 4. certifications. Try to make the current employees stay instead of recruiting new ones.
Importance Of Employee Retention Now that so much is being done by organizations to retain its employees. industry experts often quote 25% of the average employee salary as a conservative estimate. Organizations should focus on managing the work environment to make better use of the available human assets. supportive co-workers. The environment should be such that the employee feels connected to the organization in every respect. Dependent care • Work environment: It includes efficient managers. Wellness 4. the answer is a definite no. employee retention will take care of itself. . challenging work. why is retention so important? Is it just to reduce the turnover costs? Well. clarity of work and responsibilities. certifications and provision for higher studies. • Support environment: Organization can provide support in the form of work-life balance. People want to work for an organization which provides • Appreciation for the work done • Ample opportunities to grow • A friendly and cooperative environment • A feeling that the organization is second home to the employee Organization environment includes : • Culture • Values • Company reputation • Quality of people in the organization • Employee development and career growth • Risk taking • Leading technologies • Trust Types of environment the employee needs in an organization • Learning environment: It includes continuous learning and improvement of the individual. 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. involvement in decision-making. Telecommuting 6. It is about managing people. training costs and productivity loss). and recognition. Work life balance includes: 1. 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.Vacations 5. If an organization manages people well. Alternate work schedules 3.It is not about managing retention. Lack or absence of such environment pushes employees to look for new opportunities. Flexible hours 2. etc. While it is difficult to fully calculate the cost of turnover (including hiring costs.
customers. compensation. 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. The unspoken negativity often intensifies for the remaining staff. When an employee leaves. can lead an employee to leave the organization. the effect is felt throughout the organization. the employee feels demotivated and loses interest in job. which could lead to potential customer loss. If he is given a job which mismatches his personality. current projects and past history (sometimes to competitors). Unexpected job responsibilities lead to job dissatisfaction. he takes with him valuable knowledge about the company. Compensation: Better compensation packages being offered by other companies may attract employees towards themselves. Regaining efficiency: If an employee resigns. Co-workers are often required to pick up the slack. then he won’t be able to perform it well and will try to find out reasons to leave the job. Higher retention rates motivate potential employees to join the organization. Goodwill of the company: The goodwill of a company is maintained when the attrition rates are low. seniors and management: Trust is the most important factor that is required for an individual to stay in the job. . New job offer: An attractive job offer which an employee thinks is good for him with respect to job responsibility. And even after this you cannot assure us of the same efficiency from the new employee. Interruption of Customer Service: Customers and clients do business with a company in part because of the people.• Loss of Company Knowledge: When an employee leaves. seniors and management can make office environment unfriendly and difficult to work in. There are certain circumstances that lead to their leaving the organization. Lack of trust and support in coworkers. Lack of appreciation: If the work is not appreciated by the supervisor. growth and learning etc. 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. Non-supportive coworkers. 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. When the employee leaves. Often much time and money has been spent on the employee in expectation of a future return. What Makes Employee Leave? • • • • Employees do not leave an organization without any significant reason. • Job and person mismatch: A candidate may be fit to do a certain type of job which matches his personality. Turnover leads to more turnovers: When an employee terminates. Relationships are developed that encourage continued sponsorship of the business. • • • • • • No growth opportunities: No or less learning and growth opportunities in the current job will make candidate’s job and career stagnant. the relationships that employee built for the company are severed. the investment is not realized.
Empower the employees: Give the employees the authority to get things done. 8. trust them and respect them. 9. 6. Hire the right people in the first place. Keep providing them feedback on their performance. 5. Create an environment where the employees want to work and have fun.Employee Retention Strategies The basic practices which should be kept in mind in the employee retention strategies are: 1. 3. medium and high level. 7. 2. Recognize and appreciate their achievements. . Provide them information and knowledge. Keep their morale high. These practices can be categorized in 3 levels: Low. Make employees realize that they are the most valuable asset of the organization. Have faith in them. 4.
Attrition Rate The attrition rate has always been a sensitive issue for all organizations. If the number of employees who left is 300.500 (average for the year). So if a company has 1.000 in March 2005. attrition of poor performers may also not be treated as attrition.000 employees in April 2004 and 2. Moreover.000 or as 1. then the attrition figure could be 15 percent or 20 percent depending on what base you take. In some cases. No common formula can be used by all the organizations. Attrition rate: There is no standard formula to calculate the attrition rate of a company. Calculating employee turnover rate is not that simple as it seems to be. This is because of certain factors as: The employee base changes each month. It also has to take into account the root of the problem by going back to the hiring stage. A formula had to be devised keeping in view the nature of the business and different job functions. Many firms may not include attrition of freshers who leave because of higher studies or within three months of joining. calculating attrition rate is not only about devising a mathematical formula. Calculating attrition rate: . then they may take their base as 2.
