Professional Documents
Culture Documents
Reference Books:-
¬ Human Resource and Personnel Management - K.Aswathappa
¬ Human Resource and Management - Subba Rao
¬ Personnel Management and Industrial Laws - P S Narayan and P C K Rao
¬ Human Resource Development and Management - Biswanath Ghosh
¬ Personnel Management - C B Mamoria
† PERSONNEL MANAGEMENT
»Meaning and Definition:
¬ Personnel Management is a method of developing potentials of
employees so that they get maximum satisfaction out of their work and
give their best efforts to the organization.
- P. Pigors and Charles Myers.
¬ Personnel Management is that part of management process, which
is primarily concerned, with the human constitution of an organization.
-E F L Brech
¬ The personal function is concerned with the procurement,
development, compensation, integration and maintenance of the personnel
of an organization for the purpose of contributing towards the
accomplishment of that organizations major goals and objectives.
Therefore, Personnel Management is planning, organizing, directing, and
controlling of performance of those operative functions.
-Edwin B. Flippo
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Recruitment
Employee
and Selection
Maintenance
Employee
Motivation
Compensation
Benefit
s
» Personnel Principles:
If policy is a guide for managerial decisions and actions,
principle is the fundamental truth established by research, investigation
and analysis. Many personnel principles have been established through
practices, experience and observation, Principles are universal truths
generally applicable to all organizations. Policies, on the other hand, vary
from organizations to organizations. Principles guide managers in
formulating policies, programmes, procedures, and practices. They also
come handy in solving any vexing problem. Some of the personnel
principles are:
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5. Employees are used mostly for organiz- Employees are used for the
multiple mutual
ational benefit. Benefit of the organization,
employees and
their family members.
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E.g. IBM’s decision to buy Lotus was probably prompted in part by IBM’s
conclusion that its own human resources were inadequate for the firm to
reposition itself as an industry leader in networking systems.
Functional Strategy
Formulation
Environmental Scanning:
Environment needs to be scanned in order to determine trends and
projections of factors that will affect fortunes of the organizations. Scanning
must focus on task environment. Not those elements outside the task
environment are ignored, but they receive less attention. Scanning helps
identify threats and opportunities prevailing in the environment.
Strategy Formulation:
Strategies are formulated at 3 levels:
1. Corporate level
2. Business unit level and
3. Functional level
Strategy Implementation:
Strategy formulated need to be implemented. Implementation
of strategies is, often more difficult than their formulation. Although
implementation is the logical step to formulation, the two differ in the
following ways:
Strategy formulation is positioning forces before action.
Strategy implementation is managing forces during the action.
Strategy formulation focuses on effectiveness.
Strategy implementation focuses on efficiency.
Strategy formulation is primarily an intellectual process.
Strategy implementation primarily is an operational process.
Implementing strategies requires such actions are altering
sales territories, adding new depts., closing facilities, hiring new
employees, etc.
Strategy formulation concept and tools do not differ vastly for
small, large or non-profit organizations. However, strategy
implementation varies substantially among different types and sizes
of organizations.
Strategy Evaluation:
Strategy evaluation helps determine the extent to which the
company’s strategies are successful in attaining its objectives. Basic
activities involved in strategy evaluation are:
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Sales
Marketing
Production
Human
Resource
Finance Union
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about its human resources. The HRIS is usually a part of the organizations
larger mgt. system(MIS). The HRIS need not be complex or even
computerized. But computerization has its own advantage of providing
more accurate and timely data for decision making.
The areas of application of HRIS are many. Some of them
include training mgt., risk mgt., turnover analysis, succession planning,
flexible benefits administration, compliance with govt. and legal
environment, etc.
Steps in implementing HRIS:
As with any major change, proper planning is an absolute
necessity for successful implementation of an HRIS. The steps outlined
below describe the specific procedures involved in successfully developing
and implementing an HRIS.
Step 1: Inception of idea. The idea of an having an HRIS must
originate from somewhere. The originator of the idea must prepare a
preliminary report showing the need for an HRIS and what it can do for the
organizations.