It tells how many are using the company as a springboard or a launch pad. Low performance attrition: It tells the attrition of those who left due to poor performance. • • • • . Training and development cost To estimate the cost of training and developing new employees.000 in March 2005. Critical resource attrition which tell the attrition in terms of key personnel like senior executives leaving the organization. there are various other types of attrition that should be taken into account. if the company had 1. 2. and can be largely classified under the following heads: • Training materials • Technology • Employee benefits • Trainers’ Time 2. This indicates the ease with which people adapt to the company. 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. This will mean direct and indirect costs. 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. cost of new hires must be taken into consideration.Attrition rates can be calculated using a simple formula: Attrition =(No. Infant mortality that is the percentage of people who left the organization within one year. then the average employee strength is 1.000 employees in April 2004.500 and attrition is 100 x (300/1500) = 20 percent. These expenses are: 1. etc. if any • Re-location costs. and 300 quit in the year. of employees who left in the year / average employees in the year) x 100 Thus. if any n Training/ramp-up time • Background/reference screening 2. 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. These are: • • • • Fresher attrition that tells the number of freshers who left the organization within one year. Besides this. access cards.
It is now termed as Human Resource Management (HRM). such as Personnel Administration or Personnel Management. a relatively new term. that emerged during the 1930s. Many people used to refer it before by its traditional titles. the trend is changing. train and develops.Training And Development Human Resource Management (HRM). recruit. Human Resource Management is a management function that helps an organization select. HUMAN RESOURCE MANAGEMENT . But now.
and Societal. They were holding the traditional view that managers are born and not made. etc. Societal Objectives – ensure that an organization is ethically and socially responsible to the needs and challenges of the society. The divisions included in HRM are Recruitment. 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. Organizations used to believe more in executive pinching. It comprises of the functions and principles that are applied to retaining. there are four other objectives: Individual. TRAINING AND DEVELOPMENT is a subsystem of an organization. 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. etc Human Resource Management is defined as the set of activities. which in turn. and compensating the employees in organization. It ensures that randomness is reduced and learning or behavioral change takes place in structured format. healthcare. Payroll. Training is now considered as more of retention tool than a cost. There were also some views that training is a very costly affair and not worth. It is also applicable to non-business organizations. Training and Development. Industrial Relation. Functional. enhances the individual contribution to an organization.Human Resource Management is defined as the people who staff and manage organization. Organizational Objectives – assist the organization with its primary objective by bringing individual effectiveness. programs. Retention. TRADITIONAL AND MODERN APPROACH OF TRAINING AND DEVLOPMENT • Traditional Approach – Most of the organizations before never used to believe in training. developing. Introduction Of Training • . training. one such important division is training and development. and functions that are designed to maximize both organizational as well as employee effectiveness…………… …………………… Scope of HRM without a doubt is vast. All the activities of employee. such as education. But now the scenario seems to be changing. Out of all these divisions. Performance Management. Organizational. • • • • Individual Objectives – help employees in achieving their personal goals. come under the horizon of HRM. from the time of his entry into an organization until he leaves. In addition to that.
but it’s knowing how to take off • It may not be quite the outcome you were aiming for. sharpening of skills. but it will be an outcome • It’s not what you dream of doing. skills. but it’s more like a vision • It’s not the goal you set. 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. concepts. Training is about the acquisition of knowledge. • It’s not what you want in life. ROLE OF TRAINING . but it’s knowing how to reach it • It’s not where you want to go. rules. and where you will be after some point of time. but it’s having the knowledge to do it • It's not a set of goals.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. Training is activity leading to skilled behavior. but it’s knowing how to get there • It’s not how high you want to rise.
• Development of skills of employees – Training and Development helps in increasing the job knowledge and skills of employees at each level. and inter-team collaborations. team spirit. • Team spirit – Training and Development helps in inculcating the sense of team work. 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. • Productivity – Training and Development helps in increasing the productivity of the employees that helps the organization further to achieve its long-term goal. • Development of Human Resources – Training and Development helps to provide an opportunity and broad structure for the development of human resources’ technical and behavioral skills in an organization. It also helps the employees in attaining personal growth.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. • Organization Culture – Training and Development helps to develop and improve the organizational health culture and effectiveness. . It helps in creating the learning culture within the organization.
• Healthy work-environment – Training and Development helps in creating the healthy working environment. demonstrate relationships among concepts. also its impact on trainees keeping their background and skills in mind before giving training. It helps to build good employee. • Image – Training and Development helps in creating a better corporate image. • Training and Development aids in organizational development i. motivation. better attitudes.• Organization Climate – Training and Development helps building the positive perception and feeling about the organization. which can be divided in to cognitive and behavioral methods. Cognitive methods are more of giving theoretical training to the trainees. and peers. It helps in understanding and carrying out organisational policies • Training and Development helps in developing leadership skills. Organization gets more effective decision making and problem solving. • 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. subordinates. These methods are associated with changes in knowledge and attitude by stimulating learning. The employees get these feelings from leaders. relationship so that individual goals aligns with organizational goal. loyalty. 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 . etc. • Quality – Training and Development helps in improving upon the quality of work and work-life. Trainers need to understand the pros and cons of each method. • Profitability – Training and Development leads to improved profitability and more positive attitudes towards profit orientation. written or verbal information. Methods of Training There are various methods of training. • Health and Safety – Training and Development helps in improving the health and safety of the organization thus preventing obsolescence. and other aspects that successful workers and managers usually display.e.
marketing & sales. These methods are best used for skill development. etc depends on training for its survival. Training is a transforming process that requires some input and in turn it produces output in the form of knowledge. MENTORING 3. but through different means. TRANSACTIONAL ANALYSIS 3. finance. and attitudes (KSAs). . SENSITIVITY TRAINING 2. The four techniques for on-the job development are: 1. The various methods under Behavioral approach allow the trainee to behavior in a real fashion. COACHING 2. production. SIMULATION EXERCISES 5. The few popular methods are: 1. skills. JOB ROTATION 4. 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. HR. CASE STUDY Models of Training Training is a sub-system of the organization because the departments such as. Another Method is MANAGEMENT DEVELOPMENT METHOD – MANAGEMENT DEVELOPMENT – The more future oriented method and more concerned with education of the employees. 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. JOB INSTRUCTION TECHNIQUE (JIT) • OFF THE JOB TRAINING – There are many management development techniques that an employee can take in off the job. STRAIGHT LECTURES/ LECTURES 4.
therefore. 2. technology. A system approach to training is planned creation of training program. form. material. The three model of training are: 1.This phase requires listing the activities in the training program that will assist the participants to learn. Design and provide training to meet identified needs. The steps involved in System Model of training are as follows: 1. etc The next step is to develop a performance measure on the basis of which actual performance would be evaluated. employees requirement. trainers need to be aware of these forces which may impact on the content. functions. Analyze and identify the training needs i. delivering. There are 4 necessary inputs i. identifying the learning steps. validating information to be imparted to make sure it accomplishes all the goals & objectives. and conduct of the training efforts. and evaluating. and aim. who needs training. job. The training should achieve the purpose of helping employee to perform their work to required standards.e. The System Approach views training as a sub system of an organization. training is undertaken on planned basis. Instructional System Development Model 3. formulating. System Model 2. selecting delivery method. time required in every system to produce products or services. there are some internal and external forces. 5. need to be up to date with the latest technologies. to analyze the department. It establishes a logical relationship between the sequential stages in the process of training need analysis (TNA). Under systematic approach. Organization are working in open environment i. 4.e. Out of this planned effort. The output can be tangible or intangible depending upon the organization’s requirement. Develop.THE TRAINING SYSTEM A System is a combination of things or parts that must work together to perform a particular function. Making necessary amendments to any of the previous stage in order to remedy or improve failure practices. An organization is a system and training is a sub system of the organization. And every system must have some output from these inputs in order to survive. . sequencing and structuring the contents. man. 3. Implementing is the hardest part of the system because one wrong step can lead to the failure of whole training program. one such basic model of five steps is system model that is explained below. Evaluating each phase so as to make sure it has achieved its aim in terms of subsequent work performance. estimating training cost. Transitional model System Model Training The system model consists of five phases and should be repeated on a regular basis to make further improvements. The internal forces are the various demands of the organization for a better learning environment. that poses threats and opportunities. examining the training material. This step requires developing objectives of training. System Approach can be used to examine broad issues like objectives. what do they need to learn. This approach uses step-by-step procedures to solve the problems.e.