Step 2: Feasibility study. Feasibility study evaluates the present
system and details the benefits of an HRIS. It evaluates the costs and
benefits of an HRIS.
Step 3: Selecting a project team. Once the feasibility study has been
accepted and the resources allocated, a project team should be selected.
The project team should consist of an HR who is knowledgeable about the
organization’s HR functions and activities and about the organization itself
and representatives from both management information systems and
payroll. As the project progresses, additional clerical people from the HR
department will be needed to be added.
Step 4: Defining the requirements. A statement of requirements
specifies in detail what exactly the HRIS will do. A large part of the
statements of requirements normally deals with the details of the reports
that will be produced. Naturally, the statement also describes other specific
requirements. This typically includes written descriptions of how users
collect and prepare data, obtain approvals, complete forms, receive data
and performa other non-technical tasks with HRIS use. The key here is to
make sure that the mission of the HRIS truly matches management’s needs
for an HRIS.
Step 5: Vendor Analysis. This step determines what hardware and
software are available that will best meet the organizations needs for the
lowest price. This is a difficult task. The best approach is usually not to ask
vendors if a particular package can meet the organizations requirements
but how it will meet those requirements. The results of this analysis will
determine whether to purchase an ‘off-the-shelf’ package or develop the
system internally.
Step 6: Package contract negotiation. After vendor has been selected,
the contract must be negotiated. The contract stipulates the vendor’s
responsibilities with regards to software, installation, service, maintenance,
training, and documentation.
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Public Sector & Private Sector undertakings all of which have become
overcrowded with heavy surplus workforce, consequent to the
rationalization of systems & procedures in the post Reform period shedding
a host of redundant controls & restrictive provisions, transferring several
functions hither to performed by the government to private enterprise, &
switching over to computerized operations everywhere, rendering huge
workforce manually carrying on these operations redundant. The result is
high cost wage component with low productivity, & making Indian Industry
& business less competitive in the global market. It is an anomaly that the
Indian worker is paid comparatively low scales of wages, while the
employers are suffering from a high cost of labour content in their cost
structure. It is the number employed that creates the situation of low wage
& high cost. This both the worker & the business/industry stand to benefit
by rationalization of work force & improve productivity.
Why such an elaborate system & why are companies forced to
downsize their workforce by such a steep level? They recruit employees
initially incurring considerable cost, & subsequently have to train them for
several years continuously. At clerical level an employee needs six months
training, while an officer at a junior level is given training on direct
recruitment for three years. It may need for such an officer another 5 years
to be eligible to become a branch manager & so on for different higher
positions, most of which are filled through internal promotions. All these
involve huge expenditure. Banks pertain to the category of service industry
providing a specialized professional service. Its main stock-in-trade is
expert knowledge, an intangible asset. This prime asset of the banks is not
stored in its show rooms or godowns, but rests with its officers &
employees. A part of the same may be structured & retained in instruction
manuals, guidelines & job charts, but predominantly it rests with
employees, who are repositories of its knowledge-wealth. A huge turnover
of skilled & trained employees at a point of time from n institution will
disrupt its normal working, in addition to the loss of heavy resources
already spent on their recruitment & elaborate training incurred under the
consideration that their service will be continuously available for the full
term or entire span of their career.
The fast changing economic paradigms affect business models so
frequently that in the event of a business model redefinition, restructuring
of the workforce becomes a necessity. Each time this necessity arises, we
see corporate wooing employees with severance schemes that are
extremely severe on the companies’ finances & quality of the workforce. It
is unknown that competent employees use this opportunity to make the
best of both the worlds. Given the scheme of things voluntary severances is
best replaced with compulsory severance. While this may seem as
anathema to corporate it is extremely hard on the employees themselves
who have developed a certain skill set over a period of time & now finds
themselves redundant.
Thus to make this model operative in India it is necessary to institute
compensation schemes that are commensurate to the extent of damage
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» Importance of HRP:
1. Future Personnel Needs: Planning is significant as it helps
determine future personnel needs. Surplus or deficiency in staff strength is
the result of the absence of or defective planning. The problem of excess
staff has become so heavy that many units are restoring to VRS to remove
the excess staff.
» Objective of HRP:
The important objectives of manpower planning in an organization
are:
i) to recruit and retain the human resource of required quantity and
quality;
ii) to meet the needs of the programmes of expansion,
diversification, etc;
iii) to improve the standards, skill, knowledge, ability, discipline,
etc;
iv) to estimate the cost of human resources;
v) to make the best use of its human resources;
vi) to foresee» the impact of technology on work, existing
employees and future human resource requirements;
vii) to assess the surplus or shortage of human resource and take
measures accordingly;
viii) to minimize imbalances caused due to non-availability of
human resources of right kind, right number in right time and right
place.
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3. Supply Forecasting:
The first step of forecasting the future supply of human resource is to
obtain the data and information about the present human resource
inventory.
Existing Inventory
The data relating to present human resource inventory in terms of
human resources components, number, designation-wise should be
obtained. Principal dimensions of human resources inventory are:
i) Head counts regarding total, dept.-wise, sex-wise, designation-wise, skill-
wise, etc.
ii) Job Family Inventory: It includes number and category of employees of
each job family i.e., all jobs related to same category like clerks, cashiers,
typists, etc. each sub-job family i.e., all jobs having common job
characteristics (skill, qualification, similar operations) like production
engineer (mechanical) and maintenance engineer (mechanical) and broad
job families like general administration, production, etc.
iii) Age Inventory: It includes age-wise number and category of employees.
It indicates age-wise imbalance in present inventory which can be
correlated in future selections and promotions.
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9. Retention Plan:
Though there is a problem of unemployment, organizations
experience shortage of some categories of employees. and some
organizations experience shortage of some other categories of employees
due to employee mobility. Hence, the organizations have to plan for
retention of the existing employees.
3. HR programming:
Once an organization’s personnel and supply are forecast, the two
must be reconciled or balanced in order that vacancies can be filled by the
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right employees at the right time. HR programming, the third step in the
planning process therefore, assumes greater importance.
4. HRP implementation:
Implementation requires converting an HR plan into action. A
series of action programmes are initiated as a part of HR plan
implementation. Some such programmes are recruitment, selection and
placement; training and development, retraining and redeployment; the
retention plan; and the redundancy plan.
» Job Description:
A job description is a return statement of what the job holder
actually does, how he/she does it, and under what conditions job is
performed. This information is in turn used to write a job specification that
lists the knowledge, abilities, and skills needed to perform the job
satisfactorily.
There is no standard format you must use in writing job description,
but most description contains section on:
1. Job Identification.
2. Job Summary.
3. Responsibilities and Duties.
4. Authority of Incumbent.
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5. Standards of performance.
6. Working conditions.
7. Job specifications.
1. Job Identification: The job title specifies the title of job, such as
supervisor of data processing operations, mktg. mgr. or inventory
control clerk. Job titles and descriptions should be kept current.
2. Job Summary: The job summary should describe the general nature
of the job, listing only its major functions or activities. Thus, the mktg.
mgr. “plans, directs, and coordinates the mktg. of the organizations
products and / or services.”
3. Relationships: There is occasionally a relationships statement,
which shows the job holder’s relationship with others inside and
outside the organization.
4. Responsibilities and Duties: This section presents a list of jobs
major responsibilities and duties. Each of the job’s major duties
should be listed separately and described in a few sentences.
This section should define the limits of the jobholder’s
authority, including his/her decision-making authority, direct
supervision of other personnel, and budgetary limitations.
5. Standards of Performance: Some job description contains
standards of performance sections. This state the standards the
employee is expected to achieve under each of the job description’s
main duties and responsibilities.
6. Working Conditions and Physical Environment: The job
description may also list the general working conditions involved on
the job these might include things like noise level, hazardous
conditions, or, heat.