mission and values of the organization on the basis of which training model i. A vision statement tells that where the organization sees itself few years down the line. etc. Training objectives are defined on the basis of job responsibilities and job description and on the basis of the defined objectives individual progress is measured. This model is widely used now-a-days in the organization because it is concerned with the training need on the job performance.e. employees. This model also helps in determining . It identifies the position in the community. Instructional System Development Model(ISD)Model Instructional System Development model was made to answer the training problems. • Vision – focuses on the milestones that the organization would like to achieve after the defined point of time. or bringing some internal transformation.Transitional Model Transitional model focuses on the organization as a whole. A vision may include setting a role mode. and all other stakeholders. and inform the employees regarding the organization. The outer loop describes the vision. values may include social responsibility. It reflects the deeply held values of the organization and is independent of current industry environment. For example. • Mission – explain the reason of organizational existence.The mission statement tells about the identity that how the organization would like to be viewed by the customers. or may be promising to meet some other deadlines. The reason of developing a mission statement is to motivate. excellent customer service. inspire. inner loop is executed. • Values – is the translation of vision and mission into communicable ideals.
podium. the output of one phase is an input to the next phase. food facilities. instructional objectives that measures behavior of a participant after the training. cooling. job analysis. The Instructional System Development model comprises of five stages: 1. benches. selection of content. The ISD model is a continuous process that lasts throughout the training program. It also highlights that feedback is an important phase throughout the entire training program. lighting. PLANNING – This phase consist of setting goal of the learning outcome. ANALYSIS – This phase consist of training need assessment. parking. sequencing the content. visual aids. such as arranging speakers. and target audience analysis.e. 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. 5. It consists of developing course material for the trainer including handouts. 3. and other training accessories. Training Need Analysis(TNA) . types of training material. DEVELOPMENT – This phase translates design decisions into training material. methods of evaluating the trainee. sequencing of content. strategies to impart knowledge i. 2. In this model. etc. 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. media selection. EXECUTION – This phase focuses on logistical arrangements. and delivering media for the types of training objectives to be achieved. equipments. trainer and the training program. 4. course material for the trainee including handouts of summary. workbooks. demonstration props.and developing the favorable strategies.
The job analyst gathers the information on whether the job is clearly understood by an employee or not. It starts with the assessment of internal environment of the organization such as. For this approach to be successful. weaknesses can be dealt with the training interventions. • Individual Level – Training need analysis at individual level focuses on each and every individual in the organization. the HR department of the company requires to be involved in strategic planning. If the difference between the expected performance and actual performance comes out to be positive. And. and goals. In this planning. and Attributes (KSAs) based on the future KSAs requirements at each level. Threats can be reduced by identifying the areas where training is required. Today. It helps to plan the budget of the company. Why training need analysis? Training need analysis is conducted to determine whether resources required are available or not. strengths. observation. business need. Employees need to prepare . 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. At this level. and weaknesses and external environment such as opportunities and threats. 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. questionnaires asking the closed ended as well as open ended questions.An analysis of training need is an essential requirement to the design of effective training. procedures. structures. He gathers this information through technical interview. • Organizational Level – Training need analysis at organizational level focuses on strategic planning. then certainly there is a need of training. psychological test. jobs are dynamic and keep changing over the time. while strengths can further be strengthened with continued training. etc. and also highlights the occasions where training might not be appropriate but requires alternate action. individual competence can also be linked to individual need. 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. policies. the organization checks whether an employee is performing at desired level or the performance is below expectation. areas where training is required. However. HR develops strategies to be sure that the employees in the organization have the required Knowledge. After doing the SWOT analysis. Skills. opportunities can be exploited by balancing it against costs.
interpersonal. 3. Trainees’ learning style – the learning style. The trainer – Before starting a training program. Training objectives assist trainers to design the training program. what could be included. The training objective clears what goal has to be achieved by the end of training program i. knowledge. what the trainees are expected to be able to do at the end of their training. when the climate is favorable nothing goes wrong but when the climate is unfavorable. The job analyst also gathers information on the tasks needs to be done plus the tasks that will be required in the future. trainer decides upon the content to be delivered. 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. the trainer translates it into specific training areas and modules. 6. tone. Training topics – After formulating a strategy. almost everything goes wrong. Trainers break the content into headings. The trainees – A good training design requires close scrutiny of the trainees and their profiles. 4. a trainer analyzes his technical. Training-Design The design of the training program can be undertaken only when a clear training objective has been produced. Training strategies – Once the training objective has been identified. and attitudes. Age. 1. skills. Based on the information collected. 5. training Need analysis (TNA) is done.for these changes. positive perception for training program. educational background of trainees must be kept in mind in order to get the right pitch to the design of the program. 7. experience. topics. The method selection depends on the following factors: • Trainees’ background • Time allocated • Style preference of trainer • Level of competence of trainer .e. age. experience. trainer comes in the position to select most appropriate tactics or methods or techniques. judgmental skills in order to deliver quality content to trainers. etc. 2. Training climate – A good training climate comprises of ambience. The trainer prepares the priority list of about what must be included. Therefore. ad modules. feelings. These topics and modules are then classified into information. Training tactics – Once the objectives and the strategy of the training program becomes clear. needs and expectations of the trainees are some of the important factors that affect training design.
topics are ready. This will bring people together both physically and psychologically. 10. course. Training implementation can be segregated into: • Practical administrative arrangements • Carrying out of the training Implementing Training Once the staff. Therefore. etc Training Implementation To put training program into effect according to definite plan or procedure is called training implementation. Even the best training program will fail due to one wrong action. and refining. equipments. etc 9. 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. Support facilities – It can be segregated into printed and audio visual.• Availability of facilities and resources. right amount of space should be allocated to every participant. Constraints – The various constraints that lay in the trainers mind are: • Time • Accommodation. redesigning. Classrooms should not be very small or big but as nearly square as possible. 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. Training implementation is the hardest part of the system because one wrong step can lead to the failure of whole training program. facilities and their availability • Furnishings and equipments • Budget • Design of the training. flip charts. content. 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 • • . Completing training design does not mean that the work is done because implementation phase requires continual adjusting. Trainer prepares materials and activities well in advance. Also. markers. Preparation is the most important factor to taste the success. 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. the training is implemented. etc.
Research: It helps in ascertaining the relationship between acquired knowledge. • • 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. Training evaluation ensures that whether candidates are able to implement their learning in their respective workplaces. . 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. what is expected out of trainers to do at the end of the program. Training evaluation checks whether training has had the desired effect. or to the regular work routines. and how the program will run. 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. and training. transfer of knowledge at the work place.
During the start of training. There are various evaluation techniques for this phase. Once aware. 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. 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. they are asked to give their opinions on the methods used and whether those methods confirm to the candidates preferences and learning style. 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 . the top management (higher authoritative employee) uses the evaluative data to manipulate it for their own benefits. Power games: At times. Intervention: It helps in determining that whether the actual outcomes are aligned with the expected outcomes. During Training: It is the phase at which instruction is started. then it can be dealt with accordingly. Process of Training Evaluation Before Training: The learner’s skills and knowledge are assessed before the training program. 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.
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. 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. etc. change in methods of product development. etc. Logistics. it’s a foremost duty of the organization to make the trainer and their organization aware of their culture. Therefore. But the problem arises when the organization outsource the training process. Human Resource. . Finance. such as Marketing.Demand for training also increases when there is change in the nature of job. This leads to failure of the program. Operations. The organization goes through the following steps for the transfer of training to the field. accurate. climate. 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. responsibilities of organization. which results in collusion. etc. familiar looking. 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. .
Compensation is the remuneration received by an employee in return for his/her contribution to the organization. The lucrative compensation will also serve the need for attracting and retaining the best employees. Components of Compensation System Compensation systems are designed keeping in minds the strategic goals and business objectives. . 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. • Direct Compensation • Indirect Compensation \ Need of Compensation Management • A good compensation package is important to motivate the employees to increase the organizational productivity. etc. 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. It is responsible for each and every decision taken. • Salary is just a part of the compensation system. compensation helps in running an organization effectively and accomplishing its goals. compensation serves the purpose. Compensation system is designed on the basis of certain factors after analyzing the job work and responsibilities. Thus. it contributes to high organizational productivity.Payroll & Compensation Management Human Resource is the most vital resource for any organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. If the compensation offered is effectively managed. the employees have other psychological and selfactualization needs to fulfill. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness. time off. Thus. each and every work done and each and every result. • Unless compensation is provided no one will come and work for the organization. Employees should be managed properly and motivated by providing best remuneration and compensation as per the industry standards.
Change in Compensation Systems With the behavioral science theories and evolution of labour and trade unions. In return they were provided with job security. The compensation systems have changed from traditional ones to strategic compensation systems. Evolution of Strategic Compensation In the traditional organizational structures. pension plans. Maslow brought in the need hierarchy for the rights of the employees. employees started asking for their rights. The higher education standards and higher skills required for the jobs have made the organizations provide competitive compensations to their employees. It depends on both internal and external factors as well as the life cycle of an organization. Then the compensation committee or the concerned authority formulates the compensation strategy. With the changing organizational structures workers’ need and compensation systems have also been changing. It was assumed that humans work for money. He stated that employees do not work only for money but there are other needs too which they want to satisfy from there . employees have started asking for their rights and appropriate compensations.• The most competitive compensation will help the organization to attract and sustain the best talent. Strategic Compensation Strategic compensation is determining and providing the compensation packages to the employees that are aligned with the business goals and objectives. salary increments and promotions annually. The compensation package should be as per industry standards. Compensation strategy is derived from the business strategy. employees were expected to work hard and obey the bosses’ orders. Some of the organizations provided for retirement benefits such as. Evolution Of Compensation Today’s compensation systems have come from a long way. there was no space for other psychological and social needs of workers. The business goals and objectives are aligned with the HR strategies. From the bureaucratic organizations to the participative organizations. In today’s competitive scenario organizations have to take special measures regarding compensation of the employees so that the organizations retain the valuable employees. for the employees. The salary was determined on the basis of the job work and the years of experience the employee is holding.