» Job Specification:
A statement of human qualifications necessary to do the
job. Usually contains such items as:
¬ Education.
¬ Experience.
¬ Training.
¬ Judgment.
¬ Initiative.
¬ Physical Effort.
¬ Physical skills.
¬ Responsibilities.
¬ Communication skills.
¬ Emotional characteristics.
¬ Unusual sensory demands such as sight, smell, hearing.
Strategic Choices
Gather Information
Uses of Job Description and Job
Specification:
Process Information ¬ Personnel Planning
¬ Performance Appraisal
¬ Hiring
Job Description
¬ Training and Development
¬ Job Evaluation and Compensation
Job Specification ¬ Health and Safety
¬ Employee discipline
¬ Work Scheduling
¬ Career Planning
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» Quantitative Techniques:
The methods of collecting job-related data, described above,
are used by most employers. But there are locations where these narrative
approaches are not appropriate. For example there is a desires to assign a
quantitative value to each job so that jobs can be compared for pay
purposes, a more quantitative approach will be appropriate. The position
analysis questionnaire, mgt. position description questionnaire, and
functional job analysis and the three popular techniques of job analysis.
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Behavioral
Factors
Factors Affecting Job Design
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Organizational Factors
It includes characteristics of task, work flow, ergonomics, and work
practices.
¬ Characteristics of Task: Job design requires the assembly of
number of tasks in to a job or group of jobs. An individual may carry out
one main task which consists a number of interrelated elements or
functions. On the other hand, task functions may be split between a team
working closely together or strung along an assembly line.
¬ Work Flow: The flow of work in an organization is strongly
influenced by the nature of product or service. The product or service
usually suggests the sequence and balance between jobs if the work is to
be done efficiently.
¬ Ergonomics: It is concerned with designing and shaping jobs to fit
the physical abilities and characteristics of individuals so that they can
perform their jobs efficiently. It helps employers to design jobs ins such a
way that workers’ physical anilities and job demands are balanced.
¬ Work Practices: They are set ways of performing work. Work
practices were till now, determined by time and motion study which
determine standard time needed to complete a given job. A new technique
has now emerged, which if introduced, could rustically alter the work
practices in industrial undertakings. Called Maynard Operating Sequence
Technique (MOST), the technique uses a standard formula to list the motion
sequence ascribed in index values.
Environmental Factors
Environmental elements affect all activities of HRM, and job design is
no exception. The external factors that have a bearing on job design are
employee abilities and availability and social and cultural expectation.
¬ Employee Abilities and Availabilities: Efficiency consideration
must be balanced against the abilities and availabilities of the people who
are to do the work.
¬ Social and Cultural Expectations: Their were days when getting
a job was a primary consideration. The worker was prepared to work on any
job and under any working conditions. Not any more. Literacy, knowledge
and awareness among workers have improved considerably, so also their
expectations from jobs. Hence jobs must be designed to meet the
expectations of workers.
Behavioral Elements
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2(a) 2(b)
Job Description Job Specification
Job-evaluation
(3)
Programme
Wage Survey
(4)
Employee
(5)
Classification
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Evaluation
Strategy and
Applicant Control
Development
Populatio
¬ Where
n
¬ How
¬ When
Recruitment Process
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» Recruitment Process:
Recruitment refers to the process of identifying and attracting job
seekers so as to build a pool of qualified job applicants. The process comprises
five interrelated stages, viz; (i) planning (ii) strategy development, (iii)
searching, (iv) screening, and (v) evaluation and control. The ideal recruitment
programme is the one that attracts a relatively larger number of qualified
applicants who will survive the screening process & accept positions with the
organization, when offered. Recruitment programmes can miss the ideal in
many ways: by failing to attract an adequate applicant pool, by under/over
selling the organization, or by inadequately screening applicants before they
enter the selection process. Thus, to approach the ideal, individuals responsible
for the recruitment process must know how many and what types of employees
are needed, where and how to look for individuals with the appropriate
qualifications and interests, what inducement to use (or avoid) for various types
of applicant groups, how to distinguish applicants who are unqualified from
those who have a reasonable chance of success, & how to evaluate their work.