capitalist expects interest and organizer i. Men. Their performance was being measured and appraised based on the organizational and individual performance. entrepreneur expects profits. Every factor contributes to the process of production/business. has expectations. House rent allowances. psychological needs. The other factors being human. etc. emotions. Now the employees were being treated as human resource. company’s vehicle. i.job. 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. among four Ms. i. Employees were expected to work hard to have the job security. statutory leaves. Competition among employees existed. The employees are expected to work and take their own decisions. Some of the benefits are special allowances like mobile. Machine and Money.e. Maslow’s Need Hierarchy Today’s Modern Compensation Systems Today the compensation systems are designed aligned to the business goals and strategies. It will encourage the employees to perform better and achieve the standards fixed. IMPORTANCE OF COMPENSATION Compensation and Reward system plays vital role in a business organization. The compensation system was designed on the basis of job work and related proficiency of the employee. Labour plays vital role in bringing about the process of production/business in motion. Therefore a fair compensation system is a must for every business organization. it is impossible to imagine a business process without Men. . Men has been most important factor.e. It expects return from the business process such as rent is the return expected by the landlord. ambitions and egos. self-actualization. Labour therefore expects to have fair share in the business/production process. safety needs. Organizations offer monetary and non-monetary benefits to attract and retain the best talents in the competitive environment. social needs. Since.e. Similarly the labour expects wages from the process. etc. Material. Authority is being delegated. Employees feel secured and valued in the organization.
• • • • • • • • • • • • • • • • It will enhance the process of job evaluation. Such system would help management in complying with the various labor acts. requirements. It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel. It. should not result in exploitation of workers. it effectively contributes to setting up the compensation package for the job position. It will raise the morale. responsibilities. This minimizes the labour turnover. The organization enjoys the stability. training. It forms the basis for demand-supply analysis. Sound Compensation/Reward System brings peace in the relationship of employer and employees. The business organization can think of expansion and growth if it has the support of skillful. It helps in finding out required level of education. It will be apply to all the levels of the organization as a general system. Thus. compensation management. The system provides growth and advancement opportunities to the deserving employees. skills. The nonmonetary benefits offered to two different levels in the organization also vary. The perfect compensation system provides platform for happy and satisfied workforce. It should be easy to implement. Components of Job Analysis Job analysis is a systematic procedure to analyze the requirements for the job role and job profile. measurable effectiveness of the job and contribution of job to the organization. Importance of Job Analysis Job analysis helps in analyzing the resources and establishing the strategies to accomplish the business goals and strategic objectives. Such system should also solve disputes between the employee union and management. The sound compensation system is hallmark of organization’s success and prosperity. knowledge. efficiency and cooperation among the workers. etc. • Job Position Job position refers to the designation of the job and employee in the organization. etc for the job position. It aims at creating a healthy competition among them and encourages employees to work hard and efficiently. The system should follow the management principle of equal pay.e. It also depicts the job worth i. description. The success and stability of organization is measured with pay-package it provides to its employees. The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job. evaluation. recruitments. Job position forms an important part of the compensation strategy as it determines the level of the job in the organization. Job Analysis Job analysis is a systematic approach to defining the job role. Job analysis can be further categorized into following sub components. For example management level employees receive greater pay scale than non-managerial employees. and training need assessment and performance appraisal. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable. talented and happy workforce. . The system should be simple and flexible so that every employee would be able to compute his own compensation receivable. Such a system should be well defined and uniform. being just and fair would provide satisfaction to the workers.
It also helps in benchmarking the performance standards. Therefore. determining the training needs for employees who are lacking certain skills. etc.• Job Description Job description refers the requirements an organization looks for a particular job position. Pay structure refers to the process of setting up the pay for a job in an organization. • Job Worth Job Worth refers to estimating the job worthiness i. It is also known as job evaluation. education. It states the key skill requirements. Pay-Structures Once job analysis has been done organizations need to decide upon the pay structures. Job description provides the in depth knowledge about the job profile and its worth. Roles and responsibilities helps in determining the outcome from the job profile. the level of experience needed. Job description is used to analyze the job worthiness. Internal equity. Job analysis can be used for setting up the compensation packages. for reviewing employees’ performance with the standard level of performance. . External equity and Individual equity are the most popular pay structures. The roles and responsibilities are key determinant factor in estimating the level of experience. it becomes easy to define the compensation strategy for the position. It also describes the roles and responsibilities attached with the job position. The process deals with internal and external analysis to estimate the compensation package for a job profile. etc required for the job. level of education required. skill. Once it is determined that how much the job is worth. job analysis forms an integral part in the formulation of compensation strategy of an organization.e. It is also known as job evaluation. Organizations should conduct the job analysis in a systematic at regular intervals. how much the job contributes to the organization.
level of management. Organizations can either conduct the survey themselves or they can purchase the survey reports from a reputed research organization. The Salary survey is the research done to analyze the industry standards to set up the compensation strategy for the organization. . job classification. The analysis is done on the basis of certain factors defined in the objectives of the research. At times organizations offer higher compensation packages to attract and retain the best talent in their organizations. Organizations set the compensation packages of their employees aligned with the prevailing compensation packages in the market. For the purpose they undertake the salary survey. Pay structures also include the estimation of incentives. This entails for fair treatment to the employees. They cannot provide compensation packages that are either less than the industry standards or are very higher then the market rates. It helps in analyzing the employee’s role and status in the organization. level of status and factor comparison. The level of incentives also depends on the level of job position in the organizational hierarchy. . The fairness is ensured using job ranking. • External Equity Here the market pricing analysis is done.Pay structures are the strong determinant of employee’s value in the organization. Organizations formulate their compensation strategies by assessing the competitors’ or industry standards. 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. These reports constitute the last 2-5 years or more compensation figures for the various positions held by the organizations. Salary-Surveys Organizations have to bridge the gap between the industry standards and their salary packages. It provides for fair treatment to all employees. • Internal Equity The internal equity method undertakes the job position in the organizational hierarchy.
medical reimbursements. They focus on important issues usually one or two.e. • Custom Surveys At times. 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. facts and figures to support the analysis and conclusion. These surveys attempt to cover the same companies every year and provide the same time of analysis. a week. They are undertaken as the need arises. It is the money an employee receives from his/her employer by rendering his/her services. • House Rent Allowance Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. • Conveyance . They are given at a regular interval at a definite time. conveyance. Pf/Gratuity. bonus. The reports also include the data. 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. The surveys which cater this need are known as custom surveys. etc. These surveys are conducted annually based on the organizational objectives. Survey Reports The survey reports consist of the analysis and conclusion drawn from the evaluative data based on the objectives of the study. leave travel allowance. special allowances. These surveys do not have any time interval. The monetary benefits include basic salary. a few organizations need to know some specific information. This is done to provide them social security and motivate them to work. a month. etc. 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.Objectives of Salary Survey • • • • • To gather information regarding the industry standards To know more about the market rate i. The reports are published annually by the research organizations. The organizations willing to formulate their compensations strategies based on the surveys purchase the reports from the research organization. house rent allowance. • Standard Surveys Standard surveys are undertaken by organizations on a regular basis. • 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.
etc. etc. medical leaves (sick leave). commissions. The bonus amount usually amounts to one month’s salary of the employee. Hospitalization. • Leave Travel Allowance These allowances are provided to retain the best talent in the organization. Retirement Benefits. club memberships. 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. Some organizations arrange for a tour for the employees of the organization. Few organizations also provide vehicles and petrol allowances to their employees to motivate them. if they happened to do so. • Bonus Bonus is paid to the employees during festive seasons to motivate them and provide them the social security.Organizations provide for cab facilities to their employees. • Leave Policy It is the right of employee to get adequate number of leave while working with the organization. overtime pay. • Hospitalization The employees should be provided allowances to get their regular check-ups. Insurance. and maternity leaves. This is usually done to make the employees stress free. mobile allowances. travel expenses. 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. Overtime Policy. The employees are given allowances to visit any place they wish with their families. • Overtime Policy Employees should be provided with the adequate allowances and facilities during their overtime. statutory pay. Holiday Homes. The employees are provided with medi-claims for them and their family members. • Leave Travel The employees are provided with leaves and travel allowances to go for holiday with their families. meals. Leave travel Assistance Limits. This gives them the emotional security and they feel themselves valued in the organization. The allowances are scaled as per the position of employee in the organization. say at an interval of one year. such as transport facilities. These medi-claims include health-insurances and treatment bills reimbursements. reduced interest loans. • 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 . The organizations provide for paid leaves such as. insurance. • Medical Reimbursement Organizations also look after the health conditions of their employees. They include Leave Policy. Car policy. • Special Allowance Special allowance such as overtime. casual leaves.