Recruitment Planning
The first stage in recruitment process is planning. Planning involves
the translation of likely job vacancies and information about nature of these jobs
into a set of objectives or targets that specify the (i) number and (ii) type of
applicants to be connected.
Number of contacts: Organization, nearly always, plan to attract more
applicants than they hire. Companies calculate yield (yRs) which express the
relationship of applicant inputs to outputs at various decision points. For
example, assume that an organization attempting to recruit sales people ran a
series of newspaper advertisements. The advertisement generated resumes
from 2000 applicants, of which 200 were judged to be potentially qualified (yR =
10:1).
Type of Contacts: This refers to the type of people to be informed about
job openings. The type of people depends on the tasks and responsibilities
involved and the qualifications and experience expected. These details are
available through job description and job specification.
Strategy Development
Once it is known how many and what type of recruits are required,
serious consideration needs to be given to i) ‘make’ or ‘buy’ employees; ii)
techno logical sophistication of recruitment and selection devices; iii) geographic
distribution of labour markets comprising job seekers; iv) sources of recruitment;
and v) sequencing the activities in the recruitment process.
‘Make’ or ‘Buy’: Organizations must decide whether to hire less skilled
employees and invest on training and education programmes, or they can hire
skilled labour and professionals.
Technological Sophistication: The second decision in strategy
development relates to the methods used in recruitment and selection. This
decision is mainly influenced by the available technology. The advent of
computers has made it possible for employers to scan national and international
applicant qualifications.
» Sources of Recruitment:
International Recruitment
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» Philosophies of Recruiting:
The traditional philosophy of recruiting has been to get as many
people to apply for a job as possible. A large number of job seekers waiting in
queues would make the final selection difficult, often resulting in wrong
selections. Job dissatisfaction and employee turnover are the consequences of
these.
A persuasive agreement can be made that matching the needs of the
organization to the needs of the applicants will enhance the effectiveness of the
recruitment process. The result will be a workforce which is likely to stay with
the organizations longer and performance at a higher level of effectiveness. Two
approaches are available to bring about this match. They are i) realistic job
preview (JRP), ii) job compatibility questionnaire (JCQ).
Realistic Job Previews (RJP)
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» Role of Selection:
The role of selection in an organization’s effectiveness is crucial for
at least, two reasons. First, work performance depends on the individuals. The
best way to improve performance is to hire people who have the competence
and the willingness to work.
Second, cost incurred in recruiting and hiring personnel speaks volumes
about the role of selection.
Costs of wrong selection are much greater,
In organization with wrong selection incurs these types of costs. The first
type is incurred while the person is employed. This can be the result of
production or profit, losses, damaged co. reputation, accidents due to
negligence, absenteeism and the like. The second type of cost is associated with
the training, transfer or terminating the services of the employee. Costs of
replacing an employee with fresh one-costs of hiring, training and replacement-
constitute the third type of cost. Generally, the more important the job, the
greater the cost of selection error.
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» Selection Process:
Selection is a long process, commencing from the preliminary
interview of the applicants and ending with the contract of employment.
Environmental Factors Effecting Selection: Selection is influenced by
several factors. More prominent among them are supply and demand and of
specific in the labour market, unemployment rate, labour-market conditions,
legal and political considerations, company’s image, company’s policy, HRP, and
cost of hiring. The last three constitute the internal environment and the
remaining form the external environment of the selection process.
Preliminary Interview: the purpose of a preliminary interview is scrutiny
of applications, that is, elimination of unqualified applications.
Selection Tests: Job seekers who pass the screening and the preliminary
interview are called for tests. Different type of tests may be administered,
depending on the job and the company. Generally, tests are used to determine
the applicant’s ability, aptitude and personality. Ability tests. (also called
achievement tests) assist in determining how well an individual can perform
tasks related to the job. An excellent illustration of this is the typing test given to
a prospective employee for secretarial job. An aptitude test helps determine a
person’s potential to learn in a given area.
Personality tests are given to measure a prospective employee’s
motivation to function in a particular working environment.
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fitness test. A job offer is, often, contingent upon the candidate being
declared fit after the physical examination.
Job Offer: Job offer is made through a letter of appointment. Such a letter
generally contains a date by which the appointee must report on duty. The
appointee must be given reasonable time for reporting. This is particularly
necessary when he or she is already in employment, in which case the
appointee is required to obtain a relieving certificate from the previous
employer.
Contracts of Employment: There is a need of preparing contract of
employment. Contracts for employment serve many useful purposes. Such
contracts seek to restrain job-hoppers, to protect knowledge and information
that might be vital to a company’s health bottom-line, and to prevent
competitors from poaching highly valued employees.
Concluding the Selection Process: Contrary to popular perception, the
selection process will not end with executing the employee contract. There is
another step-a more sensitive one-reassuring those candidates who have not
been selected. Such candidates must be told that they were not selected, not
because of any serious deficiencies in their personalities, but because their
profiles did not match the requirements of the organization. They must be told
that those who were selected were done purely on relative merit.
Evaluation of Selection Programme: The broad test of effectiveness of
the selection process is the quality of the personnel hired. An organization must
have competent and committed personnel. The selection process, if properly
done, will ensure availability of such employees. How to evaluate the
effectiveness of a selection programme? A periodic audit is the answer. Audit
must be conducted by people who work independent of the HR department.
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» Training Process:
Organizational Objectives
and strategies
Assessment of Training
Needs
Establishment of
Training Goals
Devising Training
Programme
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Implementation of
Evaluation of Results
Training Programme
HRM notes
objectives, its formal and informal organization, and the goals of the training
programme. Training and development requires higher degree of creativity than,
perhaps, any other personnel speciality.
Scheduling training around the present work is another problem. How to
schedule training without disrupting the regular work? There is a problem of
record keeping about the performance of trainee during his or her training
period. This information may be useful to evaluate the program of the trainee in
the company.
Programme implementation involves action on the following lines:
1. Deciding the location and organizing training other facilities.
2. Scheduling the training programme.
3. Conducting the programme.
4. Monitoring the progress of trainees.
Evaluation of the Programme: The last stage in the training and
development process is the evaluation of results.
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Businessmen must sit with Deans and structure the courses that would serve
the purpose of business better.
¬ Organized Labour can Help: Organized labour can play a positive
role in imparting training to workers. Major trade unions in our country seem to
be busy in attending to mundane issues such as bonus, wage revision,
settlement of disputes, and the like. They have little time in imparting training to
their members.
†PERFORMANCE APPRAISAL
» Meaning and Definition:
Performance appraisal is:
“it is the systematic evaluation of the individual with respect to his/her
performance on the job and his/her potential for development.”
“a formal, structured system of measuring and evaluating an employee’s
job, related behaviors and outcomes to discover how and why the employee is
presently performing on the job and how the employee can perform more
effectively in the future so that the employee, organization, and society all
benefits.”
The second definition includes employees’ behavior as part of the
assessment.
» Appraisal Process:
The Performance Appraisal Process
Objectives of
Performance Appraisal
Establish Job
Expectations
Design an
Appraisal Programme
Appraise
Performance
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Performance
Use appraisal Data for
Interview
Appraisal Purposes
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psychological test is scored. People with high scores are, by definition, the
better employees; those with low scores are the poorer ones. Since the
rater does not know what the scoring rates for each statement are, in
theory at least, he cannot play favorites. He simply describes his people, &
someone in the personal dept. applies the scoring rates to determine who
gets the best rating.
5. Critical incident appraisal: The critical incident technique looks like a
natural to some people for performance review interviews, because it
gives a supervisor actual factual incidents to discuss with an employee.