It can also be called as an accounts activity which undertakes the salary administration of employees in the organization. administrating the retirement benefits and disbursements of salaries to employees. • Flexible Timings Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons. payroll management can be further subdivided into two sub processes. These holiday homes are usually located in hill station and other most wanted holiday spots. Payroll accounting and payroll administration. referring employment laws.e. the HR and accounts department work together to calculate and disburse the salary to the employees. . The process consists of calculation of salaries and tax deductions of the employees.Organizations provide for holiday homes and guest house for their employees at different locations. the HR comes into picture which maintains the daily record if employees attendance. It also undertakes the activities such as preparation of tax returns. The organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house. etc. Here. Thus. • Payroll Administration Payroll Administration involves managerial activities such as maintaining employees’ records. i. maintaining the payroll records. Administrating the employees’ salaries is not an easy task. Payroll Management Payroll is defined as a method of administrating employees’ salaries in the organizations. • Payroll Accounting Payroll accounting involves calculations of employees’ salaries and tax deductions.
There are some deductions which are provident fund (12%) of the salary. allowances. net pay. Net salary is calculated by deducting the tax and other calculated deductions (loan installments. commissions. bonus. While administrating the monthly payroll basic salary. pay for holidays.Database of employees is maintained. There are some deductions such as PF. etc are recorded. vacations and sickness. daily attendance. employee name. loan installments or advances taken by employee. taxes and other deductions. wages. incentives. conveyance. date of joining. etc). basic salary. and deductions. basic salary. value of meals and lodging etc. Payroll is administered on monthly basis and annual basis. overtime pay. Gross Salary is calculated after adding the allowances and incentives to the basic salary of the employee. taxes. daily attendance record. Employee’s details such as name. Components Of Payroll Payroll refers to the administration of employees' salaries. etc are considered. . It consist of the employee ID. and other special allowances such mobile. HRA. employee ID. bonuses.
Organizations also contribute the same amount to the provident fund of the employee. incentives.Deductions such as tax and loan/advances taken by the employee from organizations are deducted only where applicable. meal Allowances. and medical reimbursements. annual vouchers/reimbursements. Some of the organizations use the traditional manual method of payroll processing and some go for the . which is provided later to the employee. bonuses. Payroll Management Processes Calculation of gross salaries and deductible amounts is a tedious task which involves risk. Dearness Allowance and House rent allowance is provided at a fixed rate stated by the employment law. Annual payroll consists of leave travel allowances. Some organizations provided the allowances on a fixed rate say 10% or 12% of the basic salary. Some organizations go for performance based incentives. Provident fund is deducted from the gross salary of employee on the monthly basis as per the employment law. incentives. bonuses and reimbursements are based on organizational policies.
The process was very popular when there were no computerized means for payroll processing. The outsourcing organization is responsible for all the activities of the payroll accounting. An organization opts for any of the following payroll processing methods available:: 1. 4. payroll system has also developed itself into automated software that performs every action needed by the payroll process. Data is validated automatically by the software. payroll outsourcing would be very much beneficial. Payroll Software In today’s computerized environment. The data is provided to the consultants/outsourcing firms. Payroll Outsourcing Payroll outsourcing involves a third party (an outsourcing company) in the calculations of salaries and deductions. adding machine. The various payroll functions undertaken by the outsourcing organizations are as follows: • Analysis of Payroll records. But the process is tedious. Sometimes the construction industry and manufacturing industry also use the manual payroll systems for the contractual labour. It helps in calculating the payable amounts and deductions very easily. Manual System Manual payroll system is the traditional payroll system which involves pen and ink. It saves time and cost for the organization. It needs professionals to make use of the software for its efficient working. as theses contracts are on daily/weekly basis. time consuming and risky as it is more prone to errors. software and other computerized aids.advanced payroll processing software. etc instead of computers. If there is more number of employees (say more than 9001000) in the organization. Accountant Accountant is a professional having a degree/diploma course in finance/accountancy. There is full control in the hands of owner. spreadsheet. Now-a-days it is only few small scale organizations in the remote areas that use the manual payroll. It also helps in generating the pay slips in lesser time. payroll taxes • Medical claim processing • Employee Insurance & Provident fund processing • Quality Audit procedures & planning . 2. The financial control regarding salary goes in the hand of accountant. He/she has the sound knowledge of accounting principles and globally accepted standards. He/she is responsible for all the activities related to payroll accounting. The process adds costs to the organization. 3. It involves paying someone who is responsible for calculating the salaries of others. Automated calculations result in no errors.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.