Supervisors are asked to keep a record, a “little black book,” on each
employee & to record actual incidents of positive or negative behavior.
The supervisor sets the standards if they seem un fair to a
subordinate, might he not be more motivated if he at least some say in
setting, or at least agreeing to, the standards against which he is judged?
6. Management by Objectives: It should be noted, however, that when
MBO is applied at lower organizational levels, employees do not always
want to be involved in their own goal setting. As Arthur N. Turner & Paul R.
Lawrence discovered many do not want self-direction or autonomy. As a
result, more coercive variations of MBO are becoming increasingly
common, & some critics see MBO drifting into a kind of manipulative form
of management in which pseudo-participation substitutes for the real
thing. Employees are consulted, but management ends up imposing its
standards & its objectives.
7. Work-standards approach: Instead of asking employees to set
their own performance goals, many organizations set measured daily
work standards technique establishes work improving productivity.
When realistically used, it can make possible an objective & accurate
appraisal of the work of employees & supervisors.
To be effective, the standards must be visible & fair. Hence a good deal of
time is spent observing employees on the job, simplifying & improving the
job where possible, & attempting to arrive at realistic output standards.
8. Ranking methods: For comparative purposes, particularly when it is
necessary to
compare people who work for different supervisors, individual
statement, ratings, or appraisal forms are not particularly useful.
Instead, it is necessary to recognize that comparisons involve as
overall subjective judgment to which a host of additional facts &
impressions must somehow be added. There is no single form or way
to do this.
Comparing people in different units for the purpose of, say,
choosing a service supervisor or determining the relative size of
salary increases for different supervisors, requires subjective
judgment, not statistic. The two most effective methods are
alternation ranking & paired comparison ranking.
Alternation ranking: In this method, the names of employees are
listed on the left-hand side of a sheet of paper-preferably in random
order. If the rankings are for salary purposes a supervisor is asked to
choose the “most valuable” employee on the list, cross his name off,
& put it at the top of the column on the right-hand side of the sheet.
Next, he selects the “least valuable” employee on the list, crosses
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his name off, & puts it at the bottom of the right-hand column. The
ranker then selects the “most valuable” person from the remaining
list, crosses his name off & enters it below the top name on the
right-hand list, & so on.
Period-comparison ranking: This technique is probably just as accurate as
alternation ranking & might be more so. But with large numbers of
employees it becomes extremely time consuming & cumbersome.
To illustrate this method, let us say we have 5 employees: Mr.
Abbott, Mr. Barnes, Mr. Cox, & Mr. Eliot. We list their name on the
left-hand side of the sheet. We compare Abbott with Barnes on
whatever criterion we have chosen, say, present value to the
organization. If we feel Abbott is more valuable than Barnes, we put
a tally beside Abbott’s name. We then compare Abott with Cox, with
Drew & with Eliot. The process is repeated for each individual. The
man with the most tallies is the most valuable person, at least in the
eyes of the rater; the man with no tallies at all is regarded as the
least valuable person.
9. Assessment centers: Typically, individuals from different department
are brought together to spend two or three days working on individual & group
assignments similar to ones they will be handling if they are promoted. The
pooled judgment of observers-sometimes derived by period comparison or
alternation ranking-leads to an order of-merit ranking for each participant. Less
structured, subjective judgments are also made.
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† EMPLOYEE REMUNERATION
» Theory of Remuneration:
Three theories are – reinforcement & expectancy theories, equity theory &
agency theory.
Reinforcement & Expectancy Theory: The reinforcement theory
postulates that a behavior which has a rewarding experience is likely to be
repeated. The implications for remuneration is that high employee performance
followed by a monetary reward will make future employee performance more
likely. By the same token, a high performance not followed by a reward will
make its recurrence unlikely in future. The theory emphasizes the importance of
a person actually experiencing the reward.
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Equity Theory: Adams’s equity theory points that an employee who perceives
inequity in his or her rewards seeks to restore equity. The theory emphasizes
equity in pay structure of employees’ remuneration.
Agency Theory: The agency theory focuses on the divergent interests &
goals of the organizations stakeholders & the way that employee remuneration
can be used to align these interests & goals. Employers & employees are the
two stakeholders of a business unit, the former assuming the role of principals &
the latter the role of agents. The remuneration payable to employees is the
agency cost. It is natural that the employees expect high agency costs while the
employers seek to minimize it. The agency theory says that the principal must
choose a contracting scheme that helps align the interest of the agents with the
principal’s own interests. These contracts can be classified as either behavior-
oriented (e.g. merit pay) or outcome-oriented (e.g. stock option schemes, profit
sharing, & commission).
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Pay Reviews: Pay, once determined, should not remain constant. It must be
reviewed & changed often, but how often becomes a relevant question. Pay
reviews may be made on predetermined dates, anniversary dates or there could
be flexible reviews.
In organized industrial establishments, pay reviews take place once in
three years. Managements enter into wage & salary agreements with labour
unions & the agreement will be valid for 3 yrs.
Pay Secrecy: Equity in remuneration is a significant factor in employee
performance. Perceived inequity in wages & salaries will demotivate &
demoralize employees which will lower employee performance. One way of
avoiding this problem is for managements to maintain secrecy.
Comparable Worth: One of the popular principles in employee remuneration
is equal pay for equal work. Infact, this principle has been the inspiration behind
the enactment of the Equal Remuneration Act. Under this act, male & female
nurses are to be paid the same if their merit & seniority match.
International Pay: In increasing globalization of business, international pay
assumes great relevance.
» Concepts Of Wages:
While evolving, wage policy, three concepts of wages, viz, i)
minimum wages, ii) fair wages, iii) living wages are generally considered. These
are broadly based on the needs of workers, capacity of the employee to pay, &
the general economic conditions prevailing in a country.
Minimum Wage
Minimum wage is one which provides not merely for bare sustenance of life, but
also for the preservation of the efficiency of worker. For this purpose, the
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minimum wage must also provide for some measure of education, medical
requirements & amenities.
Fair Wage
Fair wage is understood in two ways. In a narrow sense, wage is fair if it is equal
to the rate prevailing in the same trade & in the neighborhood for similar work.
In a wider sense, it will be fair if it is equal to the predominant rate for similar
work throughout the country.
Living Wage
Living wage is a step higher than fair wage. Living wage may be described as
one which would enable the wage earner to provide for himself/herself & his/her
family not only the bare essentials of life like food, clothing, & shelter, but a
measure of frugal comfort including education for children; protection against ill
health; requirements of essential social needs; &/or measure of insurance
against the more important misfortunes including old age.
† PARTICIPATIVE MANAGEMENT
» Meaning & Definition:
Employee participation means associating representatives of
workers at every stage of decision making. Participative management is
considered as a process by which the workers’ share in decision making extends
beyond the decisions that are implicit in the specific contents of the job they do.
This, in actual practice, amounts to the workers having a share in the reaching
of final managerial decision in an enterprise.
A clear & more comprehensive definition is:
“Workers’ participation, may broadly, be taken to cover all terms of
association of workers & their representatives with the decision-making process,
ranging from exchange of information, consultations, decision & negotiations to
more institutional forms such as the presence of workers’ member on
management or supervisory boards or even management by workers
themselves.”
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» Importance of Participation:
The greatest benefit of participative management is that the
employee identifies himself or herself with work & this leads to an improved
performance. Participation tends to improve motivation because employees feel
more accepted & involved in the situation. Their self-esteem, job satisfaction, &
co-operation with management will also improve. The results often are reduced
conflict & stress, more commitment to goals, & better acceptance of a change.
Employees may also reduce turnover & absences when they begin to feel that
working conditions are satisfactory & that they are becoming more successful in
their jobs. Finally, the act of participation in itself establishes better
communication, as people mutually discuss work problems. The management
tends to provide workers with increased information about the organizations
finances & operations, & this helps employees to give better quality
satisfactions.
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